Kenyan drought brews good times for Assam tea

Demand for Assam tea already up by 5-7%

Assam tea is in high demand as hot and dry weather in Kenya has cut the supply from the African nation by 20-25 per cent this year. Medium to high grade Assam tea is a substitute for Kenyan grade. Demand for Assam tea is up five-seven per cent, and exporters expect that this could boost India’s tea exports by 9.5 per cent to about 220 million kg this year.

Azam Monem, vice-chairman, Indian Tea Association (ITA) and also whole-time Director McLeod Russel, said Kenyan production was down by 50 million kg so far this year, and not showing any sign of recovery.



“Demand for Assam tea has started coming from countries such as the UK, Pakistan and Egypt. May to July saw queries from the UK, and going forward, if demand from Egypt and Pakistan remain steady then it would definitely push exports from India,” he explained.

Monem added the price of Kenyan tea was around $3.5-4.5 per kg in the international market, whereas good quality Assam tea is available for $3.5 a kg. India had exported around 200 million kg last year, and if the export demand remains steady, the country could exporting around 218-220 million kg this year. India’s tea production stood at 1.2 billion kg last year, and Assam accounts for 40 per cent of it.

Manojit Dasgupta, secretary general of the ITA, said this year, up to May, the production was up 24 million kg on a year-on-year basis. However, since Assam production was down in June, the January-June figure might show flat growth.

Leading tea exporter Madhu Jayanti International Ltd which exports to over 42 countries across the globe, feels that while export demand for Assam tea is already up by around 5-7%, and by the end of the year, it could be up by 9-9.5% easily. 

  Sumit Shah, executive director, Madhu Jayanti International, said, “The substitute for the Kenyan variety is medium to high grade Assam tea, and the Sri Lankan variety cannot replace that. However, production in Assam was down by about 10 per cent in June compared to last year, and hence going forward, domestic prices could see a spike.”

A senior official in the branded tea division of the Goodricke Group confirmed that prices for good quality tea was already up by Rs 10-15 per kg compared to last year. Market insiders felt that prices could firm up further by another Rs 20 per kg.

Interestingly, Kenya has two monsoon seasons. And while its main monsoon season in March has been dry, if the shorter monsoon season in October is a good one, it could give a boost to their production as well, feels Monem. As such Kenya is one of the leading exporters of tea, exporting 499 million kg in 2014.