India Intelligence Report

   Kenyan Crisis Boosts Indian Tea Prospects


A major drought in Kenya that is decimating its population has also created a shortfall of 30 million kilograms (mkgs) of tea in the world market that will soon be filled by Indian tea exporters from domestic production of 928 mkgs. India is the world's largest producer of tea and its production has soared 13% year on year from 820 mkgs to 928 mkgs.

The large gap supply created by the Kenyan drought has created large shortages in Pakistan, Iran, Iraq, and RussiaPakistan imports 140 mkgs a year and most of it from Kenya. It remains to be seen if the Pakistani Government will get over its hardheaded attitude and allow the import of Indian tea or chose to use it as a weapon and instrument to negotiate over Kashmir.

Assam contributes 55% to India's USD 1.5 billion-tea industry. Last year, the country exported 180 mkgs at an auctioned price of Rs. 62 per kg. This year, the prices have risen 13% to Rs. 70 a kilogram. Before 1998, Assam tea was selling at Rs. 90 a kg and subsequent years saw severe drop in prices prompted by lower exports and high supply.

The European Union had ranked Indian tea in a category that contains a high toxic residue. If India needs to address the EU and US market, it needs to create a process to reduce the use of toxic chemicals in the tea industry. Since tea is grown in the higher reaches, which are also catchments areas for rivers, the pesticide and fertilizer runoffs create serious digestive, organ-affecting, and reproductive side-effects in the nation’s health. The Ministry of  Health needs to study the quality of water from hill stations in Assam, Tamil Nadu, Kerala, and Karnataka to understand how much of the EU assertion is true.

The Ministry of Agriculture can then use this data to either contest the EU findings or address the issue with tea growers.