Tough times for tea continues

• Production, exports in first quarter of 2023 dip extending declines suffered in 2022
• Low volumes boost prices with March FOB reaching highest ever level of $ 6.10 per kilo

The 2022 tough times for the tea industry have extended throughout the first quarter of 2023 with crop and exports in volume showing decline year on year though prices have gained.

Exports in 1Q of this year have declined by 9.62 million kilos or 15% year on year (YoY) to 5.48 million kilos. Tea in Bulk has shown a substantial decrease, whilst Packeted Tea has shown a significant increase and Tea Bags to a lesser extent. Exports in March 2023 declined by 5 million kilos to 18 million kilos.

Last year tea exports declined by 36 million kilos or 12.5% to 250 million kilos from 2021.

FOB value of Rs. 2,038.04 recorded in 1Q23 was an increase of Rs. 1,049.89 compared to a year ago. All categories show a significant gain in dollar terms as well by $ 1.27 to $ 5.78 per kilo from a year ago with instant tea enjoying a higher gain of $ 2.81 to $10.69.

FOB value in March was Rs. 2,018.87 reflecting a YoY increase of Rs. 973.73. On a USD basis the FOB of $ 6.10 in March (up $ 1.97) was the highest ever value for a calendar month surpassing the previous best $ 5.74 in October 2022.

According to Forbes and Walker Tea Brokers, Türkiye has emerged as the number one importer of Ceylon Tea with an increase of 102% YoY in January-March 2023. Iraq which has decreased its imports by 54% YoY has secured the second position followed by Russia with a decline of 0.9% YoY. UAE has moved down to the 4th position having decreased imports by 27% YoY. Libya has secured the 5th position having decreased imports by 25% YoY. Other notable importers are China, Azerbaijan, Saudi Arabia, Jordan and Germany.

Last year the FOB average price per kilo was Rs. 1,643.11 up by Rs. 722.35 and in dollar terms it was $ 5.09, higher by 46 cents from 2021.  

Value wise, overall tea exports in 2022 declined by 5% to $ 1.26 billion. When 2023 began, industry was aiming at increasing exports to $ 1.5 billion.

Tea production too is seeing a downward trend, largely linked to the effect of inorganic fertiliser ban since 2021.

Crop in 1Q of 2023 was down by 4.58 million kilos or 7% to 58.52 million kilos with all elevations suffering a downturn. In comparison to 1Q/2021 crop, the latest year shows a sharp 21% or 16 million kilo shortfall.

In the 1Q of 2023 High grown crop was down by 16% to 12 million kilos, Medium grown was down by 11% to 8.9 million kilos, low grown declined marginally by 3.4% to 36.75 million kilos. Green tea production however had increased by 22.6% to 0.6 million kilos. Vis-a-vis 1Q of 2021, high grown crop is down 22%, medium grown by 24% and low grown by 21%.

In the month of March, tea crop was down 3% to 21.3 million kilos and by 26% in comparison to 2021.

Last year the tea crop slumped to a 26 year low of $ 246 million kilos.