Decline in coffee prices may hit tea exports, says IMaCS

India’s tea exports may fall, albeit marginally, in 2012, thanks to high tea prices coupled with a sharp decline in coffee prices and a weaker world growth outlook. Atleast that’s what IMaCS, an arm of ICRA, feels.

According to a recent industry study by IMaCS, India’s tea exports may drop from 193 million kg to 180 million kg due to these factors. That’s not all. Country’s tea production may also go on a downslide, leading eventually commodity price head northward.

“Factors leading to decline in tea export from India are low tea consumption in the Europe due fast growing coffee market there and the weak economic growth. India’s exports to Iran could also decline because of recent sanctions imposed by the US and EU. Tea exporters to Iran may face payment and settlement problems, as the sanctions will curtail Iranian banks’ access to international banking systems,” the report said.

The fall in tea exports could also be attributed to the expected decline in domestic production during 2012 and increase in domestic consumption, the report added. Significantly, India’s tea production came down by 11.4 per cent (yoy) in the first five months of this year.

Production has experienced a downward trend since October 2011, with especially severe declines in March-April. While production in North India came down 12.2 per cent during first five months, production in south India was down by 10.2 per cent.

In North India, an early start to winter in 2011, prolonged winter during 2011-12, and drought in Q1, 2012 has affected production. In South India, production was adversely affected because of prolonged dry spell in Tamil Nadu and Kerala. Overall, domestic production is forecast to decline to around 950 mkg in 2012.

Soruce : wrd.mydigitalfc.com