Tea Production Surges 16% as Harvest Continues

EghtesadOnline: Atotal of 78,125 tons of green tea leaves have been purchased by the government from local farmers in the current fiscal year (started March 20), out of which more than 17,578 tons of processed tea have been produced to register a 16% rise compared with the similar period of last year.

News ID: ۷۵۰۴۵۳

16 July 2020

“The government has spent around 2.6 trillion rials [$11 million] on tea purchases. Nearly 68% of the total sum are top-quality tea leaves and the remaining 32% belong to other varieties of leaves,” Habibollah Jahansaz, the head of Iran Tea Organization, was quoted as saying by Mizan Online.

The official noted that more than 135,000 tons of green tea leaves are estimated to be produced in Iran by March 2021 to show a 10% year-on-year increase.

“A total of 30,000 tons of processed tea are expected to be produced this year, which will meet around 30% of domestic demand. The figure shows a 5% year-on-year rise. Top-quality tea makes up 20% of our production and the rest have relatively lower qualities and are sold at more reasonable prices in the market,” he said.

Tea is cultivated in Iran's northern Gilan and Mazandaran provinces.

“Based on the latest figures, Iran’s domestic demand for tea stands at 105,000 tons per year while tea plantations in the two northern provinces yield 40,000 tons of processed tea.”

Every year, the government buys strategic crops, including tea, wheat, sugarbeet, barley, cotton boll and oilseeds, from local farmers at guaranteed prices to control prices in the domestic market and fill its strategic reserves.

Last year’s tea harvest season ended in October 2019 and the government purchased 126,753 tons of green tea leaves from local farmers for 3.43 trillion rials (about $14.5 million).

“About 28,519 tons of processed tea were derived from this amount of purchases, showing an 11% rise compared with the similar period of last year,” Jahansaz told Mehr News Agency.

The official attributes the growth in production to favorable weather conditions, government support in granting cheap loans and increasing guaranteed purchase prices.

The crop undergoes three harvests a year: the spring harvest that starts in late April, the second in summer begins early June and the last one is in autumn that commences late September.

The main export destinations of Iranian tea are India, Uzbekistan, Tajikistan, Turkmenistan, Canada, Australia, Spain, the Czech Republic and Georgia.

Indian Exports Take Off Despite Covid-19

India is a major tea exporter and its exports to Iran have taken off, despite the economic uncertainty caused by the outbreak of Covid-19.

Iran has started importing new season orthodox teas from last week and is paying Rs400-450 per kg, a price higher than that of last year, The Economic Times reported.

This year, Indian tea production has already gone down by 140 million kg due to the lockdown. The weather has not been favorable in May and June in Assam, as there has been excessive rains that will likely impact overall production.

Last year, India produced 1,389 million kg of teas.

When orthodox teas started coming to the market in May and June, Iran was bidding for lower price. Prices of tea this year, particularly for the orthodox variety, have remained strong due to a shortfall in production.

Agarwal said that lately, Iran has agreed to pay the prevailing price which is Rs300 per kg. “And they have placed orders, too,” he said.

Anish Bhansali, another tea exporter to Iran, said Iranian importers are even ready to pay Rs400-450 per kg, depending on the quality of orthodox teas.

Last year, Iran had bought nearly 54 million kg of teas and exporters to Iran are not facing any problem over payment.

“More or less, the payment is smooth as of now. We do not know what is going to happen after a few months,” said Bhansali.

Since tea production in India is less this year and there is economic uncertainty too in Iran, exporters believe Iran may import around 45-46 million kg of teas this year, about 10% lower than last year.