Iran Tea Exports Fetch $18m in 10 Months

EghtesadOnline: Iran exported a total of 13,000 tons of tea worth $18 million during the first 10 months of the current Iranian year (March 21, 2018-Jan. 20).

News ID: ۷۸۴۵۴۰

02 March 2019

According to Habibollah Jahansaz, the head of Iran Tea Organization, the main export destinations included India, Uzbekistan, Tajikistan, Turkmenistan, Afghanistan, Iraq, Canada, Australia, Spain, the Czech Republic, Azerbaijan and Georgia, the Young Journalists Club reported.

The official added that close to 48,000 tons of tea were imported over the same period, indicating an over 2% increase compared with the similar period of last year.

Based on tea import price in the first nine months of the current Iranian year (March 21-Dec. 21), it is estimated to be worth $221 million, Financial Tribune reported.

India and Sir Lanka are the biggest exporters of tea to Iran. Other main exporters are Turkey, Germany, China, Japan, Vietnam, Kenya, Poland and the UAE.

Sri Lankan Tea Board Chairman Lucille Wijewardena recently said that with the imposition of trade embargoes on Iran, obtaining payments for tea exports from Sri Lanka to Iran is causing several difficulties.

"The European Union imposed an embargo on November 5 last year and the United States had then imposed an economic embargo on Iran, making it difficult to obtain dollar settlements. Some 32 million kilograms of tea are exported to Iran annually. This volume has now fallen by about 10 million kilograms," he was quoted as saying by Daily Mirror.

Wijewardena said Iran was the fourth largest purchaser of Sri Lankan tea.

He said earlier Sri Lanka bought crude oil in exchange for the tea, but with the EU- and US-imposed embargo, our exporters are finding it extremely difficult for tea exporters to obtain payment.

However, India may be better positioned in the Iranian market under the circumstances.

“The rupee-rial trade between India and Iran will help Indian tea exporters," Vivek Goenka, chairman of Indian Tea Association, said recently.

Under a rupee payment mechanism to circumvent US-imposed sanctions, Indian refiners make payments in rupee for oil imports from Iran to designated accounts maintained with UCO Bank of India. A portion thus received is to be used by Iran to pay for imports from India.

Between January and November last year, India exported 27.26 million kg of orthodox teas, worth Rs 671.69 crore (about $94 million), to Iran. “We could have easily crossed 30 million kg in 2018, had there been no confusion over the US sanctions on Iran,” said Azam Monem, director of tea company Mcleod Russel India.

After the US announced its plans of putting an embargo on Iran last year, Indian tea exporters, wary of the situation, halted some of the shipments and some tea producers switched to CTC from orthodox tea.

Iran normally buys second flush orthodox tea from India.

Sri Lanka is a major exporter of orthodox teas to Iran.

Iran consumes about 5% of the total world tea production, that is, around 105,000 tons of tea annually.

This year’s tea harvest season ended on Oct. 22 and a total of 112,000 tons of fresh tea leaves worth 2.2 trillion rials (around $15 million) were bought from farmers.

“Despite the frost that set in during the spring and the water shortage we faced this year, production saw a 4% increase in weight compared with last year. The dried and processed tea amounted to 20,600 tons,” he said.

The government has a guaranteed purchase system in place for many crops, including tea, to build up its strategic reserves and control prices in the domestic market.

Tea 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 and starts late September.

Tea is cultivated in Iran’s northern provinces of Gilan and Mazandaran where 50,000 families earn their living from tea farming on more than 25,000 hectares. Close to 95% of tea orchards in Iran are rain-fed.