Tea Exports Double as Imports Rise 23% in Eight Months

EghtesadOnline: Atotal of 17,259 tons of tea worth 3.89 trillion ($17.26 million) were exported from Iran to 26 countries during the first eight months of the current Iranian year (March 21-Nov. 21), showing a respective rise of 119.16% and 116.19% in weight and value compared with the similar period of last year, latest figures released by the North Tea Factories Syndicate of Iran show.

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29 December 2021

Each kilo of Iranian tea averaged $1, Young Journalists Club reported.

India with 2,502 tons, Russia with 2,500 tons, Uzbekistan with 1,439 tons and Kenya with 1,018 tons were Iran’s biggest export destinations followed by Iraq, Georgia, Tajikistan, Turkmenistan, Afghanistan, Australia, Canada, Turkey, Azerbaijan Republic, Belgium, Kazakhstan, Lebanon, Finland, Switzerland, Germany, Qatar, the Netherlands, China, the UAE, Ukraine, the UK and Kyrgyzstan.

The exports were mainly shipped from Anzali Port in the northern Gilan Province, Mashhad in the northeastern Khorasan Razavi Province and Payam Special Economic Zone in the central Alborz Province.

Imported tea during the same period came from 10 countries to stand at 44,555 tons worth $228 million, registering a 20.14% and 23.5% rise in volume and value respectively compared with the corresponding period of last year.

Each kilo of imported tea averaged $5.

India with 18,928 tons worth $89.65 million, Sri Lanka with 11,598 tons worth $67.86 million and the UAE with 9,764 tons worth $50.2 million were the main tea exporters to Iran during the period. The three countries accounted for over 90% of Iran’s total tea imports.

Kenya, Turkey, China, Vietnam, Iraq, Germany and Afghanistan were the other importers.

The main points of entry were Bushehr Special Economic Zone in Bushehr Province, Shahid Rajaee SEZ in the southern Hormozgan Province and Payam SEZ.

Citing figures released by the Islamic Republic of Iran Customs Administration, Managing Director of the North Tea Factories Syndicate Sadeq Hassani said Iran imports between 60,000 and 70,000 tons of tea every year.

Sri Lanka to Settle $251m Oil Import Dues by Bartering Tea

“A new measure has been taken for tea imports from Sri Lanka. The country owes Iran for oil imports about12 years ago. Plans are for Sri Lanka to barter the commodity alongside six other goods to repay its debt,” Hassani was also quoted as saying by YJC.

Around a quarter of Iran’s tea imports come from Sri Lanka that plans to settle $251 million in oil import dues owed to Iran by bartering tea, a Sri Lankan minister said on Wednesday, amid dwindling foreign reserves.

Plantations Minister Ramesh Pathirana told Reuters he aimed to start sending tea to Iran from January.

"We hope to send $5 million worth of tea each month to repay Iran for oil purchases pending since the last four years," he said.

Sri Lanka has to meet about $4.5 billion in debt repayments next year, starting with a $500 million international sovereign bond in January, but the country's foreign reserves had dwindled to $1.6 billion at the end of November, latest data from the central bank showed.

Central Bank Governor Ajith Nivard Cabraal said earlier this month Sri Lanka is confident of being able to "seamlessly" repay all sovereign debt that comes due in 2022.

But Fitch Ratings this month downgraded Sri Lanka's sovereign rating to "CC" from "CCC", citing a growing risk of debt default in 2022, despite repeated assurances from the central bank.

Sri Lanka has foreign currency debt service payments of $6.9 billion in 2022, equivalent to nearly 430% of official gross international reserves as of November 2021, Fitch said in a statement.

A senior member of the country's tea board said it was the first time it had been able to use tea supplies for a barter arrangement to settle foreign debt.

The Plantation Ministry said in a statement this barter with Iran "will not violate any UN or US sanctions since tea has been categorized as a food item under humanitarian grounds while none of the blacklisted Iranian banks will be involved in the equation".

"The recommended scheme will save Sri Lanka much-needed foreign currency since the settlement to Iran would be made in Sri Lankan rupees through the sale of Ceylon Tea," it added.

Sri Lanka produces about 340 million kilograms of tea annually. Last year, it exported 265.5 million kg of tea, making it the largest forex-earning crop, with earnings of $1.24 billion in 2020.

A spokesperson for the Planters Association, which includes all the major plantation companies in Sri Lanka, said this mode of transaction was a "(sticking) plaster solution by the government".

"It doesn't necessarily benefit exporters as we will be paid in rupees, circumventing the free market, and provides no real value to us," said Roshan Rajadurai.

According to IRICA Spokesman Rouhollah Latifi, global tea trade amounts to around $42 billion per annum. Some 50 countries cultivate tea and more than 3 billion people across 160 countries are regular consumers of the herbal drink.

China, Sri Lanka, Kenya and India are the main producers of tea and Russia, the US, the UK, Egypt, Pakistan and Iran are the biggest consumers.

The tea harvest season in Iran ended in November and a total of 137,000 tons of fresh tea leaves worth 7.6 trillion rials ($26.7 million) were harvested, according to the head of Iran Tea Organization.

"A total of 31,000 tons of processed tea were derived from this year’s yields, showing close to a 4% increase compared with last year’s production,” Habibollah Jahansaz was also quoted as saying by Mehr News Agency.

According to the official, the government bought about 135,000 tons of this year’s harvest worth over 7.4 trillion rials ($26.21 million) as part of its guaranteed purchase plan and the remaining 2,000 tons were sold in the free market.

“A total of 5 million tons of tea are produced globally every year and Iran currently ranks the world’s 12th biggest cultivator. Iranian tea is among the finest produced across the globe and is cultivated pesticide-free, therefore, no pollutants or chemical residues spoil its quality, healthiness and taste,” he added.

Iran has 28,000 hectares of tea plantations and more than 55,000 farmers earn their living through tea cultivation in Iran’s northern provinces of Gilan and Mazandaran where the product is considered an economically strategic commodity, Iran Tea Organization reported.

Some 90% of Iran’s tea plantations are located in Gilan Province. Lahijan County in eastern Gilan is known as Iran’s tea production hub.

According to Jahansaz, domestic demand for tea stands at 105,000 tons per year, some 30% of which are supplied domestically.

Yet, Iran Tea Association puts the domestic demand for tea at 120,000 tons per annum.