KARACHI, Feb 7: Leading packers of tea are considering increase in prices by Rs20-25 per kg following continuous upsurge in Kenyan tea prices due to election violence, low crop output and heavy buying by European countries for winter season.

Regional Chairman Pakistan Tea Association (PTA) Mohsin M. Saify told Dawn on Thursday that the price of good quality Kenyan tea had surged to $3 per kg as compared to $1.92-2 per kg before the political turmoil began in Kenya.

“There is an impact of Rs50-60 per kg of the Kenyan tea price hike but and the packers have no choice but to pass on a little burden onto the consumers,” he said adding that the prices are likely to be increased by next week.

Mr. Mohsin further said the losing value of the rupee against the dollar had already increased the cost of imports while the cumulative impact of duty and taxes comes to 35 per cent. The change in the rupee-dollar parity and the duty incidence make an impact of Rs80 per kg but packers definitely cannot pass on this huge burden onto the consumers.

He added that there was currently no import option available to the packers as the price of Sri Lankan tea had been hovering between $3.5-4 per kg while in India and Bangladesh the new crop will arrive in March/April.

Mohsin said that there had been problem in getting Kenyan tea these days despite the fact that the tea auction was being held in the country. He added there were some problems of delay in shipment from Kenya also. The packers have now over one week’s stocks.

The commodity sector in Pakistan has been marked with serious crises starting from flour and wheat to rice, power and gas shortages and now a new crisis is on the cards if Kenyan tea prices do not come down in near future.

Wholesale Kenyan tea prices (loose) had already surged in the markets by Rs30-35 per kg while its impact had not been felt by the consumers at the retail level.

Pakistan’s tea consumption stands at 170,000 tons, of which 65 per cent (105,000 tons) is imported from Kenya and the rest of the demand (70,000 tons) is met through the smuggled tea.

An importer said that on average the price of tea from various sources had surged to above $2 per kg from $1.60-1.75 while the average price of Kenyan tea has increased to $2.30-2.40 per kg from $1.80-1.90 per kg ahead of December 27.

He said that the smuggling of Kenyan tea in the market has been in full swing.