KARACHI: Tea imports declined to 89,819 tons ($186 million) in July-June 2008-09 as compared to 101,000 tons ($188 million) in the corresponding period of the last fiscal year as high prices and import duty forced packers and importers to opt for slow buying.
 
Average unit price in the outgoing fiscal year was $2.08 per kg as compared to $1.85 per kg in the last fiscal year, figures compiled by the Pakistan Tea Association (PTA) revealed.

Out of total legal arrivals from 22 countries, imports from Kenya, which holds a major share, also plunged to 48,409 tons ($116 million) in July-June 2008-2009 as compared to 61,890 tons ($129 million) in the same period of last fiscal year.

The average unit price of Kenyan tea was $2.39 per kg as compared to $2.09 per kg in the last fiscal year. The share of Kenyan tea in total legal imports during 2008-2009 dropped to 54 from 61 per cent.

PTA chairman Mohammad Hanif Janoo said keeping in view the annual consumption of 175,000-180,000 tons, tea smuggling in 2008-2009 was estimated at 90,000 tons.

The government, instead of taking any steps, further aggravated the situation by imposing additional two per cent withholding tax on imports, thus creating further problems for importers which may benefit smugglers.

He said Advisor to Prime Minister on Finance Shaukat Tarin had supported the viewpoint of the PTA in his pre-budget meeting by saying that tea imports by Afghanistan were far bigger than its actual consumption and it was destined for Pakistani market.

Janoo said that Shaukat Tarin had informed the PTA that he had conveyed this situation to his Afghan counterpart.

Tea packers have already passed on the impact of rising tea prices in the world markets to consumers ahead of budget. However, they have not yet passed on the impact of rise in withholding tax on imports from two to four per cent.

PTA chairman said that Kenyan tea prices were still higher at $2.90 per kg due to low crop.
 
He added that the demand for tea in the world market was rising and Kenya does not have any carryover stocks of last year. Till June there was a shortage of 90,000 tons of black tea in world market.

In April this year, he said that Kenyan tea was available at $2.50 per kg.

With rising pressure on legal imports by imposing additional tax, legal tea imports in the new fiscal year would shrink to 75,000 tons from 89,819 tons while smuggling may cross 100,000 tons from 90,000 tons, Janoo said.

The PTA urged the government to bring 10 per cent customs duty to zero-rated besides reducing the sales tax in the upcoming budget.

He said that the cumulative impact of taxes and duties on legal import of tea has increased to Rs90 from Rs70 per kg after an increase of two per cent in the withholding tax.

Smugglers pay expenses of Rs19-20 per kg in bringing tea to Karachi.