KARACHI, Jan 22: Pakistanis may have to sip costlier black tea as its wholesale price in the local market has already surged by Rs10-20 per kg following sharp increase in Kenyan tea price in weekly auctions in the aftermath of series of violence and political turmoil in Kenya.
Tea importers said that the price of Kenyan tea had already increased by 20-25 per cent in the last few weeks owing to prevailing uncertain political conditions in the world largest tea producing country.
Pakistan’s tea consumption stands at 170,000 tons of which 65 per cent (105,000-110,000 tons) is imported from Kenya and the rest of demand is met through arrival of smuggled tea.
Pakistan Tea Association (PTA) chairman Hamid Saeed Khawaja told Dawn on Tuesday that the price of tea at retail level had not yet increased. Currently, the tea auction is going on as Kenyan exporters are maintaining three to four weeks stocks.
Tea transportation from fields to factories and warehouses and then to port for shipments has been facing some disruption however the Kenyan authorities have taken measures to prevent complete suspension in tea exports.
In case the Kenyan political crisis deepens, Pakistan may face tea shortage since the local markets have little stock of the commodity as many tea traders have opted to other businesses following massive surge in smuggled tea arrivals in the last few years, he said.
Hamid said that currently importers were opening letters of credit (LCs) for Kenyan tea since the auction was taking place. He added in the last week the price of Indian and Bangladesh tea had also gone up by 15-20 cents per kg.
Tea imports during July-December 2007 stood at 51,000 tons as compared with 58,000 tons approximately in the same period of 2006.
He said smuggling of tea stood at 70,000 tons per annum.
Importers have to bear a cumulative impact of 35 per cent in shape of duties and taxes on official imports, while the cost incurred by the smugglers comes between 10-12 per cent.
Official tea imports in 2006-2007 stood at 114,000 tons (worth $214m) as compared to 127,000 tons ($223m) in 2005-2006. In 2006-2007, smuggling of tea was estimated at 60,000 tons while it was 35,000 tons in 2005-2006.
The tea association had been asking the government to remove the 10 per cent import duty on tea imports to discourage smuggling, he said.
Regional Chairman PTA and General Manager Tea and Blend Tapal Tea Limited Mohsin M. Saify said that the company had not yet increased the price, but rising Kenyan tea rates were building up pressure.
He said so far there had been no problem in getting shipment from Mombassa Port and the company had been waiting to get its shipment cleared. The Mombassa port has become very congested both for import and export cargoes owing to huge rush for clearance of supplies.
He added that if imports were suspended, the packers who import 65,000-70,000 tons of tea per year, would face problems.
Former chairman of PTA Muhammad Altaf said that besides political crisis, there might be 20 per cent drop in Kenyan tea production during January-March this year owing to drought. He said even rates of Indonesian, Bangladeshi and Malawi tea had gone up by 15-20 per cent.
