Middle East woes may impact tea sales: Harrisons Malayalam

Pankaj Kapoor, managing director of Harrisons Malayalam , in an exclusive interview with CNBC-TV18’s Ekta Batra and Reema Tendulkar, informs that the unrest in Middle East and Gulf would hinder trade ties in this large tea drinking markets.

"Pakistan and Egypt would take tea in abundance from India. One can gain exposure in the markets Kenya has missed," he added.

Below is the verbatim transcript of his interview. Also watch the accompanying video.

Q: The Kenyan tea production has declined almost 12% in April-Does that mean the Pakistani exports or imports would increase? How exactly this would affect the Indian tea market in terms of export realisations?

A: It would be difficult to say how the export realisation would pan out in the current landscape. The Kenyan tea production has dropped throughout the year; in the month of April it was about 12% and dipped 20 million kg for January-March. As compared to last year, production during the first four months has fallen considerably. Meanwhile, India also being a large crush tea curl (CTC) producer should be able to enter into the market Kenya has been exporting. For e.g. Pakistan as well as Egypt market would take a lot of tea from India. One can gain exposure in the markets Kenya has missed. However, it remains uncertain how much of it would result into prices. It would be difficult at the moment to predict. But, it has to be better than the previous year.

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Q: Can you tell us what the total production for the year might fall short by? Totally, in terms of the world production, how much it might go lower?

A: I may not have the exact number; however, I will give you a perspective. So far, India’s production is more or less the same as compared to last year. On the other hand, Sri Lanka is slightly ahead by approximately 2-3 million kg, the rest of the market is low. Considering the world as a whole, it should be roughly 30 million kg down. Taking in account the entire commodity market, 30 million kg down on tea must is not a substantial number. The only negative factor at the moment is the unrest in Middle East and Gulf.  These markets are large tea drinking areas, while people would stop drinking tea but disturbances in trade would hinder growth. Also, Iran payment issue would create a little hitch in extending India’s trade ties with Iran.

Q: In the short-term, can you give us an idea how tea prices would move? Is a hike in prices likely?

A: The tea prices have moved up, as compared to the same period last year. In south India and north India, tea prices have gone up by almost Rs 8-10. A week or ten days ago, the prices had softened a bit at this time because this is supposed to be the peak of the production period for both these markets.