Lockdown causes tea exports to soar as people stay home guzzling the brewTea shipments from Nepal jumped 147 percent in the first two months of the fiscal year, officials say.
The coronavirus brought an unexpected turn of good luck for tea growers as lockdowns everywhere led to people staying home guzzling endless cups of tea, with the result that exports soared to dizzying heights, Nepali traders said.
Shipments of Nepali tea jumped 147 percent year-on-year in the first two months of the current fiscal year 2020-21 that began in mid-July.
The bad news, according to traders, is that the domestic market may run short of tea as producers will be enticed into exporting their entire stock because of a sharp rise in global prices.
According to a report of the Trade and Export Promotion Centre, the country exported tea worth Rs1.58 billion in the first two months of the current fiscal year. In the same period last fiscal year, shipments totalled Rs642 million.
In terms of quantity, Nepal exported 5.31 million kg of tea in the two-month period, equivalent to a third of annual shipments. In the same period last year, exports amounted to 2.35 million kg.
Nepal produces 25.20 million kg of tea annually, of which 60 percent, or 15.04 million kg, is sold abroad, according to the National Tea and Coffee Development Board.
Tea traders said that despite a drop in production this year, exports swelled as they cleared unsold stocks from the pre-Covid period which they had not been able to ship due to border issues and transport restrictions.
According to reports, the world’s most consumed drink after water is emerging as the preferred choice for many given its low caffeine content and other health benefits.
Tea traders said that Nepali tea reaped a bonanza following a drop in output in the key growing countries, India and Sri Lanka, and increased demand in the global market. Nearly, 80 percent of Nepali tea is exported to India.
In Sri Lanka, tea production was down nearly a quarter due to an earlier drought, and the virus is now affecting exports, according to reports.
India’s output is likely to drop by 120 million kg or 9 percent in 2020 as the lockdown initially forced plantations to suspend plucking during the opening harvest,
The sudden rise in Nepali tea exports led to the product making up nearly 8 percent of the country's total exports in the first two months.
“Tea consumption increased after the lockdown as many people started working from home in India and other countries,” said Deepak Khanal, director and spokesperson for the National Tea and Coffee Development Board. “Tea consumption patterns during the lockdown caused a spike in global demand,” he added.
Exports of Nepal’s tea, both in quantity and value, have increased, said Aditya Parajuli, vice-president of the Nepal Tea Planters Association. “We even sold the inventory that had remained piled up after the lockdown was imposed,” he said.
Khanal said that tea exports had stopped for four months from mid-March, and there were large unsold stocks.
“Consumption of tea has also increased in the domestic market,” said Parajuli.
The price of Nepali tea that normally used to fetch IRs110 per kg in the Indian market has doubled to IRs220 per kg, he said. The price of green tea leaf has also doubled from IRs17 per kg to IRs30 per kg, Parajuli told the Post.
Parajuli, who has been in the tea business for the last three decades, said he had never witnessed such a dramatic hike in tea prices before.
“Demand for Nepali tea is at a peak, and if the shortage continues in the Indian market, he expects more good news for Nepali tea producers for the upcoming autumn harvest.
Nepal has four harvests per year—first flush and second flush in the spring, monsoon flush and autumn flush.
The country's tea production amounts to 25.20 million kg annually, of which 19.10 million kg is CTC tea produced in the Tarai districts, and 6.09 million kg is orthodox tea grown in the eastern hills, said Khanal.
The country exports more than 50 percent of its CTC tea to India with the rest being consumed domestically.
This year, tea production has been expected to fall by 40 percent despite good monsoon rains as Covid-19 led to the government restricting the movement of workers to prevent transmissions, said Parajuli. As a result, the first and second spring flushes were largely affected.
In the last fiscal year, tea exports saw a 13.14 percent decline to Rs2.78 billion as Nepal failed to brand its product, and was forced to sell it to Indian buyers at low prices in order to clear stocks, according to traders.
In September, Nepal's orthodox tea, which is in high demand in the global market due to its organic content, got its own trademark, 157 years after the country first started growing it.
The trademark includes the words 'Nepal Tea Quality from the Himalaya'. The trademark is expected to help Nepal brand and market its tea, which has been facing an identity crisis for over a century, in the international market.
Trademark certificates have been given to 12 tea factories and cooperatives in Ilam, Sankhuwasabha and Tehrathum which fulfilled the Nepal Orthodox Tea Certification Trademark Directive 2018.
Obtaining a trademark is basically registering a brand name. Now it is possible to have the legal right to stop someone else from using the same or similar brand as the one that has been registered. Trademark serves as a defence mechanism to protect a brand from loss of reputation, and has the potential to increase in value as an intangible asset.
Nepali orthodox tea has been gaining popularity in the international market because of its quality, aroma, taste and aftertaste. But other popular tea brands, such as Darjeeling tea, outshine the Nepali product abroad due to lack of branding, according to Nepali traders.