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Prices of Kenyan tea fall to two-year low




  • The prices of Kenyan tea varieties have sharply decreased in the wake of continuing unrest in Egypt and Syria by Rs 100-150 per kg on the local market, falling to two-year low, industry sources said on Thursday. The political turmoil in Egypt since ouster of President Muhammad Morsi and unrest in Syria have pulled down tea import, resulting in a sharp fall of the commodity prices on global markets, they said. 

    “Kenyan tea export suffered significantly from the unrest in the Arab countries, which, however, eased prices of tea on the world markets,” they said. Egypt imports six million kilograms from Kenya per month which constitutes 23 percent of its total tea imports. Though the prices of Kenyan tea at international markets are on lower trend, tea traders said that the government could not curb the smuggling of tea through Afghan Transit Trade (ATT). 

    “The imports through legal channels could not pickup despite low rates of Kenyan tea varieties at international markets due to massive influx of smuggled tea in Pakistani markets, an importer said. The prices of high-grown tea (BP-I) declined by Rs 100. Previously, the wholesale price of ‘Danedar’ (BP-1) tea variety was Rs 570 per kg, which is now being sold at Rs 460 per kg. Its retail price was Rs 500 per kg, sources said. Similarly, the price of Leaf (PF-1) tea variety was Rs 425 per kg in wholesale markets against its previous price of Rs 525/kg. 

    The prices of D-I also declined by Rs 55 per kilogram. Importers and blenders said that imports from India also declined sharply due to low prices of Kenyan tea. Sources said that the price of Melenia (BP-1) brand of Indonesian black tea also witnessed a slump. It decreased by Rs 140 per kg. Its previous wholesale price was Rs 380, and it was now being sold at Rs 240per kg. 

    According to the statistics issued by Pakistan Tea Association (PTA), Pakistan imported Rs 8.2 million kgs from Kenya in the month of August, 2013. PTA said that increase in sales tax would encourage the undocumented sector to saturate the local markets incurring the losses to national exchequer. The government’s recent move to impose standard rate of 16 percent sales tax on tea imports have given significance rise to the smuggling of black tea through Afghan Transit Trade (ATT) in country, restraining the traders to import high quality tea in Pakistan from legal channels. 

    Sources said that devaluation of Pak rupee against dollar had also impacted on a significant rise to the profit margin on illegally traded black tea in the country’s local markets. They said the traders largely opt for purchasing the smuggled tea instead of going for the imported commodity for getting a sizeable profit on its sales. 

    Copyright Business Recorder, 2013

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