CALCUTTA, Aug 18: The devaluation of the rouble is likely to take its toll on tea prices in the domestic market. Top tea producers and merchant exporters are expected to adopt a wait-and-watch attitude for some time before Russian buyers come forward with their new price quotations and both parties negotiate on new sets of prices.The devaluation had an impact on the Guwahati auction prices on Tuesday, when prices crashed by almost Rs 3-5 for Assam teas. The Guwahati auction teas cater largely to the Russian market. Industry watchers anticipate a fall in prices especially for south Indian teas which are mostly exported to Russia.
A top tea producer and merchant exporter told The Financial Express that the over 30 per cent rouble devaluation is definitely "not beneficial" as this will affect the margins of companies which export teas to Russia.
Indian exporters would not like to lose the Russian market at any cost as it is still one of the largest markets for Indian tea, the exporter said.
Among the largest exporters to Russia are J V Gokul and Co, Tata Tea, Saraf Trading in south India, M K Exports and a host of medium to small exporters.
Tea exporters had pinned their hopes on the Russian market in 1998 since they had to face severe competition from Kenya in the world market.
The Indian tea industry recorded a strong export performance in 1997 in the wake of a global shortage. It exported 203 million kg surpassing the previous year's figure by 41 million kg.
The impact of Russia on Indian teas is significant as the country alone accounted for almost 45 per cent of the total tea exported in 1997 at 90 million kg. This was a nearly 136 per cent rise from 38 million kg exported in 1996.
Out of a total export of 96 million kg to CIS countries, it was the Russian Federation that accounted for almost 94 per cent.
In fact, according to industry observers, the increase in exports to Russia was a breather when viewed against exports to other countries, which either remained at the same level or registered a decline. Except for marginal increases in exports to the UK, the Netherlands and Iraq, the industry did not do well in countries like Iran, Germany and Poland.
Printer-friendly page
