Iran plans to resume tea purchase from Lanka

S. Jamaldeen in Tehran

TEHRAN: Importers of Sri Lanka tea in Iran are mulling over resuming purchase of Sri Lanka tea, stayed since the global financial crisis, following a meeting between officials of the Sri Lanka Embassy in Tehran and top Iranian importers of Sri Lanka tea held at the Mission premises.

Leading importers of tea who responded to the Mission’s invitation for a discussion on resumption of tea purchase, were told by Mission Officials that Sri Lanka’s auction prices of tea being unusually low, this was the best time for the Iranian tea importers to resume purchase of their winter requirements.

Sri Lanka’s Ambassador to Iran M.M. Zuhair addressing the importers, headed by Dr. Hamid Movassaghi,

President of the Iranian Association of Tea Traders and Distributors said the popular Iranian grades, OP, OP1 and FBOPF1 which fetched lowest prices in September, monthly average, had picked up prices when compared with the October monthly average.

He said that OP which earned only Rs. 352.65 per kilo on an average at the September auctions, had risen up to Rs. 362.75 at the October auctions.

OP1 which sold at Rs. 352.65 in September had shot up to Rs. 436.50 in October.

FBOPF1 which earned Rs. 349.30 in September had risen to Rs. 357.50 in October.

The only Iranian - sought grade which had a price drop in October was FBOP, which had earlier on picked up the top price of Rs. 541.18 per kilo in September had dropped to Rs. 377.50 in October which price was in any event, higher than the August price for the grade of Rs. 374.39 per kilo.

The Ambassador pointed out that following quick action by President Mahinda Rajapaksa Ministry of Plantations and the Tea Board of Sri Lanka, the tea market has shown signs of not merely stabilisation but also recovery and the buyers could see for themselves as to how the tea prices have fared.

He urged those buyers, who still think that prices may drop further to take the cue from the October monthly averages and compare the prices with the September averages. Zuhair referred to an Iranian importer who had opened a Letter of Credit in favour of a Sri Lankan tea exporter, only the previous day, by hedging the price to the auction date with the importer and exporter agreeing to share any difference in the price on a 50 - 50 basis. Hedging the LC to the auction price could also be an additional solution, for those who are hoping for the unlikely further price drops, he said.

He said the Iranian consumer had an absolute preference for Sri Lankan tea, with Iran importing between 65 per cent to 70 per cent of its requirements from Sri Lanka, while Indian tea comprised 20 per cent of Iran’s imports, with China and Kenya having only 3.1 per cent and 2.17 of the market.

Iran which imported only 13,800 Metric Tons of Sri Lanka tea in 2003, had increased its purchase to 21,400 MT in 2004, 24,900 MT in 2005, 27,900 MT in 2006 and 31,700 in 2007 with imports of Sri Lanka tea in the first 9 months of 2008 crossing the 23,200 MT figure of the first nine months of 2007.

Upali Kahandawa, Counsellor, Tea Promotion, Dubai, made a detailed electronic presentation on the impact of Global Financial crisis on Sri Lanka’s Tea Industry followed by a discussion in which the Iranian importers raised several issues for clarification.