Warming up to tea imports

The Sri Lankan tea industry could be warming up to blending imported teas, not to lose out on a price driven global market place. Sri Lanka, which has a lobby against blending imported teas saw imported teas for re-export grow to 6.4 mn kilos up to Aug 25 form about 4 mn kilos in 2003.

While brand building should be the ultimate goal, industry watchers say the trade should take a leaf from the garment trade which was built on imported raw material.

Industry watchers also say that a number of tea packers and exporters are feeling the heat as the blending facility in Dubai began operations in September.

The Dubai Tea Trading Centre, a Dubai government entity, kicked off operations at its new blending facility in September with plans to explore more marketing opportunities, both in tea producing and consuming countries.

Ahmad Bin Sulayem, chief operating officer, Dubai Metals and Commodities Centre (DMCC) was quoted by industry sources saying “the main objective of setting up the blending unit is to further enhance Dubai’s position as one of the main tea-trading hubs in the world.”

The Dubai facilities are capable of blending all types and sizes of teas such as leaf, broken, CTCs and orthodox along with the option of blending different-origin teas.

A bulk of tea imported into Sri Lanka currently consists of Chinese origin green tea, Tea Board sources said. The island also imports other specialty teas like Assam and Darjeeling to meet packing orders.

A long standing lobby against tea imports for blending led by groups that want to preserve the identity of Ceylon teas, have kept imports at an arms length.

The Tea Board meanwhile has also helped control tea imports, imposing restrictions on low quality tea imports.

Some packers however say that it is sometimes difficult to match prices quoted by other packers in the world market who have access to cheaper teas for blending.

Currently importing teas for blending is not very viable with import duties still above an average 20 percent.

-Shafraz Farook: shafraz@vanguardlk.com