Tea On A Rocky Perch
By Chrishanthi Christopher
Sri Lanka’s Tea Exporters fear that tea will lose its place as one of the major revenue earners for the country if trade with Iran is abandoned.
With Iran out of the market it is reported that for over five weeks the high grown teas are being sold at low prices to other buyers. Iran, a heavy tea drinking country buys around 30 million kilograms of tea annually from Sri Lanka. “It is 10 percent of our tea exports and will definitely have an impact on our economy,” Chairman, Tea Exporters Association, Niraj de Mel said.
However de Mel is optimistic that Iran will not stop buying tea from Sri Lanka. “They will not stop buying our tea but will find new ways to circumvent the situation” he says.
He stresses that the tea will not fetch the same price as before as there will not be any direct trade between the two countries. “New smuggling routes will develop and there will be many middle men involved in tea buying” he says. “As a result our tea is going to fetch a lower price than before” he adds.
De Mel says that tea auctions are getting sluggish each week and tea traders are disgruntled with the market. “But what is to been done. Nobody wants to take rash decision and sell when they are not sure of being paid for the commodity” de Mel adds.
It is expected that Sri Lanka tea would lose at least US $ 2 on the kilo gram when middle men and smuggling routes are established. “And this would definitely have an effect on our foreign exchange earnings” emphasizes de Mel.
Moreover Iran now has to find hard cash in US dollars to pay for the tea. Sanctions will prevent Iran from buying US dollar legally at official rate and has to resort to the black market. This will bring down our tea prices even further as they will try to trim expenses at the buying end says de Mel.
Sri Lanka government entered into a barter system with Iran paying for oil with tea for the last three years. The system called the Asian Currency Unit Transaction does not involve any physical exchange of money and the governments have written off their bills by trading oil for tea. Hitherto the tea exporters here have been paid by the government.
