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GS Paper II- International Relations.

Tea exports may dip on Kenya’s 

What’s Happening-
Tea exports, after showing a healthy rise by volume and value in 2015-16.
It may decline this fiscal year due to a bumper crop in Kenya and lower prospects in some key markets.

Key sectors discussed were:

  • Lower exports to Russia (annual purchases of about 45 million kg), the U.K., the U.S., Bangladesh and Pakistan may cause the decline, according to Sujit Patro, secretary, Indian Tea Association.

Reason:

  • A bumper crop in Kenya (more than 50 per cent rise according to latest statistics) and Bangladesh, which is slowly emerging as a tea-growing nation, led to excess supply and lower prices in the international market.
  • In 2015, Bangladesh had a crop of 66.4 million kg.

Sharp decline:

  • However, Sri Lanka, India’s arch-rival in the international arena, too saw a sharp decline in its output of the commodity.
  • Also, this would be the second year of reverses in South Indian production,mainly due to adverse weather condition.

Background-
according to official statistics:
Between April and October 2016, exports stood at 119 million kg against 127 million kg of the same period in 2015.
India exported 232.9 million kg in 2015-16, rising by 17 million kg over the previous year and breaching the 230-million-mark for the first time since 1980-81.

Economic Implication:
India lost market share when it could not match the crop and the prices offered by Kenya.
Loss of Employment.
Loss of Revenue to government.