Tea packers set to raise prices as demand increases

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KARACHI: Leading tea packers are set to push up tea prices possibly by first week of next month to cash in on peak demand during winter season.

One of the tea packers cited rising Kenyan tea price as one of the main reasons for raising domestic prices.

According to shopkeepers, a distributor of one of the companies said that a leading tea packer had already raised the prices from Nov 7, 2016 and it would start distributing the new enhanced priced tea in the markets by end of this month as it is waiting for clearing of old stocks. They said the distributors of other companies have already been notified about the price hike by month end or first week of next month.

Giving an example, they said the 95-gram packs of different quality will cost in the range of Rs72-90 as compared to Rs68-78.

Similarly, the 190-gram pack, which currently ranges from Rs132-150, will be available at Rs140-170. The 950-gram pack would be sold at Rs700-780 from Rs610-690.

Packers had cut the tea price by Rs140-150 per kg in March this year due to falling rates in the world markets, particularly in Kenya.

A tea packer said Kenyan tea rate has surged by 60-70 cents in the last one month while some high quality tea price has soared by $1 per kg in Kenya due to low rainfall in Kenya.

Packers and traders import 70pc of their tea from Kenya to blend it with tea imported from 20 other countries. Kenya produces various varieties of tea with prices hovering between $1.5 to over $4 per kg.

In Pakistan’s annual estimated tea consumption of 220,000-235,000 tonnes — some 180,000 tonnes land through legal channels and the rest finds its way through informal channels.

The packer said that cumulative duties and taxes on tea imports is still 35pc which encourages smuggling of tea into Pakistan. Illegal arrival of tea can only be controlled if the overall taxes and duties on import of tea come down drastically, he added.

According to Pakistan Bureau of Statistics, tea imports rose to 57,916 tonnes valuing $134 million in July-September 2016 as compared to 39,537 tonnes worth $121m in the same period of 2015.

Total tea imports in 2015-16 swelled to 180,790 tonnes with an import bill amounting to $513m as compared to 150,538 tonnes amounting to $341m in 2014-2015.

As per figures of large scale manufacturing, blended tea production in Pakistan during July-August 2016 went up to 23,274 tonnes as compared to 20,854 tonnes in the corresponding period of 2015.

In 2015-16, blended tea production rose to 138,422 tonnes from 117,270 tonnes in 2014-15.