Govt. to engage US, Iran on tea exports
The government is expected to request the United States to remove restrictions in marketing Ceylon Tea to Iran. This comes in the wake of sanctions imposed on that country’s financial institutions that impacted on Sri Lanka’s drop in the Iranian tea market share in 2014 and is likely to slip to number two, overtaken by India this year.
Plantations Minister Lakshman Kiriella has written to the Prime Minister to intervene in a bid to find a solution similar to the concessions granted to India, Sri Lanka Tea Board (SLTB) Chairman Gamini Wijeyaratne told the Business Times.
Sri Lanka enjoyed a 54 per cent share of the Iranian tea market in 2012 with exports amounting to 38,125 MT that year. This came down by 22 per cent in volume to 29,260 MT in 2014 mainly due to the delay in remittances as a result of which exports dropped, SLTB statistics indicate. In 2013 tea exports to Iran were at 38,416 MT.
With India entering into a trade agreement with Iran the former would be doubling its tea exports to the country that has a firm taste to its orthodox teas.
Iran is the second biggest market for Sri Lanka’s tea exports, representing 14 per cent of the total tea exports from this island nation. Iran buys the highest amount of teas from Colombo comprising 48 per cent of its market share of the total 80, 000 MT tea imports to Iran.
Discussions are likely to be held within the next two weeks between the Sri Lankan government and US State Department officials on this issue.
Tea is not a sanctioned item since it is considered a food item however the financial institutions in Iran that were imposed with sanctions find it difficult to make payments directly to Sri Lankan banks, else the latter too would come under sanctions, Sri Lanka Tea Exporters Association (SLTEA) Chairman Rohan Fernando said.
He noted that due to this, exporters were using different routes to obtain payments from the Iranian market via India, Dubai or other Western states.
During the discussions with the US State Department, Sri Lanka is expected to request relaxing the embargo on payment issues as it is a food item to be exported to Iran and for payments to be made through the Iranian banks.
The new regime has been able to muster support from the Western states as a result of which they would be able to go ahead with these discussions as opposed to the Rajapaksa administration that when requested to find solutions to this same matter had dismissed it by asking exporters to search for new markets, Mr. Fernando opined.
Sri Lanka competes with Indian orthodox tea which is quite popular there and the latter has now worked out a government to government agreement with the Iranian authorities to sell its produce.
The SLTB has also informed the Foreign Affairs Ministry to take up this issue with the US and Iran, SLTB Chairman Mr. Wijeyaratne said.
He added that they would request US to consider Sri Lanka’s tea imports as a food item thereby lifting sanctions on the item.
Another key market in which Sri Lankan exporters were facing difficulties to get payments was Russia. However, the government has not been engaged in identifying what could be done at this stage to ensure payments were made to the local exporters.
Russia was reeling from a falling Rouble that was impacting heavily on the country’s economy and its trading patterns as well.