Tea Stimulus For Pakistan's Economy
Pakistan is the world’s third-largest importer of tea with nearly 175 million kg of annual consumption, costing an estimated $500 million, and increasing at about 4% a year. It imports tea from 21 countries, with the lion's share of black tea imports coming from Kenya, Bangladesh and Sri Lanka. The country's green tea requirements are met by imports from five countries led by Indonesia and Vietnam. Only a small fraction of Pakistan's tea imports come from neighboring India.
Tea prices, which hit record highs in 2009 due to droughts in India, Sri Lanka and Kenya, should stabilize in 2010 as weather has returned to normal in the main producing regions in Asia and Africa, the Food and Agriculture Organization (FAO) said. It is estimated that global tea production has been cut by as much as 20% this year.
The UN food agency said its Tea Composite price, the indicative world price for black tea, hit a high of $3.18 a kg in September, driven by the droughts and higher demand, up from an average price of $2.38 per kg in 2008. At 34 percent annual increase, tea prices have significantly outpaced overall food price inflation, which has also been running in double digits in recent years in Pakistan.
China, India, Sri Lanka, Kenya, Turkey, Indonesia, Vietnam, Japan, Argentina and Bangladesh are the top 10 tea producing countries in the world.
Pakistan is not a tea producing country but it is the third largest importer of tea in the world, behind Russia and the UK. Because of its high tea consumption, and the fact that it has no production of its own, it is a market which is keenly pursued by main tea exporting nations. Tea affects the taste buds; therefore, it is difficult to replace a particular variety with a substitute. This explains why certain types are favored by certain countries : for example, the Russians and former Soviet republics favor Indian and Sri Lankan teas. UK and Pakistan prefer Kenyan teas.
To cut spending on tea imports, trials have been conducted for growing tea in Pakistan, particularly Mansehra, Battagram, Swat and Azad Kashmir. These trials have shown good results in Northern Pakistan, but the necessary commercial investment needed to develop a viable industry has not yet materialized.
With the rising tea consumption and growing import bill, it is important for Pakistan to give incentives for investments for tea cultivation. Such a policy can help create jobs in the northern regions where they are most needed, while at the same time providing economic opportunity to young people to take a step toward creating the much-needed peace and political stability for the entire nation.
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