International Tea Day: Pakistan is the World's Largest Tea Importer
Pakistan does not produce tea but it is the most popular beverage among Pakistanis. The country is ranked as its largest importer in the world. In 2020, Pakistan imported $646 million (9% of global tea imports) worth of tea and exported $15.2 million in branded blends of tea such as Tapal Tea. Pakistan tea imports grew 19.8% from 2019 to 2020.
|Pakistan Tea Trade. Source: The Observatory of Economic Complexity|
Other major tea importers in 2020 were as follows: United States: $473.8 million (7.1%) Russia: $412.2 million (6.2%) United Kingdom: $348.7 million (5.2%) Saudi Arabia: $243.6 million (3.7%) Iran: $236.3 million (3.5%) Hong Kong: $221.8 million (3.3%) Morocco: $202.3 million (3%) Egypt: $197.2 million (3%) Germany: $195 million (2.9%) China: $180 million (2.7%) France: $168.1 million (2.5%) United Arab Emirates: $164.9 million (2.5%) Japan: $156.6 million (2.4%) Iraq: $134.7 million (2%). Global purchases of imported tea totaled US$6.7 billion in 2020. Of these countries, 4 markets for tea imports grew since 2019 namely: Hong Kong (up 19%), Pakistan (up 18.7%), Saudi Arabia (up 2.9%) and France (up 0.7%).
Tea is popular in Pakistan and many other parts of the world for many reasons. A British study found that tea provides as much day-time stimulation as coffee, despite having half the caffeine. But tea was less likely to disrupt sleep. A Japanese study reported that plant compounds found in regular black tea – called theaflavins – were found to kill off oral bacteria linked with tooth and gum disease in a clinical trial with adults. A team of American scientists in Baltimore reviewed the evidence on tea and heart health, reporting that tea polyphenols have a direct impact on heart muscle contractions by controlling the flow of calcium ions into the muscle cells. The TAP (Tea Advisory Panel) data review reveals that more than half of Brits agree that tea is good for the heart.
|World's Top Tea Importing Countries. Source: Statista|
Last year, the PTI government headed by former Prime Minister Imran Khan decided to push domestic cultivation of tea in Pakistan with the help of Chinese experts. Already, trials have been conducted for growing tea in Mansehra, Battagram, Swat and Azad Kashmir regions which are considered to have the right climate for it. About 25,000 acres of government land has been allocated for tea cultivation along the China-Pakistan Economic Corridor (CPEC).
“This year we are going to approve a project where we are growing tea on an area of 25,000 acres; we are creating history; we plan to complete the proposed tea plantations over the next five years,” said Special Assistant to Prime Minister on Food Security Jamshed Iqbal Cheema during his 2021 visit to the National Tea and High-Value Crops Research Institute (NTHRI) at Shinkiari, Mansehra in Khyber-Pakhtunkhwa province. Cheema said Pakistan has great potential for growing tea. The country has 178,000 acres of tea cultivable land. “Pakistan can grow its own tea,” he said, adding that the country imported 30 million tonnes of tea each year from 15 different tea-producing countries.
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When compared to last year’s import bill of USD 44.73 billion, the country’s overall import bill spiked by 46.51 per cent to USD 65.53 in ten months ending October 2022, reported the Dawn newspaper. The share of these products also faced an increase of 37.79 per cent. The sharp ascent in these two sectors has resulted in trade deficits in Pakistan, adding pressure on the government’s external side.
Further, data released by the Pakistan Bureau of Statistics revealed that the import bill on oil has increased by over 95.84 per cent to USD 17.03 billion in 10MFY22. Further, the import of petroleum products increased by 121.15 per cent in value and 24.17 per cent in quantity, crude oil imports witnessed a hike of 75.34pc in value and 1.36pc in quantity while there was a sharp rise of 39.86 per cent in the value of liquefied petroleum gas imports.
Reportedly, in order to close the gap in food production, the food import bill had a surge of over 12.30 per cent to USD 7.74 billion in 10MFY22, reported the Dawn newspaper. The import bill in Pakistan is likely to spike further in the following months as the Pakistan government has decided to import about 4 million tonnes of wheat and 0.6 million tonnes of sugar to build strategic reserves, reported the Dawn newspaper.
Meanwhile, there was also a steady increase in edible oil imports in terms of both value and quantity. The value of the palm oil import bill was also hiked by 44.64 per cent to USD 3.09 billion in ten months ending October 2022, up from USD 2.14 billion in 10MFY21. This in turn resulted in a domestic price surge in vegetable ghee and cooking oil.
Notably, the import of soybean oil ascended by 101.96 per cent in value and 9.30 per cent in quantity this year while wheat imports had a decline of 19.12 per cent to 2.206 million tonnes from 3.61 million tonnes in the previous year, reported the Dawn newspaper. Pakistan witnessed a zero wheat import in the month of April.
Also, in comparison to 280,377 tonnes of sugar imports in Pakistan last year, this year there was a hike of about 49.52 per cent to 311,851 tonnes of sugar import. There was also a rapid surge in the import bill of tea, spices, and pulses as well.
Meanwhile, according to a report released by the Global Report on Food Crises, Pakistan’s Balochistan, Khyber Pakhtunkhwa and Sindh provinces are suffering from acute food shortages. A hike in food and fuel prices, drought conditions, livestock diseases, and unemployment issues have contributed to the rise in national food rates.
Further, ahead of the delay in the revival of the International Monetary Fund (IMF) programme and falling foreign currency reserves, the Pakistani rupee hit an all-time low against the US Dollar, crippling the country’s economy further. (ANI)
By Riaz Riazuddin former deputy governor of the State Bank of Pakistan.
As households move to upper-income brackets, the share of spending on food consumption falls. This is known as Engel’s law. Empirical proof of this relationship is visible in the falling share of food from about 48pc in 2001-02 for the average household. This is an obvious indication that the real incomes of households have risen steadily since then, and inflation has not eaten up the entire rise in nominal incomes. Inflation seldom outpaces the rise in nominal incomes.
Coming back to eating habits, our main food spending is on milk. Of the total spending on food, about 25pc was spent on milk (fresh, packed and dry) in 2018-19, up from nearly 17pc in 2001-01. This is a good sign as milk is the most nourishing of all food items. This behaviour (largest spending on milk) holds worldwide. The direct consumption of milk by our households was about seven kilograms per month, or 84kg per year. Total milk consumption per capita is much higher because we also eat ice cream, halwa, jalebi, gulab jamun and whatnot bought from the market. The milk used in them is consumed indirectly. Our total per person per year consumption of milk was 168kg in 2018-19. This has risen from about 150kg in 2000-01. It was 107kg in 1949-50 showing considerable improvement since then.
Since milk is the single largest contributor in expenditure, its contribution to inflation should be very high. Thanks to milk price behaviour, it is seldom in the news as opposed to sugar and wheat, whose price trend, besides hurting the poor is also exploited for gaining political mileage. According to PBS, milk prices have risen from Rs82.50 per litre in October 2018 to Rs104.32 in October 2021. This is a three-year rise of 26.4pc, or per annum rise of 8.1pc. Another blessing related to milk is that the year-to-year variation in its prices is much lower than that of other food items. The three-year rise in CPI is about 30pc, or an average of 9.7pc per year till last month. Clearly, milk prices have contributed to containing inflation to a single digit during this period.
Next to milk is wheat and atta which constitute about 11.2pc of the monthly food expenditure — less than half of milk. Wheat and atta are our staple food and their direct consumption by the average household is 7kg per capita (84kg per capita per year). As we also eat naan from the tandoors, bread from bakeries etc, our indirect consumption of wheat and atta is 41kg per capita. Our total consumption of wheat and atta is about 125kg per capita per year. Our per person per day calorie intake has risen from about 2,078 in 1949-50 to 2,400 in 2001-02 and 2,580 in 2020-21. The per capita per day protein intake in grams increased from 63 to 67 to about 75 during these years. Does this indicate better health? To answer this, let us look at how we devour ghee and sugar. Also remember that each person requires a minimum of 2,100 calories and 60g of protein per day.
Undoubtedly, ghee, cooking oil and sugar have a special place in our culture. We are familiar with Urdu idioms mentioning ghee and shakkar. Two relate to our eating habits. We greet good news by saying ‘Aap kay munh may ghee shakkar’, which literally means that may your mouth be filled with ghee and sugar. We envy the fortune of others by saying ‘Panchon oonglian ghee mei’ (all five fingers immersed in ghee, or having the best of both worlds). These sayings reflect not only our eating trends, but also the inflation burden of the rising prices of these three items — ghee, cooking oil and sugar. Recall any wedding dinner. Ghee is floating in our plates.
Infant Mortality Rate (IMR) in Pakistan has declined to 54.2 deaths per 1,000 live births
in 2020 from 55.7 in 2019, while Neonatal Mortality Rate declined to 40.4 deaths per
1,000 live births in 2020 from 41.2 in 2019. Percentage of birth attended by skilled
health personnel increased to 69.3 percent in 2020 from 68 percent in 2019 (DHS & UNICEF). Maternal Mortality Ratio fell to 186 maternal deaths per 100,000 births in
2020, from 189 in 2019 (Table 11.1).
With a population growing at 2 percent per annum, Pakistan’s contraceptive prevalence
rate in 2020 decreased to 33 percent from 34 percent in 2019 (Trading Economics).
Pakistan’s tuberculosis incidence is 259 per 100,000 population and HIV prevalence rate
is 0.12 per 1,000 population in 2020.
Table 11.1: Health Indicators of Pakistan
Maternal Mortality Ratio (Per 100,000 Births)* 189 186
Neonatal Mortality Rate (Per 1,000 Live Births) 41.2 40.4
Mortality Rate, Infant (Per 1,000 Live Births) 55.7 54.2
Under-5 Mortality Rate (Per 1,000) 67.3 65.2
Incidence of Tuberculosis (Per 100,000 People) 263 259
Incidence of HIV (Per 1,000 Uninfected Population) 0.12 0.12
Life Expectancy at Birth, (Years) 67.3 67.4
Births Attended By Skilled Health Staff (% of Total)** 68.0 (2015) 69.3 (2018)
Contraceptive Prevalence, Any Methods (% of Women Ages 15-49) 34.0 33
Source: WDI, UNICEF, Trading Economics & Our World in data
Food and nutrition
Calories/day 2019-20 2457 2020-21 2786 2021-22 2735
Table 11.9: Availability of Major Food Items per annum (Kg per capita)
Food Items 2019-20 2020-21 2021-22 (P)**
Cereals 139.9 170.8 164.7
Pulses 7.8 7.6 7.3
Sugar 23.3 28.5 28.3
Milk (Liter) 168.7 171.8 168.8
Meat (Beef, Mutton, Chicken) 22.0 22.9 22.5
Fish 2.9 2.9 2.9
Eggs (Dozen) 7.9 8.2 8.1
Edible Oil/ Ghee 14.8 15.1 14.5
Fruits & Vegetables 53.6 52.4 68.3
Calories/day 2457 2786 2735
Source: M/o PD&SI (Nutrition Section)
The country is grappling with a debt crisis
On june 14th Ahsan Iqbal, Pakistan’s minister for planning and development, appealed to people “to cut down the consumption of tea by one to two cups” a day to help preserve the country’s dwindling foreign exchange reserves. Cries of “austeri-tea” soon made their way across social media. The average Pakistani sips at least three cups a day. So why is the Pakistan’s government asking them to drink less tea?
Pakistan imports some $600m of tea each year. But the government coffers hold less than $9bn in foreign reserves. That is a drop of more than 50% since August and barely enough to cover 45 days of imports of all goods. It owes some $129bn to foreign lenders. On June 21st representatives from the United Nations Development Programme met officials in Islamabad, Pakistan’s capital, to discuss the country’s economic crisis.
Food and fuel prices are rising across the world. In Pakistan annual inflation hit 13.8% in May, the highest in two-and-a-half years. But decades of economic mismanagement have triggered a string of balance-of-payment crises. The country has spent 22 of the past 30 years in some kind of International Monetary Fund (imf) programme. The pandemic and war in Ukraine have further battered the ailing economy. On June 21st the rupee hit a record low against the dollar. And the budget deficit is 8.6% of gdp, well above the government’s previous target of 7.1%. Recent political instability has not helped matters. Imran Khan, the former prime minister, was ousted in April and replaced by Shehbaz Sharif. Mr Khan has sought to destabilise the new government ever since.
Still, there are signs that Mr Sharif’s new government is restoring some order to the economy. On June 10th Miftah Ismail, the finance minister, presented a budget full of cost-saving measures. He increased the taxes on the banking sector by three percentage points and reduced the target for the budget deficit to 4.9% of gdp. He also promised to revoke fuel subsidies that cost the government $600m each month. On June 17th, the government increased fuel prices by 29%—the third increase in a month. Such moves will be painful but are aimed at coaxing the imf into disbursing the remaining half of a $6bn rescue package, without which Pakistan may default on its debt obligations.
But the imf is fed up with Pakistan’s long history of empty promises. Between 1996 and 1997 the government fiddled with the budget-deficit figures to reduce it by $2bn in order to secure a bailout from the fund. Citigroup, an American bank, predicts that the new budget announcements will not be enough to sway the fund.
The tea-based austerity is not the first time that the government has used a spoon to dig itself out of a hole. In 2018 officials were asked to replace meals with biscuits during meetings to cut costs. But difficult structural reforms, rather than cutting down on tea, will be necessary to save Pakistan’s economy from plunging deeper into crisis.
Pullarao Daravathu and thousands of fellow farmers from Telangana in India's south are busy planting oil palms as their home state aims to add more area under the controversial crop within four years than the entire country has in decades.
Telangana is targeting 2 million additional acres under oil palm cultivation in the next four years, and is going to great lengths to achieve this goal - from building large dams and irrigation canals to importing millions of germinated sprouts.
Generous government subsidies and bumper profit potential compared to other crops are also encouraging farmers like Daravathu to shift to oil palms.
"Oil palm is giving more than 200,000 Indian rupees ($2,536) per acre return to farmers who planted the crop some years back. In rice, I am struggling to earn 40,000 rupees even after putting in lots of effort," said Daravathu, who was planting oil palm on his 5-acre farm at Sathupally, nearly 300 km (186 miles) east of Hyderabad, the state capital.
The recent rally in palm oil prices has more than doubled prices of fresh fruit bunches, which farmers sell to oil mills.
For years, price volatility, water scarcity and a gestation period of nearly four years limited oil palm plantation in India to less than 1 million acres, mostly in coastal Andhra Pradesh, the state that Telangana was carved out of in 2014.
But Telangana, which occupies an inland region on the Deccan Plateau, is now keen to emerge as India's main palm oil hub, with an area target that would place the state as the fifth largest oil palm grower globally – from a negligible base currently.
The drive could reduce India's mammoth vegetable oil imports, which cost the country a record $18.9 billion a year ago and widened the national trade deficit.
India fulfils two-thirds of its vegetable oil demand through imports of around 14 million tonnes annually, including around 8.5 million tonnes of palm oil.
The federal government is keen to increase palm oil output to slash those expensive imports, which lifted inflation this year to multi-year highs after top supplier Indonesia abruptly halted exports.
"In the next four years, most of the palm planting would be done, and after 7-8 years Telangana could be producing 4 million tonnes of palm oil," L Venkatram Reddy, director of Horticulture at the state government told Reuters
Companies operating in Telangana imported 12.5 million sprouts last year and made seedlings for around 200,000 acres this year, said an official with the state-run TS Oilfed, the country's biggest importer of germinated sprouts
The state is aiming to import 15 million sprouts this year - mainly sourced from Indonesia, Malaysia, Thailand and Costa Rica - and 50 million next year to achieve the target, he said.
But only handful of companies are supplying germinated sprouts.
"There is sudden surge in demand following a rally in palm oil prices. Companies are not able to supply as much we need this year," said Sougata Niyogi, a top official at Godrej Agrovet. "The supply situation would become more comfortable next year."
Researcher says tea plantation can be promoted through cooperative farming, subsidies
Pakistan has huge potential to become self-sufficient in the tea sector. If planted on an additional 2,000 hectares of land offered by the government and invested by private companies, it can meet 95% of the national demand, said Dr Abdul Waheed, Director of National Tea and High Value Crop Research Institute, Pakistan Agriculture Research Council (PARC) said in an interview with the China Economic Net (CEN).
“We have done much research in collaboration with China. The tea research institute was also built on the recommendation of Chinese researchers and was later renamed as National Tea and High Value Crop Research Institute,” he said and underlined the need to follow commercialisation.
Pakistan’s heavy reliance on import of tea calls for enhancing the local production capacity. During 2021, Pakistan imported 2,258,000 kg of black and green tea for $596 million.
In the first three quarters (July-March) of fiscal year 2021-22, tea imports recorded an increase of 11.95% as compared to the corresponding period of last year.
“We have 64,000 hectares of land suitable for tea plantation. But so far only less than 80 hectares are dedicated for tea plantation. We must use at least 2,000 to 10,000 hectares under public-private partnership in the first year,” he recommended.
“We should rely on our capacity of four million plants per annum, rather than import,” he told CEN.
“Tea plantation can be promoted through cooperative farming and government subsidies. Private farmers have their own land and need incentives from the government.”
Providing incentives like interest-free loans to growers during the gestation period is also a practice adopted by China.