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President Donald Trump's decision to pull the United States out of the nuclear deal with Iran and impose new economic sanctions is causing anxiety in unexpected places: Iran is the biggest buyer of tea in the world. India, and traders and producers feel the effects.
The demand for Assam's popular black tea, in northeastern India, Iranians favorite beer, has declined. Sales plummeted, prices dropped and some companies chose to start planting cheaper teas for domestic consumption.
"If business is to stop, it will be a disaster for us," said Vivek Goenka, president of Warren Tea and president of the Indian Tea Association, who said the price drop exacerbated by sanctions had already begun to weigh on his business. "I do not know what will happen."
The tea producers in India, the world's second largest producer, are now trying to find a way to continue selling in Iran. The sanctions imposed by the United States do not cover food and agricultural products, but exporters are facing difficulties in financing their trade and are looking for ways to avoid using dollars and dollars. build potentially risky relationships with Iranian banks targeted by the United States.
As India seeks to increase its overall agricultural exports, the country's tea industry has been investing for years in relations with Iran. Last year, Iran ranked Russia as the top destination for Indian exports, with about $ 100 million in loose tea, according to Tea Board India, although Russia remains ahead in terms of quantity. Tea exports to Iran have doubled to around 31 million kg in 2017-2018 since the beginning of the decade.
But sales to Iran in the six months to September fell 13 percent from the previous year, to stand at around 12 million kg. Prices, meanwhile, fell by 10% to about $ 3.50 per kg during the same period.
The Trump administration's sanctions were aimed at punishing what he called Iran's threatening behavior in the Middle East and elsewhere. But they have caused headaches in countries such as India, which depend on Iranian oil imports. The United States has granted India and seven other countries a temporary waiver of sanctions allowing them to work to reduce imports.
The exemption helped mitigate the impact on the Indian economy, but tea producers said they did not know how to continue selling their tea to Iran given the heightened vigilance surrounding the expiration of the renunciation in six months, just at the beginning of the new growing season.
"Iran needs tea," said Sujit Patra, secretary of the Indian Tea Association. "We want to have our tea there."
Iran and India had previously responded to the sanctions by cutting back on dollar trade and buying oil, tea and other products in currencies other than the United States, including the Indian rupee, a system that tea exporters hoped to restore. In the meantime, however, some buyers and exporters were cold-hearted and downsized, they said.
"These markets are important," said Biswajit Dhar, professor of economics at Jawaharlal Nehru University. "The feeling is bad."
Indian producers said that they would now contact buyers with similar tastes in countries such as the United States, Germany or Japan to see if they could take over left by Iranian trade is losing momentum. "We can not predict what these countries will do," Kapil Sharma told Vikrma Impex, which sends about a third of its tea exports to Iran. "We are mere businessmen."
