Tea picker working on a tea plantation in Lahijan, Gilan Province, Iran. Photo by Adobe iStock.
Iran’s government boosted green leaf price guarantees 45% this spring, pleasing the nation’s 55,000 growers and expanding domestic production. The guarantee is a base; many of the nation's 160 tea factories purchase tea from local growers at prices higher than the $0.30 floor for quality leaves and the $0.20 rate for seconds.
Output from the harvest that began in May is expected to reach 135,000 metric tons in calendar 2021, up 4,000 metric tons compared to 2020. The Iranian calendar year ends March 20.
Iran produces 90% of its tea in the far northern Gilan and Mazandaran Provinces. Production grew 10% from March 2018 through March 2019, according to the Iran Tea Organization. There are currently 28,000 hectares designated for growing tea, with 22,000 hectares under tea. Lower precipitation is a concern, but there was sufficient tea for plucking the first week of May.
Iran is a net importer but now produces enough tea to trade small quantities with Azerbaijan, Uzbekistan, Tajikistan, Turkmenistan, Afghanistan, Canada, Australia, Spain, the Czech Republic, and Georgia.
Iran also issued its first agritourism permit for a farm in Qom Province last week. The permits allow farmers on privately-owned land to host tourists and educational experiences such as tea tastings. The program is a subset of the rural tourism industry that includes resorts, non-profit agricultural tours, farmer's markets, and support for leisure and hospitality ventures that attract visitors with money to spend. The Tehran Times reports that “in addition to the customer services jobs, agritourism pays special attention to the production sector. Experts say agricultural tourism is much more important and practical than other branches of tourism because it creates a new chain and diversity in the field of production and services.”
India Exports
Contracts for 30 million kilos of new-season tea are currently being negotiated. Indian sellers shipped twice the amount of tea as in 2019-20 at favorable prices, averaging $3.91 per kilo, making Iran the single largest importer of Indian tea. Last year Iran bought 21% of India’s exports, exceeding Russia/CIS for the first time.
Iran increased its tea shipments from India after sanctions were imposed. Quantities increased following India’s cessation of exports to Pakistan after an exchange of gunfire over Kashmir in 2019. According to the Islamic Republic News Agency, India and Iran first established trade relations in 1950 and have since expanded cultural exchange and development agreements, including highway connections via Afghanistan and oil imports totaling 5 million barrels a day.
Iran previously traded oil for tea, but the US has since convinced India to stop importing oil from Iran, causing some tea growers to worry about timely payments.
“India has a rupee-rial mechanism [USS converted to rial to INR] through which certain exports like tea, rice, etc., are covered for repatriation,” said Sujit Patra, president, Indian Tea Association. A portion of the US dollar is kept for barter trading of tea. “This system will continue till equivalent oil money is there,” he said.
“The present sanctions by US may create some difficulties, but tea exports will continue to grow,” analyst Ajit Nandkeolya told Northeast Now. “Indian tea exports to Middle East have steadily gone up over the years despite continuous US sanctions and the turmoil in the region during the last 10-15 years,” he told the newspaper.
Tehran and New Delhi are in the final phases of negotiations for a preferential trade agreement easing financial transactions currently restricted by US and European Union sanctions against Iran. In 2019 Iran signed a provisional trade agreement with the Eurasian Economic Union (EAEU), a trade block that imports tea from Gilan Province, lowering tariffs to 3.1%.