Iran consumes far more tea than it produces but supplies several nearby countries with largely orthodox loose-leaf teas.
Farmers at the local tea harvest festival in Darbaq, in Iran’s Gilan province, were buoyant on good yields through mid-July. Iran’s Tea Factories Syndicate reported an 18% increase in volume to 50,309 metric tons of green leaf with sales to the government totaling $12.4 million. The leaves made 11,320 metric tons of finished tea.
Exports were up for the first quarter of the year, topping 1,600 metric tons despite US sanctions that make it difficult to trade using conventional banking systems. Habibollah Jahansaz, head of the Iran Tea Organization (ITO), projected sales at $2 million. Iran exports tea to India, Uzbekistan, Tajikistan, Turkmenistan, Afghanistan, Iraq, Canada, Australia, Spain, the Czech Republic, Azerbaijan, and Georgia, the former Soviet state, he said.
Tea exports from India to Iran tripled during the first part of the year. Volume was 27.09 million kilos, according to Indian exporters who said prices increased 7.5% compared to the previous year. Iran and India struck a deal to avoid US sanctions by trading in rupees through the UCO Bank. India deposits payments in rupees into Iran’s bank account in payment for oil and then the oil companies pay Iranian exporters. Iran typically buys about 28 million kilos annually from India. The accelerated purchases were likely prompted by India’s decision to quit buying Iranian oil. Iran is the third-largest supplier of oil to India. Tightening sanctions may lead shipping companies to refuse transit.
Barter agreement
To meet its consuming needs Iran signed a two-year “barter” arrangement with Sri Lanka under which Tehran supplies the island nation with oil in exchange for tea.
The Tehran Times reports the deal with Ceylon Petroleum Corp. could be worth $200 million. Tea exporters would be paid in local currency by the petroleum company, bypassing rules restricting international banking transactions. The arrangement depends, however, on Iran’s ability to export oil in a region that is now tense as the confrontation over shipping via the Straits of Hormuz escalates.
Last year Sri Lanka exported 23,914 metric tons of tea to Iran, down from 27,418 metric tons in 2017. Iran is among the top five importers of Sri Lankan tea.