Vietnam Tea Returns to Russia

Vietnam Tea Returns to Russia

In mid July, chairman of the Russian Association of Tea and Coffee Producers (Rusteacoffee) paid a visit to famous tea growing areas in Vietnam, including Phu Tho, Yen Bai, Tuyen Quang, Thai Nguyen, Nghe An and Lam Dong. Also on this occasion, officials from Rusteacoffee had working sessions with the Vietnam Tea Association to discuss the signing of an agreement on co-operation and investment in producing, exporting and importing, and distributing tea products between enterprises of the two countries.

Nguyen Kim Phong, chairman of the Vietnam Tea Association, said that the main focus of the meeting was to exchange experience in building, maintaining and developing business associations as well as growing, processing and exporting tea. The two sides also discussed their joint activities in trade promotion.

Among the 50 tea export markets of Vietnam, the top seven markets in terms of volume include India, Taiwan, Iraq, Pakistan, Russia, Poland and China. Its nine top markets in terms of price include China, Afghanistan, Taiwan, Japan, the Philippines, the United Arabia Emirates, Thailand, France, and Sweden.

Russia is considered as a potential market for Vietnamese tea. Before the 1990s, Vietnam exported between 13,000 and 15,000 tonnes of tea to the former Soviet Union. Vietnam then exported only about 1,000 tonnes of tea to Russia for many years. This increased to 4,800 tonnes in 2001, more than 3,600 tonnes in 2002 and 3,800 tonnes in 2003 and is expected to reach about 3,000 tonnes in the first half of this year.

Vietnamese tea exporters are currently paying attention to Rusteacoffee's forecast that in three or five years' time, packed tea will account for between 30 and 35 per cent of the total tea volume consumed in Russia, in comparison with the existing 10-12 per cent. Shteyman Ustim, chairman of Rusteacoffee, said that one of the major goals set by the two sides was to increase the volume of tea imported from Vietnam to 5,000 tonnes in 2004 and between 13,000 and 15,000 tonnes in 2010 providing that Vietnam accepts fair and equal competition from enterprises from other countries. This would be equal to about 10 per cent of Russia's total imported tea volume. Rusteacoffee will help Vietnamese tea enterprises to increase their export of packed tea to Russia, so that this kind of tea product will account for 40 per cent of Vietnam's exported tea volume to Russia in three to five years.

Phong said that in 2003 a contraction in the world tea demand produced negative impacts on Vietnam's tea production and business. Last year's export volume saw a fall of about 16,500 tonnes while export turnover dropped by US$22.8 million against 2002. Even compared with the figures of 2001, last year's output was only equal to 88.4 per cent while turnover reached only 76.1 per cent. Difficulties in outlet prevented traders from collecting materials. As a result, sales of tea buds and incomes of tea farmers dropped. This is also a reason for the fall in volume of unprocessed tea buds in the first months of this year. Exporters suffered from high interest rates and warehouse costs and they consequently had to sell products below their collection prices.

Phong said that compared with 2002, last year's exported tea volume to Iraq fell by 12,500 tonnes and to India, 10,300 tonnes. However, Vietnamese tea exporters increased their exports to traditional and new markets by 6,300 tonnes. These figures show that despite difficult times local tea exporters have gained great successes in increasing their shares in traditional markets and expanding new markets. This year, the local tea industry has set a target of exporting 75,000 tonnes of tea, earning US$75 million in revenue. This implies an increase of 24.4 per cent in volume and 25.7 per cent in revenue. However, in comparison with 2002, it is suffering a negative growth rate (-2.3 per cent in volume and -9.1 per cent in turnover). In the first half of this year, 150 enterprises exported about 40,000 tonnes to 50 countries and territories, earning revenues of US$35 million at an average price of US$880 per tonne, with black tea products accounting for 79 per cent, green tea, 20 per cent, and others, one per cent. The results show positive signs for 2004, in which the local tea industry will achieve its target with 2004 becoming the year with the highest tea export volume, which is expected to serve as momentum for the industry to achieve higher targets set for 2005.

• Kim Kim