In the middle of March 2022, the Eurasian Economic Commission (EEC) Council announced the suspension of import duties on a range of essential goods, including raw materials for food production, medicines, metal and construction components, and shipping supplies. This decision also touched finished tea products, according to Ramaz Chanturia, general manager of the Roschaikofe association, speaking with socialbites.ca.
“AET directed a policy shift toward Russia at Belarus’ suggestion. Previously, Brazil and India hesitated to accept the idea of waiving import duties on finished tea, and now it feels like a windfall for them. The period for the temporary tax reset is expected to end in September, but suppliers could push for an extension of the zero rates,” Chanturia stated.
He asserted that the EEC’s decision would not only tilt the market toward foreign tea at higher shelf prices in Russia but also weaken domestic production. Until recently, Russia’s import duties on finished tea stood around 9.7–10%. The current reform instead treats these duties like taxes on raw materials, reshaping the cost base for local manufacturers.
“The risk of tea shortages grew in the autumn. With a 10 percent tariff on imports of finished tea products, the danger of famine is still lower than having zero rates,” explained the Roschaikofe leader.
The situation is further muddied by rising shipping costs. Freight rates in the past year have nearly tripled, largely due to the US–China trade tensions. A substantial share of the global container fleet, about 5%, was disrupted, and since the start of 2022 costs have risen by another 20%. As sanctions tighten, tens of thousands of containers may not be counted on in the near term, Chanturia noted.
Chanturia described that a standard 40‑foot sea container carries about 5–7 tons of finished tea or 20–25 tons of raw materials. This shift would dramatically curtail the supply of foreign raw materials used in Russia’s tea processing sector, since instant tea grains, now of higher value, have become more profitable to export. Foreign suppliers find it more advantageous to ship smaller batches of instant tea to Russia than to export cheaper raw materials in bulk, he explained.
What do they think in “We are Rusprodsoy”?
Rusprodsoy has previously called for tax relief on tea and coffee. The initial version of the organization’s message to the Ministry of Economic Development urged zero taxes on finished tea products. Chanturia emphasized that this development surprised Roschaikofe.
The document proposed suspending import duties on several goods used in producing finished tea and coffee items within Russia. It covered items like filter paper for tea bags and various valves used in coffee packaging, among others. Yet a major German tea importer within Rusprodsoyuz added a clause seeking zero rates for finished tea products without Roschaikofe’s agreement. Consequently, the letter was withdrawn immediately, Chanturia said.
Rusprodsoyuz confirmed to socialbites.ca that a letter had been sent to the Ministry of Economic Development but was later retracted. The organization clarified that any duty reset should apply solely to tea materials.
“Russia cannot benefit from importing packaged products when its own packaging raw materials capacity suffices for the domestic market and for export of processed and packaged tea and coffee,” Rusprodsoyuz stated.
The opinion of Russian manufacturers
Russian tea production relies entirely on foreign raw material sources, as there are no domestic farms capable of sustaining large-scale industrial tea production. The Krasnodar region houses most potential plantations, yet the Moscow Tea Factory indicated that current fields cannot meet the country’s full consumption needs.
“Having operated with existing raw materials and packaging stocks since the start of the year, there has not been a noticeable rise in costs yet. We have modestly raised prices for items tied to previously purchased tea materials,” the Moscow Tea Factory noted.
The industry added that the price increases buyers see in stores result from multiple factors, including the pricing of tea raw materials in US dollars, euro-based purchases of filter paper for tea bags produced in Austria, and a general uptick in packaging material costs. “Raw tea itself is rising in price as its currency value strengthens, and old logistics routes are failing. It is hard to predict freight costs, which have already surged during the pandemic,” the factory explained.
To forestall further fallout for Russian producers, Roschaikof intends to persuade EAEU governments to rescind March’s zero-tax decision on instant tea imports by the end of May. “Without lifting this measure, there is a risk of slipping back to the 1990s when Russia’s tea industry concentrated mainly on selling foreign brands,” Chanturia observed.
He also emphasized that Russian tea exports, a government priority, could face threats. “Tea is sent not only to EAEU nations but also to Eastern Europe and the Middle East. Export volumes have risen recently, but zero taxes on finished tea imports could undo years of hard work,” he warned.