Financial Daily from THE HINDU group of publications
Wednesday, Jan 30, 2002
Financial Daily from THE HINDU group of publications Wednesday, Jan 30, 2002 |
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Agri-Biz & Commodities
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Tea Dipping prices worry southern tea trade L. N. Revathy
COIMBATORE, Jan 29 THE South Indian tea industry is still strapped in low equilibrium price levels. A cursory look at the auction catalogue is clearly indicative of the steep decline in tea prices. The average price fetched by the tea producers of South India fell from Rs 68.79 per kg in 1998 to Rs 57.10/kg the following year, and further nose-dived to Rs 44.63 in 2000. In 2001, the price level hovered around Rs 46/kg. January 2002 was no better. In the first three sales for the current year, the auction price slipped by 20 per cent to Rs 40.29/kg. Industry players are panicky about the whole situation. According to the Secretary-General of the apex body of plantations in the South, UPASI, Mr Ulhas Menon, ``the magnitude of the crisis is frightening if the price realisation is compared to the production cost of tea''. Over the last five years, the cost of production of tea has surged from about Rs 52.25/kg to over Rs 63/kg in 2000-01. The average annual year-to-year growth rate of tea prices between 1996 and 2001 fell by 5 per cent, while the production cost surged by 5 per cent, he said. An analysis of the balance sheet of 23 tea companies in South India (which account for a lion's share of the estate sector production) show that a majority of these are in deep financial crisis. ``The industry, in order to survive, has to be price competitive. High production cost is a big impediment,'' he said and pointed out that wages formed 60 per cent of the production cost. ``The recent hike in power tariff and fertiliser and other inputs have added to the cost escalation,'' he added. The association is pleading for some sort of fairness to the wage structure, by linking wages to productivity. A concerted effort from all segments in trade would help in pulling the industry out of its present crisis before it is too late, Mr Menon said.
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