The Hindu Business Line : Tough concoction

PRIMA FACIE, the new medium-term tea export strategy being considered by the Tea Board appears well formulated. But it is doubtful if the industry will be able to implement either easily or quickly the recommendations seeking sizeable reduction of permanent labour force, linking of wage with productivity and introduction of mechanised plucking. Equally doubtful is if New Delhi and the industry can find the funds for product and market development as also for promotion of the beverage that the strategy report calls for. The report is less than charitable to the industry and trade when it observes that they have tended to view export as merely disposing the surplus over domestic requirements. The suggestion that they are more committed to the domestic market smacks of inadequate appreciation of the obvious — that India has the largest domestic tea consumption base, that tea is under the Essential Commodities Act and that any unusual spurt in prices always attracts government intervention.

Thereal reason why the industry and trade have not been able to develop a diversified outmarket has to be traced to the pre-disintegration Soviet Union with which for long India had bilateral trade agreements by which almost 50 per cent of the tea export volume was committed to that country. The recent drive to step up value addition, develop products and tap new overseas markets should, therefore, be seen as an attempt to undo the damage that overdependence on one market had done in the yesteryear. True, the efforts are less than adequate and one reason certainly is paucity of funds. Today, because of the onslaught of colas, the industry has been forced to mount promotional campaigns even in the domestic market, highlighting the beneficial health aspects of tea. But, here too, despite New Delhi's financial support, the industry and trade have to reckon with a fund shortage, particularly because tea prices have been low while costs have soared. However, it must be conceded that the report makes some useful suggestions for focussed effort to increase the share of orthodox variety in the total tea output, concentrate on key 22 overseas markets which account for 75-80 per cent of the world tea exports, create niche segments, tone up service levels, continuously improve quality, and cut down landed cost.

However,the list of what is described as `high level scan markets' includes Pakistan and Iraq. Although they offer promising opportunities, there are serious limitations. While exports to Iraq are subject to the UN's food-for-oil scheme, it is futile to expect the opening of the 140-million-kg Pakistan market without a political settlement. Cost reduction by linking wages to productivity, trimming permanent workforce and introducing contract labour concept, and mechanised plucking will call for dialogues with the unions, which have considerable clout in the gardens. In the short-term, however, the tea factory upgradation scheme, recently introduced by the Tea Board, and the decision of the Commerce and Industry Ministry to introduce a scheme, compatible with the WTO norms, for taking care of the additional freight that transhipment via Colombo entails should aid exports of orthodox tea, tea bags and packet tea. It will be interesting to see how the Tea Board goes about executing the recommendations, particularly the one for promotion for which fund requirement over five years to 2006 is put at Rs 557 crore, to be shared almost equally by the Centre and the industry. The suggestion for a project approach for implementation appears conceptually sound.

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