The Hindu Business Line : Tea industry rules out output cut

THE tea industry has ruled out a possible production cut at the end of the year despite facing a huge crop, falling prices and stagnating growth in consumption.

According to Mr C.K. Dhanuka, newly-elected President of the Indian Tea Association (ITA), there is no possibility that the association would take a decision to go for an industry-wide production cut.

In 2001, the Consultative Committee of Plantation Association (CCPA) decided for an industry-wide production cut. As a result, tea production in all the tea gardens was stopped during December. Clarifying this, one of its members said that it was good to leave the decision to t individual members.

"Last time, though every tea garden assured to stop production, hardly any one followed. So, instead of making a mockery of an industry-wide decision, it is better not to take any such decision," the ITA member told Business Line.

There had also been reports that tea production during August was good and this had lead to an increase in the number of offering at the auction centres.

Probably, a fallout of it is the subsequent increase in the number of rejected lots at the Kolkata auctions. A section of the industry is of opinion that ITA should restrict the flow of tea offerings into the auction house. ITA is against such a move.

"There is no point in restricting offering. It is a temporary phenomenon and demand is bound to pick up. There is no need to create an artificial demand by clogging the auction system," Mr Dhanuka said.

Meanwhile, the Deputy Commissioner of the Dibrugarh district in upper Assam has fixed a floor price of green leaves purchased from the small growers by the bough leaf factories.

The price has been fixed at Rs 9 per kg against the prevailing market rates of Rs 5-7 per kg. The official further stated that the notice should be given immediate effect.

Some sections of the tea industry has welcomed this move and said it would certainly prop up theprices. According to them, small growers would greatly benefit from it.

However, this is not a statutory order. Hence, the State Government cannot enforce it. As a result, it would be difficult for the Government to stop sale of green leaves below the floor price of Rs 9 per kg.

"What is the point of fixing of fixing floor price for green leaves without a fixing a similar price for teas at the auction centers?" Mr Dhanuka asked.

According to him, unless floor prices are fixed at both the levels - at the gardens for green leaves and at the auction houses for tea - the recent order of the Deputy Commissioner of Dibrugarh will fail to leave an impact on the tea prices.

The tea industry had earlier requested the Union Commerce Ministry to fix a floor price for both CTC and orthodox tea at the auction centre to put a check on the falling tea prices.

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