The Hindu Business Line : Inventory fall likely to revive tea industry

THE tea industry can hope for a revival in sentiment after a long depression on signs of drop in inventory levels and rise in prices at the north Indian auction centres, says the Tea Board Vice-Chairman, Mr M. Bhojarajan.

As per statistics available with the Tea Board, there is a shortfall of almost 35 mkgs at auction centres across the country this year, Mr Bhojarajan told Business Line.

"In the year 2002, the backlog in north Indian centres up to the 49th sale was around 35 mkgs. But as per the statistics provided by brokers in North India, this year, teas available for sales through auction centres in North India up to the 49th sale is only 0.8 mkgs.

In comparison to the teas available at the 49th sale in 2002, the quantum available for sale at South Indian auction centres up to the 49th week of the year 2003 was down by 0.7 mkgs.

According to Mr Bhojarajan, in Kolkata and other centres, teas available with the trade is minimum.

"This is largely because given the easy availability of teas at cheaper rates this year, no one has stored teas. This is also indicative of the fact that consumption in the country has gone up substantially,'' Mr Bhojarajan said.

Reiterating this view, senior tea industry officials maintain that domestic consumption is likely to see a growth of 3.5-4 per cent year-on-year.

Domestic consumption for 2003 has been pegged at around 680-690 mkgs.

"Exports are down substantially while production for the period January-October 2003 has increased. And nobody is stocking up on teas, so where has all that tea gone if not the domestic market. This is a clear-cut indication of jump in domestic consumption,'' an industry officials said.

Trade sources said teas available for cataloguing in north Indian auction centres had come down.

"By mid-January, one could see North India drying up. This shortfall may be felt and the market could look up for better teas. In fact in the last two weeks, premium, good quality teas have been fetching good prices at the north Indian auction centres. And with the availability of these teas likely to come down, prices are expected to firm up further,'' a tea broker said.

According to trade sources in the last two weeks, the price of medium to exportable type of teas at South Indian auction centres has also been looking up.

"In the last two weeks the leaf market has been dearer, however, the dust category showed a slightly lower tendency,'' a Coonoor-based auctioneer said.

While there is talk of 70-80 mkgs of tea in the pipeline in the country, the trade is as yet a little hazy on whether all this quantum has been consumed or is expected to be consumed. One line of thought is that a substantial quantum could be absorbed in the coming months with North India cutting down on production in the period Dec-Feb, due to winter.

"In the absence of production of quality teas in North India during winter and normalisation with Pakistan, the price of tea will go up further in the coming months, '' Mr Bhojarajan said.

Production during January-October stood at 733.49 mkgs, up from 702.11 mkgs for the corresponding period last year.

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