Financial Daily from THE HINDU group of publications
Thursday, Mar 04, 2004
Agri-Biz & Commodities
Industry & Economy - Exports & Imports
Orthodox tea exports may take a beating on poor, unstable supply
Wellington (Nilgiris) March 3
INSUFFICIENT and inconsistent supply of primary orthodox grades is likely to hamper export of orthodox tea, say traders.
Merchant exporters told Business Line that a lack of consistency in supply could mar the otherwise positive export scenario.
``CTC tea, price wise is doing well at the moment. However, it is not so with orthodox. If one were to say, buy one container of orthodox, it takes almost three weeks to cover that quantity. This is keeping importers of orthodox tea away from India,'' a leading merchant exporter said.
There is also a growing uneasiness amongst the exporting community with regard to exports to Iraq. ``There is worry that one may not be able to meet the demand. And there is no question of re-import, what with Iraq insisting on a certificate of origin,'' a leading exporter to Iraq said.
Sources say that the quantum of orthodox tea coming up for sale at auctions is also relatively low.
In fact, as per the Blue Market report, the year 2002 saw 50.09 lakh kg of orthodox (both leaf and dust) sold at Coonoor auctions. In sharp contrast, in 2003, only around 25.34 lakh kg of orthodox tea was auctioned. Trade sources maintain that the quantum is a 13-year low at Coonoor auctions. Reiterating this is Mr Dipak Shah, Director, Crystal Tea (India) Ltd, says that increasingly it is becoming tough to offer orthodox tea. ``In Coimbatore, there were only 15 lots printed in comparison to say 200-300 lots some weeks ago,'' he said.
Exporters are of the view that one reason for low arrivals at auctions is the fact that some gardens indulge in direct exports. ``A lot of gardens are holding back in anticipation of Iraq buying. Thereafter, there is also a price difference of almost Rs 15-30. The Government should make 100 per cent routing through auctions mandatory. Even if it means that a producer has to buy his own tea via auctions,'' Mr Dipak Shah added.
Trade sources say that sometimes teas are printed but the price quoted is so high that there are no bids. Thereafter, it is withdrawn deliberately. Additionally, the district is `cropping' very low. ``We usually have some small showers in February but this year this was not the trend. This has also impacted production,'' an exporter reasoned.
Sources said that all these factors could lead to a shift in demand to other producing nations. ``There are countries where there is no problem of insufficiency and where tea is available at low prices,'' a trader added.
There is speculation in the trade that due to the current inconsistency, a large part of the South Indian orthodox trade has already gone to Sri Lanka and to some extent Vietnam.
``The major orthodox producers need a medium term policy to supply orthodox grades in a consistent manner,'' sources reasoned.
As per Upasi data, total South India orthodox production for the year stood at 31.2 mkg. For the year 2003 the total production was around 24 mkg, a drop of 7 mkg.
In sharp contrast, North India orthodox production for the year 2002 stood at 58 mkg. And for the year 2003 the total quantum was 68 mkg, an increase of 10 mkg.
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