The Hindu Business Line : Tea buyers unperturbed by fall in production

TEA buyers and packeteers are not too concerned over the Tea Board's announcement last weekend that tea production had declined by over six million kg (mkg) in the first three months of 2004.

According to them, the producers are trying to cause panic in the market so that tea prices will firm up further when auctions reopen on Tuesday. They are waiting to see the price movements during the week.

Last Friday, the Tea Board had announced that during January-March 2004, tea production in the country registered a shortfall of 6.56 mkg compared to the corresponding period last year. Tea buyers believe that 6.56 mkg is too negligible an amount to worry about. During 2003, the annual tea production was approximately 857 mkg, of which, 663.6 mkg was from North India and 193.4 mkg from South India.

``So, it is clear that 6.56 mkg is even less than 10 per cent of the total annual tea production of India. Moreover, this shortfall can be rectified any time during the year,'' a representative of a major tea buyer told Business Line.

Meanwhile, tea producers are happy with the recent report about the shortfall of production. In the last few years, producers have suffered due to high production and low prices. So, they find the recent development a welcome change.

A section of the tea auctioneers are optimistic of a price rise. According to them, tea prices have already hardened during the last few weeks and are likely to go up further.

The reasons cited for the production shortfall are floods in Assam and drought-like situationin South India, which have affected both North and South India.Tea buyers, however, have a different opinion. According to them, weather conditions in Assam have improved and most of the tea gardens are operational. Also, flush teas are expected to arrive on time. Hence, they said, there would be no shortage of tea in the market.

``Recent reports of crop shortage may lead to a sharp increase in the prices of the second flush teas, which is considered as the best quality teas. So, the auction prices of the next few weeks may be an important indicator about the future prices,'' an auctioneer said.

Tea Board sources said the arrival of CTC tea, which is mostly preferred in the domestic market, had shown a decline of 0.75 mkg in April and prices were Rs 6.94 per kg higher than those in the corresponding period in 2003.

Even for the auctions in May, arrivals of tea showed a decline of 5.8 million against last year.

Meanwhile, the Tea Board announced that during the January-March 2004 period, exports registered a growth of 7.2 mkg compared to the corresponding period last year.