The Hindu Business Line : Upasi sees coffee, tea prices rising

Pointing out that last year, tea estates in the South lost Rs 15.50 on every kg produced as the average price was only Rs 45.50 even as the production cost stood at Rs 61, the UPASI President, Mr B. Medaiah, told Business Line some firming up tendency had been noticed of late.

"It is too early to vouch for any optimism, but looking at the demand-supply position, it looks certain that the prices should increase. "

"In the first quarter of this year, while the production fell by seven million kg, exports rose by the same volume.

"This clearly indicates that the world consumption is increasing, which is, indeed, a point to be taken note of," he asserted.

Coffee prices had been showing improvements last year itself.

For the "other milds" category, prices rose to 64 cents/lb from 60.43 in 2002 and for "robusta", they rose to 38.39 from 30.83.

"The rising tendency was evident in the first quarter of this year, but from April, the prices are falling.

Looking at the market fundamentals, I feel that there is a favourable environment for the prices to improve because the supply is relatively tight over the previous year.

The global coffee production in 2003-04 will be only 101.38 million bags comapred to 119.44 last year.

Importantly, this means an end of five consecutive years of excess production which contributed to erosion of prices," Mr Medaiah said.

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