The Hindu Business Line : Coffee, tea sector value loss up on rising input costs, falling returns

AS a prelude to its annual conference, UPASI (United Planters Association of Southern India) organises a session on plantation commodities every year.

The session on tea had largely focused on marketing strategies and other aspects during the last four years. After a brief interval, the planters' body decided to refocus its attention on the scientific or technical aspects this year, with an eye on improving quality and cutting costs.

The steep rise in production cost vis-à-vis the poor price realisation has probably compelled the planters to re-look the situation.

The price decline has been severe in the case of tea and coffee. The magnitude can be seen if a comparison is made between the production cost and the price realised. The value loss on tea and coffee arrived on the basis of difference between the value realised in 1998 and 2003, indicate a loss of Rs 770.3 crore and Rs 1210.3 crore respectively. This, however, does not take into account similar value loss incurred during the interim period (1999-2002).

The indebtedness of the tea and coffee sector (due to the difference between the cost of production and prices realised for the period 2001 to 2004) has been estimated at Rs 641.6 crore and Rs 626.15 crore respectively.

In the case of tea, the total production cost, which was hovering at around Rs 17/kg during 1985 had zoomed to Rs 60/kg by 2003, registering a 353 per cent jump.

Price levels had, during this period, declined steadily eroding the margins and compelling the estates to effect measures to control/cut costs.

The labour cost alone has swelled to 70 per cent of the total cost of field operation.

"For cost control, the thrust area should be on improving labour productivity and rationalising the input levels. Cost-cutting exercise should not impair effective execution of a practise," said Dr J.B. Hudson, Assistant Director (Extension), UPASI - TRF (Tea Research Foundation).

Industry sources, while stating that the tea industry was in dire straits, reiterated the need for policy consistency.

The industry has been appealing to both the Centre and the State to extend all possible assistance to this ailing sector on a number of issues, which include among others abolishment of the Additional Excise Duty on tea to prevent further closure of estates in the South, extension of incentives to exporters of orthodox tea, prescription of a minimum value addition norm on imports for re-exports, linking of labour wages to productivity, extension of a special tea term loan, restoration of the DEPB rate at 2 per cent for the tea industry.

More Stories on : Plantations | Coffee | Tea

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Guar gum prices increase on weather woes

Vijaya Bank farm credit target for Kerala

Samba cultivation picks up in Cauvery delta

`Ship-breaking units will hurt shrimp hatcheries'

Farm credit: Targets are fine, but more is needed

Coffee, tea sector value loss up on rising input costs, falling returns

Rubber growers unhappy over falling prices

Spot rubber static in inactive market

Tea Board to seek Centre's help for re-planting

Kharif oilseeds harvest begins

Plea to include soyameal in farm produce scheme

Broiler, egg rates lowered