The Hindu Business Line : New profile emerged for tea exports in 2004

2004 will go down in the history of Indian tea industry as a year which ushered in a new profile for exports. The traditional importers disappointed the producers; still, the overall exports rose over the previous year due to the support received from unprecedented quarters. While this was welcome, there is little to suggest that this profile will sustain in 2005 and beyond because of the broad doubt over their dependability.

Three vital aspects clearly emerge when the export performance is analysed. First, while the volume rose, the value earned fell. Second, while the South has earned more from an increased volume of shipments, the North has lost both in terms of volume and value. Third, unpredictable importers supported the shipments even as the expected ones lowered their purchases.

For instance, in the first ten months of 2004 for which official data is now available, while the shipments rose by 11 million kg to 143 million kg, the earnings fell by Rs 23 crore to Rs 1,236 crore. This happened because more teas could be shipped only when the average prices were reduced by Rs 9 a kg to Rs 86.47.

The decline was more pronounced in the North where the volume of shipments fell to 61.61 million kg from 72.9 million kg, since the prices were retained at around Rs 118 a kg as in the previous year. Consequently, the earnings dropped to Rs 727 crore from Rs 866 crore. In 2003, during the same period, 12.75 per cent of the production in the North had been exported, but in 2004, only 11.33 per cent could be shipped.

In the South where over 60 per cent of the production depends on export sale, the average prices were reduced by Rs 4 a kg to Rs 62.56. Hence, the shipments rose to 81.33 million kg from 59.06 million kg. Consequently, the earnings increased to Rs 509 crore from Rs 394 crore. In 2003, only 36.5 per cent of the production was exported, while in 2004, as much as 53 per cent had been shipped.

Kenya, however, bought sizeable volumes of CTC teas from the South. Hindustan Lever Ltd purchased such teas for the Kenyan market, but these were used for re-exports from there. It also paid anincrease in price of Rs 4 a kg to average at Rs 45.85. Consequently, India earned as much as Rs 43.19 crore from Kenya against Rs 7.32 crore in the previous year.

Iraq increased its purchases by 14.88 million kg to reach 15.71 million kg from a mere 0.83 million kg in 2003. Also, India had to lower its price to an average of Rs 52.48 a kg from Rs 72.41. Consequently, the overall earnings from that country rose to a whopping Rs 82.44 crore from a mere Rs 6 crore.

Had it not been for these markets, the overall shipments in 2004 would have been lower than 2003.

On the one hand, only some countries such as Poland, Syria, ARE, Jordan, Turkey, Singapore, Sri Lanka, Japan and Australia bought more teas from India, but the increase was only marginal.

On the other hand, even traditional buyers such as Russia and the Commonwealth of Indian States, the US, the UK, Germany, the Netherlands and Canada abstained from buying.

Russia once again violated its commitment to facilitate an export of 100 million kg annually when it lifted a lower volume of 26 million kg against 31 million kg in the previous year despite lowering the price to Rs 63.20 a kg from Rs 65.16. Hence, the earnings fell to Rs 164 crore from Rs 199 crore.

Overall, CIS imported around 8 million kg lower to remain at 33.52 million kg despite lowering the price to Rs 2 a kg. The realisation fell sharply to Rs 235 crore from Rs 301 crore.

All the efforts to exchange delegations to Pakistan did not bring in improvement in trade as the volume shipped dropped marginally by 0.18 million kg to 3 million kg. There was a marginal increase in the price paid by Pakistan which averaged Rs 43 a kg, but the overall earnings dropped to Rs 12.92 crore from Rs 13.59 crore.

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