The Hindu Business Line : Value-based tea export strategy required

One reason why the export targets are not reached is the understandable hesitation of the producers when they are able to get a higher price in the home market.

If the returns from exports do not match the efforts put in by the growers, they will show less interest and the volume target would remain un-reached.

This explains why a weighted spread of the focus should be given to low-volume-high-value markets (Japan, Germany, Australia, Ireland, etc) even as the high-volume markets (US etc.) should be covered.

Uncertainty

Also, why value-added products, including the new-found speciality teas should be promoted - some teas fetched nearly Rs 18,000 - Rs 26,500 a kg.

The hard reality is that although India has been, over the years, exporting its teas to nearly three dozen markets across the continents, the industry is unhappy and uncertain about the export trade. It is because of the growing domestic market and the relatively better revenue earned in domestic sales than in export that India's rank in global tea export volume has slipped to fourth from first.

Still, the domestic base is not all that safe. The home market, which absorbs nearly 740 million kg, is drawing the attention of other producers like Sri Lanka and Kenya that are dependent on exports for nearly 95 per cent of their production. Unless the quality, the taste and the price of the Indian teas are globally competitive, the home market itself cannot offer the cushion for long.

Unavoidable

Besides, with the production growing, the home market cannot absorb the entire production. That's why exports become unavoidable.

The Government has announced an export target of 200 million kg for the current fiscal. On the face of it, this appears achievable because last fiscal, the country exported 181 million kgs. But, on a closer look, the fact is that exports are currently trailing behind last year.

In the first four months of this calendar, there was a 20 per cent drop in shipments - to 45.37 million kgs from 56.89 million kgs in the corresponding period of 2005. For the fiscal also, in April, the exports slipped to 8.82 million kgs from 9.56 million kgs.

The main reason is a dampening of enthusiasm by the traditional importers, including Russia and the rest of CIS. Also, the prices offered are falling - this year the average price on export trade has fallen to Rs 86 a kg from Rs 91 last year.

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