The Hindu Business Line : Tea industry hopeful of another good year

Warming up
Higher domestic consumption wipes out carryover stock.
Domestic consumption likely to increased 3.3 per cent.
Egypt, Iran and Pakistan expected to boost exports.

Kolkata April 4 The tea industry is hopeful of yet another good year in 2007-08. In 2006-07, the average price increase was about Rs 7-8 per kg. The extent of price increase in the current fiscal too should be around the same, according to tea industry sources. "If the year 2006-07 was reasonably good, there is no reason why the same trend will not be maintained in the current fiscal also," observe the sources.

Factors

Several factors, it is felt, will contribute to the rise in tea prices as projected for the current year. First, the year starts with no carryover stock. As a result, there has already been a drop in auction sales. In fact three sales each in Kolkata, Guwahati and Siliguri auctions were cancelled due to the non-availability of tea.

Last year the carryover stock at the beginning of the year was about 23 million kgs, which was totally wiped out during the course of the year thanks to high domestic consumption of 805 million kgs.

Shortfall

Together with exports of 205 million kg, the tea demand during 2006-07 was estimated at 1,010 million kgs as compared to the availability of around 980 million kgs, comprising a production of 955 million kgs and import of another 25 million kgs. Thus there was a shortfall of 30 million kgs, which could not be met entirely by the carryover stock. The year 2007-08 thus started with a negative carryover stock.

Second, the domestic consumption, it is felt, will continue to be good in the current fiscal. An estimated 3.3 per cent growth in domestic consumption will create an additional demand for 25 million kgs or so. But the production is unlikely to increase significantly.

Crop situation

The crop situation so far has not been very good. In first three months of the current year, the production dropped by about 15 to 20 per cent vis-à-vis the same period last year, largely due to the adverse weather condition.

The sources, however, point out that the present shortfall should not be the criterion for estimating the current year's overall production trend. The year starts with the first flush tea, which accounts for 10 to 12 per cent of the total production.

Finally, the exports too, it is indicated, will receive a boost in the current fiscal as new demands will be generated from the countries like Egypt, Pakistan and Iran. The tea delegation, which recently visited Egypt sounded very bullish about the prospects of the Egyptian market. Egypt has substantially slashed the duty on Indian tea. Last year, Egypt purchased about 2.7 million kgs, likely to increase significantly in the current year.

PAK RAISES HOPE

Pakistan is another country on which a good deal of hope is being raised. Last year Pakistan bought an estimated 12 to 15 million kgs of Indian tea (there is a discrepancy in figures offered by the industry and the Tea Board), largely due to the non-availability of the Kenyan variety. This year the production in Kenya is up and it therefore remains to be seen how much Pakistan chooses to buy from India. Traditionally, Pakistan has been a major buyer of Kenyan tea. An Indian tea delegation is to visit Pakistan shortly.

LANKAN CROP FAILURE

There is another point. The crop failure in Sri Lanka, a major producer of orthodox tea, has boosted the export prospects of Indian orthodox variety.

ITA Seminar

Meanwhile, the Indian Tea Association on Wednesday held a seminar on agro diversification to alternative crops for tea industry to explore the scope of crop diversification in lands occupied by tea gardens. Experts on the subject from Assam and West Bengal and eminent personalities from the tea companies like Tata Tea and Williamson Magor, Tea Board, ITA, Tea Association of India, individual planters and others deliberated on various topics relevant to crop diversification.

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