The Hindu Business Line : ‘2009 tea season to see shortfall in output’

Kolkata, Sept. 23 The tea season due from April 2009 will start with a shortfall of at least 75-80 million kg (mkg) of tea, according to Mr Aditya Khaitan, Chairman of India Tea Association (ITA) and also Chairman of Consultative Committee of Plantation Associations (CCPA).

“This will happen because both domestic and export demands for tea are steadily rising even as the production remains virtually stagnant,” Mr Khaitan told Business Line. At the current consumption growth of 3.5 per cent annually, the domestic demand would rise by an additional 35-38 mkg and the export in the current year too would be up by another 35-40 mkg, he said

PRICE RISE

“There was no carryover stock at the beginning of the current year’s tea season and the situation would only worse in the coming year,” he said, projecting a shortfall in current year’s production of the North India varieties accounting for nearly 70 per cent of the country’s total tea production.

An inevitable fallout of it would be price rise. But then, as he cautioned, there should be no euphoria over the rising trend in tea prices in past couple of months. “It would be wrong to presume that the higher sale proceeds are entirely entering into the producers’ profits,” he said. “Far from it”.

The prices, as he pointed out, were yet to reach the levels of 1997-98 but the costs jumped at least by 60 per cent in past 10 years. More important, the bad phase through which the industry passed in the past seven to eight years left majority of the producers “virtually bleeding”. Most of them ran into debts and no wonder there had been no replantation and rejuventation of plants, no uprooting of old bushes, no modernisation of the processing units and no replacement of old vehicles in most tea estates. The workers too suffered immensely.

The present price rise therefore was only helping the industry to pay off their debts, clear their past liabilities and start working on modernisation. The workers too were having a rise in their wages and bonuses which was good, he said. An estimated 100,000 workers are dependent indirectly and indirectly on tea production.

NO INVESTMENTS

Mr Khaitan emphasised that present rising trend must continue for next few years to help tea industry not only recover but also grow. “How will the industry grow unless the producers generate surpluses to plough back”? he asked pointing out that today’s production stagnation was largely due to the absence of investments in past few years. Also, tea being an agricultural commodity and dependent on vagaries of weather, no investments would give instantaneous results. The results would be visible only after four to five years.