Financial Daily from THE HINDU group of publications
Friday, Aug 22, 2003
Agri-Biz & Commodities
Industry & Economy - Exports & Imports
ITA sees output up a tad; exports, imports projected to dip
Kolkata , Aug. 21
THE Indian Tea Association (ITA), in its status paper for 2003, has forecast nominal growth in domestic tea production and consumption but a substantial fall in exports and imports.
According to the report, published on Thursday, production is expected to increase by 4.6 per cent from 826 million kg (mkg) in 2002 to 864 mkg. An increase in consumption has been predicted at 1.8 per cent, from 685 mkg to 697 mkg in 2003.
The status paper apprehends that exports will fall by over 6 per cent from 198 mkg in 2002 to 186 mkg in the current calendar year.
Tea import is estimated to fall by 45.45 per cent, to 12 mkg from 22 mkg in 2002.The industry, however, continued to reel under falling auction prices.
The average auction price in 2002 was Rs 55.95 per kg against Rs 61.66 per kg in 2001. While the CTC prices of north India gardens dropped by 11 per cent that of south India dropped by 10 per cent.
In the case of orthodox, it is the other way round. For the south India gardens, the average orthodox prices dropped by 9 per cent but only 4 per cent for the north India gardens.
In the international arena, tea production and exports registered an all-time high. Production increased from 3,021 mkg to 3,022 mkg in 2002 and exports increased from 1,396 mkg to 1,426 mkg.
The paper has suggested an increase in more orthodox production. "Boosting exports will be the main thrust of the industry. Sluggish demand in the domestic market as well as lower prices will have to be countered through concerted efforts of generic promotion, cost control with a focus on quality control," the paper stated.
Regarding the auction prices, the status paper has observed: "Substantial price differentials at all auction centres were witnessed between quality and plainer teas," which suggests that buyers are willing to pay a premium for good teas.
Reasons such as oversupply of CTC teas, uncertainty in exports, slowdown in domestic consumption growth and lower stocks with the traders have also been identified for the declining price phenomenon.
Exports may decline as the Iraqi market has collapsed. In 2002, Indian tea industry registered a record trade of 43 mkg under the Oil-For-Food Programme. But this is no longer applicable. Hence, exports are likely to be down.
For 2003, the paper has projected exports of 50 mkg (47 mkg in 2002) to Russia, 15 mkg to Kazakhstan (11 mkg in 2002), 10 mkg to Pakistan and 25 mkg to the UK (21 mkg in 2002).
Regarding exports, the status paper pointed out that huge quantities of inferior quality teas are being imported and then re-exported from India. This has affected the image of Indian tea in the global market.
"There are no mandatory quality checks on imported tea as per Government rules. These teas do not bear `multi-country' origin declaration but only bear the name and address of the Indian exporter," it stated.
Interestingly, of the 22 mkg of imported tea, 21.58 mkg has been exported and it was mostly for the Iraq market. As there is no demand for such huge quantities for the Iraq market in 2003, tea imports into India will drop to 12 mkg, says the paper.
Collection and compilation of domestic tea consumption figures continue to be poor. In 2002, IIM Calcutta projected a 3.1 per cent growth in domestic consumption. As per the study, consumption in 2002 should have been 693 mkg, but the ITA, in the status paper, has worked it out at 685 mkg.
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