The Hindu Business Line : Tea prices increase 10 pc in S. India

THE average price of tea in the auctions in South India increased by 10 per cent from January to September 8 this year compared with the same period a year ago. But the rise in average price on all-India basis was only four per cent.

According to statistics available from the United Planters' Association of Southern India (Upasi), the average price of tea was up at Rs 45.04 a kg against Rs 41.24 last year.

In North India, it increased to Rs 68.28 from Rs 63.49, a seven per cent rise. But if the returns of Darjeeling tea are included, then the all-India average is Rs 59.59 a kg compared with Rs 57.12 last year.

Category wise, CTC (crush, tear and curl) tea fetched Rs 44.21 (Rs 40.55), while orthodox tea realised Rs 51.57 (45.23) at the auctions in South India.

However, trade sources say the increase in auction prices was significant in August. The average price, according to them, was Rs 72.09 a kg in August from Rs 54.42 a kg last year.

The increase has been higher than centres such as Colombo, where prices were up by Rs 12.76 to Rs 84.13, and Mombasa in Kenya, when it increased by Rs 3.72 to Rs 72.66.

According to Mr Ullas Menon, Secretary-General, Upasi, the auctions are witnessing a rise in prices due to fall in production this year and rise in exports.

"Prices are up a little this year but things are not comfortable yet for the industry. Prices are also up because tea available in the domestic market is expected to be less this year," he said.

Till August, production is down by 42.3 million kg (mkg) at 490.3 mkg compared with the output during the same period a year ago. The fall has been steep in North India by 32.3 mkg.

Last year, the production was a record 857.1 mkg. This year, production has been hit by dry weather followed by heavy rains during monsoon in the North.

Exports, on the other hand, have shown an encouraging trend increasing by 15.2 mkg to 107.7 mkg up to July. However, the unit value realisation is low at Rs 82.35 a kg against Rs 100.52 last year during the period.

While exports to the Commonwealth of Independent States (CIS) or the erstwhile Soviet Union — the traditional market for India tea — have declined, it has increased to other destinations, particularly to Iraq, Kenya, Poland, Pakistan and Afghanistan.

The export prospects are looking good with Iran and Libya also evincing interest to buy tea from the country. Early this month, Libya lifted its ban on import of India tea.

"Exports are looking up. But there are other issues to attend to if we really have to capture a fair market share in the global market," Mr Menon said.