The Hindu Business Line : Low orthodox output may hamper tea exports

EVEN as tea exports are showing a rising trend, lack of adequate facilities to produce orthodox tea is causing concern. Industry players feel this could hamper the country from taking advantage of the current situation in the global market.

"We are facing a problem of product mix. There is a great demand for orthodox tea but since we produce more of CTC (crushed, tear, curl) tea, we are unable to service all the demand," industry sources said.

Mr Anil K. Bhandar, President, United Planters' Association of Southern India (Upasi), told Business Line: "Our product mix is skewed in favour of CTC tea, whereas the global demand is for orthodox teas".

Initially, 90 per cent of tea produced in the country was in orthodox form. But with the erstwhile Soviet Union buying huge quantities of CTC teas, the product mix changed in its favour.

"Now, we produce 90 per cent of tea in CTC form and the rest in orthodox form," said Mr Ullas Menon, Secretary-General, Upasi.

Ever since the dissolution of the Soviet Union, tea exports to the region, now known as Commonwealth of Independent States (CIS), have tapered off to around 60 million kg from a high of over 150 million kg. Exports to the CIS region are declining because Sri Lanka and Vietnam have emerged as key suppliers at competitive price.

Sri Lanka, besides being competitive, is also offering longer credit facility apart from expressing willingness to buy arms from Russia.

"This year, we are seeing good demand from places such as Iraq, Iran, Libya which consume lot of orthodox tea. We have to take steps to service these markets," the sources said.

Changing the product mix in favour of orthodox involves considerable cost. "An additional Rs 7-8 a kg will have to be spent to produce orthodox tea and given the current situation the industry is in, it is not possible to spend that much amount," Mr Menon said.

Mr Bhandari said: "We have requested the Union Government to consider an incentive package for the entire orthodox production and not just for incremental output, so that producers can work out a strategic and integrated plan for production and export".

Also, additional incentive has been sought for orthodox tea export, which should be made available both for merchant-exporters and direct export by producers, according to him.

"We have represented the matter to the Commerce Ministry and we expect some response in a month's time," industry sources said.

During January-August this year, exports have increased to 107.7 million kg, up 15.2 million kg during the same period a year ago.

Meanwhile, a Upasi delegation is likely to visit Pakistan after Ramzan to explore ways and means to improve the market share there.

According to Mr Menon, Pakistan is a CTC market and the industry will have no problem in meeting the demand there. Currently, Pakistan buys mainly from Kenya, Sri Lanka and Indonesia.

Following persistent attempts by the industry, it has begun to make limited purchases from India. Last year, it bought 6.4 million kg and this year till July, it has purchased 2.14 mkg. During the same period a year ago, it had bought 1.83 mkg.

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