The Hindu Business Line : ITA sees higher exports, lower output

THE Indian Tea Association (ITA), the apex body of tea producers, is optimistic about ending 2004 on a better note after half a decade of demand recession.

In its Status Paper 2004, published on Thursday, ITA projected that production in the current year would drop to 830 million kg (mkg) from 857 mkg in 2003. The projections also stated that exports would increase to 190 mkg from 173 mkg and consumption would grow to 710 mkg from 697 mkg.

The producers are also hoping that there would be a sharp jump in the exports to West Asian and African countries apart from healthy growths in their traditional markets such as Germany, Russian Federation and Ukraine and the US.

"Many in the industry are optimistic observing the trends since the beginning of 2004. There appears to be equilibrium in demand supply. If the current trend continues, the industry should perform well and resume its growth momentum after a half a decade of recession," the paper stated.

Exports to Iran were expected to jump by over 120 per cent to 3.5 mkg in 2004 from 1.58 mkg in 2003, while that to Iraq were likely to rise by about 42 per cent to 18 mkg from 12.68 mkg, it said.

Similarly, exports to the UAE and Saudi Arabia were likely to increase marginally or come down, that to Turkey were likely to jump to 1.5 mkg from 0.195 mkg in 2003.

Explaining the reasons for spurt in export to West Asian and African countries, the ITA paper said Iran had lifted the ban on import of tea in June 2004, while Egypt had reduced import duty on tea from 30 per cent to five per cent with effect from September. "By this reduction, Indian CTC tea becomes competitive once again in Egypt," it stated.

The paper noted exports to Germany were likely to come down to 4.50 mkg this year from 4.653 mkg last year, while that to Russian Federation were estimated to be lower at 41 mkg from 42.762 mkg. Exports to Ukraine and the US might fall to 1.5 mkg and 8 mkg from 1.745 mkg and 8.587 mkg, respectively.

The paper stated that its survival depended on cost reduction and increase in orthodox production of tea. "Boosting exports and domestic consumption will be the main thrust of the industry", the paper suggested.

ITA felt that more intensified efforts would be required towards upgrading the image and increase of Indian tea exports in the international market.

"More intensified and structured efforts would be required at the industry and Government levels to regain India's quality image and correct market sentiments in the international arena," the paper said.

ITA also recommended Government assistance for re-plantation activities and review of the old labour laws. "We do not advocate paying labour less but labour must produce more," the paper stated.

It was suggested that the tea sector must benchmark its activities against Kenya and Sri Lanka. ITA was of the opinion that total area under cultivation should be reduced if it could not sustain high yields.