The Hindu Business Line : Firm prices at Coonoor sale spell good times for tea sector

There was certain buoyancy in the Coonoor market on Thursday, as prices firmed up by at least Rs 3-4 a kg. Market sources foresee this as the beginning of a change for the better and expect the trend to continue in the months to come.

It's different: "We cannot expect the same boom conditions as in 1977, 1984 and 1998-99. But the time has come for the producers to look forward with some confidence into the future," Mr A.I. Kurien of Forbes, Ewart & Figgis Pvt Ltd, told Business Line.

Sharing his perception, Mr Kurien said tea was the only agricultural commodity that had not gone up in value terms. "Rubber, sugarcane and coffee (to name a few) prices have all shot up significantly. Considering the general economic boom and the large inflow of money, particularly in the rural pockets, tea cannot lag behind," observed Mr Kurien.

He substantiated his observation by stating that the early reports from Kenya indicated a 25 per cent drop in its tea production due to drought. "This would translate into a production loss of nearly 82 million kg of tea this year, which is almost equivalent to the world surplus at this point in time. Further, the crop loss in Kenya could be favourable for other tea producing countries. India can make use of this situation by routing teas to overseas markets such as the UK and Pakistan, which are solely dependent on Kenya for tea," he said.

Advantage Lanka: He conceded that Sri Lanka, because of its better quality teas, would have an edge over other teas. But, in a situation of a widening demand-and-supply gap, the demand for teas from other origins would tend to rise.

He saidin the past, irrespective of the internal shortage, prices remained depressed and exports lower in absolute terms. "And when prices went up, it was not in real terms. It is to be assumed that when exporters are active, they are in a position to exert pressure on domestic buyers, who are then forced to pay a higher price. It is the competition provided by the exporters that is instrumental in pushing up the value to impressive levels," he said

To a query, he said internal trade was still a hand to mouth existence and the position would be less comfortable in the coming months because of the demand on quality and consequent lower arrivals.

"Any attempt to increase production at the expense of quality to take advantage of the short-term boom would be detrimental to the long-term interest of the industry," Mr Kurien said.