The Hindu Business Line : Global tea output dip fails to ignite Indian prices

Tea trends
Overall decline in world output has not helped Indian tea prices to pick up.
Tea output in the country is on the higher side and 75 per cent of it is absorbed locally.
Declining trend in tea shipments to traditional markets continued due to shift in consumers to teas of other origins.

Kochi , May 23

The decline in overall world tea production does not seem to have made any appreciable impact either on the Indian exports or the prices in the domestic market here.

The world tea production in March 2006 dropped by 33.3 million kg (mkg) with the Kenyan output showing a drop of 35.5 mkg.

Indian production was up by 2.8 mkg to 97.9 kg in January- March 2006 from 95.1 kg a year ago. South Indian output during January-March 2006 declined by 0.1 million kg.

The price of Kenyan tea shot up to 206 cents/kg during January-march from 155 cents during the same period last year. North Indian (Calcutta) average price during January - mid-April 2006 was at 148 cents/kg as against 143 cents/kg in the corresponding period a year ago, while South Indian average price was 112 cents/kg compared with 114 cents/kg.

The overall decline in world output has not helped the Indian tea prices to pick up. However, it was slightly better than that of last year, sources at the United Planters' Association of Southern India (UPASI) told Business Line.

Output

"Indian tea prices do not seem to be driven by the demand - supply position," they said. Tea output in the country is on the higher side and the domestic market absorbs 75 per cent of it, they pointed out. The Indian production in 2005 was 928 million kgs as against 893 million kgs in 2004. Of this, the domestic consumption, both packaged and loose teas combined, is estimated at around 750 million kgs.

Exports

Exports to Pakistan have shown an upward swing of late but not to the expected levels as "they were looking for a particular type of tea at a particular (low) price", they said.

The declining trend in tea shipments from the country to its traditional markets, i.e. the CIS countries, continued following the shift in the consumers to teas of other origins. As against 53.35 mkg valued at Rs 421.42 crore in 2004 it was 45.27 mkg valued at Rs 363.28 crore in 2005.

However, there has been significant improvement in the exports to non-traditional markets in Asia and West Asia, industry sources said. Shipments to Iraq, UAE, Pakistan and Iran have shown substantial increase.

Exports to Iraq increased to 34.33 million kgs in 2005 from 25.79 million kgs the previous year, UAE 26.26 million kgs from 25.60 million kgs, Pakistan from 3.49 million kgs to 10.90 million kgs and Iran from 5.27 million kgs from 6.05 million kgs.

Diversifying to non-traditional markets apart from increasing the domestic consumption might help improve the prices in the coming days, they claimed.