The Hindu Business Line : Tea exports may increase 20 million kg this fiscal

India’s tea exports in the current fiscal should increase at least by 20 million kg, according to Mr Aditya Khaitan, Chairman of Indian Tea Association (ITA) and Managing Director of McLeod Russel India Ltd, the world’s largest tea producing company.

Choice before buyers

“There is a global shortfall and the major buyers are looking towards India,” Mr Khaitan told Business Line. With Kenyan crop having suffered in past few months, the countries such as the UK, Pakistan and Egypt, all traditional buyers of the African teas, were now turning to India.

The choice before them was either to pay too high a price at the Mombasa auction or opt for the Indian CTC, he said.

The rupee-US dollar parity rate, however, continued to be a matter of concern. “But then, the overseas demand is buoyant and, it appears, will continue to be so,” Mr Khaitan said, expressing hope that Pakistan’s demand for North India tea would rise, despite the shipment problem.

The demand for orthodox tea too, was likely to increase as the prices in the Colombo auction were high.

No carryover stock

Mr Khaitan, however, was not sure if the orthodox production in India would increase significantly in a situation where the demand for the CTC would be strong.

In 2006 also, the Kenyan tea production was hit by drought but the impact of it was not so much felt in India where there was a surplus crop with substantial carryover stocks. The situation this year was different in the sense India too, was running short with no carryover stock, he said.

The size of crop this year, according to the ITA Chairman, would be too early to estimate right now. The picture would be clear around July-August. “Even in the best of times, India’s production never increased by more than 20 million kg (mkg),” he said pointing out that the demand-supply gap would persist this year even if there was a bumper crop which was unlikely. The March crop in North India failed.

Growing demand

With the domestic demand increasing at three to 3.3 per cent, thus, creating an additional demand of about 30 mkg every year and with no carryover stock, the domestic price of tea too would be on the high side by all indications. It would be at least another three years before increased production, resulting from rejuvenation and replantation programme now in progress, would materialise.

“The producers currently having a judicious mix of export and domestic markets thus, stand to benefit most in the current situation,” he said.

The tea industry, Mr Khaitan said, suffered a lot in the past few years when the prices did not even cover the cost of production. New threshold prices, therefore, are need of the hour.

“Fortunately, the prices are showing signs of firming up, both within the country and outside,” he said. “We in McLeod Russel are fully geared to meet the market demand.”

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