The commodities sector in South India, especially in Kerala, experienced a hostile environment in 2016 — be it on climate, land and labour issues, prices, productivity. The sector also witnessed one of its worst water crises and drought situations in 117 years, resulting in low productivity.

Tea production during the year under review was at 49.37 million kg — 3 per cent lower than in the same period last year.

Due to the failure of the North-East monsoon, the Association of Planters of Kerala (APK) expects a subdued crop in the remainder of the current calendar year as well as financial year 2016 -17.

The production cost in Kerala remains the highest among tea producing States due to high taxation, labour wages and low productivity, while prices remain stagnant, said Thomas Jacob, Chairman, APK.

South India also saw the worst weather conditions this year. In the major tea growing districts of the Nilgris, the rainfall deficit was in the range of 70 per cent, while in Kerala’s Vandiperiyar, it was around 50 per cent. A similar situation was experienced in other tea growing regions leading to a drop in output.

Planters’ body Upasi estimates that the tea crop in South India will be in the range of 205-210 million kg — down nearly 17.5 million kg, said N Dharmaraj, past president, Upasi.

Tea prices, he said, are ruling around ₹23 higher though the bottom line remains unchanged due to a sharp decline in production. Given the low production from many major producing origins and relatively buoyant world consumption growth, the first half of 2017 appear to be positive for the tea sector.

The climatic conditions in South India in the next four months will be a deciding factor as far as commodity prices are concerned, Jacob said. “How long are we going to survive with the failure of two consecutive monsoons,” he said.

Rubber stretches losses

Natural rubber (NR) production was up 8 per cent compared to the same period last year. Consumption was showing a downward trend in September and October. However, on a year-on-year basis, there is an increase of 5 per cent. During the first half of 2016, approximately 2.6 lakh tonnes of NR was imported against 2.3 lakh tonnes in the corresponding period last year.

However, C Vinayaraghavan, former APK President, said rubber prices would remain more or less the same in the New Year due to excess production and sufficient availability.

Spices: Mixed bag

Prakash Namboodiri, Chairman, All India Spices Exporters Forum, said that spices exports have seen an 8 per cent rise in value terms and 9 per cent in volumes. Chilli, with almost 24 per cent share, is the major commodity in the export basket, followed by mint, spice oils, cumin, pepper, turmeric and nutmeg.

However, pepper saw a substantial decline in exports — by more than 50 per cent — following lower production. There was an increase in cumin, nutmeg, cardamom, ginger and garlic output. Cardamom production was 30 per cent lower than last year even through there has been a price increase of almost 15 per cent.

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