Financial Daily from THE HINDU group of publications
Wednesday, Aug 31, 2005
Agri-Biz & Commodities
Marketing - Standards & Benchmarks
Quality tea stirs industry revival
Kochi , Aug 30
LED by high-quality teas, the tea industry that was besieged by un-remunerative prices for the past five years, is staging a comeback.
"Quality teas have always have always been attracting buyer's attention and such teas are the first to bounce back the moment prices start to recover after a depressed phase. I urge the producer friends to bring out the best and transform the image of South Indian teas from mere price reducers to quality price reducers," said Mr K.M. Salim, Chairman of Tea Trade Association of Cochin.
Addressing the 13th AGM of the association, he wondered, "Without up-gradation of quality, how can we justify the tags such as premium gold and supreme that our gardens have acquired recently?"
The price recovery was visible at all the three auction centres in South India with prices at the Kochi centre averaging Rs 52.30 a kg for 2004 against Rs 47.21 for the previous year. In Coimbatore, the price was Rs 46.50 (Rs 38.30) a kg and in Coonoor it was Rs 43.30 (Rs 34.55).
The average price realisation for South Indian tea during 2003 was Rs 33.80 a kg against Rs 58.89 for north Indian teas, revealing a price differential of 42 per cent between the two regions, said Mr Salim.
Of the total offerings in all the three auction centres in South India, Kochi accounted for 46.55 per cent, followed by Coonoor with 37.76 per cent and Coimbatore with 15.69 per cent.
Mr Salim lauded the Kochi centre for being the leader among the South Indian auction centres.
Tea production witnessed a fall during 2004 with South Indian production dipping to 167.20 million kg (180.7 million kg) during 2004, while North Indian production dipped to 634.5 million kg (663.60 kg). The all India production fell by 5 per cent to 801.7 million kg (844.40 kg) for 2004.
With the prices beginning to recover, production grew by 10 million kg during the first six months of the current year, against the corresponding period last year.
With the opening up of the markets of Iraq, Libya and some other countries, Indian tea exports have been looking up. Tea exports touched 183.63 million kg in 2004, compared to 173.10 million kg the previous year. While shipments to traditional markets such as Russia, CIS, Kazhakstan and Ukraine declined by around 10 million kg, exports to Iraq has increased to 25 million kg.
Efforts of the Tea Board to improve exports to Pakistan did not yield much result.
Countries such as Jordan, Poland, Syria, Turkey, Singapore and Australia bought more tea from India, but the increase was negligible. As against the 100 million kg exports to Russia and CIS countries during the nineties, the region accounted only for 60 million kg in the recent times. This has prompted the Tea Board to look at other markets, particularly West Asia, Iraq and Iran.
While there has been a decline in the volume of exports during the first five months of the current year, it has been made up by better price realisation, bringing an additional Rs 5.84 crore during the period.
The association said import of tea continues to be a cause of serious concern for the industry. Imports increased to 30.52 million kg, valued at Rs 139.43 crore, from 9.86 million kg worth Rs 57.57 crore in 2003. The association welcomed the Tea Distribution and Export (Control) order of 2005, which is to ensure the minimum percentage of Indian tea to be present in the export of imported tea under the `India Tea' label.
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