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Rising offtake buoys tea industry hopes

Our Bureau

Kolkata , Dec. 22

THE tea industry has become positive and optimistic about its future prospects with production and the actual domestic consumption levels growing.

Addressing a press conference here, Mr P.T. Siganporia, Chairman of Indian Tea Association (ITA), said the domestic per capita consumption of tea has increased to 733 gm per annum from 630-640 grams per annum during 1996-97, marking a compound annual growth rate of 3.3 per cent.

The annual tea production figures for the last few years have also been revised. For example, the ITA had earlier fixed production in 2002 at 838 million kg (mkg), 857 mkg in 2003, 820 mkg in 2004 and hoped that it would touch 875 mkg in 2005.

On Thursday, Mr Siganporia revised the figures upwards. . The 2002 production has been put at 883 mkg, followed by 907 mkg in 2003 and 870 mkg in 2004. For the current calendar year, production would be 920 mkg. "Mind you these are extremely conservative estimates," he added.

The announcement was welcomed by everyone in the industry, which had been wallowing in the perception that domestic consumption had slowed down after prices sky-rocketed in 1996-97.

According to Mr Siganporia, in June 2005, the Tea Board and ITA realised that there is a strong need to take a closer look at the production estimates because the industry structure has changed with the emergence of small growers and bought-leaf factories.

Subsequently, the two bodies collected garden-wise data from excise departments in Assam. The exercise is currently being carried out in North Bengal and South India too. While final statistics are yet to be prepared, ITA made a fresh estimate of the production figures from 2002.

In an attempt to analyse the past, Mr Siganporia said between 2001 and 2003, the stocks had piled up and led to the crash in the prices. Since 2004, stock depletion was carried out at a faster pace and it continued in 2005.

"The current cumulative stock position in 2005 reflects a similar position as was in 1999 and is indicative of some buoyancy in the market. This is further borne out by some auction indicators like lower arrivals, lower stock and lower out-lots," he said.

However, he said the average auction prices had dropped further in 2005. While it declined by Rs 8.62 a kg in North India, in South India it fell by Rs 3.50 a kg. Exports too dropped by around 16 mkg but the per unit price realisation improved marginally.

Mr Siganporia identified at least one socio-economic factor behind this development. He said India's poverty levels had improved and the new section of people, who are now able to lead a decent life, are the new drinkers of tea. This pushed up consumption.However, global consumption of black tea is falling against the growth in demand of green and speciality teas. In India, he said, tea was actually a mix of drink added with milk and sugar. Worldwide tea is mostly drunk in a different manner.

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