Financial Daily from THE HINDU group of publications
Thursday, Jan 27, 2005
Agri-Biz & Commodities
Industry & Economy - Exports & Imports
Tea exports decline drastically; imports up
Kolkata , Jan. 26
TEA exports during 2004 have once again declined compared to the level of 2003. This is the second consecutive year that the tea industry has failed to increase its share in the global market.
Though the official figures are yet to be announced by the Tea Board (only January to November figures are available), sources in the tea industry confirmed that exports had fallen further.
From 201 million kg (mkg) in 2002, exports dropped to 173 mkg in 2003. For 2004, the Indian Tea Association (ITA) had set an export target of 190 mkg. However, the sources said the industry had failed to reach even the 173-mkg mark.
In the first seven months, tea exports registered a healthy growth.
But in the latter half of the year, they slipped drastically. During January-November 2004, the volume was up by only two mkg, that is, 155.94 mkg against 153.31 mkg in 2003.
This apart, net tea exports (total exports minus total imports) have also dropped.
Tea imports increased to 30 mkg in 2004 against seven mkg in 2003.
ITA's mid-year review stated that tea imports this year would be 25 mkg. Most of the teas imported into India are generally re-exported.
"Let us assume that we have exported 170 mkg during 2004. From it, deduct another 30 mkg. So, net exports would be only 140 mkg against 166 mkg in 2003," the sources said.
Exports have fallen despite several initiatives taken by ITA.
The sources said the biggest let-downs for the country have been Russia, Pakistan and Iran.
In 2003, tea exports to Pakistan were 7.4 mkg. It was expected to increase further, but 2004 ended with only around 3.5 mkg.
In Russia, the most important market for Indian tea in the past, the industry has continued to lose its market share. However, the sources say that Indian tea continues to enjoy good brand equity in that country.
Indian tea exporters have increased their presence in Iran but performance is still far below expectation.
Similar has been the case with Iraq. Indians almost lost the entire Iraqi market in 2003 but have succeeded in regaining a portion of it.
According to Mr C.K. Dhanuka, President of ITA, fall in exports has been due to low orthodox tea production in India. He feels the situation would have been different if the Indian industry had produced more orthodox tea.
"The producers had asked for some relief from the Government for increasing orthodox tea production but nothing materialised. Once we get some benefits and orthodox production increases, we will regain our global market share," Mr Dhanuka told Business Line.
It may be noted that a large part of the tea-drinking market currently prefers orthodox tea over CTC. A decade ago, it was the other way round. In order to shift from CTC production to orthodox, the producers have asked for support from the Union Government.
Mr Dhanuka admitted that the Indian industry had failed to capture the Pakistani market because it was not cost-competitive compared to the Kenyans. He added that ITA was seriously thinking about improving the export scenario and firm plans would be drawn up by the end of February.
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