India Tea production marginally low this year

Tea production in India will be marginally lower this year than in the year before due to erratic weather, says Tea Board of India chairman Basudeb Banerjee.

“This year our production has been slightly lower than last year. We will be marginally down by 10-15 million kilograms this year (by the end of the season — first week of December),” Banerjee told IANS.

The production last year was 981 million kg.

“There were times during the season when unseasonal rains or lack of it hampered the crop. Erratic weather played a crucial role,” he said.

On the spiralling tea prices, Banerjee said overall prices are up by 30 percent over last year’s average.

“Average prices of South Indian tea, which was Rs.60-70 per kilogram last year are now around Rs.100 per kg. Average prices of north Indian (Darjeeling, Assam) tea that was around Rs.100 per kg is now around Rs.130 per kg,” Banerjee said.

The rising prices can be attributed to the behaviour of the international traders on demand-supply pull and secondly the higher wages paid to the labourers.

He traced the origin of the all-round price rise to the drought and political problem in Kenya two-three years ago, and added this year the traders expected there could not possibly be two droughts in a row.

Production cut in Kenya and Sri Lanka due to drought and a drought-like situation in India to a limited extent led to the overall shrinkage of tea availability.

“International traders were probably a little confident that tea stock availability would not be low this year. But eventually their stocks ran low. Now when stocks are low and the supply pipeline is drying up (due to drought) there is a demand-supply mismatch,” Banerjee said.

Talking about tea consumption in the country, he said it is growing satisfactorily.

“In India, consumption has gone up. Till last year tea consumption growth rate was more than three percent, as against 1.8-2.4 percent in the last few years of the 21st century.”

The tea industry has remained largely insulated from the global economic meltdown as internationally people consume more tea during a recession since this is a cheaper beverage, he said.

“Nevertheless, higher end tea has suffered due to the meltdown.”

Out of the 981 million kg produced last year, around 200 million kg were exported. But at present the export market is not doing too well.

“The export market is not doing too well in terms of physical quantity. A five-six percent decline has happened in export, but we have made up as the unit cost has increased,” he said.

Total global supply of tea was 3,749.78 million kg in 2008 vis-�-vis a demand of 3,603.25 million kg. Total quantity of tea exported in 2008 was 203.12 million kg clocking a value of $551.17 million. This year till September 131.23 million kg has been exported for $362.83 million.

The major countries India exports to are Russia, Iran, Iraq, Egypt and Pakistan. These countries consume CTC (curl, tear, crush) variety.

“It is our endeavour to sell more CTC as there is a risk in manufacturing more orthodox type because if we can’t sell it abroad we don’t have a domestic market to sell it,” he said.

Banerjee said Britain and Russia consume more CTC from India as tea bags are very popular there.

He emphasised that India needed to produce more orthodox tea as that is consumed abroad. “We are not an export-oriented country, 80 percent of our product is consumed domestically.”

To catch the fancy of orthodox tea drinkers, it is important to change the ratio of the quality of tea exported. “India is a bulk exporter of tea — the ratio between bulk and value-added tea has to change.”

Banerjee mentioned that shipping and transportation costs are the biggest hurdles in the export route as the production areas are located in remote regions.

Talking about branding of export tea, Banerjee asked: “Does the brand come first or the product come first? High quality tea export of India is much lower than other exporting countries like Sri Lanka and Kenya.”

“We need to create infrastructure before we start branding our exports like what Sri Lanka did, pack for foreign brands. It is not easy to create a brand. Value of bulk exports has to go up and proportion of value-added tea and bulk exports has to go up.”

Union Minister of State for Commerce and Industry Jyotiraditya Scindia on a recent visit to the city had said: “We require product diversification. Moving away from CTC to orthodox. There is need to produce quality tea for export markets, which is why rejuvenation and replantation work is very important in the tea gardens.”