Weather plays foul on tea

KOLKATA: Blame it on the weather gods if tea production in India does not touch the magical 1,000-million kilogram (mn kg) mark this year. Production was hit due to sparse rainfall from late September and the mercury has plunged before it usually does, affecting tea farming. Total production so far by north and south Indian gardens together is 730 mn kg. Industry experts are not very hopeful of touching the 1,000-mn kg mark. "Since September 20, Assam has experienced very dry weather. Both the north bank of the Brahmaputra as well as upper Assam received low rainfall. The tea crop output is dropping rapidly this month. So, even if it rains now, the Assam tea gardens won't have the same yield. Anyway, some rain is required now to stop the drought-like conditions in the gardens," Rossell India managing director Indian Tea Association (ITA) chairman C S Bedi told TOI. In 2010, the total tea production in India was 966.40 mn kg. "The only year when production came close to the 1,000-mn kg mark was 2007 when Indian gardens together produced 986 mn kg. But production declined in the two subsequent years," said Sujit Patra, ITA joint secretary. Till September, north Indian (including Darjeeling, Terai, Dooars and Assam) production was up by 36.7 mn kg compared to the same period last year. South Indian (Kerala, Karnataka and Tamil Nadu) production during the same period was down by 4.6 mn kg. Till September last year, north and south Indian production was to the tune of 693 mn kg. Industry members also said since October was a festive month, plucking was affected. "This year, all Hindu religious festivals were in one month and there were some other religious festivals also that hit the crop," he said. "Although, there was a surge in crop production in the initial months, but I don't think it will be able to touch the 1,000 mn kg mark as temperatures in north India have already started dropping. Therefore, October, November and December will only see reduction in production," said Aditya Khaitan, managing director, McLeod Russel. His company is the world's largest tea producer. But the Darjeeling tea production can cheer up the tea buff. It is expected that Darjeeling's yield this year will be higher by 10-15% at around 9 mn kg. . "Till October, Darjeeling's 87 gardens together produced around 7.3 mn kg this year," said Darjeeling Tea Association secretary Kaushik Basu. Last year, Darjeeling produced 8 mn kg. Table: Indian Tea Production 2010: 966 mn kg 2009: 979 mn kg 2008: 981 mn kg 2007: 986 mn kg Source: Times of India

Tea imports down 10.85% at 9.2 mn kg in Jan-June

Tea imports to India fell by 10.85 per cent to 9.2 million kg in the first six months of the current year.

The country imported 10.32 million kg of tea in the April-June period last year, the Tea Board said in a statement.

Though the maximum quantum of tea came from neighbouring Nepal, its exports, however, were down when compared with the corresponding period last year. Nepal exported 2.35 million kg of tea during April-June, 2010, as against 3.04 million kg in the same period last year.

On the other hand, Vietnamese tea imports improved to 1.96 million kg in the first six months of this year from 1.92 million kg in the year-ago period.

Iran also increased its shipments to India by 1 million kg during the January-June period to 1.18 million kg, compared to the same period last year.

India, the world's largest consumer of tea, mainly imports tea from 18 countries around the world, including Papua New Guinea.

The imported tea, however, is hardly used for domestic consumption and is mainly re-exported to Iraq. A fall in the number of contracts with that country have impacted the shipments, an industry official said.

Tea production in India, the second biggest producer of tea in the world, was 979 million kg last year.

India accounts for about 28 per cent of world tea production and 14 per cent of trade. There are about 1,600 tea estates in India. The industry employs more than two million people.

Source: PTI

Positive on Tata Global Beverages: Rajesh Jain

ajesh Jain, Market Strategist, speaks to ET Now about Tata Global Beverages.

What are your reasons for liking Tata Global Beverages your target on it and why do you like it?

Tata Global Beverages is a very strong play on the tea sector. We discuss this a couple of weeks ago on the same show when I had given a set of 4 food processing stocks, 3 in the multinational space and Tata Global was a fourth one. Tata Global currently enjoys the benefit of improving tea prices thanks to the crop problems that have besieged the East India plantations. So that should really help in better realisations and Tata Tea being an integrated tea company would be able to lock into some stock profits and hence there is an opportunistic profit gain for the company there. In terms of the overall business model what is exciting is what it will be doing with Himalaya since it has acquired Mount Everest and then it has this tie up with Pepsico for affordable water as well as ready to drink health beverages. Recently they have announced the foray into foods again on the wellness platform and it would be interesting what are the kind of launches to be seen there but both the affordable water, the Himalaya drinking water as well as the food segment will take some time to acquire critical mass and start contributing to the top line and the bottom line.

I think the exciting potential in Tata Global Beverages apart from tea, team mind you was 85% of the company even today and it has a lot of sales overseas. It recently has decided to garner greater than 10% share in Sri Lankan and Pakistan markets. It already straddles a lot of the western markets. The upside in Tata Global Beverages or Tata Tea as it was known has to be the coffee business. Today it is a commodity supplier but there is tremendous upside from branding out there. We already have two very large brands in the country and I do not think there is a room for a local brand to really shake the packing order there but I think in the export market Tata Tea is already working very aggressively and I think that can give you over a 2 to 3 year time frame the big kicker in the stock. In the near term 12 to 18 months I hope the stock should be able to give a 150 which is a fair return from the current levels.

Source: ET

Tea: India should strive to regain pre-eminence

If the tea plantation industry is to survive and sustain itself, the production margins must improve substantially.

India has lost its leading position in tea exports over the last 20 years due to failure in facing the competition from China, Sri Lanka and Kenya. Unless the margins of major companies in the industry improve, the country will be reduced to a small player in the international markets, according to the findings of a Commerce Ministry Committee on the competitiveness of the industry.

The panel findings gain a renewed significance in view of the statement made by Union Minister of State for Commerce and Industry Jyotiraditya Scindia recently that tea and spices were the two commodities that India could develop as brands in the international markets.

Since the scope for expansion of tea growing areas is limited, the committee, headed by former secretary S. N. Menon, recommends that India should raise its exportable surplus by increasing productivity, which will bring down the unit cost to some extent. India already has a handicap of being a high-cost producer.

Chiding the industry for having failed to respond to the global changes in consumer preferences in terms of product-mix (as the shift towards larger amounts of orthodox production has not been adequate), the panel admits that further cost reduction can take place through a host of measures within the control of managements but reduction of cost of certain items require the cooperation and action by unions, State and Central governments.

As the flag-bearer of Indian teas, Darjeeling should receive some special considerations. Due to its low productivity and high costs, which will continue to be endemic, some measures are needed to mitigate costs. This should include supply of steady and stable grid power and extension of transport subsidy, the panel report says. The average cost of production in the industry is Rs. 350 a kg, which can increase to Rs. 600 a kg during specific periods, the committee observes.
Problems of the South

The committee says that the acute shortage of labour, especially during the peak plucking season, is affecting the entire South and machine harvesting needs to be encouraged.

Tamil Nadu finds a special mention in the report, which says that the Government should speedily resolve the deadlock on the Gudalur Janmam Estates’ case for the tea industry’s benefit. There are also problems on application and interpretation of land and environment laws which should be settled. The State should set up an SEZ in Coimbatore with special facilities for tea, the committee says.
Social overhead costs

On the issue of social costs, the committee calls for a review of the 1951 Plantation Labour Act as it feels that many of the provisions have lost their relevance. Statutory social welfare measures as mandated in this Act add to the garden cost and reduce the competitiveness of the tea industry. It also recommends that as in Sri Lanka, the Union Government may consider the transfer of funds for programmes to be implemented in mitigating the burden of social overhead costs by extension of government schemes to the plantation sectors through a separate trust or an agency under the aegis of the Tea Board.

Indications that the government has already started thinking on these lines were evident during the recent visit of Mr. Scindia when he said that social cost was a major issue for the tea industry and the government was examining the possibility of as to how the Centre and the State could bear this cost.

According to the committee, if the tea plantation industry is to survive and sustain itself, the production margins must improve substantially.

Within the sector, margin improvement can take place by cost reduction. Productivity-linked wages on the lines of West Bengal and Tamil Nadu model will produce substantial cost reduction. There is a substantial difference between farm-gate price and the final retail price, all of which go to layers of intermediaries. A part of this difference must be made available to the producer.

Noting that the tea industry is characterised by high manpower intensity, the committee says that because of historical reasons, the industry has been burdened with social responsibilities to the workmen which should rightfully have been the territory of States. The industry has repeatedly pointed out that these provisions were initiated in early years when employment in remote areas was difficult because of inadequate facilities. However the Plantation Labour Act, 1951, which was enacted to make it incumbent on tea estate managements to provide certain facilities still exist, directly impacting the cost of tea production.

An inter-ministerial committee constituted by the UnionLabour Ministry has dealt with the subject in detail and has worked out the cost of social welfare provisions at around Rs. 5 a kg, excluding concessional rations in the North. The various components of labour welfare are medical, fuel, housing, education, drinking water, sanitation and conservancy. The committee finds that though there has been a substantial recovery in prices in 2009, continuing onto the current year, medium and long-term viability of tea production continues to remain uncertain. In a representation to the 13th Finance Commission, the Consultative Committee of Plantation Associations (CCPA) stated that the high cost production in India has been a critical factor impending India’s export competitiveness. It also sought reimbursement of the welfare expenditure. The report mentions several Central government schemes under the control of the Union Ministry of Rural Development, Panchayat and Urban Development and the Ministry of Social Justice and Welfare.

The schemes which are run by the government and which have the potential of being dovetailed into the tea sector schemes are: social security schemes, heath and hygiene schemes, employment generation and livelihood schemes like NREGs, education schemes such as the Sarva Shinksha Abhiyan.

However, although an indication of the government’s inclination to examine this issue was given by Mr. Scindia during his last visit to Kolkata, it is not easy to provide coverage and benefits from these schemes to the families of the workers living in the tea plantations. Among the issues which make the task difficult is the fact that ownership of land on which the workers stay is neither with them nor with the tea garden managements which only hold it as a lease. Sri Lanka has been able to extend government schemes through a trust through which funds are canalised. This could be examined by India too, the committee observes.

INDRANI DUTTA

From The Hindu

Govt brews global branding plans for tea industry

The Union commerce ministry has turned to four wise men in the tea industry to secure the identity of Indian tea across the world markets. Tea industry hotshots like Aditya Khaitan of McLeod Russel, Tata Tea's Sangeeta Talwar, Hindustan Unilever's Sanjiv Chatterjee and Bharat Arya of JV Gokal will be part of a core committee that will formulate a global branding strategy to market Indian teas worldwide. What's more, iconic adman Piyush Pandey, who used to be a tea taster in Kolkata many moons ago before he joined the advertising industry in 1982, will hand-hold this elite panel to ensure teas of other origins don't masquerade as Indian tea in overseas locations.

Significantly, the commerce ministry plans to create an umbrella brand for Indian tea under which all categories will be exported across world markets. While the umbrella brand concept is yet to crystallise fully, several options are being tossed. For instance, all `Made in India teas' could have a single uniform logo along the lines of famous `lion logo' that distinguish Sri Lankan teas marketed worldwide.

When contacted, a senior Tea Board official told ET: "Union minister of state for commerce Jyotiraditya Scindia had called a meeting to explore ways to establish Indian tea as a strong brand in the world market. There was a brainstorming session, which was attended by all stakeholders of the industry, following which the decision to create a four-member committee was taken."

Mr Scindia had recently indicated in Kolkata that India can emerge as a brand for commodities like tea in the world market. He had also emphasised that the tea sector needed to focus on value-added products like tea bags to be competitive overseas.

He added that there was a need to integrate the back-end and front-end of the tea industry. "The front-end comprises packeteers and marketers while producers form the back-end. There is no synergy between them," Scindia had said at a recent chamber interaction.

From that perspective, the composition of the four-member panel aims to bring powerful synergies to the table. While Aditya Khaitan is managing director of world's largest tea producing company, Sangeeta Talwar is executive director of Tata Tea. Sanjiv Chatterjee, in turn, is GM (TEC & F&B Exports) at HUL while Bharat Arya, is CEO of J V Gokal, which represents packeteers and marketers of Indian tea industry.

Incidentally, between January and September 2009, India exported 131.22 million kg of tea against 150.25 million kg in 2008. But even though the volumes are less, the unit price realisation has increased to Rs 135.42 per kg compared to Rs 111.93 per kg in 2008.

Iran to pay for Indian tea in euro now

Kolkata (IANS): Iran has decided to pay India in euros instead of US dollars for the tea it imports from this country, Tea Board of India chief Basudeb Banerjee said after returning from a three-day visit to Iran.

India exports 11-12 million kg of tea to Iran every year at an average price of Rs.107 ($2.22 or 1.64 euro) per kg. Its total 189 mn kg tea export in 2007-08 was worth Rs.18.89 billion (Rs.1,889 crore or $381 million/ 289 million euro) .

"In Tehran we met officials of Asian Clearing Union (ACU) headquartered there where it was decided that due to payment related problems, Iranian importers would start dealing in euro from Jan 15," Banerjee told IANS.

ACU has been promoted by the UN with the central banks of Iran, India, Bangladesh, Bhutan, Nepal, Pakistan and Sri Lanka as its members.

The delegation was headed by additional secretary in commerce ministry T.K. Chowdhury. Banerjee and representatives of tea producing companies like McLeod Russel and Rossell Tea and also exporters like Shah Brothers Ltd were in the delegation.

"The three-day meeting in Iran (staring from Jan 3) was very successful. We have discussed all the major issues with the deputy ministers there," Banerjee said.

The delegation discussed the registration charge of $7,000 imposed by the Iranian government in 2007 on exporters under the local Good Manufacturing Practices Act.

"The registration charge will remain but earlier there was delay in the process of trading even after paying that charge. Now they have said they will expedite the process," Banerjee said.

Indian exporters considered this charge high and unnecessary as they were already following recognised manufacturing standards like Hazard Analysis and Critical Control Point (HACCP). HACCP is used in the food industry to identify potential food safety hazards.

Earlier, consignments were not cleared from the port despite paying charges, which resulted in demurrage charges imposed on exporters by port authorities.

From IANS

Tea price surge fuels hope of turn around

Siliguri: Frantic end-of-season sales have taken tea prices to a new high in north Bengal, making this year the best since the industry went into recession about six years ago.

“It’s boom time with tea prices going up significantly,” said S.K. Saria, the chairman of Siliguri Tea Auction Centre (Stac). “Although the benchmark set by the golden period of the 90s is still far away (see chart), this year’s is a remarkable gain compared to that of last year, which itself was better than the preceding year. The industry seems to have made a U-turn and if the trend carries on for the next few years, the tea sector will be able to regain its lost glory.”

The average price during Sale 50 held on December 20 was Rs 74.98 per kg, while that of Sale 49 held on December 13 was Rs 73.24, according to auction sources.

“The average price of Sale 50 last year was Rs 62.50,” said Ravi Agarwal, a former chairman of Stac and a member of Siliguri Tea Traders Association. “That is a gain of more than Rs 12.”

According to the latest figures, the average auction price this year — up to December 20 — is Rs 67.44 per kg. The corresponding figure in 2006 was Rs 66.60 and in 2005 Rs 59.29.

“This year’s average price is the best ever since the recession set in,” said P.K. Bhattacharya, the secretary of the Dooars Branch of Indian Tea Association. “This end-of-season fillip will help keep the prices high until the middle of next year at least.”

Industry watchers said the price boom was driven by a combination of several factors.

“There was no tea in the pipeline,” Bhattacharya said. “In addition, there was a drop in the overall crop production by about 20 million kg. The shortfall in supply had an obvious effect on prices.”

The trend was also affected because several CTC manufacturers took to making orthodox teas, Agarwal said. “This year, more than 20 million kg tea was converted into the orthodox variety, which always fetches good prices. The shortfall in CTC helped boost its prices,” added Agarwal.

“Major buyers like Unilever who were silent for most part of the year, were at their active best as the end approached,” Saria said. “The competition from major buyers firmed up the prices further.”

However, all stakeholders of the industry agreed that it would be a challenge to sustain the trend.

“To take the industry forward, we have to ensure that we do not compromise on the quality of tea in our bid to sustain the boom,” Saria said.

“Often there is a tendency to compromise on quality to increase production and meet the increasing demands. If we give in to market pressure in this way, we will get sucked up into recession again,” the Stac chairman added.

Source: The Telegraph

Tea Brew hardshell meet

Tea growers in north Bengal are thinking of holding a convention to project the brew produced in the Dooars and Terai.

The India International Tea Convention (IITC) in Guwahati, which ended on Saturday, has left the stakeholders of the brew industry in north Bengal unhappy. Other than a session titled Indian Panorama, in which every variety and place of tea production was highlighted, the CTC brew produced in the Terai and Dooars was never mentioned during the event, said one of them.

“Tea from north Bengal was hardly highlighted,” said N.K. Basu, the principal adviser to the Indian Tea Planters’ Association. “We feel it necessary to project the tea produced in the Terai and Dooars to augment its export like the Assam tea. The latter was presented as a premium brand at the IITC.”

After Guwahati, it is a two-day event in Himachal Pradesh’s Kangra that has left many growers in north Bengal toying with the idea of holding a similar meet, focusing on the region’s tea.

Tying up with Tea Board of India and the Institute of Himalayan Bioscience Technology, the Kangra Valley Small Tea Producers’ Association will organize the conference titled Kangra Vision 2020 at Palampur from tomorrow.

“The basic idea is to promote the orthodox tea that we produce here for export and also for domestic consumption,” J.L. Butail, the president of the association, told The Telegraph over phone from Kangra.

Basu now plans to call up the tea board and the Consultative Committee of Plantation Associations, an apex body of planters, to take the initiative for the north Bengal convention.

“Such an event will help a lot in promoting our tea overseas,” said Anand Agarwal, the president of the North Bengal Tea Producers’ Association.

Source: The Telegraph

Indian tea to Russia

Siliguri : The first-ever official trade delegation from north Bengal is set to leave for a seven-day trip to Russia tomorrow with the hope of rekindling some of the lost business it had with the country, especially in tea.

Under the aegis of the Confederation of Indian Industry’s North Bengal zonal office, a 12-member team comprising representatives from the tea, tourism and education sectors here will be meeting government, trade and business personalities from Moscow and Ufa, the headquarters of the Republic of Bashkortostan.

“We will be holding face-to-face discussions with representatives of organizations that have shown keen interest in doing business and trade with this region of India,” said Kamal Mittal, chairman of CII’s North Bengal Zonal Council and leader of the delegation speaking from Bangkok. He will be joining the rest of the team in Delhi tomorrow.

With Prime Minister Manmohan Singh currently on a visit to Moscow, the CII tour too is expecting sufficient attention.

The delegation will meet the director and members of the Bashkortostan Chambers of Commerce, the republic’s minister of external links, trade and entrepreneurship, and the business community as well as visit tea factories and distilleries.

“We shall be setting up a joint business center in Bashkortostan in conjunction with the mayor of Ufa,” Mittal said. The latter part of the tour will be with business representatives in Moscow.

“Our main agenda there will be tea. The Russians have expressed interest in joint ventures in this sector, including takeover of a few faltering gardens (in north Bengal), where 50 per cent of the investment will be done by them,” said Prabir Seal, spokesperson of the delegation and a CII zonal council member.

“They have also shown interest in importing tea from north Bengal. Several aspects of the likely deals have already been taken up through email, like the type of tea (CTC and Darjeeling), packaging, transportation and the joint collaborations. What we are taking with us are the samples and the prices, which we will tell them across the table,” Seal, also a tea trader, said.

The other members of the team comprise Sravan Choudhury, Rajkumar Dalmia, Ravi Agarwal, K.K. Tiwari, Vikas Bansal, Pawan Poddar (all tea), Prasenjit Saha (tea and liquor), Sujit Raha, K.K. Kedia (real estate and education) and Laxmi Limbu Kaushal, head of CII North Bengal.

“The export of tea to Russia dropped in the mid 1990s, before which 50 per cent of brew that went to that country was from India. In 2006, of the 181 million kg of tea exported, only 20 per cent went to Russia. The Indian government has set a $10 billion trade turnover target with Russia to be achieved by 2010,” Seal said.

Tea tourism, flori-culture, scope for bottling Russia’s favorite drink, Vodka, and several other areas will also be explored, Kaushal said.

Source: The Telegraph

More of Organic Black tea

Kolkata : India’s organic farming efforts will see a sea change in the tea sector following the launch of the project to develop organic black tea with funding from the Amsterdam-based Common Fund for Commodities (CFC), a UN body.

According to Tea Board officials, the project is set to take off in the current year itself. Under the project, the Tea Board will receive from CFC $9,00,000 as loan repayable over seven years and another $6,00,000 as grant.

The agreement between the Union Government, which will be the guarantor to the loan, the Tea Board and CFC will be signed in this year.

Three model firms, each of 100 acres, will be set up in Assam (near Tinsukia in Upper Assam), West Bengal (Darjeeling district) and Tamil Nadu (tea growing areas in Annamalai hill range of the Western Ghat).

The technical support will be provided by Tocklai tea research station in Assam, Tea Board’s research center in Darjeeling and Upasi Tea Research Foundation in Tamil Nadu.

The thrust of the CFC-funded organic black tea project will be to standardize the organic tea growing practices through proper technical support, assess the market and determine the demand to establish its commercial viability and to have a proper certification procedure.

China interested in Indian Tea

There is potential to increase tea trade between India and China, China Tea Marketing Association (CTMA) vice-chairman Jahn Litan said here yesterday.

In an interactive session with the Confederation of Indian Industry yesterday, he said CTMA could play a vital role to boost export and import of the beverage between the two countries if there was positive response from India.

CTMA information officer Zhu Zhonghai, who visited several tea gardens in the Darjeeling hills along with its delegation, lauded the quality produced, particularly its flavour which according to him would win the hearts of the tea-loving population of china.

West Bengal Minister for Municipal Affairs and Urban Development Ashok Bhattacharya was also present at the interactive session.

Source: PTI

China interested in Indian Tea

There is potential to increase tea trade between India and China, China Tea Marketing Association (CTMA) vice-chairman Jahn Litan said here yesterday.

In an interactive session with the Confederation of Indian Industry yesterday, he said CTMA could play a vital role to boost export and import of the beverage between the two countries if there was positive response from India.

CTMA information officer Zhu Zhonghai, who visited several tea gardens in the Darjeeling hills along with its delegation, lauded the quality produced, particularly its flavour which according to him would win the hearts of the tea-loving population of china.

West Bengal Minister for Municipal Affairs and Urban Development Ashok Bhattacharya was also present at the interactive session.

Source: PTI