Tea industry unhappy over lopsided exemptions

GUWAHATI, April 18 – Though Chief Minister Tarun Gogoi, in his budget, gave certain benefits to the tea industry, the associations representing the industry are disappointed with the budget and they feel that the budget would benefit only a handful of bog gardens. The industry also felt that the Chief Minister, despite promises made earlier, failed to provide a level playing field to the tea gardens of Assam by extending the concessions given by other tea producing states of the country.

The Chief Minister announced the Government’s decision to extend the exemption of Rs 5 kg of agriculture income tax to tea exported through the Inland Container Depot, Amingaon for another year , but tea industry sources said that only a handful of gardens of the state export directly through the ICD. Sources said that at present, only around 30 million kilograms of tea is exported through ICD directly every year against the average annual production of around 450 million kilograms. That is why, the concession given by the Chief Minister would only benefit a handful of big gardens, sources added.

The exemption on entry tax on import of tea will also not be beneficial for majority of the gardens. Sources said that only a handful of major tea companies import tea from other parts of the country for blending, while, in most cases, Assam tea is taken out to other parts of the country for blending.

Before the budget, the associations representing the tea industry submitted memorandum to the Government with the request to provide a level playing field by providing the concessions given by the other tea producing states of the country, but none of the demands were fulfilled, which came as a major disappointment for the industry. Sources said that Assam is the only tea producing state to impose cess on green leaf. Among the tea producing states of the country, apart from Assam, only West Bengal had imposed cess on green leaf but because of the present health of the industry, the Government of West Bengal gave a moratorium of five years to the gardens , which has been extended by another year in this year’s budget. But instead of reducing the rates of cess as demanded by the gardens, the Assam Government decided to increase the rate of cess from 32 paisa per kilogram in the Brahmaputra valley to 40 paisa and from 29 paisa per kilogram in the Barak valley to 35 paisa.

The decision of the state government to increase the land revenue rates would also have a major impact on the gardens coming out of the slump. Sources said that the land revenue rates in Assam are the highest in the country and the decision of the Government to increase the rates with retrospective effect of five years would put serious burden on the gardens.

Meanwhile, talking to this correspondent, secretary of the Tea Association of India (TAI), Guwahati, D Deka said that the budget was disappointing for the tea industry. He said that despite repeated requests, the State Government did not provide a level playing field to the tea gardens of Assam. He said that the decision to increase the land revenue with retrospective effect would have serious consequences.

Source: The Assam Tribune

Post-Avurudu tea auctions to see low volume

Volumes for this week tea auction to be held on 20 and 21 April are likely to be low due to the holiday season and the constant showers, sources claim.

Director of Forbes and Walker Tea Brokers (Pvt) Ltd. Dilan Polonwita yesterday stated that the upcoming sales would be very moderate, with approximately 5.7 to 5.9 million kilos of tea produced.

The last tea auction that was held on 5-6 April showed only 6.1 million kg of tea, one million less in volume than the previous tea auction. He stated that proper sales could only be reaped by mid May.

"With the rainy season in tow from end March, plucking was delayed by almost five to six days. This would be a cause of low level of production," Polonwita said. "However, from the month of May, productivity will be on the rise, quantities will grow and the end result of the month would show stability in the market."

Noting that Sri Lanka was now at a crucial juncture, Polonwita stated that when assessing data of the first quarter in tea production worldwide, year-on-year growth had increased, with countries such as India, Kenya and Sri Lanka catching up to close most deficits by end May 2010.

"Right now the market is substantially strong. Tea at the lower end is currently experiencing a fairly attractive process. However, by mid or end May, the prices will begin to differ between the lower end and better quality tea and the parity between the two will widen. From May onwards we are expecting the better quality tea to command a premium."

Up until end February, crop figures indicate a 21.2 per cent increase in tea production in comparison to the figures received this year and in 2009. Year-on-year gain was 51.9 million kilos in February 2010 whereas only 30.7 million kilos were produced in the same period the year before.

Sri Lanka experienced a 28.9 million kilo deficit in 2009 December when compared to December 2008. However, Sri Lanka will be able to surpass this figure by end 2010, Polonwita said.

"Figures indicate that up until now Sri Lanka has experienced a healthy crop figure. This would help the market realise its goals this year and would undoubtedly bring in more production in volumes by end this year."

He stated that worldwide deficit in tea production was some 50 to 60 million kilos in 2009 with major tea producer countries facing a slight drop in year-on-year production. However, a larger market is expected in 2010 as a healthy demand was encountered at the beginning of the year.

Source: Daily Mirror, Sri Lanka