The tea industry now presents a mixed scenario. On the brighter side, the prices are increasing bringing cheer to the industry and on the other side, production and exports have nosedived.
In other words, there is not enough tea in the system to enable the producers and exporters to cash in during the current boom.
“The tea prices are increasing because of the rising demand, the demand for about additional 30 million kg (mkg) every year, while the production is not keeping pace with the demand because there has been virtually no investments in tea, either for modernisation of estates or capacity expansion, for six successive years till 2006,” according to Mr Aditya Khaitan, Chairman of Indian Tea Association (ITA).
“Unlike other industries tea bushes, like a human body, need care and nourishment for sustainable development and growth,” Mr Khaitan observed, adding, “unlike other industries, the costs in tea industry are by and large fixed as the industry is governed by so many statutory rules and regulations. Our costs thus remain more or less the same even when the going is not good.”
Between January and May this year, according to statistics released recently by ITA, the average auction prices at Rs 89.56 a kg were up Rs 20.42 over Rs 69.14 in the same period of 2008. Of this, the average auction price of South Indian tea rose Rs 23.07 a kg at Rs 79.61 (Rs 56.55), while that of the north Indian varieties increased Rs 17.05 a kg at Rs 94.65 (Rs 77.60).
However, it is interesting to note that in April and May, the rise in auction prices, particularly of the North Indian teas, was much sharper that that of South. Thus, in these two months, the average price rise for the North Indian varieties was Rs 34.98 a kg at Rs 127.94 (Rs 92.96). During the same period, average rise in the price of South was Rs 29.80 a kg at Rs 87.19 (Rs 57.39).
Source : Business Line