KOCHI: The tea industry is looking at the second half of the year for a revival of fortunes as both the production and export continue to be on the downswing for the first six months.
The production has been hampered by adverse weather conditions. Though the June crop is up by 12 million kg, the overall production for six months ended June has shown a decline by the same margin. The production in the first half of the year stood at 334 million kg.
The slump has been more severe in South India. According to R Sanjith, head of commodities of United Planters' Association of Southern India (Upasi), excessive rain and low sunshine have damaged the crops. `` We expect the South Indian tea production to be down by 2.5 million down in July,'' he said.
The global tea production is also facing a shortfall of 78 to 80 million kg, which has pushed up the prices. By the end of the year, the shortage is expected to touch 100 million kg. Even if the tea crop shows improvement from August, it is difficult to make up for initial crop deficiency, it is pointed out.
The situation is not rosy on the export front either. The Indian tea export which touched 196 million kg in 2008, is unlikely to reach that figure given the current situation, according to the exporters. The exports for the six month period ended June 30 stood at 74.5 million kg, down by over 16 million kg from the same period of the previous year.
Pakistan and Egypt who had shown interest in Indian tea initially have gone slow on purchase. Both are buyers of CTC teas. Iraq, which was not active last year, is buying more Orthodox tea from India. Russia is another Orthodox tea buyer.
One factor that has gone against Indian tea is the rise in prices, according to leading exporter Krishnakumar J Shah. The auctions prices are at least Rs 20 per kg higher than last year partly due to low production. For the period till the end of June, the average auction price as per the Tea Board figures is Rs 95 per kg as compared with Rs 74 per kg for the same period in the previous year.
Source : The Economic Times