| The Indian Tea Association (ITA) status paper 2006, released today, indicates that stocks in the pipeline since the beginning of 2006 have started declining, which may put pressure on prices towards the end of 2006.
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| According to estimates, it appears that the express pipeline stock at the end of 2005 has been reduced to around 23 million kg.
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| The status paper shows at the end of 2006, cumulative stock in the pipeline would not only be exhausted but move into a negative zone with a deficit of 27 million kg.
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| In the first few months of 2006, the plantation industry and trade reflected lower carry over stocks from previous year combined with lower production in India and worldwide.
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| Production in the first half of 2006 declined by 10 million kg, vis-a-vis 2005, due to unfavourable weather conditions.
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| Moreover, the estimated level of consumption of tea in India for 2006 was projected at 805 million kg, thereby putting pressure on the supply side.
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| During the year, ITA had a relook at the production-consumption matrix and it was revealed that the cumulative growth of tea consumption per annum between 1997 and 2005 was 3.3 per cent and per head consumption of tea around 733 grams per annum.
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| The findings were contrary to the perception that the growth rate of tea consumption in India was below two per cent and per head consumption was around 650 per annum.
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| However, tea exports to many countries had started declining since the beginning of 2006. During January to June 2006 total tea exports was lower by 1.5 million kg.
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| Exporters were optimistic and hope that this trend could be arrested as soon as the second flush crop becomes available.
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| ITA expects the year 2007 would start on a better note but much of the Indian tea industry’s prospects would depend on the level or quality of production and competitiveness in the global market.
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| The main thrust for the industry would be boosting exports and higher orthodox production in order to enhance export availability.
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| However, the chronic problem facing the industry was the issue of high cost of production.
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| As a long-term perspective the ITA has suggested that efforts should be made to identify surplus or marginal lands within tea estates, which are not suitable for tea or where tea yields may not be economic for alternative crops with commercial potential. |
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