J Thomas predicts better times for tea

J Thomas & Company (JTC), the largest tea auction house in the country, has forecast a buoyant year for the tea industry. In its annual review for 2003, JTC was optimistic about the prospects of the industry in 2004.

Negligible carry forward of old season stocks at the auctions centres, together with the expected increase in domestic consumption following the parliamentary elections and the possibility of improving exports to countries such as Pakistan, Iran and Iraq, were positive factors.

The Indian tea market in 2004 certainly has the potential to be more buoyant than that of 2003, JTC concluded.

However, the report pointed out a strong internal market and healthy price levels depended on the industry's success in achieving an export target of at least 200 million kg. a year.

To achieve the export target, industry would have to produce more orthodox teas, particularly from lower growths. The expected premium over comparable CTC teas was likely to be greater.

Recent developments in Iran had proved this. J Thomas however cautioned the industry that prospects could be translated into returns only if growers upgraded quality and developed a common supply source to attract all available demand and buyers.

"Substantial premiums have been forthcoming in auctions for top quality teas both in north and south India in the last few years following good competition. Producers would be well advised to take advantage of this and focus on upgrading quality in the new year to improve returns" said the report.

The report said the revamped Tea Marketing Control Order (TMCO) helped producers by reducing time to sale, with closing dates for all auctions from April to December fixed at 19 days prior to sale.

As a result, the auction system in north India handled 359.8 million kg in 2003 compared to 311 million kg in 2002.

The outcome was improved cash flows for producers, as also fresh offerings for buyers. The increased offerings led to greater buyer participation.