Tea prices decline 13.5% in South India

Lower production and higher exports during the period between January and May have failed to arrest the fall in prices

Tea prices in South India have declined by 13.5% to Rs 90 per kg between January and May 2014 as against Rs 104 per kg in the corresponding period last year despite lower production due to extreme weather conditions during this period.

The tea production in South India has marginally dipped by 1% to 90.6 million kgs during this period, while on all India basis, the production has declined by 8.5% to 22 million kgs due to extreme weather conditions. In 2013, tea production stood at 1.2 billion kgs, of which South India contributed 241.8 million kgs.

Further, exports during the current calendar year went up by 6.7 million kgs and world production has shown a similar trend as major producing countries have reported substantial drop in production.

Peter Mathias, President, United Planters Association of South India (UPASI), in a press statement wondered why the general economic principle of supply and demand is not working out for tea. While there has been considerable reduction in the price at the auctions, prices of packet teas sold to the consumer has not changed. He was shocked at the press statement made by a tea dealer association that the Government should relax the import norms for tea to allow import of large quantities.

"Tea industry is getting into a crisis mode once again due to lower price realisation and skyrocketing cost of production. If the same trend continues, it will be difficult for many of the estates even to pay the wages on time," Mathias said.

Tea industry supports 2.5 million workers directly and almost double the number of people indirectly. He pondered why the demand for cheaper imports is made when there is sufficient quantity of all types of teas available in the domestic market. Indian teas over a period of time, has taken the challenge of meeting the world standards in all types of teas and they are equipped today to meet any demand, he said.

The industry in collaboration with Tea Board has put in place monitoring mechanism to ensure that teas produced in the country meet the stringent quality parameters laid down under various legislations in India and abroad.

If one looks at the statistics, production has been growing at an average rate of more than 4% over the last 5 years and there is absolutely no shortage of teas in the country. Tea industry over a long period has been requesting for the Government?s intervention in reducing the gap between price to the consumer and price to the producers. While there may be genuine reasons for the gap, it is necessary that the producer gets a fair return, as it is an important agro industry supporting a large population in difficult and inaccessible terrains, Mathias said.

UPASI is of the view that the Tea Distribution & Export Control Order should be further strengthened to ensure that even in the case of imports for re-exports, only teas of high quality which meets all the stipulations of FSSAI as applicable to domestic producers are allowed.

On many occasions in the past, tenders were floated by some West Asia and North African (WANA) countries at price below domestic levels. To meet price stipulations, some of the exporters have been blending cheap and sub standard imported teas thus suppressing both local price and tarnishing the quality image of India in the consuming countries. Some countries in the past had refrained importing Indian teas on quality issues because of such instances and that being the case, how can we even think of duty reduction of Indian teas, Mathias questioned.