Study Reveals Slump In Tea Auctions Realisation
He has shown this by comparing a 15-point rise in the tea price index against a 70-point rise in the wholesale price index, both of which take 1990 as the base year.
Dhanuka comments that tea corporates are finding it increasingly difficult to meet escalating production costs.
"The auction price realisation can be at par with inflation only if it reaches Rs 74 per kg, whereas, currently, the figure is languishing between Rs 50 and Rs 55 per kg," Dhanuka said.
Only a 50 per cent increase would take into account the accumulated cost-push effects of the past six years during which the tea market has remained depressed.
The study shows that the average price per kg of tea has increased between 1990 and 1996 from Rs 43.28 to Rs 50 (it had even declined to Rs 38.88 in 1992).
The tea price index, as a result, rose a mere 15.5 points to 115.5 in 1996 (up to August).
In contrast, the rise in inflation has been extremely steep. The rise has been 70.8 points to 170.8 during the same period. The extent of rise in the wholesale price index therefore was more than four times that in the tea price index.
Other commodity prices are revised according to a more realistic yardsticks, Dhanuka said.
He pointed out that continuous rise in inflation is immediately reflected in the prices of all other commodities, whereas it impacts the tea market after a lag.
"The average auction price realisations should be brought to a level where the producers are able to meet the escalating production costs and generate sufficient finances to be able to
continue with various development programmes," Dhanuka said.
Though the average price of tea is up till date, the south Indian produce continues to suffer due to lower price realisations.
Even the average price realisation for north Indian tea has declined lately, compared
with June -July 1995, the study said.
The current trend of falling prices of both north and south Indian varieties was particularly evident from August.
The auction prices of July showed that north Indian tea was Rs 4 ahead compared with last year's levels, while south Indian tea was higher by Rs 2 during the same month.