Ministry Steps In To Sweeten Public Taste As Tea Prices Spurt

The commerce ministry is closely monitoring the tea market to regulate and control the prices of the commodity.

The Tea Board will join the ministry in the exercise that has been initiated in the wake of a sharp spurt in the prices of tea, official sources said yesterday.

The prices of the commodity have shot up from Rs 46 per kg in 1996 to over Rs 100 per kg in recent auctions.

The sources said that prior to the recent spurt, tea prices had remained relatively constant even as the prices of other commodities have jumped over 3-4 years.

Ministry sources attributed the rising tea prices to a simple demand and supply gap. Despite a good production of 810 million kg in 1997, there has been a shortfall of about 40-50 million kg  with exports at 200 million kg and domestic consumption at 640-650 million kg.

 

Export of tea during the April-November 1997 period was at Rs 1,166 crore.

The corresponding figure for the previous year was Rs 697 crore.

This marks a rise of 42 per cent in rupee terms and 22 per cent in dollar terms this year.

The sources said that there has been global short supply in the wake of Kenya and Indonesia harvesting a bad crop and Sri Lanka facing problems with tea plantation workers. As a result, exports from India have gone up since export prices are remunerative and domestic supply is suffering.

Ministry sources said economically-priced packs of tea had been distributed in mid January through the National Co-operative Consumer Federation (NCCF) and the ministry would continue to supply tea at regulated prices to the general market.

Sources in the ministry said that several options were examined, including banning and capping exports.

However, a proposal to this effect has been rejected as it was expected to harm the export industry and affect the credibility of Indian exporters.

So much so that in the past, a substantial portion of the American tea market has been lost as Indian exporters failed to supply the commodity owing to curbs clamped at home.

The option of levying a duty on exports has also been rejected.

Importing, explained sources, is also not an option since international market prices are high and this has, in fact, led to the short supply at in the country, led by a spurt in exports.

Ministry sources expected the high price situation to continue for a few months. The ministry is, however, alert to the situation, they added.