Indian tea fights back with production

Guwahati, October 18:

India’s beleaguered tea industry is showing signs of resurgence with a jump in production and exports as well as prices firming up in the weekly auctions.

“Production and exports figures in the first eight months of the current year compared to 2005 are recording a positive growth and, with prices in the auctions beginning to increase, the overall mood is upbeat,” said Dhiraj Kakaty, secretary of the Assam chapter of the Indian Tea Association (ITA), the country’s apex tea administration body.

Tea production in January to August this year was 587.2 million kg compared to 571.1 million kg in the same period in 2005. Similarly, exports jumped from 110.56 million kg during January to August 2005 to 114.09 million kg in the same period this year.

“The gain in production and exports apart, what is heartening is the fact that we are fetching reasonably good prices in the auctions. There is no glut in the market now unlike in previous years,” Kakaty said.

India produced a record high of 928 million kg of tea last year compared to 820 million kg in 2004. India is the world’s largest tea producer followed by China.

“We expect to produce about 930 million kg by the end of this year,” the official said. The northeastern state of Assam is considered the heart of India’s tea industry with the state accounting for about 55 percent of the country’s total annual tea production.

India’s $1.5 billion tea industry had been facing a crisis with prices dropping in the weekly auctions since 1998 and exports plummeting as well. A kilogram of good quality Assam tea sold at Rs 70 in the auctions last week.

Last year, the average price in the auctions was Rs 62 a kg. “The increase in prices is due to very good quality tea that we have produced,” an official at the Tea Auction Centre in Assam’s main city of Guwahati said. India’s domestic tea consumption that remained stagnant for over a decade had shot up about 620 million kg three years ago to 805 million kg this year.

“The healthy domestic consumption apart, the other aspect to cheer about is that the crashing prices in the auctions were beginning to firm up,” B Sharma, a planter in Assam, said.

Tea exports, however, plummeted from 190 million kg in 2004 to 180 million kg last year. The slump in prices and exports was largely attributed to cheap and inferior quality teas produced by many new tea-growing countries, thereby pushing premium quality Indian teas to facing stiffer competition in the global market.

Faced with crashing prices, a glut in the market and falling exports, the Indian government announced a whopping Rs 50 billion package to boost the sagging tea industry.