Guwahati: The tea industry must adopt a two-pronged approach to not just regain lost markets, but also secure footholds in newer markets, the chairperson of the Indian Tea Association said.
Speaking on the declining tea exports, Nayantara Palchoudhuri said a two-pronged approach is necessary. Traditional markets must be protected through periodic delegations, interaction with trading bodies and growing markets should be tapped through sustained promotional drives and activating interaction with trading bodies and govt agencies of these countries.
She said this recently at the 131st annual general meeting of the Assam Branch Indian Tea Association held at Jorhat.
“The pandemic and the unresolved payment issues concerning Iran, which is our largest orthodox market, have pulled down exports substantially in the last two years. India’s export in 2021 is 196 mkg,” she said.
“The conflict in Eastern Europe between Russia and Ukraine does force the industry to keep its fingers crossed as more than 45 mkg is exported to the CIS countries. Russia is a traditional and largest Indian tea market for Orthodox and CTC teas. However, this is generally a lean period of exports to Russia, and it usually picks up from August/September. The Association in a recent meeting with the Union Commerce Ministry and DGFT has submitted for provisions of financial assistance to exporters to defray additional costs,” she said.
“Forty per cent of global export market distribution is skewed towards orthodox. Thus, in a scenario where the scope to bolster CTC exports is little, India has to produce more Orthodox to increase exports and secure stability in the domestic market through correction of product mix,” she added.
To encourage Orthodox production, the orthodox incentive needs to be not only restored but also revised upwards from Rs 3 to at least Rs 20 per kg and our pleas to the Union Commerce Ministry subsists. The Association has made its submissions to the Parliamentary Standing Committee on Commerce in Kolkata and Delhi recently.
The drop in India’s production for two successive years – 2020 & 2021 has helped in correcting the demand-supply mismatch with the wiping out of the huge surplus stock. In 2021, Assam has seen a decline of 8%, which is almost 54 mkg, when compared to 2019. In the global context, the total world output estimated at around 6470 mkg in 2021 is higher by 3% and 5% in comparison to 2020 and 2019 respectively.
“With production increasing, prices are getting affected as predicted by the Food and Agriculture Organisation some time back,” she said.
In India, while on one hand, the organised sector’s production is showing a declining trend (-0.7%), the small tea grower sector production is up by nearly 200 % since 2005, and surpassed 50% of overall production. “Unfettered addition of new areas into tea should not be allowed so that both the organised sector and STG sectors coexist amidst economic viability,” she said.
On the price front, she said the tea price trajectory of the last decade reflects a prolonged phase of stagnation and pushing a large segment of producers into crisis.
“In the current fiscal, over 50% of North India CTC and Dust have sold below Rs 175 per kg at the auctions. In 2021, prices dropped to 2019 levels. At current price levels, the industry cannot be sustainable. The leading buyers must show the way for sustainable sourcing so that teas are sold above the cost of production,” she said.
“The surge in imports by as much as 48 % in 2020 and 11% in 2021 worries us. The influx of average quality teas at cheaper rates from countries with a lower cost of production upsets the demand-supply balance and causes depression in prices. Monitoring needs to be strengthened, and non FSSAI compliant teas from abroad should not be allowed at all, which we have articulated time and again,” she said.
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