Indian Tea's Cup Of Woes Runneth Over In '07

KOCHI: Downturn in production and export has hit Indian tea’s prospects in the current year. As activity in the tea industry slows down during winter, the country could close 2007 with lower production and exports, industry sources said.

Most major global tea producers, except India and Sri Lanka, have shown an increase in tea production during the year. Kenya has recorded the maximum increase, which has affected Indian exports.

Industry sources attributed the lower production in India to the prolonged rains during the year. Production is down 17.53 million kg at 689.26 million kg for January-September, compared with the same period in the previous year. For the same period, Kenyan production is up 63.48 million kg.

With just three months to go, production is unlikely to touch the level of 956 million kg achieved in 2006, sources said. In fact, Indian tea production has been rising consistently since 2000 except for a bad year in 2002. All-India tea production was 847 million kg in 2000, as per Tea Board figures.

The situation is far worse on the export front. Till September, exports were down 37.16 million kg even as Kenyan exports rose 28.75 million kg. Indian exports for the nine-month period stood at 118.74 million kg. Lower exports to Iraq, coupled with the rupee’s appreciation, have been instrumental in pulling down total exports, which had touched 203 million kg in 2006.

“Indian exporters have not been sending tea to Iraq since March as the payment for the earlier consignments are still due. Iraq is now buying more from Sri Lanka and Vietnam,’’ said leading tea exporter Krishnakumar J Shah. Last year, Iraq was the largest purchaser of Indian tea at 40 million kg. This year, till June, exports to Iraq were down 20 million kg. Purchases by Pakistan have also gone down. With an improved crop situation, Kenya is supplying more tea to Pakistan. With lower production and exports, the average price of Indian tea in auctions was down Rs 1.27 per kg at Rs 65.14 per kg till September.