Home market kindles tea hopes

The tea industry, for which 2003 was one of the worst years ever, is hoping to turn around in 2004.

C K Dhanuka, chairman Indian Tea Association said, around 80 per cent of the gardens will revert to black in 2004. Though prices started moving up since November, this year, it was unlikely that this would be reflected in the tea companies' balance-sheet for 2003-04.

The average price for north Indian CTC in November was Rs 55.19 per kg as compared to Rs 63.42 per kg in the previous year. Orthodox prices were at Rs 66.30 per kg as against Rs 71.41 per kg.

But, the resurgence in Darjeeling tea prices was unparalleled. Darjeeling prices in November was Rs 130.96 per kg as compared to Rs 98.96 per kg.

But, this was just the beginning. The industry believed that 2004 would be the turnaround year for the industry. Kiran Desai, chairman of Calcutta Tea Traders' Association (CTTA), said one reason for the surge in Darjeeling prices was that since the quantity of Darjeeling tea was smaller local buyers were picking up the tea in advance.

There was widespread anticipation that by January there would no tea and the new season in April-May would start on a clean slate.

The supply constraint was despite a bumper crop, this year. However, Desai said that while figures might have showed an excess of 30 million kg, in reality it could be just about 10 million kg.

The new Tea Marketing Control Order (TMCO) stipulations made it mandatory for reporting bought leaf output, as well. So, more crop was reported, this year.

Deepak Khaitan, executive vice chairman and managing director Eveready Industries India, which produced 40 million kg last year, believed domestic consumption would pick up.

He said, since exports were lower and there was more production, domestic consumption must have picked up, as there were no stocks.

Khaitan also said that next year would be even better. The rationale: exports was bound to move up. Iraq exports, which were almost negligible, would move up.

Also, Pakistan and Iran were expected to do better. Again, if exports moved up, production was normal and domestic consumption remained at the current level, then there would be a short supply of tea, which would send prices northwards.

However, for the industry to come out of the woods proper monitoring of tea would have to be done from July onwards. Most of the tea would be produced during those months and if the supply was more than the demand then prices would again come under pressure.