Coonoor, Tamil Nadu: Indian tea growers are savouring a 30% jump in the prices of their produce for the first time in several years, thanks to rising exports and a production shortfall in Kenya, the world’s largest exporter, industry representatives said.
“Things are now looking rosy at the moment as exports are good and consumption in the domestic market is also rising,” said Basudev Banerjee, chairman, Tea Board.
India’s tea exports in the first seven months of 2008 rose 19% to 105.6 million kg.
While most of the north Indian tea is consumed at home, nearly 40% of the tea grown in south India is normally exported.
In January-July, north India produced 335.7 million kg and exported 53.6 million kg, while in south India output was 141 million kg, of which 52 million kg was shipped overseas.
“It’s definitely a better situation for us. Now we can think of improving our tea estates,” said T. Rangaiah, president, Nilgiri Small Tea Growers’ Association.
In India, the world’s second largest tea producer after China, area under tea is estimated at about 521,500ha. About 130,000 growers and 1.26 million workers are associated with the industry in the country. Tea prices moved up to Rs85 per kg at the end of July from Rs65 in January, according to the Tea Board. Prices in the last seven years hovered around Rs60 per kg.
A tea grower cannot turn to crop rotation when prices are weak nor he can increase the output in a short time to take advantage of higher ruling prices, said N. Dharmaraj, vice-president,Harrisons Malayalam Ltd, south India’s largest tea planter.
Tea is a perennial crop. Newly planted tea bushes require at least four-five years to start yielding green leaves and the tea bush has a life of more than 100 years.
Despite a spike in prices, margins are under pressure, thanks to a steady rise in costs.
The price rise is not in proportion to the rise in production costs, said G. Herbert of Kolukkumalai Tea Estate in Tamil Nadu. “In the last five-six years, wages have increased significantly. Other input costs like fertilizer, transportation and raw material costs have also jumped sharply,” he said.
Labour cost in the last five years has moved up to Rs103 from Rs60 earlier, while prices of packing sacks doubled to Rs30. Fuel price hike has also been a concern, growers said.
“Prices may decrease after two-three years but rising costs are not going to come down,” said D.P. Maheswari, chief executive of Jaishree Tea.