The Indian Tea Association status paper for 2003 has painted a grim picture of the industry as it grapples with a bumper crop in a year plagued by a sharp drop in exports.
According to ITA, the year would see production growth of 38 million kg at 864 million kg and a decline in exports by 12 million kg to 186 million kg. This would put pressure on prices.
During January-June this year, production was up 30 million kg while exports were down 22.1 million kg. Exports earnings were also lower by Rs 145.16 crore (Rs 1.45 billion).
Exports declined on account of loss of the Iraq market of 13.89 million kg till May. Exports to Russia, the largest market for Indian tea industry, were also down by 3.81 million kg.
Moreover, the rate of growth in domestic consumption was also lower at 1.8 per cent from the earlier projected 3 per cent.
ITA also cautioned that according to market information, a large amount of CTC teas had been carried forward to 2003.
To counter the situation, ITA recommended that the industry must make all efforts to increase exports, particularly of orthodox tea.
"India must make at least 20 million kg more orthodox tea" said the report.
In 2002, the total orthodox production was at 94 million kg, which was marginally lower than the previous year's 96 million. The fall happened despite ITA's continued emphasis towards increasing orthodox output.
The reduced level of orthodox production and inconsistency in production pattern of orthodox have resulted in orthodox markets being lost to Sri Lanka, which was perceived to be a more dependable orthodox supplier.
ITA has warned its members about the changing consumer preference and has said that the driving factor would be out-of-home consumption.
The back-end operations of the industry would have to adapt to the fast changing loose tea market and integrate itself with the new customised options that were beginning to emerge. The industry has to move from the concept of selling tea to marketing tea, ITA indicated.
ITA cautioned in its report that there were important lessons on the pesticide residue front and India's response by way of conformity would have to be guided by two key aspects -- close interaction with government and regulatory bodies in importing countries, and constant tracking of standard teas through own research laboratories and scientific institutions.
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