Never had it so good!

In the first half of 2008, exporters earned Rs 116 crore more than in the same period of 2007.  This occurred because the volume shipped rose to 87 million kg from 77 million kg and prices fetched increased to an average of Rs 101 from Rs 99 a kg.   Consequently, overall earnings increased to Rs 883 crore from Rs 767 crore.

The principal reason is the increased demand for Indian teas arising from shortage of Kenyan teas in global market.    In the first half of 2008, global production has fallen by 9.8 million kg.   The highest loss occurred in Kenya where the output fell by 40 million kg to dip to 181.6 million kg.   Because of short supplies, prices rule high at Kenya's Mombassa auctions. Pakistan, which imports the bulk of its crush-tear-curl (CTC) tea requirements from Kenya, is forced to scout for teas from other suppliers.  But, tea is in short supply in other African countries as well.   Uganda has lost 4.7 million kg, Zimbabwe 3.3 million kg, Tanzania 2.2 million kg and Malawi 1.6 million kg.

So, Pakistan is required to buy in Asia where production has increased.   Sri Lanka has posted the world's highest increase of 30 million kg.   Still, Pakistan cannot purchase its bulk requirements from Sri Lanka because the island supplies orthodox, not CTC teas.   Production has increased by just a million kg in Bangladesh, but has fallen by 5 million kg in Indonesia.  

Hence, Pakistan has to import volumes of CTC teas from India where production has increased by 11 million kg to reach 345.7 million kg.   Of this, South India recorded an increase of 10.3 million kg to total 119.7 million kg.  North Indian production rose marginally by 0.7 million kg to total 226 million kg.

Also, compared to the price prevailing at Mombassa auctions, Pakistan saves Rs 50 a kg when it buys in India.   Till July, Pakistan has been the mainstay of the CTC leaf market at Coonoor auctions.  Following the adverse publicity to adulterated teas in a Nilgiri factory, allegedly meant for export to Pakistan and the on-set of Ramzan fast, Pakistan refrained from buying Indian teas in August.    But, with pipeline stocks dwindling to cater to post-Ramzan requirements and confidence gaining on quality of teas catalogued for auctions, Pakistan resumed purchases in mid-September. 

Kenya's output this year is predicted to be 33 million kg lower than last year.   Also, Kenya Tea Board is promoting domestic consumption.  In the first half, Kenya's home intake has risen by 2 per cent over 2007.  So, the country's supplies for global trade will be tight till December.   But Kenya is dependent on export to sell over 90 per cent of its production.   To retain its importers, it is also directly purchasing teas including from India.   Collectively, the export demand is predicted to be strong till the year ends.

In the Indian auctions, prices had risen by Rs 11 a kg to average Rs 76.  The reality was that prices rose by 19.21 per cent even as the production increased by 3.3 per cent over 2007.  Small-sector also benefited significantly.  In Coonoor auctions where bulk of the teas from small-scale private factories, popularly called bought-leaf factories, are sold, earnings have risen by as much as Rs 97 crore in eight months of 2008 over 2007.  This happened because 3.43 crore kg were sold against 2.34 crore kg at an average price of Rs 59 a kg against Rs 45 last year.  Consequently, the overall earnings rose to Rs 203 crore from Rs 106 crore, marking an increase of as much as 91 per cent.

Arising from this, returns to more than 60,000 small growers in Nilgiris have increased significantly.   These growers live by supplying green leaf to factories. In the past ten years, they have been getting a meagre price of Rs 2 to 7 a kg for their green leaf. They had staged several agitations following which, Centre and Tamil Nadu governments gave subsidies.   They had been demanding a floor price of Rs 10 to 15 a kg, but Tea Board had rejected it.   Now, with high black tea prices, premium quality green leaf prices rule Rs 15 to 18 and good grade leaf Rs 10 to 14.