India has an opportunity to further penetrate into global markets
The declining trend in Sri Lankan orthodox tea production is likely to benefit South Indian crop further, as exporters believe that there is enough scope to enter into various global markets.
Crop figures available with Kochi tea auctions said Sri Lankan orthodox tea production declined during the January-July period with a deficit of 35 million kg at 153 million kg compared to 188 million kg in the corresponding period of last year. Traders said that this is a major drop as far as the tea production in the island nation is concerned and there is likely to be a further decline in the coming months. Though the neighbouring nation has started applying fertilisers to the crop, it will take some more time for production to improve.
This difference augurs well for South Indian orthodox teas to further penetrate into global markets, they added. “By and large orthodox teas can replace only orthodox teas”, a leading tea exporter in South India told BusinessLine. There has been increased demand for orthodox teas all around and the need of the hour is to produce good quality teas that can bring good prices. The likely stoppage of North Indian tea production in the next two months with the commencement of the festival season will further push up demand for South Indian orthodox leaves.
“But are we ready to cater to the demand in the global market is the million dollar question?”, he said.
Factories not equipped
India cannot produce 35 million kg of orthodox tea in excess because of the limited production capacities in manufacturing units. Factories are not equipped to have dual manufacturing processes due to the huge financial outlay. Also, India is traditionally consuming CTC in which 80 per cent of the domestic consumption is absorbed easily by the market.
At present some large tea manufacturing companies with dual production facilities are benefiting out of the situation. But the majority of these firms are also not focussing on the conversion because of the higher prices realising for CTC dust, the exporter said.
However, sale 34 in Kochi auctions witnessed lower arrivals due to rains last week with an offered quantity of only 2,47,291 kg. With a fair demand, the sold quantity was only 73 per cent, the auctioneers Forbes, Ewart & Figgis said.
An exporter in Kochi said that Iran was the main buyer for good quality teas and the trade is expecting lower stock in the next arrivals due to the impact of last week’s rains. However, rising tea prices in India have started hitting exports mainly to smaller countries which are the traditional markets for Indian teas, he said, adding the inflationary pressure, recession fears might be reasons for the subdued demand.
Published on August 27, 2022