Fresh tea numbers are cause for cheer

The disparity of 73 million kg in the 2004 production figure and 53 million kg for 2005, alters the country8217;s production and more pertinently the consumption picture rather dramatically.

For one it clearly belies the lingering perception that domestic consumption growth rate has been slowing down. Given that 2004 saw a faster rate of stock depletion, while the production levels have gone up, it is evident that the consumption of tea has been going up.

In fact, tentative estimates show that domestic consumption has climbed from 610 million kg in 1997 to 790 million kg in 2005, reflection a growth of 3.3 per cent per annum. The per capita consumption of tea is now put at above 733 gm each year.

This in itself is reason for the tea makers to rejoice. It effectively means firmer tea prices, even exclusive of the global tea supply situation.

Working on the suspicions of under-reportage that the Indian Tea Association ITA talked of in December the Board revisited the production, export and import figures of the past few years. It was decided to not draw purely on the reported figures but also have them cross-checked with data from the Excise Departments.

The cumulative stock position in 2005 is reaching the 1999 levels. The industry reported that last year nearly 90 per cent of the stock that came into the auction centres were sold out. Given that orthodox tea is largely produced by the organised players, who are believed to report their production figures more accurately, it is estimated the much of the additional tea now being sighted is in the form of CTC that came out of the gates of the small grower-BLF combine.

This combine today contributes a significant 22 per cent of the country tea supply and is estimated to enjoy a CAGR of approximately 6-7 per cent, way above the total industry growth rate of two per cent. True, with some of the State Governments gearing to put the brakes on the expansion on tea areas, these players may have had to rethink their expansion project.

Industry estimates that this may clip their growth rate. However, consider they are working with much younger crop than the bigger players, the fall in their growth may get contained at 5 per cent CAGR.

With reports of key global players not doing so well and the crop in the Northern States not looking so promising and consumption levels at a new buoyancy, the tea industry has its eyes glued on a firm price line for a while now.