by admin | May 25, 2021 | Business, Commodities, Commodities News, Commodity Market, Corporate, Corporate Governance, Investing, SMEs
By Bappaditya Chatterjee,
Kolkata : Targetting 300 million kg of exports by 2020, tea planters have told the government that the key to this lies in incentivising production of orthodox (full leaf) tea and boosting the Merchandise Exports from India Scheme (MEIS).
“We are mainly focusing on exports and have given proposals to incentivising this by increasing the Merchandise Exports from India Scheme (MEIS) reward rate from 5 per cent to 11 per cent,” Indian Tea Association (ITA) immediate past-Chairman Azam Monem told IANS.
The central government was keen on planters producing tea suited for export markets instead of exporting that which is lying surplus, he said.
“To do that, we have to target exportable produce like orthodox tea. We are only making 80-100 million tonnes of orthodox tea and have asked for incentivising its production,” Monem said.
After clocking the highest exports of 256.57 million kg in 2017-18, an ambitious target of 300 million kg by 2020 has been set in the short run. The trend towards a new record in exports was evident in 2017 (January-December) itself as this stood at 251.91 million kg in the year, an increase of 29.46 million kgs over 2016.
ITA Chairman Vivek Goenka told IANS: “Enhancing the current MEIS rate of 5 per cent for bulk tea will be beneficial to become cost competitive in international markets. There are various commodities which have higher rate of MEIS. The orthodox incentive is currently at Rs 3 per kg which is low compared to higher cost of producing it.”
According to the latest data, India’s tea exports during January-November 2018 were at par at 225.76 million kg against 226.04 million kg during same period of the previous year. Exports volumes are expected to be at similar level in the calendar year.
According to a study by rating agency ICRA, global tea production increased 1.8 per cent during the first 10 months of 2018, primarily driven by an increase in the Kenyan crop. This has adversely impacted the Kenyan auction realisation, which corrected by around 12 per cent during January-October 2018.
The Sri Lankan auction realisations, in spite of low production, witnessed a considerable decline of around 10 per cent during the same period, primarily because of the uncertainties arising from the impact of the impending sanctions on Iran.
“We believe incentives would be the key to surpass the level of 250 million kg and otherwise it would be difficult even retaining this. All depends on how we will be able to cope with the international markets, which are a little suppressed. I do not expect Africa to repeat the higher production of over 60-70 million that they did last year. There should be higher penetration by Indian exporters,” Monem said.
Indian exporters are hopeful of gaining shipments to the UK, Russia, China, the UAE and also Iran, a large consumer of orthodox tea.
“We need to tap new markets for orthodox. Chile and Iraq have been targeted though it is difficult to penetrate such markets in a big way as they were dominated by Sri Lanka,” Monem pointed out.
In spite of having a record export in 2017 and shipments being at a similar level during the 11 months of 2018 as against the previous year, “tea prices at the farm gate level remained stagnant”, Bidyananda Barkakoty, Advisor to the North Eastern Tea Association, said, adding that either production needs to be brought down or domestic consumption increased and exports pushed up.
“Cutting down production globally is practically not possible. Achieving 300 million kgs of exports become imperative to have any positive impact at farm gate level price,” Barkakoty told IANS.
(Bappaditya Chaterjee can be contacted at bappaditya.c@ians.in)
—IANS
by admin | May 25, 2021 | Business, Corporate, Corporate Buzz, Economy, Large Enterprise, Markets, News
By Bappaditya Chatterjee,
Kolkata : Amid fears of losing export markets to other nations due to the ongoing unrest in the northern West Bengal hills, Darjeeling’s tea planters are hoping that the Geographical Indication (GI) tag will enable them to regain their market share in the future.
All plucking and manufacturing operations in Darjeeling’s 87 gardens have been suspended since June 9 due to the crisis in the region with an indefinite shutdown continuing for over two months.
As a result, there is no availability of second flush premium quality tea in the export market, which is a “setback” to the industry and also to overseas buyers.
Darjeeling has been on the boil since June 8 after the principal hill party, the Gorkha Janmukti Morcha (GJM), renewed the movement for a separate Gorkhaland state. The GJM began the indefinite shutdown from June 12.
“Due to non-availability of Darjeeling tea, the buyers would not be able to get it. If they are unable to get it, there is a possibility that players from other countries — Nepal, Sri Lanka, Kenya — will be able to make a breakthrough into the market,” Aditya Khaitan, Vice Chairman and Managing Director of McLeod Russel India, the world’s largest bulk tea producer, told IANS.
Citing a 1984 situation when there was an export ban on CTC (crush tear curl) tea — the most popular and largely produced variety in the Indian domestic market — he said: “I heard that due to the export ban, lot of English market players started buying Kenyan tea. Till now, it is difficult for us (the industry) to get back the market share that the industry had in 1984. The only concern is that if the players change the blend and get tea from some other origin, Darjeeling may have difficulties in future. It is an apprehension.”
Echoing Khaitan, Goodricke Group Ltd’s Managing Director A.N. Singh recently said the morning cuppa could not go empty, and as such, tea from other origins, which are similar to Darjeeling, would “make their way through”.
“Once the original tea is replaced by the blend, it (Darjeeling tea) would lose the market favour and this is our biggest fear,” he said.
It seemed obvious that the current year’s exports would be hit as the production was only 2.07 million kgs in the January to June period, against 8.13 million kgs during the entire 2016.
However, Darjeeling’s tea planters are hoping that the GI tag to the varieties of muscatel flavour tea (a unique taste found in some variants of Darjeeling tea) would help the industry regain its market share in future, particularly once the supply normalises.
“People will look for alternatives when Darjeeling tea is not available. This is a short-term phenomenon. Due to the unique nature of Darjeeling tea, no one will be able to replace it completely and a GI tag should help in keeping its brand equity intact in the markets,” Ashok Lohia, former Chairman of the Darjeeling Tea Association (DTA), told IANS.
Similarly, the present DTA Chairman, Binod Mohan, said: “Darjeeling tea is protected under the GI Act and I doubt if any other origin tea can replace it. But there would be a shortage in the market as the quantity of Darjeeling tea now available would be sold out in some point of time.”
Meanwhile, faced with an “unusual situation” arising out of the indefinite shutdown in the hills, Darjeeling’s tea planters have sought “financial support” from the central government. “They (Tea Board) wanted a specific proposal and that is being prepared,” Mohan told IANS.
He said industry had earlier faced hardships, but it never experienced such a prolonged shutdown in the second flush production period.
The second flush production is considered the premium variety that contributes about 20 per cent of the industry’s annual production and accounts for approximately 40 per cent of its annual revenue. The estimated loss to the industry has mounted to Rs 350 crore, Mohan added.
(Bappaditya Chatterjee can be contacted at bappaditya.c@ians.in)
—IANS
