The new regulations regarding credit facilities to overseas buyers notified to commercial banks by the Central Bank has been fully endorsed by the Tea Exporters Association.

According to the Association, Sri Lanka will not lose its markets if long-term credit facilities are not made available to overseas buyers. "The investigations carried out by the Association have confirmed that such a situation will not occur," Chairman of the Association Ajith Goonetilleke said in a letter to the Central Bank Deputy Governor, Manik Nagahawatte.

The Association represents a membership controlling approximately 90 percent of the country's tea exporters. "The majority of exporters are satisfied with the Central Bank's decision to limit the credit facility for overseas buyers to 90 days through its circular dated January 22, 2001.

"This would apply in the case of extended terms of payment to countries such as Russia and other countries in the CIS region and Middle East where conditions in the past have led non-recovery or delayed payments," the Association said. Daily News 28.03.2001

INDIA’S TEA exports during the first ten months of current financial year increased by 5.17 million kgs, tea board officials today said.

Total exports between April, 2000 and January, 2001 increased to 168.88 m kgs from 163.71 m kgs during the corresponding period of previous fiscal, officials said.

Tea exports in January this year was, however, down to 13.30 m kgs from 13.53 m kgs in the same month of previous year, they added. The buoyant export figures have reportedly prompted Indian tea manufacturers to set a higher export target for 2001. (28/03/2001) Business Standard

Sri Lanka continued to make strong progress in every area of the tea industry in 2000, setting records in production, exports and price.

The country, the world’s largest exporter of tea, reaped the reward of concentrating on manufacturing orthodox teas after some big importers bought extra large quantities last year.

The Tea Market Annual Report 2000 from J Thomas, the world’s largest tea broker, says Sri Lanka achieved record growth in production, helped by strong exports, and fetched on average 17.4 per cent higher prices in local currency terms at the Colombo auction.

However, the country’s tea export earnings in dollar terms “were only moderate” because of the devaluation of the Sri Lankan rupee.

The 22m kg rise in Sri Lankan tea production to 305.8m kg last year was as much a result of favourable weather as improving agricultural practices.

Karan Paul, managing director of AFT Industries, one of India’s largest tea producers, says: “The country has made remarkable progress in making orthodox teas and also in adding value to the beverage.

The export success is under-pinned by Sri Lanka producing the whole range of orthodox teas to suit the needs of different markets. Some of its teas will stand in comparison with our whole leaf Darjeeling.”

The report says Sri Lanka’s exports to the Commonwealth of Independent States was up last year at the expense of Indian teas.

As the Sri Lankan industry prospered last year, the weight of CTC (crush, tear and curl) tea production in India led to a 15.2 per cent fall in the average auction price for all teas to Rs 61.71 ($1.33) a kg.

The report says the price fall was taken almost entirely by CTC teas at the auction average of Rs73.46 a kg for orthodox, the fall was only Rs 1.60 a kg.

There was an 8.7m kg rise in Indian orthodox production last year to 87.8m kg but this still constituted only 10.7 per cent of the total Indian crop of 823.421m kg. CTC teas made up the balance of 735.62m kg.

The report observes that “traditionally, Indian orthodox production was in the region of 13 per cent of the crop” and any tinkering with it will upset CTC prices. A good sign, however, is the Indian industry’s recent effort to lift the production of orthodox teas.

The report says the 6.1m kg rise in Indian export to 197.8m kg was entirely on account of higher dispatches of orthodox teas to the CIS and the West Asia.

“Indian exports would have been still higher but for the reduced CTC shipments to the CIS,” it says.

(28/03/2001) Business Standard

With nearly 25,000 tea estates and contributing to 31 per cent of total tea production, India continues to maintain its leadership in the world market for the last 150 years. N.K. Das, Chairman Tea Board, in an interview with Paromita Sen Gupta talks about the export potential of tea, the present scenario and the future.

What is the present market scenario for tea ?
The tea sector in India passed through a phase of severe depression in prices since 1999. Prices are, however, ruling higher in the last two months, compared to the last year and the market scenario for the next two months would emerge as new teas start arriving in the North Indian auctions after the winter dormancy. On a long term view and on a global level, international prices have largely remained stable over the previous five years. There has been an emergence of new players like Indonesia, China and Vietnam, in addition to Sri Lanka and Kenya in the black tea segment. For India, the rapid growth of the small growers’ sector (which now accounts for about 20% of the total production) is a recent phenomenon. Impending imports due to removal of Quantitative Restrictions on tea imports has also to be taken into account; however, the raising of import duty to a basic duty rate of 70% in the recent Budget will reduce the possible impact.

What is the export potential of tea ?
India as the world’s leading producer of tea has the advantage of offering the widest variety. This includes both Orthodox and CTC from different regions of the country. The special characteristics of Darjeeling, Assam and Nilgiris are internationally acknowledged. India is also the leading producer of organic tea, he export of tea from India is an important segment of the total demand for tea. In the year 2000, export of tea registered an increase of 6 Million Kgs over the same period of the previous year while the total foreign exchange earnings is approximately Rs.1742 Crores, the role of exports is important in sustaining the realization of reasonable prices and hence crucial to the health of the sector as a whole, which provides direct employment to over 1 Million people. There is potential in obtaining higher price realization from the developed markets by moving up the value chain by exporting value added items. The emerging markets must also be tapped.

According to the market, good times are ahead for tea. What is your view ?
The tea industry, with it’s recent experience of poor price realization, has realized the importance of quality of the basic product and the need for value addition. They are also gearing themselves to meet with the competition and to raise productivity and efficiency. While it is too early to make and comment on the emerging scenario, the industry has the strength to raise itself to it’s full potential.

Is the Tea Board encouraging tea cultivation in non-traditional areas where there is potential for tea cultivation ?
The total area under tea cultivation is 4,37,851 Hectares. There are two Schemes of the Tea Board for encouraging the extension of tea cultivation in non-traditional areas, one specifically directed at the hill States of the North East.
Tea has been successfully grown in states like Orissa, Bihar and Uttaranchal. For expansion in new areas the need is to plant high quality and high yielding clonal material and to provide a proper extension support. Unbridled growth of small plantations and “Bought Leaf” factories manufacturing common varieties of tea would not be economically viable in the long term. The higher cost of plantation in these areas and the overall levels of domestic and export demand and domestic production and import availability has to be kept in mind before we encourage new plantations in non-traditional areas.

Any new plans to develop the tea industry ?
The Tea Board will henceforth specifically focus on quality improvement and market promotion (both generic and uninational) to boost tea trade both within the country and in the major export destinations. Assistance to the industry to obtain International Quality Certification such as ISO and HACCP would be offered. The Small Growers’ sector will be specially targeted for field level and factory level quality enhancements. The system of auctions will have to be strengthened and technologically improved by moving to appropriate electronic formats modifying the existing systems.

Any other point that you would like to add….
The long term objective of ensuring sustainable global competitiveness for Indian teas would require positioning of India as a source of value-added teas. This would entail setting up of modern tea blending, processing and packing facilities and producing internationally approved quality and price-competitive teas. This would be a pre-requisite, not only for the export market, but also to consolidate India’s share in the domestic market. This objective can be achieved only through complete synergy among the major stakeholders in the trade industry and plantations. The Government, both at the Centre and at the States, as well as the Tea Board will have to play a coordinating, facilitating and catalytic role in this process.

(28/03/2001)