Sri Lanka tea exports for the first two months of the year recorded a significant increase of 32 percent to Rs. 9.8 billion compared with Rs. 7.5 billion over the corresponding period last year.

The quantity shipped increased by 8 percent to 44.9 million kg from 41.7 million in 2000.

"The earnings are notable considering the quantity," tea brokers said.

The CIS countries maintained their position as the prime destination for Sri Lanka tea.

The second highest market UAE purchased a large quantity of 7.9 million kg, an increase of 54 percent over the corresponding period last year.

Daily News 30.03.2001

GUWAHATI, India, March 30 (AFP) - India's beleaguered tea industry is showing signs of recovery with increasing exports and auction prices proving a restorative brew for planters.

Tea exports showed a slight increase of around three percent in the first nine months of the year to March, totaling 169,000 tonnes, while good quality teas are fetching up to 108 rupees (2.3 US dollars) a kilogram at weekly auctions.

A plunge in tea prices last year, caused by cheaper foreign alternatives and a seasonal decline in domestic quality, had left tea planters here fearing for their economic survival.

In the weekly auctions over the past few months, the all-India average price for a kilogram of top quality Assam tea had dropped to 74.8 rupees as against 93.77 rupees during the same period in 1999.

Assam accounts for 55 percent of India's annual tea production of 806,000 tonnes.

"The situation has improved to an extent which is indeed encouraging as the mood in the industry was really depressed when prices dipped so low," said Narayan Sharma, a planter in Assam.

India's current tea prices have stabilized following a series of remedial measures taken by the Consultative Committee of Plantation Association (CCPA), the apex body representing 2,000 tea gardens in Assam, West Bengal, and Tripura.

The CCPA had asked growers to shut down production from December 12 in view of the crash in tea prices, heavy withdrawals from tea auctions, and huge retention of poorer varieties of teas in the domestic market.

"We believe the initiatives by the CCPA are having a positive impact on the industry," Robin Bartakhur, secretary general of the Assam Branch of Indian Tea Association (ABITA) told AFP.

Buyers from former Soviet states were quite active, while the Middle East countries were selective at the weekly auctions across India.

Nevertheless, there are still problems that need to be fixed if the industry is to secure its future.

Leading planters and experts have identified a need for the industry to improve its research and development, besides upgrading factory machinery to improve the quality of the tea.

"There is an immediate need to adopt a more scientific approach in producing quality tea," said Abani Borgohain, chairman of the Tea Research Association (TRA).

"If the decline in quality continues for some time, it could have a disastrous impact on the industry, and we will be unable to retain our status in the world market."

The TRA, located at Jorhat in eastern Assam, is one of Asia's biggest tea research stations.

The ABITA, representing more than 250 of Assam's 800 gardens, says there should be a government agency to control and monitor tea quality.

"There are hundreds of small tea growers who are producing tea without bothering much about quality and so we need some nodal agency for quality control," said P.K. Duarah, zonal secretary of ABITA.

AFP(30/03/2001)

Mumbai, March 30 (Bloomberg) -- Many of India's 700 million villagers who depend on farming for a living won't be looking forward to the weekend. That's when the government scraps import quotas on agriculture and other products, opening the door to foreign products and competition.

India is set to remove import restrictions on as many as 700 items from Sunday as part of its World Trade Organization commitments. They include quotas on tea and rubber, as well as used cars, bombs and grenades to seeds, insecticides, and roses.

While India will replace quotas with duties of as much as 70 percent on some products, such as tea, farmers say imports will threaten the livelihood of as many as 75,000 tea growers and 900,000 rubber planters. Farmers said they are still recovering from last year, when tea and rubber prices dropped below cost the of production, pushing many small growers into bankruptcy.

``We are looking at a very bleak future for the industry,'' said David King, manager of Arnakal Tea Estate in Kerala. ``Despite the 70 percent import duty, there will still be teas coming in at prices cheaper than ours. We are just wondering what will happen.''

Indonesia and Vietnam can produce teas at low cost and sell them for about 30 rupees a kilogram in India, compared with more than 60 rupees a kilo for local teas, growers said. Even a 100 percent duty on those tea imports won't give India growers an advantage, said Kalyan Sundaram, secretary of the Calcutta Tea Traders Association.

India is also committed to reduce average import tariffs to 20 percent from 35 percent within three years.

India doubled import duties on tea to 70 percent last month, and even that may not be enough to keep imports at bay, after the country signed an agreement with Sri Lanka last year, to allow 15 million kilos at 7.5 percent duty.

Tea prices fell as much as 40 percent last year in local markets, due to declining demand. The main concern now is that tea prices will not get a chance to rise, as imports from Sri Lanka, the world's biggest exporter will act as a dampener.

``Last year, there was very little import of tea, as domestic prices were so low, but when prices start rising, people will start buying Sri Lankan teas, and depress them.'' said Buddha Acharya, chief executive at Kolkata-based Paramount Tea Marketing Ltd.

By Mrinalini Datta

Bloomberg(30/03/2001)