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Tea hits turnaround trail

Calcutta, Nov. 9: The domestic tea industry expects a turnaround in a year, according to chairman of Indian Tea Association C. K. Dhanuka.

Talking to The Telegraph, Dhanuka said in the last six weeks, the prices of tea have gone up by Rs 4-5 per kg. “Tea is also selling well. If this trend continues, a turnaround is expected in a year,” he said.

Moreover, the feel-good factor in the economy will also have some impact on the tea industry, the association chairman feels.

The tea industry is passing through rough times for the past four years. The prices of tea have gone down substantially, while the cost of production has gone up in a spiralling manner. This has forced some of the tea companies with smaller estates to close down their gardens.

Low productivity is also eating into the cash flows of the tea companies. Linking wages of the workers with productivity is being discussed in the industry for quite sometime now. “It is a complex matter and cannot be solved immediately. We are having talks with labour unions at present,” he said.

Dhanuka said global production of tea is up by 45 million kg. Of this, Indian production is up by 40 million kg till date.

“Internationally, tea consumption is going up at a rate of 60-70 million kg per annum. So the surplus production will be able to bridge the increased global consumption. If Indian tea industry utilises the opportunity then a turnaround is expected. Exports need to be beefed up,” he added.

While the industry considers exports to newer markets, it should give more attention to the existing markets like Russia, Germany, UK, the US and West Asia.

Commenting on the lower offtake by the Russian importers this year, Dhanuka said efforts are on to revive the Russian market.

“We expect the Russians to pick up some good volumes of tea by the end of the year,” he said.

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