• PAGE ONE
• INDEX
• HOME

Plans for a brew

THERE ARE CLEAR indications that the WTO Agreement on Agriculture and the already competitive market scenario have forced the Department of Commerce (DoC), in the Commerce and Industry Ministry and the Tea Board to impart professionalism in their Tenth P lan (2002-03 to 2006-07) exercise on production and marketing strategies.

In a welcome departure from the past, the DoC, the Tea Board and the industry are opting for several studies by reputed consultancy firms to be able to access a whole lot of inputs and findings that will help them determine what will be the ideal directi on if tea corporates are to withstand competition in the marketplace, domestic and foreign. By opting for consultants' opinion, they are conceding that a conventional approach, taking into account only the trends by the terminal year of the previous Plan period, will not work for fixing tea production, export and domestic consumption targets for the next five years.

Mention in this context has to be made of the proposed study on the competitiveness of Indian tea by a well-known consultant and the soon-to-be-launched generic promotion of the beverage in the domestic market for which too professional agencies have bee n involved. The findings of the competitiveness study and results of the domestic generic promotion will, it is to be hoped, not only facilitate realistic assessment of the demand for Indian tea during the Tenth Plan period but also help formulate action plans to boost demand for the product both within the country and abroad. Needless to say, if the demand estimate is realistic, the industry will be better placed to fix tenable programmes for production and estate development, which call for sizeable i nvestments on a regular basis. As it is, the ground realities point to a tough time for the Indian tea industry.

This is because in several outmarkets India's rivals have been able to entrench themselves; they being more competitive in terms of cost of production. Secondly, in the domestic market, despite its size, aggressive marketing efforts of the `cola' MNCs in recent years have had the effect of weaning away the youth, who constitute a big chunk of the population, from a beverage like tea. It is against this backdrop that the domestic generic campaign, with focus on the beneficial health aspects of drinking t ea, has to be seen. Another study to be assigned to a consultant will be on the rather wide difference between the auction prices of tea and the retail prices of packet tea. Blenders and packers may have their own explanation for the wide divergence; but it seems the DoC is not inclined to accepting their viewpoints in toto. In its view, far too much `rent' is being extracted from consumers of packet tea, and the auction system is being questioned for its inability to deliver a fair price to producers. The proposed study is expected to identify the rigidities and imperfections that mark the auction system which, for tea producers, is the primary market.

The meeting called by the commerce secretary, Mr Prabir Sengupta, on April 30 with the representatives of the tea industry and trade threw up enough pointers that the Tenth Plan programmes and projections will clearly identify the tasks ahead. Perhaps, f or the first time it was agreed that production-oriented target should be given a go-bye and, instead, targets be set in terms of adherence to the prescribed international and domestic SPS (sanitary and phyto-sanitary) standards for tea, value-addition a nd marketability. The last Union Budget provided a fillip to the tea industry by way of doubling the allowance under Section 33AB of the Income-tax Act to 40 per cent which, in normal times, will release Rs 80 crore extra annually for development schemes . New Delhi would do well to concede the industry's demand for relief from the import duty on tea bagging machinery and thereby provide an impetus to marketing of tea bags, in which value-addition is substantial.