New Delhi, April 27: The United Planters Association of South India (UPASI) has termed the sharp rise in tea prices since the second quarter of 1997 as a global phenomenon saying the sharp rise in tea prices cannot be viewed in isolation."In terms of united states dollars, prices since 1991 have been declining and even with the higher prices fetched in 1997 , it were still lower than 1990 prices in dollar terms," UPASI said in an editorial in its journal "Planter's Chronicle".
Tea prices have spurted on production shortage in African countries, mainly Kenya, and Indonesia due to drought. This had led to a rise in the prices and in India, the rates have been driven by export demand.
Commodity prices caught the attention of the government, press and consumers when they rose but none was concerned when the prices stagnated or declined and the industry was hit, it claimed.
The short-term phenomenon of price spurt could not be viewed separately and the tea industry's performance had to be taken intoaccount over a period of time, it added.
While the cost of production had been rising on constant increase in labour wages, which were linked to cost of living index, and input prices, tea rates had remained subdued for over four years between 1993 and 1996.While average prices of all varieties of tea in South India was Rs 42.69 a kg in 1993, it had declined to Rs 41.42 in 1996, UPASI said.
The situation in 1996 has resulted in plantations finding it difficult to make both ends meet and many low-yielding estates had to face crisis.
"The crux of the matter is that but for the improvement in prices in 1997, revival of the tea industry would not have been possible and many units would have become sick. Contrary to the general perception, current prices - and profits - have only helped in wiping out the accumulated losses of the previous years," the association said.
Average prices in South India during 1997 had increased to Rs 57.55 for crushed tear curl (CTC) tea and Rs 66.94 for orthodox, which isexported fully.
Referring to price trend since 1990, it said the auction price in 1990 was Rs 38.62 a kg, wholesale price index (WPI) of all commodity 100 points, tea price index 100, tea labour wage index 100 and tea price in dollar terms2.21.
In 1997, the auction price was Rs 59.31, wpi 178.4, tea price index 153.6, labour wage index 216.8 and dollar term price 1.60.
"The recovery in 1997 has helped only in restoring the health of the industry enabling it to strengthen the much needed development activities," it added.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
