The Hindu Business Line : `Transformation to CTC costs tea industry dear'

THE Indian tea industry is in a paradoxical situation today with the manufacturers not in a position to revert to orthodox tea production because of financial constraints.

Once the world's largest producer and exporter of orthodox teas, India could have escaped encountering such a situation had it not depended on one particular market, for the sake of which the industry underwent almost a complete transformation from orthodox to CTC, say industry insiders.

China, which ranks next only to India in production, did contemplate to change to CTC tea production, but could not do so owing to resource constraints. This limitation probably proved to be a blessing for China, as the global demand was shifting towards orthodox and organic teas.

Though the largest producer of tea in the world, accounting for about 28 per cent of the global production, followed by China at 23.07 per cent, Kenya and Sri Lanka at 9.7 per cent, Indonesia at 5.61 per cent, the Indian production growth rate at 0.73 per cent in comparison with higher growth rates of other competing countries sends a wake up call for the domestic tea planters and manufacturers.

According to a study conducted by leading brokers J Thomas and Co Private Ltd, the set back was on account of loss in CTC production by 25.5 million kg in 2002. While the crop loss in South India was evenly distributed between orthodox and CTC, the entire crop loss in the North was on account of CTC.

Looking back, it is evident that India was predominantly an orthodox-tea producing nation until the early 90s, when a transformation took place. The share of CTC recorded a sharp rise from a little over 35 per cent in the 60s to 90 per cent of the total manufactured teas a decade ago. The share of orthodox slipped to less than 10 per cent from 62 per cent four decades ago.

According to manufacturers, the shift to CTC was solely because the cuppage per unit weight of these teas, which was more than double that of orthodox. Bent on tapping the emerging market potential, the manufacturers rushed to CTC production, ignoring and forgetting the unique art of making fine teas, the source lamented.

Meanwhile, the price for orthodox teas started moving up in 2002. Plainer teas, particularly brokens and fannings were in great demand following higher off take in the export market, though the unit value was said to be lower compared with the earlier year.

Market sources say the off take was encouraging for good quality teas. The CTC market, however, continued to remain sluggish in 2002, with falling price levels and huge carry forward stock.

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