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18 Oct 2019, Edition - 1557, Friday

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Coimbatore

Mismatch in demand supply led to depressed price scenario of plantations

Covai Post Network

Coimbatore : World tea production after crossing 5 billion kg milestone in 2013, added nearly another billion within a span of 5 years, as tea crop in 2018 registered an increase of 158 million to reach 5,856 million kilograms.

India’s contribution was 1,339 million kgs of which South India contributed 224.9 million kgs.

Tea prices in major producing countries except Sri Lanka reported a decline in dollar terms and South India had the lowest price realisation at 1.45 USD per kg despite the fact that it witnessed a drastic decrease in production, a statistics released by United Planters Association of Southern India (UPASI).

Export performance surpassed the record high of 251.9 million achieved in 2017 by reaching 256.1 million kilograms.

Global coffee production during 2018-19 season was estimated at 169.78 million bags, higher by 10.12 million bags.

India reported a marginal increase, at 3,19,500 tonnes or 5.33 million bags.

While domestic Arabica prices in 2018 declined, Robustas had a slight improvement and exports during 2018-19 saw a dip, both in quantum exported and value realisation.

Global Natural Rubber production in 2018 was more or less static, with a small increase of 44,000 tonnes.

Indian production declined from 6,94,000 tonnes to 6,42,000 tonnes during 2018-19 and prices continued to decline but it has slightly improved now.

The root cause for the agonising situation is excessive imports, which reached a record high of 5,82,000 tonnes in 2018-19.

Cardamom production during 2018-19 is estimated to be 12,950 tonnes from 20,650 tonnes the previous year mainly due to the rain damage last year.

Estimated export is one of the lowest in the recent past at 1,250 tonnes compared to 5,680 tonnes in 2017-18. The only solace is the price levels averaged at Rs 1,477 per kg during the last season.

Pepper production too declined in India last year from 70,878 tonnes to 62,144 tonnes. Prices of pepper last year dropped to an average of Rs 360 per kg which had touched the 700 mark in 2016. In pepper as well, unregulated excessive import was the reason for the decline in prices.

Wage levels in South India being very high compared to the other plantation regions, it has significant consequences on the viability of the plantation industry.

Compared to the 1995 wages in Tamil Nadu, Karnataka and Kerala with the price of tea, coffee and rubber respectively, it is quite revealing that while tea wages have gone up by 7.7 times, prices have increased by only 2.5 times, coffee wages have gone up by 9.7 times whereas arabica coffee prices increased by 1.9 times and robusta by 1.6 times and rubber wages have gone up by 8.2 times compared to the price increase of 2.5 times.

Inflation has gone up by 4.38 times during the last 25 years and factoring in the average yearly inflation rates, from 1995, prices of tea should have been Rs 238 per kg now, where as it is Rs 111, coffee arabica in place of Rs 440 is Rs 193 and Robusta in place of Rs 370 is Rs 134 and rubber in place of 223 is Rs 134.

One of the reasons for the depressed price scenario is the mismatch between supply and demand, In today’s liberalised economy, produce of other origins will flow in if there is a shortage, it said.

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