According to a top industry official, this trend is likely to continue unless exporters come up in a big way with renewed demand. The slide is even sharper when compared to last year's levels which were pegged at very high levels.

According to an industry observer, there happens to be two distinct price levels in south Indian tea. One is the lower price category averaging between Rs 45-50 whereas the other category is the premium variety fetching almost Rs 20 higher than the low-priced variety.

This trend of a wide concertina between the two categories was not so prominent in 1998, when high demand conditions fetched high prices for all teas across the board.

This year with slackening demand conditions, the averages of the ordinary varieties has received a majorsetback. The premium varieties basically grown by the bigger companies comprise just about 10 per cent of the entire production of south India, said an industry observer. Most of the auctions are catered to by a host of smaller companies who have a small holding pattern in the southern states.

According to an industry analyst, compared to the smaller companies, the problem is not that acute for the bigger producers and exporters as they are in a position to absorb the price drop to a certain level atleast. Moreover, few of the large companies who are also big packeters are able to use their teas in their own blends, thus sustaining the price knocks to a certain level.

On the contrary, the smaller companies are faced with considerable financial strain, said the analyst. A slightest drop in production and prices would impact more on a company with a smaller production base than for a bigger company, he contended.

Prices of south Indian varieties are unlikely to increase unless the Russian buyers come instrongly, is the industry contention. Over half of the southern production is exported to Russia and few other CIS countries. With the conspicuous absence of the major importer, it would possibly have to be a situation of wait and watch for the growers of south India.

Market expectations indicate that things might see a change for the better from July onwards, when Russians may start enquiring for Indian teas.