North Indian CTC prices during the first quarter of 2009-10 increased by a minimum of 37%, while the orthodox variety was up by 15% over the last year.
According to Basudeb Banerjee, chairman of Tea Board, better margins are pushing the growers to shift to CTC tea. We might lose the orthodox market if we cut down its production. Relative prices of orthodox to CTC have gone down. That is a problem which we will have to address, Banerjee added.
According to estimates of the Tea Bulletin, published by Associated Brokers, Assam CTC leaf and CTC dust were sold at Rs 130.86 per kg (an increase by 38.4%) during April-June 2009 against Rs 94.54 per kg for the corresponding period last year. Dooars CTC leaf and dust were sold at Rs 125.67 per kg (an increase by 37.67%) during the period against Rs 91.68 per kg for the same period last year. Cachar CTC leaf and dust were sold at Rs 114.88 per kg (41.06%) against Rs 81.44 per kg for the same period last year.
While during the same period, Assam Orthodox was sold at Rs 136.78 per kg an increase of just 15.10% over the previous years price. May be they are getting good returns by selling CTC now, but what about the market five years down the line, Banerjee said questioning the logic behind large-scale shifting towards CTCs.
According to him, there is a necessity to keep on exporting orthodox tea. If you lose a market now it is lost and will be very difficult to re-enter it.
The average auction price of the Indian tea has increased by 31.6% to Rs 112.71 per kg during April-June 2009 against Rs 81.07 per kg for the same period last year.
The country produces 90 million tonne of orthodox and 10m tonne of Darjeeling tea. Eighty million is not bad. We have come up to 80 million from 60 million. But, if this trend continues and we get stuck at 80 million tonne, then it is a problem, he said.
Meanwhile, Orthodox Tea Production Subsidy Scheme is also under the scanner of the Planning Commission. The scheme was launched in 2005 and provided for extending subsidy of Rs 3 per kg for orthodox leaf grade tea and Rs 2 per kg for orthodox dust grade teas.
Tea Board has appointed AC Nielson to take a stock of the situation under the scheme. Planning Commission will decide whether we will run the scheme at the present form or with some modification or whether we will run it at all, Banerjee said.