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 Post Posted: Wed Feb 28, 2018 4:03 pm 
 

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THE Chairman of the Tea Board of India, Mr Naba Kumar Das, took time off to share his views with Business Line Wholesale Cigarettes For Sale, on why the industry has knuckled under the turbulence of plunging prices and excess production. Mr Das speculates on how to get the industry back onto its feet. Taking a look at other problems such as those in the auction system, pesticides in tea, he analyses the roadmap to the 1,000 million-kg annual target envisioned earlier.

Excess production, low prices and high costs. The industry is taking heat from every side. Do you see any respite for the industry?

The industry must learn how to cope with change. We have more countries producing tea now. African countries, in particular, have increased production. Vietnam and China have switched to black tea. In India, the industry still operates on a high-cost basis largely due to some social costs in plantations. So, costs are something every company is looking into. You have to control costs; otherwise you will not be able to compete. Ultimately, quality also counts. A lot of work has to be done from both these angles to optimise the two.

You must also look into ways of improving the overall demand for the commodity. And try to stem non-viable growth. It is, however, very difficult to do this. In the past, the tea industry was highly controlled, limited to a few countries and operated with a lot of international cooperation. Now, each country has its own compulsions as tea exports have become central to many economies. The consumption is now much less than the production.

This year, fortunately, the weights have tilted because of climatic changes not necessarily because of an effort by the industry. Worldwide, we have seen a fall of about 32 million kg of tea production and domestically, about 14 million kg. This will definitely help. Unfortunately, we have also seen real exports drop. We now have to produce tea the world wants. We should also start to produce more orthodox teas although we have a strong domestic CTC market.

There are still operational bottlenecks. For example, it is more expensive (labour-intensive) to produce orthodox teas. It is also riskier to produce orthodox tea as the domestic demand for this variety is still weak. On the other hand, if you produce CTC, you may not be able to sell it at the right price though ultimately there is still a buyer. So, in producing the orthodox variety the producer must take a risk and he must perceive it worthy.

Besides a surfeit of supply and high overheads, what other factors are responsible for low prices at auctions?

It is basically a question of demand and supply. There has been a marked change in the consumption of tea. We were looking at a much higher percentage of growth in consumption. We now realise that this is not true and consumption levels have come down. There is also a threat from other beverage companies. Cokes and Pepsis have taken a toll, mainly among the youth. There has to be a lot of innovation. It is a forum where both buyers and sellers meet. Prices are transparent. There is no delay or default in payment. The problem with the system is that it is slow. Information flow should be fast. It takes me a week and a half to access traded prices too slow these days. We are looking at trying to automate the bidding floor. We are also trying to reduce other costs. Besides, there is a need to standardise packaging for delivery for instance, stacking produce in pallets.

A 5 per cent subsidy has been granted for the Tea Factory Upgradation Programme. How do you see the industry using this subsidy to leverage the quality/efficiency of production process?

A lot of small growers, both in the North and South, participated in the cultivation process and sold the produce to the Bought Leaf Tea factories. Now these bought factories need to produce both the orthodox variety for exports as well as the CTC variety for domestic consumption. Therefore, the factory upgradation subsidy was granted, primarily to help these factories convert to both modes of production (orthodox as well as CTC) and also ensure better quality simultaneously.

Please comment on any exercise to maintain the average age of tea bushes. How often is replantation undertaken?

This definitely is a problem as we have a large percentage of over-aged plants. We have to do more work in replanting and rejuvenating bushes. The industry as a whole has targeted a 2 per cent rate of replantation. But we have not been able to achieve this. Of course, a lot of other well-established companies have done much better Cigarettes Online Usa Only.

The major hitch is that once the plant is uprooted, the soil becomes unsuitable for replanting for about two years. Then there is a gestation period of about five years before the new saplings can produce leaves Wholesale Newport Cigarettes Online. We are serious about replantation getting priority.

Have there been demands by CIS/Europe/US for quality other than what is being produced? Have other countries been able to cater to these standards, and at lower costs?

One of the fastest growing segments is the flavoured tea segment. The perception of quality varies from consumer to consumer. In Russia, for instance, we pushed a lot of CTC tea after the break up. Now the economy is improving and consumers are more discerning. Tastes have changed. Studies have shown that the public perception in Russia today is that Sri Lankan teas are more expensive but they are the best. On the other hand, people now say of India "Yes, you produce tea, but not the best".

As per a FAO report on tea industry, the market for tea is expected to grow at 3 per cent per annum till 2005 (on base period 1993-95). Do you agree with this forecast?

Three per cent is optimistic by all standards. I would focus on a more realistic growth of approximately 1.8 per cent in these years ahead.

How does the industry view the 1,000 million kg target? Is there still optimism? Will it help to re-focus on this mark?

We were actually supposed to have reached this target last year but unfortunately have been able to do so Wholesale Usa Cigarettes. In the beginning of the Eighth Plan, there was a perception based on statistical evidence that we would become a net importer of tea as early as 2000. So, the signal to the industry was to keep producing.

Now the signal is "produce, but produce the right stuff". We cannot rein in production but we are not encouraging further expansion either, except in a limited manner. We are now looking to export about 270 million kg by the end of the Tenth Plan. This provided it happens plus the domestic offtake should see us somewhere within this target in the next few years Cigarettes For Sale Wholesale.
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