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India: political upheaval doesn't aid industry.

India: political upheaval doesn't aid industry

The political and social climate of India does not look too bright, particularly after assassination of Rajiv Gandhi, the former Prime Minister and president of the Congress (I) Party on May 21, 1990. Political murders are neither uncommon nor unknown in India. But the brutal assassination of a young and well loved political leader (47) in the midst of an election process is, to say the least, sad and unfortunate.

Since the last general election in 1989, two governments fell in the course of 18 months and now again 543 million voters are in the process of choosing the next in midterm. Prospects however do not seem very bright as the possibility of a single party majority or coalition among parties, have become issues of journalists' delight. During the last two years, leaders were even more busy in political adjustments, and re-alignments, rather than to provide guidelines for improvement of commerce and industry. There were many major issues in which careful assessment by Government and its decisions were necessary. But such issues did not receive proper attention.

In the meantime the country's reserves had dwindled and to recover the position, the only talk heard from the Government level was to increase exports. But exports of tea and coffee in the competitive and complicated international scene does not increase merely for asking. Or, the advice to increase output by using modern techniques of production remains a mere academic exercise in the absence of some hard decisions at Government levels.

The rate of progress, compared to other producing countries is fair. At this rate in the year 2000 A.D. one may expect 875 (approx.). But to reach the target figure of 1100 would certainly call for drastic steps which can be taken only at Government initiative. Industry on its own may be said to be doing its best to maintain this rate of progress in spite of extreme adverse conditions.

Assam, which produced 378.7 in 1989 in India's total output of 684.1 (being more than 50%), and similar proportion in 1990's total out of 720, was under stream of terrorist threat. Several top notch tea executive and estate managers were killed. United Liberation Force of Assam (ULFA) unleashes a reign of terror in the tea growing regions. They extorted large sums of money under threat of murder, (some events have already been reported by this correspondent). In spite of such disturbance in the normal working conditions, the producing community has kept up the rate of production in quantity as well as quality. This is not a mean achievement for the tea industry. The present situation is however under control due to administrative steps taken and USFA's agreeing to let the election process continue without disturbance. Indian Tea industry has recently set up to impart professional training.

While the tea industry on its own is doing whatever is possible to increase output, the Reserve Bank has sounded a word of caution that unless production is enhanced India may have to import tea in order to satisfy internal demand. Tea consumption in the country registered a substantially higher average growth of 4.8% against corresponding 3.1% rise in production. In this context, the tea industry's demand for more land, contiguous to the bigger gardens needs further examination at government level. The existing policy of encouraging small growers and expansion in non-traditional areas certainly have merit, but considering immediate need to increase output such term measures alone may not be adequate to avert crisis.

On the export side, on analysis we find, out of 220m. kg. tea exported in 1990, a large chunk of 135 m. kg. had gone to Russia under bilateral trade pact. Further a quantity of about 30 has gone to Iraq and Iran. Sales to free markets were only 55 In view of political changes taking place in Russia and the Middle East, one is never sure if a similar quantity may be exported to Russia and the Middle East in the near future. At least, it is high time that steps are taken without delay without delay not only to retain but expand in these markets.

The position equally applies to direct sale of coffee of a quantity of 50,000 tons in 1991 as per contract signed between the Coffee Board and So Juzplodo Import of Moscow.

Direct marketing of specialty tea and coffee has already been recognized as a feasible proposition in order to increase export earnings. "Malabar Monsoons" have a distinct appeal to connoisseurs. Moreover, the quality control division of the Coffee Board has decided to introduce |specialty coffee" made from high grown selected Arabic Cherry. While these are positive steps, the Board and the industry is surely aware of the specialist promotional measures needed to market then successfully. In the field of tea similarly, promotional campaign for pure Darjeelings and Assams with specific symbols, had been already launched with some uses. Marketing of specialty items, which recently began, requires further professionalization in order to claim a substantial share.

Contrary to tea, the domestic market for coffee needs substantial encouragement to expand. Consumption is around 5,500 tons, and there seems to be a vast market for internal expansion. Large instant coffee manufactures claim that they are promoting coffee in domestic market by making it available all over. Others have the view that the price constrain of instant coffee is not complementary to its desired expansion. Subsidy for roasting, grinding and making available brewing equipment at moderate prices would do the internal promotion at a desired scale. Regarding import of tea for value - added export similarly, there are opposite views. Generally the producers are of the view that it will not be effective. Because, as soon as India enters the international market as an importer, the prices will tend to rise and the effect of competitiveness will vanish. The others however, argue that in this period of foreign exchange crisis there is no other method open to keep the domestic consumers happy as well as to earn more foreign exchange.
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Title Annotation:difficult times for production and marketing of tea and coffee
Author:Bose, Bimal
Publication:Tea & Coffee Trade Journal
Date:Sep 1, 1991
Previous Article:World tea situation in brief.
Next Article:New developments at London Fox.

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