PRICES
Tea prices in US dollar terms in all the major centres declined with the exception of Sri Lanka and Bangladesh. While Kenya, Indonesia and Malawi witnessed substantial fall in auction prices, in Sri Lanka, the Colombo auction continued to be buoyant
throughout the year following sustained demand from Russia/CIS and the Middle East.

It must be noted here that the Sri Lankan rupee was depreciated by 11.7 per cent during 2001.

The Indian tea industry, for one more year, had to bear the ill effects of the continuation of the depressed price scenario. The downward pressure on prices continued threatening the very existence of several tea companies.

The all-India auction average in 2001 at Rs 61.66 per kg was lower by five paise against the level of 2000 when prices slided by Rs 11.09 per kg over 1999 realisations. Compared to the 1998 level, the total erosion in all-India average prices was Rs 14.77 per kg. South India experienced the maximum slide of Rs 22.77 per kg although its prices improved slightly (Rs 1.38 per kg) during 2001 over the level of 2000.

AVERAGE AUCTION PRICES IN MAJOR COUNTRIES (per Kg.)
	In US $ (Approx)			In INR (Approx)
Country	2001	2000	+/-	2001	2000	+/-
India	1.30	1.37	-0.07	61.25	61.71	-0.46
North India	1.48	1.57	-0.09	69.66	70.36	-0.70
South India	0.97	0.99	-0.02	45.87	44.64	1.23
Bangladesh	1.05	1.09	-0.04	49.46	49.08	0.38
Indonesia	0.97	1.20	-0.23	45.55	53.71	-8.16
Kenya	1.53	2.01	-0.48	72.00	90.52	-18.52
Malawi	0.87	1.01	-0.14	41.06	45.46	-4.40
Sri Lanka	1.61	1.76	-0.15	75.81	79.16	-3.35

Darjeeling had a dismal season with significant price declines for the second consecutive year. Though compared to 1998 and 1999 levels realisations prices were substantially lower, Dooars, Terai and Cachar did register some improvement in price averages. The reasons for the decline were attributed to: a general over-supply situation, particularly of the plainer grades; irregular participation of major buyers at auctions; sluggish demand in the domestic market; drop in exports leading to an over-supply situation in the domestic market; and lower offtake of orthodox by traditional importers.

It might be pointed out here that despite lower price realisations, the Indian tea industry had to bear the burden of high social costs unlike its counterparts in Kenya, Sri Lanka, China and Indonesia which enabled them to produce at much lower costs and offer at lower prices too. During the past three years, the surge in cost of production was at least 38 per cent.

EXPORTS
World tea exports registered an increase of 56 per cent (four per cent) to 1,389 mkg during 2001 over the previous year's level. A significant growth of 41 mkg (five per cent) was registered in the Orthodox and Green tea categories against a growth of 15 mkg (three per cent) in CTC.
While Kenya and China had achieved sizeable growth in exports, Sri Lanka maintained its position as the largest exporting country with continued steady growth. Significantly, Vietnam managed to increase its exports by 2.5 times. Export increases in the Orthodox segment by Sri Lanka, Indonesia and China were also noteworthy.
The Indian tea industry's export front continued to be worrisome. All efforts to achieve a higher tea export level have proved futile which is reflected in the major export decline in 2001 which stood at 179.8 mkg, the lowest in the past five years.
Export realisations to the tune of only Rs 1,898.61 crore at an average of Rs 91.80 per kg was the lowest in the past three years.
The average export prices of north Indian teas were twice as much as that of the varieties from the South because of the former's superior quality and market acceptance. However, north India witnessed a sharper decline of 17.2 per cent in export volumes as compared to the South which shipped around 50 per cent of its produce. Exports from north India suffered excessively in the 3rd and 4th quarters of 2001 witnessing a decline of as much as 18.74 mkg (29 per cent) against the 2000 level. South was hit since the beginning of 2001, except in the 3rd quarter, recording a total export shortfall of 10.59 mkg (9.5 per cent).

REASONS FOR THE DISAPPOINTING EXPORT PERFORMANCE

. Shift in Russian buying from CTC to Orthodox teas. The Russian Federation's share in India's exports fell by 20 per cent to
69 mkg in 2001 from over 86 mkg in 2000, 94 mkg in 1999 and 83 mkg in 1998. Despite the declining offtake, Russia still remains the largest importer of our country's brew.

. Lower exports to other traditional markets such as UK, Germany, Poland, Turkey, Japan etc.

. Ban on import of Indian teas by Iran and Libya.

. Stiff competition from Kenya, Sri Lanka, China, Indonesia and Vietnam. Al these countries managed to achieve higher export levels.

. Limited spread of markets. For a country like India which has Large varieties of teas, the portfolio of export destinations is woefully low.