Tea production likely to be lower this year, but prices don’t exhibit buoyancy

India’s tea production for this calendar year is likely to be lower due to weather affecting the crop but despite the output decline prices at the auactions have not gained, leaving the industry perplexed. Last year, the production was 1366.36 million kgs (mkg).

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Tea production was 980.22 mkg during January-September this year compared with 1003.19 mkg during the same period a year ago, according to the latest Tea Board data.

“The latest Tea Board report indicates a shortfall in production up to September 2023 vis-à-vis the corresponding period of 2022. During the period there was a deficit of 22.97 million kgs. Last year’s production was 1366.36 mkg, and chances of reaching this figure in the current year is remote as the industry has reached the backend season when production usually tapers down,” Tea Association of India Secretary General P.K. Bhattacharjee told businessline.

“Although the official figure of October is still awaited, our internal records state the crop production could improve slightly in the month of October 2023,” Bhattacharjee said.

“While we cannot rule out some amount of recovery happening in October and November, total tea production for this year is unlikely to witness a material increase compared to last year,” said Kaushik Das, Vice President and co-group Head, Corporate Sector Ratings, ICRA.

• Also read: Overseas enquiries boost orthodox tea exporters’ hope at Kochi auctions

Despite lower output, average auction prices of tea is down, especially for orthodox tea.

The combined average price of tea at the North India auction during January-October 2023 was ₹190.22 against ₹206.59 in the same period a year ago, witnessing an eight per cent year-on-year decline.

“Prospects at the export front, too, show lacklustre results in the sense that the export value (in $ million) from April to October this fiscal was four per cent lower vis-à-vis corresponding period last fiscal due to low exports to markets like Iran and UAE,” Bhattacharjee said.

“Exports are not looking very attractive and domestic consumption is not growing as it was expected. There has been a very big change in the markets. There are a lot of new avenues for sale like online sale and modern formats. So stock holding at retailers has reduced. That is what is impacting,” said Azam Monem, former chairman of Indian Tea Association.