Late rain hits tea crop

The price of tea has begun moving up, with late rainfall having affected the crop. Rising export and an increase in home consumption, of about 30 milion kg, less than the anticipated rise in year-end output, would add to the drawing down of stocks.

In October and November, prices had dipped by almost Rs 10 a kg from the same period last year, but good quality teas are now almost at the same levels as the same period of last year, an industry representative said. The average North India price is Rs 121 a kg, compared to Rs 126 a kg last year at this time, said McLeod Russel’s chief financial officer, Kamal Baheti.

The spike, however, is not going to translate into an increase for packet tea. “Packeteers are more or less covered and don’t depend on this tea for their blends,” said Tata Global Beverages’ vice-president, Kiran Desai.

October and November have been dry months for the industry. Till October, the crop was estimated to be higher by 33 million kg than the same time a year before, but this rise has now come down to 20-25 million kg, with the late rains. The industry is expecting to end the season with production of 990 million kg. Indian Tea Association (ITA) data showed that till October, estimated production was 847 million kg compared to 813 million kg in the corresponding period of last year. This is expected to change. “The gardens went for early pruning with the late rains and, hence, the higher crop was nullified to some extent,” an industry official said.

There is not much pipeline stock and the stocks are likely to be exhausted by end-February. Concurrently exports have increased. “The cumulative deficit for the year is expected to be 45-50 million kg,” said the former chairman of Calcutta Tea Traders’ Association, Azam Monem. Till October, Kenya had lost about 23 million kg, while world tea production was down by 16 million kg.