Tea prices expected to rise again, by 10%

Lower production may lead to 10% rise in coming months

Tea prices are likely to increase by around 10 per cent over the next few months, with lower availability.

Tea Board figures for this calendar year, till August, say production in North India — the term covers Assam, West Bengal and all other states outside the four southern ones — was 543.6 million kg as compared to 561.6 million kg in the same period last year.

The industry does not expect availability to improve in the coming months, as the three-month lean season starts in November. “From now on, prices will move up,” said Azam Monem, additional vice-chairman of the Indian Tea Association. Asked to what extent, he said nine to 10 per cent.

Till August, production in South India, was 158.5 mn kg as compared to 147.7 mn kg last year in this period. As a consequence, auction prices were down Rs 16.3 a kg.

Availability in North India has been an issue this year from the start of the season due to weather conditions. Till May, shortfall was a shade shy of 20 mn kg. “This year, we are likely to end with a shortfall of 30-35 mn kg,” said Monem.

Total production in calendar year 2013 was 1.2 billion kg. Each year, consumption grows by around 30 mn kg.

The lower availability has kept prices on the higher side. Up to September, the average price of North India tea was Rs 155 a kg as against Rs 148 a kg last year. Packet tea companies passed on the increase to consumers a couple of months earlier.

That the end-season shortfall is limited to 30 mn kg is due to lower export to Britain and Pakistan. “Exports are lower as Kenyan prices have been competitive,” Monem explained. Till July, production in Kenya was higher by 1.7 per cent over last year.

World tea production, till August, was lower by 0.5 per cent, led by India and Uganda.