Tea prices likely to increase by Rs 15-20 per kg this year

Low yield last year coupled with insufficient rainfall in tea producing states, may push prices upwards

Owing to shortage of stock and higher cost of production, tea prices are likely to increase by Rs 15-20 per kg this year. The Indian Tea Association (ITA) feels that low yield last year coupled with insufficient rainfall in tea producing states, is likely to push tea prices upwards in India. 

According to ITA, the average tea price at different auctions is ruling at Rs 99-110 per kg.

Gautam Bhalla, advisor, ITA, said,"While the demand is good but the supply is not adequate as last year's production was low. Moreover, we are also spending higher on our labour and their families which further pushes our production costs higher." He added that tea demand in India is growing by 3 to 4 per cent every year. 

The major tea growing states in India, Assam, Bengal, Tamil Nadu, Karnataka and Kerala, have not received sufficient rainfall in the past three months.

The Tea Board's latest tally shows that production for 2012 was 1,111.76 million kg, lower by 3.96 million kg. The country's tea exports have remained stable at around 200 million kg per year for the last couple of years. The rest is consumed in the domestic market. Domestic consumption of tea has been growing by around 20-25 million kg per annum.

S Patra, joint secretary of ITA, however, pointed out, "Tea prices have not increased like other commodities. Last year, the average price was around Rs 125-130 per kg, which is hardly a 20-25 per cent rise in 15 years."

ITA is now focusing on to means to increase the consumption of tea in various forms in India and is also planning to target the youth. Bhalla said, "Most of the young people prefer to drink coffee. Moreover traditionally we drink hot tea across the country. We now want people to know various varieties of tea like black tea, cold tea, lemon tea, etc."

At present, the per capita consumption of tea in India is about 730 grams per annum, while in states like Gujarat the per capita consumption of tea is over 1 kg.

ITA is organising road shows in India to promote tea consumption in India. Last year the ITA had done road shows in cities like Mumbai, Delhi, Bangalore, Hyderabad and Ahmedabad, while this year it organised shows in Rajkot, Indore, Pune and other smaller cities in India.