Tea prices to firm up on low output

Prices have already risen by Rs 15-20 a kg.

Tea prices are likely to firm up further in the next few months with north India output showing a downtrend.

At present, prices are higher by Rs 10-15 a kg, season-to-season.

“Sensing the decline in crop in June and July, prices have already started firming up. It will also put pressure on end-season teas,” said Aditya Khaitan, chairman Indian Tea Association (ITA).

Around 60 per cent of the crop is produced over the next four months. The north India industry has already lost the quality month of June and July does not look any better.

The industry lost about six million kg in June and most of the estates in Assam have lost 25-40 per cent crop in the first week of July, due to erratic weather and pest attack. In May, too, north-east India registered a decline of 3.5 million kg.

North-east India comprising West Bengal and Assam produce the quality tea.

“While quantity can be compensated, quality will not be,” said Basudeb Banerjee, chairman, Tea Board of India.

The tea mosquito has affected saplings in such a way that the crop will take one-two months to recover, which implied that much of the quality months would be lost.

However, the industry is divided in two halves. While north India is seeing firm prices and depressed crop, south India is seeing lower returns on a higher crop. Till May, crop was up by 12 million kg in south India and prices were soft.

The scenario might just impact the global market. The Kenyan government has said tea production was expected to grow at a slower rate than anticipated at the beginning of the year due to cold weather. India, Kenya and Sri Lanka produce about 80 per cent of black tea. Sri Lanka however, has seen a steady increase in crop by about 25 per cent till May.