Tea shortfall to touch 40 million kg by Sept

Despite monsoon recovery, shortfall in first and second flush unlikely to be compensated

The overall monsoon deficit was lowered in July but even after covering lost ground, the shortfall in tea likely to be 35-40 million kg at the end of September.

"The shortfall in the first flush and second flush is unlikely to be compensated. Last year, there was a spurt of 60-70 million kg - we will lose half of that," said Azam Monem, additional vice-chairman, Indian Tea Association. Till May, the shortfall in crop was a shade shy of 20 million kg. The total production in 2013 was 1.2 billion kg.

The first and second flush happen to be the quality period but the saving grace is that the delayed onset of the season pushed the quality period from June to July.

According to recently-released Tea Board figures, Assam recorded a lower crop of four million kg during the month of June.

A lower crop has resulted in higher prices. "Good tea from Dooars and Cachar is higher by Rs 18-25 a kg," said Monem. Indications are that prices would continue to remain strong.

The crop in South India during June was, however, up by 5.36 million kg. According to the United Planters' Association of Southern India (Upasi) officials, the crop in July was also higher by 2.5-2.7 million kg. "Typically, for South India, the peak period is April-May but due to the delayed onset of monsoon, the June-July period has seen a higher crop. The higher crop has reflected in prices. Prices in 2014 are down by Rs 8-9 a kg," said a Upasi official.

Domestic demand was robust even at the beginning of the season. What is likely to keep prices firm is international demand. In May, there was a deluge of crop in Africa. The Mombasa (Kenya) auction was getting an average of 9-10 million kg a week, vis-a-vis the usual 5-6 million kg.

"Much of that extra crop has been absorbed. Moreover, post-Ramzan, Iran and West Asia have started buying tea from the market. We expect exports to pick up," said Monem. Last year, exports to Iran were 22 million kg.

Sector representatives feel prices could pick up further if the export momentum is maintained. "This will reflect in packet tea prices. Regional packeteers are holding on to the current prices for the festive season but margin pressure will push them to raise prices," said a producer.