The domestic tea industry is likely to end the year with a production deficit of 100 million kg, despite good weather conditions and a higher crop.
Last year, during January-December, production was 966 million kg and the industry expects it to be 990 million kg this year. The increase in production will just about take care of the yearly consumption increase. On an average, the domestic consumption increases by about 30 million kg every year.
“The year started with a shortfall of 100 million kg. I dont think the production increase will mitigate the deficit. It will be enough to absorb the consumption increase. But this year looks much stronger than the previous year when we lost crop during the quality period,” Aditya Khaitan, managing director of the world’s largest bulk tea producer, McLeod Russel (India), said.
Tea prices have risen Rs 15-20 a kg. Tea stocks reflected the sentiments voiced by the industry. The McLeod Russel stock touched a high of Rs 287.90 on the Bombay Stock Exchange, a 52-week high. Jayshree Tea and Industries also scaled a high of Rs 181.90, close to its 52-week high of Rs 210 a share.
“What has led to the firming of prices is a global shortfall,” industry representatives pointed out. Week-to-week prices at Mombasa auctions showed that prices were up by 60 to 70 cents. Africa has registered a shortfall of 45 million kg till now. The industry expects that the annual global shortfall to be around 55 million kg.
“Last year, our exports were at 22 million kg. This year, we have a target of 25-26 million kg,” Khaitan said.
Both crop and production were up in May, officials of the Indian Tea Association said.
According to figures on the Tea Board website, up to May, the crop was higher by eight million kg at 243 million kg. May alone saw an increase of 3.5 million kg in production. The increase was primarily in Assam and North Bengal, while south India actually saw a marginal dip in production.
Up to April, production was down by 5 million kg.
Exports for May were up but by less than a million kg. The unit price of exports saw a huge jump from Rs 141.28 a kg from Rs 115.84 a kg last year.
Exports at the beginning of the season, however, were down. During April to May, exports stood at 22 million tonnes while in the previous year they were close to 24 million tonnes.
The Indian Tea Association is yet to release the latest figures, but both crop and production were up for the month of May, officials of the association said. Exports for May were up by one million kg. Till March, world production was down by 31 million kg.
Industry representative indicated that if the weather conditions maintained the current pattern then the year would close with a deficit of about 155 million kg.