Tea prices set to increase on lower production
Poor rainfall hits Assam, Bengal tea output
BS Reporter | Kolkata June 5, 2014 Last Updated at 22:34 IST
Adverse weather conditions in north India (Assam and north Bengal) are likely to result in a sharp rise in tea prices, the Indian Tea Association (ITA) on Thursday.
In April, all producing districts in the Assam valley had recorded a 40 per cent fall in production compared to a year earlier; for May, the decline was 30 per cent.
“This could translate into an overall decline in the north Indian crop by about 16 million kg in April and 14 million kg in May, an unprecedented decline of 30 million kg in two months, compared to the corresponding period of 2013. The estimates are based on ITA members’ crops; if other estates and bought leaf factories/small growers are taken into account, the shortfall might stand at 50 million kg,” said a release issued by the association.
Also, there has been a rise in the cost of field and factory inputs. The impact is clear—-production costs will increase, and so will prices. “The impending wage revision, effective from April 2014 in the north Bengal tea sector, will further increase the cost of production. Further deterioration in conditions could jeopardise the viability of many estates in Assam and north Bengal,” ITA said.
“This kind of a shortfall in the months of April and May hasn’t been seen in a long time. The market will react; prices need to do better,” said Aditya Khaitan, managing director of McLeod Russel. Represent-atives from the sector said at the auctions here this week, the quantities were low and prices were higher by Rs 15-18 a kg.
Till March, all tea districts, barring Darjeeling and Terai, had registered an increase in the crop. Subsequently, when rains were imperative, the situation deteriorated. ITA is apprehensive it will be difficult to make up for the decline in the crop, as the threat of the El Niño is looming large. More, domestic demand has been growing at three per cent every year. “It is likely the demand for replenishment of tea will increase in the coming months,” ITA said.
The situation in south India, too, isn’t very different. Officials of the United Planters’ Association of South India said in April, the crop had fallen by 3.7-4 four million kg.
Dry spell hits Assam, Bengal tea output