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http://www.financialexpress.com/news/tea-prices-to-climb-as-output-hits-rough-weather/1261340
Prime Minister Narendra Modi’s much-touted 'Chai Pe Charcha' campaign worked well with the Indian voters but chats over tea are soon going to cost you a lot more as India is likely to see a sharp decline in the availability of the brew by a whopping 80 million kg this year.
According to industry insiders, this demand-supply mismatch would continue for the next several years with domestic tea consumption growing by around 30 million kg every year and production from the organized sector remaining stagnant.
Facing the crisis, tea growers want the Modi government to increase the replanting subsidy given to the planters in order to speed up the ongoing bush uprooting and replanting programme.
Speedy replantation of old bushes will increase yields.
“Every year we need 30-35 million kg of additional tea to cater to the growing demands. And this year till now we are 50 million kg down due to crop loss in April and May on the back of no rainfall. I am not too optimistic that the deficit could be wholly made up at the end of this year as parts of Assam are still very dry,” former Indian Tea Association (ITA) chairman CS Bedi told FE. “So this year availability of tea is likely to be down by about 80 million kg,” said Bedi, also MD of Rossell Tea.
He said total output of the crop this year was likely to be less than that of last year. The country's tea production stood at 1,200 million kg in 2013. Deficient rain also impacted the production of Darjeeling tea and this year's output of this world-famous tea is expected to be down by 10% compared to last year.
Arun N Singh, ITA chairman, said end customer prices could rise by around Rs 20 per kg. Darjeeling tea prices are expected to go up by Rs 50 a kg, said chairman of Darjeeling Tea Association, SS Bagaria.
“In the coming years demand will outstrip supply due to the stagnating trend in tea production from the organised sector in India. Prices will be buoyant,” said Aditya Khaitan, MD, McLeod Russel, the world largest tea producer.
Tea processors and traders, however, said in this critical short supply situation the country’s millions of tea lovers can get some relief from the rising prices of the hot energizer if the government allows duty free import of the brew or reduces import tariff. Indian tea producers are now protected with 100% duty levied on imported tea.
“The new government can think about matching the demand-supply situation by giving incentives to the tea gardens and also bringing down the import tariff,” Federation of All India Tea Traders Association vice chairman Ramesh Chand Agarwal told FE.
Echoing Agarwal, Kiran Desai, former vice president of Tata Global Beverages, said, "If duty-free import of tea is allowed or import duty is substantially reduced then customers will immensely benefit."
Duty-free imports should be allowed for non-producing months – December, January and February – in order to solve problem in procuring supply as also during the months in the beginning of season – March, April, and May, Desai added.
Prime Minister Narendra Modi’s much-touted 'Chai Pe Charcha' campaign worked well with the Indian voters but chats over tea are soon going to cost you a lot more as India is likely to see a sharp decline in the availability of the brew by a whopping 80 million kg this year.
According to industry insiders, this demand-supply mismatch would continue for the next several years with domestic tea consumption growing by around 30 million kg every year and production from the organized sector remaining stagnant.
Facing the crisis, tea growers want the Modi government to increase the replanting subsidy given to the planters in order to speed up the ongoing bush uprooting and replanting programme.
Speedy replantation of old bushes will increase yields.
“Every year we need 30-35 million kg of additional tea to cater to the growing demands. And this year till now we are 50 million kg down due to crop loss in April and May on the back of no rainfall. I am not too optimistic that the deficit could be wholly made up at the end of this year as parts of Assam are still very dry,” former Indian Tea Association (ITA) chairman CS Bedi told FE. “So this year availability of tea is likely to be down by about 80 million kg,” said Bedi, also MD of Rossell Tea.
He said total output of the crop this year was likely to be less than that of last year. The country's tea production stood at 1,200 million kg in 2013. Deficient rain also impacted the production of Darjeeling tea and this year's output of this world-famous tea is expected to be down by 10% compared to last year.
Arun N Singh, ITA chairman, said end customer prices could rise by around Rs 20 per kg. Darjeeling tea prices are expected to go up by Rs 50 a kg, said chairman of Darjeeling Tea Association, SS Bagaria.
“In the coming years demand will outstrip supply due to the stagnating trend in tea production from the organised sector in India. Prices will be buoyant,” said Aditya Khaitan, MD, McLeod Russel, the world largest tea producer.
Tea processors and traders, however, said in this critical short supply situation the country’s millions of tea lovers can get some relief from the rising prices of the hot energizer if the government allows duty free import of the brew or reduces import tariff. Indian tea producers are now protected with 100% duty levied on imported tea.
“The new government can think about matching the demand-supply situation by giving incentives to the tea gardens and also bringing down the import tariff,” Federation of All India Tea Traders Association vice chairman Ramesh Chand Agarwal told FE.
Echoing Agarwal, Kiran Desai, former vice president of Tata Global Beverages, said, "If duty-free import of tea is allowed or import duty is substantially reduced then customers will immensely benefit."
Duty-free imports should be allowed for non-producing months – December, January and February – in order to solve problem in procuring supply as also during the months in the beginning of season – March, April, and May, Desai added.
