Droughts affecting global tea price

Droughts in key producing countries and the impact of the weak pound are putting tea prices under pressure, industry experts have warned.

Low rainfall in the growing regions of India, Kenya and Sri Lanka - which together account for half the world's exports - have led to poor crop yields, according to the United Nations' Food and Agriculture Organisation (FAO). Civil unrest around Kenya's elections also caused problems last year.

Prices at weekly auctions in Mombasa - the global benchmark for the industry - have risen 15% since December, to 3.40 US dollars (£2.38) a kilogram. Wholesale black tea prices surged 11% last year to an average of 3.10 dollars (£2.17) a kilogram last year - the highest annual average since at least 1993, according to figures published by the Financial Times.

While the supply problems are unlikely to have too much impact on mainstream tea prices, premium teas such as Darjeeling could be affected.

Kaison Chang, a tea specialist at the FAO, said high altitude teas like Darjeeling have been hit by the drought and "the quantity is not expected to be as much as last year".

It is understood that part of the supply problem stems from Sri Lanka, which is set to see production fall to a seven-year low after the drought and farmers' unwillingness to use expensive fertilisers.

William Gorman, executive chairman of the UK Tea Council, said that, while the price of a cuppa has risen, this was the first hike in 10 years.

He said the typical cost of 80 tea bags, which retailed at £1.89 in 1999, had recently gone up to £1.97.

Mr Gorman said the increase was predominantly a product of the weakness in the pound, as tea is traded in US dollars.

"We have had to find more pounds to pay for our tea," he said.