New season tea hits market; costlier by Rs 20-30 a kg

After a two-week delay, the new season tea has started trickling into the market, at a price that is Rs 20-30 a kg more than in the previous season.

The industry expects prices to remain at the same level till July. While March was a dry month, Assam is experiencing good rain at present.

However, like last year, the current season is expected to end with a deficit. Aditya Khaitan, chairman, Indian Tea Association, said: “The season started with a deficit of 50-60 million kg. Moreover, consumption increases 30-35 million kg every year worsening the situation.”

To make up for the deficit, India would have to produce 100 million kg more, which is unlikely. Last year, production was around 980 million kg against 978 million kg the previous year.

Also, the government’s uprooting and replanting programme is gaining ground. So, uprooting will result in 2 per cent less crop. “Every year, we will have 2 per cent less crop,” said a source.

However, the industry does not expect prices to hit the roof.

Sources in Tata Tea, one of the major buyers at auctions, said prices at the end of the year could see a slight dip.

The first flush normally sees the steepest increase in prices. “Last year, first flush prices were not that high. So, they are seeing a correction now. Year-end prices, which were very high last year, are also likely to see a correction this year,” said industry sources.

Last year was an unusual year, when major tea producing nations, like Kenya and Sri Lanka, witnessed unprecedented shortage. However, tea production in Kenya this year is forecast to be higher by 15 per cent.

In India, too, weather conditions are much better and production is expected to be at the same level as last year. The season started about two to three weeks later than usual due to a dry spell. North India witnessed dry weather conditions in March, which led to a delayed crop.

Source: Business Standard