Higher output fails to cool tea prices

Despite a higher crop output of 87 million kg in major tea producing countries — Kenya, Sri Lanka and India — prices are constant, as the cumulative deficit stands at 125 million kg.

After last year’s deficit crop, Kenya and Sri Lanka have reported a higher output of 75 million kg during January-March while south India registered an increase of 12 million kg in output for the first three months of the calendar year.

The three countries account for 80 per cent of the black tea production. Yet prices are holding out across the world markets.

Prices in Kenya and Sri Lanka have a strong undertone and are higher by 40-70 cents over last year. In India, markets have surplus plain teas at the moment, but good teas are in short supply. So, prices are higher by Rs 10-20 than the previous year.

Ullas Menon, secretary general of the United Planters Association of South India (Upasi) said, the average price of south Indian tea is Rs 111.93 a kg while last year the price was Rs 94.39 a kg. But Menon thinks it is a temporary blip.

“There is no reason for prices to fall. Kenya and Sri Lanka are seeing a bumper crop, but prices are firm. North India prices are buoyant,” he said.

Aditya Khaitan, chairman, Indian Tea Association (ITA), said prices in India would hold out.

Not just in India, figures indicate that they could hold water for world markets as well. The cumulative deficit of the last five years is to the tune of 200 million kg.

In India, production is expected at the same level as last year’s 979 million kg. Menon said since in April there was a dry spell, the crop would be at the same level as last year, even though it was significantly higher till March.

If the output remains at the same level, the season would again end with a deficit. “Each year, consumption in India grows by 30-35 million kg,” Khaitan said. Last year, there was a deficit of around 40 million kg.

Source: Business Standard