A 44.17 million kg drop in the September crop is triggering fears of a lower tea production this year in India. The sharp fall in September is led by Assam, the country’s largest tea-growing State, which suffered a 30.4 million kg decline in production. The decline has been attributed to climatic adversities like heavy rains, said Indian Tea Association (ITA) secretary general Arijit Raha.
Between January and September 2017, tea production stood at 912 million kg which was 10.7 million kg lower than the year earlier. The 25.7 million kg drop in the North Indian tea crop was partially set off by a 15 million kg rise in the output of South India, which was affected by a drought in 2016 (suffering a 7% drop in production). However, in September 2017, even South India saw a small decline. While Assam accounts for nearly half of India’s tea output, West Bengal’s Dooars region and the tea producing States in South have a contribution of 25% each.
Limited scope
There is limited scope for recovering the entire loss, although a partial recovery was reported in October from Assam. The advent of early winter has also compounded matters as this may cut short the production cycle by at least a fortnight, said an ITA release. Strife-torn Darjeeling, producing about 8 million kg, already suffered a 50% crop loss between June and September. Low tea prices, for long a bane of the Indian tea industry, have risen by about 2% in 2017. However, this is considered inadequate by the industry due to rising production costs. “There is oversupply in the Indian tea market,” Mr. Raha said. Between 2012 and 2016, auction prices of tea have grown at a compound annual growth rate of 1.4%, while input prices have risen by 10%, according to ITA estimates.
McLeod Russel India Ltd., among the world’s larger plantation companies, said on Friday that tea prices had risen due to increased demand in domestic and export markets and lower production. It said prices will remain higher on expectation of growth in rural demand after a good monsoon.
However, the year’s costs would be higher due to increase in wages and inputs.