AHMEDABAD: Enjoy your morning cup of chai before you read this. The rise in retail price of tea by 30 per cent due to drop in production and increased dependence on imports post-pandemic may just leave a slightly bitter taste in your mouth.
During the lockdown, absence of migrant workers on tea estates meant that the leaves were not plucked on time, hampering production. Estimates by the Federation of All-India Tea Traders’ Association suggest that tea production went down by roughly 1.4 lakh tonne since April last year. This means a drop of roughly 10% in production.
“Tea production went down from 13.9 lakh tonne in 2019 to 12.5 lakh tonne in 2020. Due to the pandemic, tea leaves grew too big as it was not plucked on time. As a consequence, the stock got wasted, denting total production of tea. This led to a 22% increase in wholesale price of tea, which stands at Rs 300 per kg,” said Viren Shah, chairman, FAITTA.
According to the federation, tea auction prices in 2020 were about 35% higher compared to 2019 – around Rs 80 per kilo - as this was the result of a fair price discovery mechanism based on demand and supply. Retail tea prices rose by an average of Rs 60-70 per kilo during the year.
Getting quality tea was a key challenge during lockdown, said Parag Desai, executive director of Wagh Bakri Group, commenting on the impact. “However, services are back to pre-Covid levels now. The hike in tea price has been passed on by traders to end customers, because other challenges for business such as rising fuel cost and that of transport containers has increased.”
Despite the rise in prices, consumption of tea has not reduced. “In India, chai culture is very strong. Therefore, people have absorbed the hike prices. With increased preference for quality, branded tea is gaining better edge against non-branded tea,” said Desai.