The recent catastrophic events- Assam Floods and COVID-19 pandemic, results in low stock of tea. Further, the said events will lead to a rise in Tea price across India.
Tea production has taken a massive hit because of the recent floods that are wreaking havoc in Assam. Also, the lockdown with unfavourable weather conditions had a negative impact on tea production. Thus, leading to low inventory levels in Assam and West Bengal. All these factors combined are contributing to the rise in tea prices. Additionally, India might have to import tea for the first time to stabilize prices.
The situation has been grim for tea producers in the country for the past few months. Initially, tea farmers dealt with movement restriction and labour shortage during the lockdown that had a significant impact on production. Currently, they are crippling under the devastations of floods in Assam.
Addressing that, Prabhat Bezboruah, the chairman of India’s Tea Board, states that a 12% price increase might compensate the 10% crop loss. Additionally, the price rise has come after eight years of stagnation. However, prices might reduce next year because of higher production. The tea producers from the southern part of India had more to cheer about, as the Tamil Nadu Small Tea Growers Industrial Cooperative Tea Factories Federation Limited raised the prices of the green leaf tea. Accordingly, the price rose from 14-17 rupees to 22 rupees per kg for August.
The executive director of the Tea Board (South), Mr M Balaji, mentions that the shortage of supply from the northeast states is because of floods. Also, he highlights that the demand for tea is high due to COVID. Further, he also adds that the quality of made-tea fetched high prices in auction centres. And subsequently, it was distributed to the small tea growers in Nilgiris who benefited greatly from this.
As mentioned previously, the Tea Board has increased district average prices for tea to Rs. 20.99 per kg. According to Mr M Balaji, the decision was made based on the consolidated auction sale (CTC teas from factories). Also, he confirms that this is the highest price fixed so far. Subsequently, Ramesh Chander, President of the Nilgiris Small Tea Growers’ Association said that small tea growers are happy. Further, he mentions that they have advised members to stick with the quality of the leaf to get reasonable prices and high returns.
Due to the monumental increase in tea prices, tea is imported from countries like Kenya and Vietnam. As the said country’s tea prices have crashed due to excess production. However, the Federation of All India Tea Traders Association (FAITTA) assures that imports will not become the norm. Also, FAITTA highlights that importing fashion is only for this year. Despite the assurance, the Indian Tea Association’s (ITA) chairman Vivek Goenka opposes the import of tea. Further, the association is stern on stopping the import of cheap teas by approaching the Commerce Ministry.
Addressing the hardships, the government is trying to help the tea producers with the price rise. However, bearing in mind the consumers, imports might be essential to stabilise the prices. But, a suitable agreement that satisfies both the parties is crucial.
Source: Grainmart News
Domestic prices have risen to a record high as a result, which may limit exports by the world’s second-biggest producer, potentially enabling Kenya and Sri Lanka to ship more, multiple trade sources said.
India’s tea production in the first half of 2020 fell 26.4% from a year ago to 348.26 million kilograms (kg) as heavy floods and coronavirus movement restrictions curbed output in the main producing region, the state-run Tea Board said in a statement.
Tea growing areas, notably Assam - which accounts for more than half the country’s production - suffered flooding in May, June and July.
Domestic prices have risen to a record high as a result, which may limit exports by the world’s second-biggest producer, potentially enabling Kenya and Sri Lanka to ship more, multiple trade sources said.
In June, India produced 138.52 million kilograms of tea, down 8% from a year ago as plucking was affected by floods in north-eastern state of Assam, the Tea Board said.
Sujit Patra, secretary at Indian Tea Association said a recovery in the crop was unlikely in the second half of the year.
In July, weekly auction prices jumped to a record of 232.60 rupees ($3.12) per kg, up 57% from a year ago, according to the Tea Board.
India’s tea exports in the first five months of 2020 fell 26.6% from a year ago to 74.40 million kilograms, it said.
The country exports CTC (crush-tear-curl) grade mainly to Egypt, Pakistan and the United Kingdom, with the orthodox variety shipped to Iraq, Iran and Russia.
Source: Hindustan Times
