Tea prices in India have been rising and are expected to remain high as heatwaves and floods during the peak harvest season hit key producing regions hard.
The price hike could support India’s beleaguered tea industry, which has been struggling with rising production costs amid negligible increases in tea prices over the past decade.
“Extreme weather events are taking a toll on tea production. The excessive heat in May, followed by continued floods in Assam, are reducing production,” said Prabhat Bezboruah, a leading tea planter and former chairman of the Tea Board of India.
Production was also affected by the government’s decision to ban 20 pesticides, Bezboruah said.
India’s tea output in May fell more than 30% from a year earlier to 90,920 tonnes, the lowest for that month in more than a decade.
In the northeastern state of Assam, which accounts for more than half of the country’s output, more than 2 million people were affected by severe river floods in July.
The rise in tea prices began after a heat wave reduced production from April amid good demand, said Kalyan Sundaram, secretary of the Calcutta Tea Merchants Association.
In the last week of June, average tea prices rose to 217.53 rupees ($2.61) per kg, marking a nearly 20% increase from a year earlier, according to data compiled by the Tea Board.
Tea production improved in June after good rains gave respite from the heatwave, but again floods in July limited the harvest in many districts of Assam, a tea planter in Jorhat said.
“July is normally a peak production month, but this year we are expecting a deficit of 15 to 20 million kg,” the grower said.
India produced a record 1.394 billion kg of tea in 2023, but in 2024 production could fall by around 100 million kg, Bezboruah said.
The production shortfall is expected to push prices up significantly, but financially weak and debt-ridden producers struggle to negotiate with powerful buyers in peak production months, a Kolkata-based trader said.
More than half of India’s total tea production is harvested from July to October.
Average tea prices in 2024 could be 16% to 20% higher than last year, but the increase is unlikely to reduce tea exports as many buyers are increasing their purchases following pesticide bans, Bezboruah said.
India’s tea exports in the first four months of 2024 rose 37% from a year earlier to 92,000 tonnes, according to the commerce ministry.
Source: CNN Brasil
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