Tea prices at North Indian auction centres have been witnessing a continuous rise as production has taken a hit due to unfavourable weather conditions.

However, prices of the brew in South Indian auction centres have fallen over the last few weeks as arrivals have increased. Significantly, both North and South Indian teas fetched higher prices at auctions held in June and the first week of July compared to the same period last year.

According to the data from the Calcutta Tea Traders Association (CTTA), the average all-India auction prices in June increased by around 11 per cent to ₹223.79 per kg from ₹201.74 per kg. While average prices at North Indian auction centres saw over 18 per cent jump or a rise of ₹40.57 per kg rise last month. During the period, the average prices at South Indian auction centres fell by ₹0.47 per kg.

Average auction prices in South India saw ₹4.89 per kg increase to ₹130.19 in sale number 23 (held in 2nd week of June) from ₹125.30 in sale number 22 (held in 1st week of June). Thereafter, the auction prices continued to fall.

Average all-India tea auction prices discovered in the first week of July (in sale number 27 held on July 1, 2024) stood at ₹225.35 per kg, which was a 21.88 per cent jump compared to the same period last year. Average North-India and South India auction prices in the first week of July increased by 26.22 per cent and 16.53 per cent year-on-year at ₹267.30 and ₹122.44 per kg, respectively, the CTTA data showed.

Crop shortage

One auction is being held per week in seven auction centres across the country. “In North India, auction prices are rising because of the shortage of crops. A significant drop in production happened in North Indian teas, the drop was not to that extent in South India,” Calcutta Tea Traders Association secretary Kalyan Sundaram told businessline.

According to Tea Board India data, total tea production for India fell to 263.60 million kg during January-May this year from 321.96 million kg a year ago, While production declined to 188 million kg from 236.98 million kg in North India, the output dropped to 75.20 million kg from 84.98 million kg during the same period.

According to tea industry experts, heatwaves and erratic rainfall have affected tea production in North India. “Domestic prices are extremely high because of the crop shortage in North India. And also because of all the initiatives on cleaner tea, there was a reduction in the quantity of production. And, because of that tea prices for both CTC and orthodox have been very high,” said Indian Tea Exporters Association (ITEA) chairman Anshuman Kanoria.

Notably, the Food Safety and Standards Authority of India (FSSAI) in November last year issued a notification directing all notified laboratories to test banned pesticides in tea. According to the recommendations of FSSAI, the Tea Board India announced a ban on the use of 20 different varieties of pesticides in tea plantations across the country.

The FSSAI has also operationalised the maximum residue limit (MRL) for five pesticides used in tea. It has recommended MRLs in teas to streamline food safety and regulations.