Tea prices at North Indian auction centres rose in the range of 23-36 per cent year-on-year during August on the back of a sharp fall in the production of the brew.
According to the Indian Tea Association (ITA), prices are likely to stay firm for the rest of the year as the overall production for 2024 is expected to be significantly lower compared with 2023.
The average price of all teas during auctions held in Kolkata, Guwahati and Siliguri in the last week of August this year was ₹260.90 per kg, which was up by around 36 per cent y-o-y compared with ₹192.05 per kg in the last week of August last year, per data from the Calcutta Tea Traders Association (CTTA).
Average auction prices in North India grew 23 per cent y-o-y to ₹245.66 in the first week of August compared to ₹199.22 during the same period last year.
Drop in volume
“Prices are very firm compared to last year because of the crop shortage. The quantity of tea sold in sale Nos 31 to 35 (from first to last week of August) of 2024 in Guwahati, Siliguri and Kolkata auction centres fell to 57.52 million kg (mkg) from 59.15 mkg in the same Sale Nos last year,” Calcutta Tea Traders Association secretary Kalyan Sundaram told businessline.
According to Tea Board India, the country’s tea production declined by 13.44 per cent y-o-y to 552.83 mkg during the January-July period this year. During the period, production in North India and South India fell 14.67 per cent and 8.79 per cent y-o-y at 430.12 mkg and 122.71 mkg, respectively.
“The crop loss is due to unsupportive weather conditions and high pest attacks. The resistance to the existing set of chemicals that we have to fight the pests in over a period of time has not very affective. As there is a crop loss obviously the prices ought to rise because availability becomes a little bit of a challenge,” Indian Tea Association Chairman Hemant Bangur told businessline.
Unlikely to make up
According to the recommendations of the Food Safety & Standards Authority of India (FSSAI), the government has announced ban on the use of different varieties of pesticides in tea plantations across the country.
Bangur said total tea production of India would not cross 1,200 mkg this year based on present rates. Last year, total production stood at 1,393.66 mkg.
“I don’t think that the crop losses the tea industry had upto August can be made up in the moths of September, October and November. So, overall crop for this season will be lower, and if the demand is even constant at last year’s level, prices should remain firm,” he said.
The ITA Chairman, however, said the price rise was not good enough for the amount of loss the tea companies had suffered earlier.