July 4, 2020
The Indian tea industry will have to suffer an annual shortfall in output by around 150 million kg (mkg), even if all goes well from now, says Tea Board of India deputy chairman Arun Kumar Ray, further adding a point that an unprecedented drop in tea consumption has worsened the situation.
“Although price realization has improved by around 20-40% owing to sudden fall in supply, the demand for tea is not picking up. Outside tea consumption on roadside hangouts, tea stalls, cha bars, hotels and eateries is yet to gather momentum following zero sales of the hot brew in the last three months. The marginal rise in domestic tea consumption cannot compensate for the drastic fall in sale of big tea packets,” said Ray. According to him, the sudden flood in Assam and dip in supply of green leaves in North Bengal have added to the concerns.
In 2019, India produced 1,350 mkg tea, out of which around 250 mkg was exported. “As the domestic consumption of tea lovers account for around 1,000 mkg, the Tea Inc is left with around 100 mkg over-produced tea leaves each year. This causes price depression. However, this year, this will not happen owing to the 150mkg shortfall in production,” informed Ray.
There was a shortfall of 48% in Darjeeling, till the months of May and June this year. Sandeep Mukherjee, principal advisor, Darjeeling Tea Association (DTA), said, “Last year’s annual production in Darjeeling was 7.75 mkg of tea. The shortfall is likely to dip, but it will remain since Darjeeling tea industry usually runs for eight months in a year. Price depression and paucity of demand are badly affecting the Hills tea sector.”
Goodricke MD & CEO Atul Asthana, agreeing to the above statements too, feels there will be a 10-15% shortfall in tea production across the country. “In April, the tea output fall was at 72%, in May, it was 55% and in June-end, it is still at 48%. This huge shortfall cannot be compensated by the current price rise of tea,” agrees Asthana.
According to the Arijit Raha, secretary-general of the largest planters’ body, Indian Tea Association (ITA), “The industry is heading for a major crisis because loss suffered in terms of crop till date and the prospects of recouping in the coming months is difficult on the face of massive rainfall reported from North Indian tea growing regions, both in Assam and West Bengal”.
In the last few months, average tea prices jumped by 25-50% in the auctions. In May auctions, prices escalated by over 52% to Rs. 217.12 per kg in Guwahati, while in Siliguri, it surged by 39% to Rs. 204.25 a kg, Tea Board data said.