Indian tea prices surged by 18% during the January-October period of 2024 compared to the same timeframe last year. However, this price increase comes against the backdrop of a significant production decline, with tea output dropping by 66.39 million kilograms to 1,112.11 million kilograms.
Union Commerce and Industry Minister Piyush Goyal, in a recent meeting with Assam tea planters, emphasized the importance of quality production and strict compliance with Maximum Residue Limits (MRLs). He urged the Food Safety and Standards Authority of India (FSSAI) and state governments to enhance monitoring to ensure compliance.
The production decline is largely attributed to adverse weather conditions in Assam and West Bengal, which have impacted yields. Minister Goyal reiterated that no extensions would be granted for manufacturing beyond the mandated closure on November 30, 2024, except for gardens producing high-quality tea that meet the Tea Board’s exemption criteria.
To sustain prices and maintain market stability, Goyal stressed the need to manage oversupply. Additionally, the policy of routing 100% dust-grade tea through auctions will continue to ensure better compliance and traceability. The meeting revealed that dust-grade tea has performed well in terms of price realizations under this system.
Impact of Production Ceasefire and Future Outlook
With tea manufacturing ceasing from December 1, 2024, India’s overall production for the year is expected to fall short of last year’s figures. While domestic prices have surged recently, the earnings gains are offset by the significant crop decline.
Industry concerns were raised regarding a noticeable price drop during November sales compared to September across auction centres in North India, with prices dipping by Rs. 15-40 per kilogram.
The Indian Tea Association has called for measures to stabilize the market as the sector navigates the dual challenges of reduced output and fluctuating prices.