India's tea prices soar as extreme weather slashes output

Harrisons Malayalam

08/07/2024 09:09

* 
      Heatwave, floods trim output in key Assam state, planters
say
    

        * 
      Output seen down 100 mln kg in 2024 from year ago,
planters say
    

        * 
      Tea prices jump 20% y/y on lower supply, Tea Board says
    

  
    By Rajendra Jadhav
       MUMBAI, July 8 (Reuters) - India's tea prices have been
soaring and are expected to stay high as heatwaves and floods
during the peak harvesting season slash output in key producing
regions.
    The price rise could support the beleaguered Indian tea
industry, which has been struggling with rising production costs
amid a negligible rise in tea prices in the past decade.
    "Extreme weather events are hurting tea production.
Excessive heat in May, followed by ongoing flooding in Assam,
are reducing output," said Prabhat Bezboruah, a senior tea
planter and former chairman of India's Tea Board.
    Production was also affected by the government's decision to
ban 20 pesticides, Bezboruah said.
    India's tea production in May plunged more than 30% from a
year earlier to 90.92 million kg, its lowest for that month in
more than a decade, hurt by excessive heat and scant rainfall.
    In the north-eastern state of Assam, which accounts for more
than half the country's output, more than 2 million people have
been affected by severe river flooding in July.
    The upside in tea prices started after a heatwave reduced
production from April onwards amid good demand, said Kalyan
Sundaram, secretary of the Calcutta Tea Traders' Association.
    In the last week of June, average tea prices surged to
217.53 rupees ($2.61) per kg, marking a near 20% increase from a
year before, according to data compiled by the Tea Board.
    Tea production improved in June after good rainfall gave
respite from the heatwave, but again flooding in July has
limited plucking in many districts of Assam, said a Jorhat-based
tea planter.
    "July is typically a peak production month, but this year we
anticipate a shortfall of 15 to 20 million kg," the planter
said.
    India produced a record 1.394 billion kg of tea in 2023, but
in 2024 production could fall by around 100 million kg, said
Bezboruah.
    The production shortfall should drive prices significantly
higher, but financially weak and indebted producers are
struggling to bargain with powerful buyers in peak production
months, said a Kolkata-based trader.
    More than half of India's total tea production is plucked
during 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 boosting their purchases following the
pesticide bans, said Bezboruah.
    India's tea exports in the first four months of 2024 jumped
37% from a year ago to 92 million kg, according to the commerce
ministry.
    The country exports the CTC (crush-tear-curl) grade mainly
to Egypt and the United Kingdom, with the orthodox variety
shipped to Iraq, Iran and Russia.

($1 = 83.4575 Indian rupees)

 (Reporting by Rajendra Jadhav; Editing by Jan Harvey)
 ((rajendra.jadhav@thomsonreuters.com; +91-22-68414378 ; Reuters
Messaging: rajendra.jadhav.thomsonreuters.com@reuters.net))