Indian Tea Association raises concerns over lower production, prices

Lower production, coupled with falling prices, has compounded the woes of the Indian tea industry.

The leading planters' body, the Indian Tea Association (ITA), said on Thursday that sweltering heat with insufficient rainfall in the Brahmaputra Valley in Assam and West Bengal has adversely impacted production.

Moreover, heavy rain, coupled with thunderstorms and hail across several tea estates in the Barak Valley in Assam throughout April, has left planters in the region concerned about second flush teas and the overall production scenario, the ITA noted.

Citing Tea Board data, the association said that North Indian tea production from January to March 2024 was down by more than 21 million kilograms (mkg), while all-India production was lower by more than 13 mkg. Production in South India was, however, up during the January to March period, the data showed.

Exacerbating the situation is a declining trend in prices. The ITA pointed out that tea prices in 2024, according to available Tea Board data for January to March, continued the downward trend across all auction centres in India, worsening the financial stress of tea producers.

The all-India average auction price from January to March 2024 was Rs 128.12 per kilogram, compared to Rs 144.21 per kilogram in the same period in 2023. The average for North India was Rs 134.57 per kilogram, down by Rs 16.30, while for South India it was Rs 113.30 per kilogram, down by Rs 17.39.

The average all-India auction prices declined by Rs 14.81 per kilogram from April 2023 to March 2024, ITA stated. “The Bharat auction model introduced in April 2023 could not ensure fair price discovery, forcing the industry to revert to the English model in November last year,” it added.

According to the association, the margins of a vast majority of companies are sharply declining, as reflected in their balance sheets.

For Darjeeling, which is marked by low yield, declining prices, and an influx of Nepal teas, the situation is even more precarious, the association noted. According to the ITA, without a financial relief package, the survival of the industry in Darjeeling is at risk.

“The Indian Tea Association has urged the government to extend a financial revival package to the Darjeeling tea sector, which was endorsed by the parliamentary standing committee on commerce in its 171st report. This awaits consideration and action,” the association said.