Erratic rainfall brews challenges for North India tea output, prices up

Except for Darjeeling, the other categories have been on an uptrend since mid-May

Erratic rainfall has affected tea production in North India, pushing up prices. However, industry stakeholders say the price increase is insufficient to offset the higher costs and crop losses.

Data from the Calcutta Tea Traders Association (CTTA) indicates that the average price realised for crush-tear-curl (CTC) leaf at Kolkata auctions held on Wednesday and Thursday was Rs 304.69 per kilogram (kg), compared to Rs 236.9 per kg the previous year.

The average price for CTC dust was Rs 304.69 per kg, up from Rs 246.95 per kg; orthodox leaf averaged Rs 312.15 per kg, compared to Rs 230.11 per kg; and Darjeeling leaf was Rs 318.8 per kg, compared to Rs 310.29 per kg.

Except for Darjeeling, other categories have been on an upward trend since mid-May at Kolkata auctions, according to CTTA data.

J Kalyana Sundaram, secretary of CTTA, noted that the last time the average price for CTC leaf reached this level was from June to September 2020.

“Orthodox leaf prices were higher in 2022.”

CTTA organises the Kolkata auctions.

Adverse weather

Climate change has been affecting the industry for several years. This season began with a long, dry spell, followed by excessive rain.

Sandeep Singhania, president of the Tea Association of India, projected that the combined fall in tea production in North India until the end of June 2024 would be around 60 million kg (mkg) compared to the corresponding period last year.

North India, comprising Assam and West Bengal, accounts for more than 80 per cent of the industry’s annual production.

Singhania noted that production in West Bengal is lagging by 25-40 per cent, and in Assam by 10-15 per cent, compared to the same period last year (first fortnight of June 2024).

Joydeep Phukan, secretary of the Tea Research Association, said the entire area from North Bank in Assam to West Bengal has been severely affected. March and April were unusually dry months.

“Humidity is crucial for tea growth, but it was unusually dry. Increased pest activity also impacted the crop,” he said.

Himanshu Shah, chairman of M K Shah Exports, said there was a cumulative crop deficit until the end of May. “And with the first half of June continuing the trend, there is still a huge deficit.”

The right balance between rain and sunshine is essential for a good crop, but recent years have seen extreme weather conditions.

Counting losses

Last year, the industry recorded significant losses, said Indian Tea Association (ITA) Chairman Hemant Bangur.

“This year, it’s a zero-sum game. We have gained in price but lost in crop. Thus, net revenue is still down compared to last year. If the crop and prices do not improve, the industry will struggle to generate enough cash to pay workers’ bonuses this festive season.”

The tea industry in both Assam and West Bengal faces a challenging future, Singhania warned, citing concerns about rising essential input costs, including wages and higher bonus payouts in the near future.

Nevertheless, without the price increase, the situation would have been far worse.

“If tea prices hadn’t jumped, we wouldn’t have been able to run the tea gardens,” said a large tea producer. “We hope the price levels sustain.”

Anshuman Kanoria, chairman of the Indian Tea Exporters Association, said, “It’s a bit premature. The heavy cropping months will start from July, and we’ll need to see if prices hold at these levels. If they do, it will be good for the industry.”

Exports look up

Iran, one of the top buyers of Indian tea, reduced purchases hugely in 2023. However, demand has returned this year.

“Iran usually doesn’t buy before May or June, but they have already started purchasing,” said Shah, adding that there was also increased demand from Russia. “After many years, Russia’s average buying price has increased.”

Shah attributes this to Sri Lanka’s inability to meet requirements. “Big buyers have realised there is no alternative to India.”

Kanoria added that Iraq has emerged as one of the largest buyers.

Figures from the Tea Board show that exports from January to March 2024 stood at 64.63 mkg, up by 33.29 per cent over the same period the previous year.