Packet tea companies — planning a second round of price hike this month — have postponed it till July-end, on the back of resistance from consumers.
Harendra Shah, chairman, Federation of All-India Tea Traders Association (FAITTA) said that the industry was divided on the second price hike and hence it was postponed by a month. “The market has not changed and the supply is still constrained, but the packeteers are divided on the price hike. Also, there is some resistance from the market.”
The packet tea producers increased prices in May by Rs 20-40 a kg and were planning another increase of Rs 15-20 a kg in June. That increase would now come in July.
However, if the rains continue playing truant then bulk tea prices could escalate further. Normally good tea crops require around five inches of rainfall. The hike in packet tea prices was on the back of a global shortfall in tea crop, resulting in an increase in auction prices.
During March and April, the shortfall in crop was around 15.8 million kg in north India. Industry representative said that May was marginally better, and year-on-year crop was up by a million kg. However, June was lower compared to last year, and last year’s June crop was very poor.
The situation in south India was worse. Not just India, the global shortfall was pegged at around 100 million kg, factoring the pipeline deficit. The tea season in India started with a deficit of 25 million kg.
Bulk tea prices are currently higher by Rs 25-30 a kg. Aditya Khaitan, chairman, Indian Tea Association (ITA) said, the second flush teas were running behind schedule by a week and had just started coming into the market.
“With the second flush arrivals prices which had eased marginally, have started firming up again,” he said.
The shortfall in crop was largely due to deficient pre-monsoon showers. And if the monsoon continued the trend then the shortfall would increase. Industry representative said the shortfall could not be made up for. India is alone staring at a shortfall of 60 million kg. With the three major black tea producing countries — India, Sri Lanka and Kenya — the shortfall would be 80-100 million kg.
