INDIA – India’s tea prices have been soaring and are expected to remain high due to heatwaves and floods during the peak harvesting season, which have significantly reduced output in key producing regions.
According to Reuters, this price rise could support the struggling Indian tea industry, which has been grappling with rising production costs amid negligible price increases over 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.
He added that production was also affected by the government’s decision to ban 20 pesticides.
India’s tea production in May dropped more than 30 percent from a year earlier to 90.92 million kg, the lowest for that month in over a decade, due to excessive heat and scant rainfall.
In 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 increase in tea prices began after a heatwave reduced production from April onwards amid strong demand, noted Kalyan Sundaram, secretary of the Calcutta Tea Traders’ Association.
By the last week of June, average tea prices surged to 217.53 rupees (US$2.61) per kg, marking a nearly 20 percent increase from a year before, according to data compiled by the Tea Board.
Tea production saw some improvement in June after good rainfall provided respite from the heatwave, but flooding in July has again limited plucking in many districts of Assam.
India produced a record 1.394 billion kg of tea in 2023, but production in 2024 could fall by around 100 million kg, stated Bezboruah.
The production shortfall is expected to drive prices significantly higher, but financially weak and indebted producers are struggling to negotiate with powerful buyers during peak production months. More than half of India’s total tea production is harvested from July to October.
Average tea prices in 2024 could be 16 percent to 20 percent higher than last year, but the increase is unlikely to reduce tea exports. 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 percent from a year ago to 92 million kg, according to the commerce ministry. The country exports the CTC grade mainly to Egypt and the United Kingdom, with the orthodox variety shipped to Iraq, Iran, and Russia.
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