Assam tea to see higher prices in 2018 auctions as production falls

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Come January 2018, tea producers from Assam and West Bengal can expect higher prices in auctions as well as direct sales, as tea availability is projected to come down in these areas owing to a shortfall in production.

Tea production in Assam, which accounts for over 50 per cent of the annual production in the country, fell by 27 per cent to 81.75 million kg (mkg) in September because of unseasonal torrential rain. The production in West Bengal’s Dooars region dipped by 19 per cent to 43 mkg in the same month.

While industry officials reported a 5-6 per cent crop recovery in these areas in October as the rain subsided, November is again expected to see a shortfall of 10-15 per cent compared to the production in the corresponding month last year. Officials are of the view that a production shortfall in north India will result in a supply shortfall, and hence prices are expected to improve.

“The coming year is expected to begin on a good note as far as prices are concerned. There is no carryover stock now; there is a production shortfall in the face of higher demand in the country; and the export situation is also improving,” Azam Monem, chairman of the Indian Tea Association (ITA) told Business Standard.

According to McLeod Russel, the world’s largest tea producer, prices in India have increased by ~5 a kg due to increased demand from both domestic and export markets and lower production. 

Arun Thekedath, chairman of Assam Tea Planters’ Association, said good quality teas would see a 10 per cent surge in their prices, though the price increase for average grades couldn’t be predicted. “But I think prices will be on the higher side as demand for teas is increasing while there is a production shortfall,” he said.

India annually consumes around 1,000 mkg of tea, growing at a less than 10 per cent rate. Till September, total production in the country declined marginally to 912.55 mkg as against the production of 923.27 mkg. However, a shortfall of around 23 mkg from Assam was made up by South India where production grew by 15 mkg.

Officials expect total production in the country to remain in the 1,200-1,220 mkg range, which is lower than the previous projection of 1,300 mkg this year.

After the September downpour hit the production, the Assam and Dooars estates are currently faced with lower temperatures, which are not conducive for tea growth. In Assam, the minimum temperatures this month have been in the range of 14-20 degrees Celsius, while in Dooars, the mercury has fluctuated between 16 and 19 degrees Celsius.

Tea production until September 2017: 

Region June 2017 July 2017 August 2017 September 2017
    West Bengal
    • 43.01
    All India
Source: Tea Board of India

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