KOLKATA: Global tea production is heading towards a shortfall in the January-March quarter of 2009 due to the prevailing dry spell in the major tea producing nations. Indicative figures show that the production is already down by 14 million kg, with Sri Lanka being the worst loser.
Tea production in India has also been hit by the drought-like situation, which has affected first flush teas in south India, Assam and Dooars.
This has resulted in tea prices firming up in the global markets as well at the Indian auctions. "FY10 may turn out to be a good year for the Indian tea sector. The Indian tea companies are expected to perform better this year as tea prices have already gone up by Rs 20-25 per kg," McLeod Russel India MD Aditya Khaitan told ET.
In fact, good Assam teas, which had been fetching some Rs 85-90 per kg in 2008 are now commanding anything between Rs 95-Rs 130 per kg. According to initial reports, tea production in India has gone down to a marginal 21.5 million kg in January 2009 as against 21.6 million kg in the corresponding period of the previous year.
A senior official of Indian Tea Association (ITA) also said the crop loss in February and March will be much higher. "It will be difficult to recover the first flush teas," the ITA official said.
Tea companies are hoping that firm prices will continue this year as there is no carryover stock to meet the growing internal demand. Warren Tea executive chairman Vinay Goenka said: "Prices for new season teas have already jacked up by 25-30% on an average. We only hope that we do not lose much tea due to the drought-like situation. We should have some tea to sell in the market and the weather should improve. In the case of Warren Tea, out of our 14 estates, we have not been able to kick off operations at three of our factories as production has been very low in these estates."
A similar crop loss situation had arisen in 1999, when Indian tea crop production had gone down by 45-50 million kg. But the global production was not affected that year and therefore the prices did not go up significantly. In Kenya, the crop has gone down to 25.5 million kg in January 2009 as against 29.7 million kg in January 2008.
Sri Lanka has been the worst hit with production going down by 8.7 million kg in the month of January. As against a Sri Lankan production of 26.3 million kg in January 2008, the production has dwindled to 17.6 million kg this time. Indonesian crop is down by 0.6 million kg and the tea production is down by a marginal 0.1 million kg in Bangladesh.
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