Tea Prices Surge on Supply Shortage

Chennai: Tea prices jump on reduced output of the commodity in the event of extreme weather events.The average price of tea increased by nearly 20 per cent from the previous year to Rs 217.53 per kg in June.

As per the data of the Tea Board, India's tea production has been significantly reduced due to extreme weather events. The production of tea experienced a 30 per cent decline in May, reaching a low of 90.92 million kg, the lowest level in a decade.

While heat waves had affected the plantations, heavy rains too had a negative impact on the crop. Assam, which accounts for over half of the country's tea production, was affected by severe river flooding in July. India produced a record 1.394 billion kg of tea in 2023 and the output of Assam is likely to be reduced by 100 million kilograms in 2024 compared to the previous year.

Meanwhile in South India, the absence of summer rains in January, February, March, and April had led to an unprecedented drought-like situation in tea plantations.

Further, the government ban on pesticides has severely impacted tea production. The government had decided to prohibit the use of 20 pesticides for tea plantations. However, the lower usage of pesticides supported exports. India's tea exports increased by 37 per cent to 92 million kg in the first four months of 2024, The country primarily exports the CTC (crush-tear-curl) grade to Egypt and the United Kingdom, while the orthodox variety is shipped to Iraq, Iran, and Russia.

These factors affected the supply of the commodity in the domestic market. The average tea prices in 2024 is expected to be 16 to 20 per cent higher than the previous year. Nevertheless, over half of India's total tea production is harvested from July to October.