Tea industry to witness decline in production, increase in exports by 2024

The tea industry is likely to see a drop in production by over 100 million kg this year due to erratic weather coupled with early closure of gardens, which will lead to higher cost per kg for farmers, stakeholders said on Monday.

However, the silver lining this year has been better price recovery and increased exports.

Compared to the production of about 1,178 million kg of tea during the first 10 months of 2023, the country produced about 1,112 million kg of tea during January-October of the current calendar year, while exports are expected to touch 240-250 million kg in 2024. , they said it increased from 231 million kg last year.

Production fell by about 66 million kg in the January-October period in 2024, and production is expected to decrease by another 45-50 million kg as the infusion is suspended after November, said Indian Tea Association chairman Hemant Bangur. .

Despite political challenges and financial problems, tea sales in India were healthy and the increase in exports was due to the strong desire of traders, the chairman of the Indian Tea Exporters Association Anshuman Kanoria said.

“The performance of the tea industry this year was not very good as the yield decreased and the production cost per kg increased and many costs were fixed and the price did not increase proportionally.

The industry was in the red in 2023, and the situation is now better than last year but the industry is not out of trouble,” Bangur told PTI.

Companies have suffered huge losses in all areas in 2023 and the industry is likely to break even this year, he said.

“In Assam, producers may make a small profit or break even but in north Bengal, they will still be in the red… This year, there will be a 110-120 mkg dip in production compared to last year,” he said. .

Saying that climate change and variable weather conditions are affecting crop production, the Tea Research Association (TRA) has advised the industry to improve soil health, build water sources through rainwater harvesting and improve shade conditions to achieve good microclimate conditions in tea areas.

“The effects of climate change are making Indian tea less competitive.

This year, many tea-growing regions have seen temperatures ranging from 35 to 40 degrees Celsius and reduced rainfall for a long time, affecting tea production by 20 percent on average in the quality months of cultivation,” TRA secretary Joydeep Phukan told PTI.

However, exporters have strength in the growing export trend.

“Tea exports have been good this year. We expect to close the 2024 calendar year with an estimated 240-250 million kg (mkg) and the 2024-25 financial year with around 260 million kg,” said Kanoria.

There has been a huge increase in tea exports to Iraq, accounting for 20% of tea exports, and traders expect to send 40-50 million kg to the west Asian country this amount, he said.

Indian exporters, entering many western Asian markets while Sri Lankan yields are low, have been able to maintain export prices there, he said.

“Despite geo-political challenges and currency problems, our exports have generally been healthy. The increase in exports was due to the high risk of traders from the country.

They’ve gone out of their way to do a marketing campaign and take risks,” Kanoria said.

He also commended the Tea Board for quick steps to address the issue of MRL (major residue limit) content and improve quality and compliance with international standards.

“Steps taken by the Tea Board like more inspection, sale of 100 percent tea and early closure of gardens are welcome,” he said, adding that promotion of Indian tea, strict adherence to food safety rules and adequate production. It is necessary to push exports to the 300 mkg mark.

Kanoria said there is room for growth in traditional Indian tea markets such as Western Europe, Russia and other CIS countries, the US and Japan.

Regarding orthodox tea exports, this year is the same, as the country is expected to maintain tea exports of more than 100 mkg, while CTC tea exports have also increased, ICRA assistant president and sector head Sumit Jhunjhunwala said.

“In the first eight months of 2024, India exported 64 million kg of orthodox tea, compared to 63 million kg exported during the same period last year.

Exports of orthodox varieties for 2022 and 2023 were 109 mkg and 101 million kg respectively. This trend will continue this year,” said Jhunjhunwala.

More than 100 million kg of sales of the orthodox variety from India is said to have decreased in Sri Lankan crops by more than 50 million kg, he said.

“The data for the eight months of this year also suggested that India exported 87 million kg of CTC, up from 62 million kg during the same period in 2023,” he said.

ICRA said the average retail price of CTC tea rose by Rs 48 per kg in the April-November period this year due to a demand-supply gap, driven by lower CTC production and higher exports.

However, prices have come down in recent auctions.

This reduced production, coupled with a lower carrier price, is likely to support strong tea prices in early 2025, until May-June next year, the rating firm said.