Agri Business

Double whammy for tea sector

Vishwanath Kulkarni V.Sajeev Kumar Bengaluru/Kochi | Updated on February 04, 2019

File photo of tea plants hit by frost   -  the hindu

Faced with the double whammy of deficient North East Monsoon (NEM) rains and severe frost this winter, the tea sector in South India is staring at a loss of production in the January-March quarter in calendar 2019.

While there was a 23 per cent deficit in NE monsoon rains in Tamil Nadu this year, triggering drought-like conditions, the winter was severe with temperatures dipping to a record low of -8 degrees in some estates, impacting production in the key regions of Nilgiris and Munnar.

Various industry players estimate production losses between 10-30 per cent for the Jan-March quarter.

“There’s a big impact on production and it is too early to quantify the losses,” said R Rajkumar, Chairman, Nilgiris Planters Association (NPA). “Frost should be treated as a calamity and growers should be compensated for the losses,” Rajkumar said.

Ramesh Bhojarajan, President of The Nilgiris Bought Leaf Tea Manufacturers Association said that more than 30 per cent of the crop has been lost due to the failure of NEM and severe frost. As a result, many of the tea factories have been operating at lower capacity and in single shifts. “We are operating at one third of our capacity of 14,000 kgs a day and only for four days a week,” Bhojarajan said.

‘Treat frost as calamity’

“If the NEM rainfall was better, the severity of the winter would have been reduced,” said N Lakshmanan of the Golden Hills Estate. “Production can revive during the April-June quarter only if there’s a good pre-monsoon,” he said, adding that government should treat frost as a calamity.

According to planters’ body UPASI, tea production in 2018 was lower at 218.6 million kgs, down 16 million kgs from the previous year’s 234.6 million kgs. South India accounts for roughly 17 per cent of Indian tea production while its share in exports is nearly 40 per cent.

“We expect at least a 10-15 per cent drop during the January-March period,” said Venkitaraman Anand, Whole Time Director and Chief Executive – SBU A, Harrisons Malayalam Ltd. Production during this period last year was 38.34 million kg and the sector would be short of around 4-6 million kg this year, he said.

In December, the sector was close to the target set by the Tea Board by achieving 19.18 million kg.

The auction price for the period between January-December 2018 for south India was ₹101.19 as against ₹96.52 for the same period in 2017, a growth of 4.84 per cent. An increase in wage rates is on the cards, which would lead to a considerable decline in the already poor operating margins, unless there is a commensurate increase in tea prices on a sustainable basis, he said.

Exports have not been increasing as there is not enough orthodox teas and most producers are unable to switch from CTC to orthodox as there is a higher cost of around ₹15/kg in orthdox production.

A proposal to revise the export incentive is still pending with the government and the Tea Board needs to increase its efforts in increasing the visibility of South Indian teas in traditional as well as emerging markets, Anand added.

However prices are on the higher side by ₹3/kg compared to last year, said JKThomas, Managing Director of Malankara Plantations.

Published on February 04, 2019

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like