Tea prices in estates in North India, including West Bengal and Assam, are likely to rule firm on the back of a lower carryover stock from last year and a decline in production of the first flush crop in February and March this year.

According to industry insiders, there has been a near 40 per cent decline in production of first flush crop in the North India gardens in the months of February and March due to lower rainfall and unfavourable weather conditions. Production during February 2022 was 1.81 m kg, while the March output data is yet to be released by the Tea Board. The production of first flush crop in February 2021 was 2.18 m kg and was 46.87 m kg in March. Total first flush output in 2021 was 49.05 million kg (mkg).

First flush crop is usually available till the second week of April post which there is a lull period before the second flush starts arriving in early May.

Prices up

The average price of good quality tea is up by nearly ₹30 a kg at around ₹350 a kg this year as compared to same period last year.   “The prolonged winter wave in Assam and West Bengal has affected production and the first flush crop is down by nearly 40 per cent. There has also been pest attack in the gardens. Now we need strong rains for a good quality second flush,” Bijoy Gopal Chakraborty, President, Confederation of Indian Small Tea Growers Association told BusinessLine.

The prices are expected to rule firm because of the low carryover stock from last year. Tea production has been lower crop in 2020 and 2021 and this has taken out excess supply of teas from the pipeline. Nearly 180-190 mkg of tea has been sucked out of the system because of the lower production during last two consecutive years.

“The opening price of new season tea in Siliguri auction has been very good. Usually when volumes are low, the prices tend to remain high. However, these are early days and we have to assess the quantum of production in end April,” Atul Asthana, MD and CEO, Goodricke Group said.

According to Sujit Patra, Secretary, Indian Tea Association, rains have started in North Indian gardens and the quality of first flush is not likely to be impacted. The prices are expected to improve since the crop is down, he said.      

Surge in input cost

However, there has been a huge surge in input cost, primarily fertilisers and coal prices, and this is likely to impact the tea industry. “Fuel and fertiliser cost are increasing and availability of these have also been impacted. Cost of coal, especially in West Bengal, has also gone up,” Vikram Singh Gulia, MD&CEO, APPL, said.

According to Chakraborty, there has been huge rise in potash product, which has gone up to nearly ₹44,000 a tonne, up from ₹21,000 a tonne last year.

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