Tea prices firm up as estates in North India close early

Tea prices at the lower end of the market have firmed up by nearly 20 per cent in the past three-four weeks following Tea Board’s directive to tea estates in North India to stop plucking. Prices are currently ruling at around ₹125 a kg, as against ₹95-105 in the same period last year.

The Tea Board had, in October, directed tea gardens not to harvest leaves beyond December 10, in order to reduce the quantity of substandard teas. While tea manufacturing units in Assam, Arunachal Pradesh, Meghalaya, Mizoram, Nagaland, Tripura and Manipur were ordered not to pluck beyond December 10; those in West Bengal, Bihar, Sikkim, Himachal and Uttarakhand, were told to stop by December 15.

Tea gardens usually carry on plucking leaves till the end of December. According to Vivek Goenka, Chairman of Indian Tea Association, the early closure of gardens will help reduce the supply of teas by around 25-30 million kg (mkg) this year.

“Tea Board has ensured that the order is complied with in word and spirit. I am in Assam right now and no trucks are moving around carrying leaves. Prices at the lower end of the market have already moved up by ₹20 a kg,” Goenka told BusinessLine .

Increased supply of poor quality leaves, which is usually produced when plucking continues till the fag end of the season, exerts pressure on the price of good quality teas.

Drop in production

Tea production in October is already down by nearly seven per cent to 150.55 mkg, as compared with 162.06 mkg in the same period last year.

November production is also estimated to be down by about 10-15 mkg. “The shortfall in production coupled with a demand growth of around 30 mkg on a year-on-year basis, will help keep the prices firm,” said DP Maheshwari, MD & CEO, Jay Shree Tea.

As per Tea Board statistics, the country produced close to 1117.62 mkg of tea during January-October. The production for the whole year is expected to be down by nearly 40-45 mkg.

The average price of North India tea at auctions during the four month period of August-November was up by nearly 5 per cent in 2018, as against same period last year due to the drop in production.

First Flush prices likely to open firm

According to Goenka, the early closure of gardens will allow estates to take up pruning in a planned manner and lead to production of better quality of teas at the beginning of next season in March.

“The early closure will give more time for rest to the bushes which will translate into better quality thereby making an impact on prices of first flush crop,” he said.

Without stocks of low priced produce, the fresh tea will have better demand and prices said Krishan Katyal, Chairman and Managing Director of auctioneer J Thomas.

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