BackAs supplies from Kenya dry up, Indian tea prices head north
As supplies from Kenya dry up, Indian tea prices head north
PremiumReaping profits: Women pick tea leaves in a field in the Balacola region outside Coonoor, India. Things are looking up for Indian tea as demand on the domestic front also shows a steady rise.
Kochi: Tea produced in Assam and West Bengal has been fetching good prices at the weekly auctions in Siliguri, Guwahati and Kolkata, thanks to growing domestic consumption and a smaller crop in Kenya, a major producer and exporter of tea.
As a result, the price of such Indian tea has risen by Rs10-15 per kg.
A prolonged dry spell has badly hit production of tea in Kenya. On top of that, the violence in January after the presidential elections led to workers fleeing tea estates and factories being closed.
Trade sources in Kochi, citing recent reports in Kenya, say production during the first two months of 2008 was down by 22.7 million kg to 53.8 million, compared with the first two months of 2007.
In March, the decline has been arrested to some extent and the shortfall has been around 30 million kg.
Kenya produced 370 million kg tea in 2007, up from the previous year’s 310.8 million kg. India’s production in 2007 was down to 944.7 million kg against 955.9 million kg in 2006.
Indian exports had fallen by nearly 62 million kg to 157 million kg in 2007. By contrast, Kenyan exports in the first 11 months of 2007 rose to 315 million kg from 288 million kg in the whole of 2006.
The average price of Indian teas at the auctions has been on the rise in the first quarter. According to Manojit Dasgupta, secretary general of the Indian Tea Association, though the quantity of first flush leaves cropped after winter has not been encouraging, prices fetched at the auctions have been on the higher side by Rs10-15 a kg.
Normally, the first flush fetches Rs80-85 a kg. The crop situation is expected to be better this month, he says.
In the south, tea prices have also seen a rise by ₹ -3 per kg and the average price has been ₹ 51-52 in first three months of 2008, says K. Maheswari, president of the United Planters Association of Southern India (Upasi). He says the increase in price realization has been mainly for the cut, tear, curl (CTC) variety and themajor reason behind this is lower production in Kenya. This variety of tea accounts for roughly 80% of Kenya’s total production.
The domestic situation appears to be favourable with practically no carry-forward stock from the previous year. Lower tea production has pushed up the prices at the auction in Kenyan port city of Mombasa by around 70 cents to $1.80(Rs72) a kg.
A severe drought in Kenya in 2006 had seen Indian tea find its way to several markets, including Pakistan, which took 16 million kg of teas from here.
N. Sriram of Coimbatore-based Contemporary Tea Co. says there was good overseas demand for Indian teas. While the average lower teas has a demand between Rs50 and Rs60 a kg, the better quality ones are being sold at Rs60-70.
Dasgupta of Indian Tea Association says deficit in Kenya is likely to persist for some more time due to the drought.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
