Indian tea prices have fallen by 20% in a month as arrivals increased in auctions amid dull demand. Price of the Orthodox tea variety has seen a pick-up in the awake of weak sri Lankan shipments following economic trouble in the country. But Orthodox tea constitutes only around 10% of the total tea produced in India.
The average yearly tea price in 2021 was secured at Rs 173.63 per kg, down from Rs 184.68 per kg in the last year. But 2020 is considered as an abnormal year by the industry because of the pandemic, which created a supply shortage, leading to hike in prices. Tea prices in 2022 have remained below the average price of 2021 except for a brief period.
“The production of tea has increased from April from both associates and bought leaf sector (BLS). The availability of cheap teas especially from the latter has suppressed demand for higher grades teas. However, the increase in the natural gas prices has raised the cost of production in the estates in Assam,’’ said A Bhattacharya, deputy secretary of the Indian Tea Association, Assam.
While domestic demand has remained flat, exports too have not gone the way the industry wanted. Russia is the biggest buyer of Indian tea followed by Iran. India is facing difficulties in shipping tea to both these countries. “There are payment issues for shipments to both these countries and hence exports are not smooth. We hope to get some clarity on these matters soon,’’ said Deepak Shah, chairman of the South India Tea Exporters Association.
Sri Lanka is a major supplier of Orthodox tea in the global market. Its exports have decreased with its economy in a disorders. “In Sri Lanka, the situation is bad with a fall in tea production. Power cuts have affected the quality of tea produced. But the Orthodox tea prices did not pick up as we expected in the world markets. Of late, the prices are moving up,” he added.