Supply crunch to push up tea prices this winter

KOLKATA: Tea drinkers may have to shell out more for this winter. An erratic weather condition throughout the year is likely to cut tea production to 940 million kg compared to 980 million kg in 2011. Though Tea Board is yet to come out with production figures, industry people say that production was down by 25-30 million kg till September.

"Production-wise, 2012 has not been a very good year for tea companies. As things stand today, we feel that the production will be down to 940 million kg. October has also been a very good month for north Indian tea production," said CS Bedi, chairman of Indian Tea Association.

In fact, there is a nip in the air and tea production may come to a close by the end of November and may not extend to December 15. "This is an unusual situation and crop production has deteriorated in October. In November, we do not see much improvement in production and we may be forced to close down operations by November-end," said AN Singh, MD of Goodricke Group.

The industry is expecting a price rise of Rs 10-20 per kg in the coming months. Bedi said: "The impact of the supply crunch will be felt in coming months. In fact, tea prices in last two auctions, though higher than last year, have showed a decline."

In Mangaldoi district of upper Assam, production in 16 tea estates was down by 31% in October. The crop loss for September would be around 20%. If only the second half of the month is taken into account, the loss will be much higher-around 30%. In September 2011, Assam produced 93 million kg tea. The industry officials said that, taking into account the decline in September, the total drop will be around 25 -30 million kg.