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The tea industry in North India, which is already reeling under production losses over the last three months (March-May), is likely to be further impacted due to incessant rains and flood in many parts of Assam — one of the major tea growing regions.
According to Vivek Goenka, Chairman, Indian Tea Association (ITA), tea production in Assam is estimated to be lower by 8-10 per cent at close to 65 million kg (mkg) in June this year as compared to 75 mkg same period last year. Assam accounted for nearly 60 per cent of the tea production in North India, which stood at 125.86 mkg in June last year.
“The rains have been devastating and this is likely to impact production massively. We had expected bushes to start growing in June post the skiffing that we had undertaken in April but the rains has impacted the crop,” Goenka told BusinessLine.
Tea production in the North was already estimated to be lower by around 140-150 mkg this year. Nearly 65 per cent of the first flush crop was lost as the plucking activities had come to a standstill between March 25 and April 13 on account of the countrywide lockdown.
Quality hit
While the industry was sure not be able to make up for this lost production, however, the expectation was that production would start picking up June onwards.
“The crops are down in June due to excessive rains and in July also atleast for the next fortnight we do not see the situation improving and we are not very positive about making last years’ production levels. There is siltation taking place in gardens and workers are finding it difficult to come to gardens due to floods,” said Vikram Singh Gulia, MD&CEO, Amalgamated Plantations Private Ltd (APPL).
Cost push
Though the lower production and the steady demand might push up prices, however, it might not be good enough to offset for the increased cost of production.
Per estimates, a 10 per cent loss in crop is expected to push up the cost of production by nearly 15-20 per cent. This is because the industry has to bear fixed costs in terms of labour and other expenses. Labour accounts for nearly 60-65 per cent of the industry’s total cost.
According to data available on the Tea Board of India website, the weekly average prices of CTC and dust sold at the Kolkata auction centre, were up by nearly 44 per cent at ₹247.44 a kg, as compared to ₹171.35 in the same period last year.
The weekly average tea prices in Guwahati auction centre was up by 56 per cent at ₹252.15 a kg (₹161.93).
“The price rise can never be enough to offset loss in production because of the high fixed costs that the industry has to bear. We would be fortunate if it can help cover our losses to some extent,” Gulia said.
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