Branded tea prices to soar as auction prices rise 4-6%

Written by RajeshRavi | Kochi | Updated: Jul 26 2012, 07:55am hrs
A global shortfall in black tea production in the first six months of the year is likely to make the beverage costlier for the consumers. Indian consumers may end up paying more for their branded and packaged tea as auction prices have moved up 4-6% in the past six months due to shortage and higher exports.

The downfall in production across all black tea producing countries is alarming. This will have a definite impact on the price of tea. The total deficit in black tea would be around 60-65 million kg according to latest reports. Kenya is short by 24 million kg, while India is seen lower by 20-30 million kg in the first six months. Even Sri Lanka is reporting lower production, R Sanjith, Head (Commodities), United Planters Association of South India (UPASI) said.

According to Tea Board data, the countrys tea production in the first five months of 2012 fell by 11.4 % to 215.8 million kg from a year earlier.

South India witnessed one of longest duration of dry spell, which resulted in the crop loss of this magnitude.

Reports suggest that India consumes about 25 % of total tea production in the world, and over 75-80 % of its own production.

Domestic consumption during 2011 is estimated around 856 million kg or a per capita consumption of 720 gm. Indias tea production in 2011 rose to a record high of 988.3 million kg. Auction prices for the first five months of the year is seen higher by R7-8 per kg or 4% when compared with the same period of the previous year. In South Indian the auction prices are up by 10%, R Sanjith said.

Tea Board data for the first five months show that average price for tea stands at R99.18 per kg as against R95.43 during January-May period of 2011.

UPASI reports that the export of tea look very encouraging this year, unlike the last year where the world demand was tweaked by internal disturbance in West Asia and North Africa (WANA) region and the payment problem with Iran.

Lower global production would help in higher exports of tea especially (crush, tear, curl) CTC variety, N Sriram of Contemporary Tea Auctioneers told FE.