Global shortage pushes first flush tea price for exporters

While global tea exports have dipped 5.8%, owing mainly to a poor crop because of truant weather and low fertiliser application in the time of economic recession, the Indian tea industry has cashed in with a higher price on its first flush.

The average auction price of Indian tea during April-May, 2009 ?largely reflecting first flush figures?has gone up by Rs 7.67 to Rs 89.56. The increase, according to tea industry estimates, is substantial against the average price of Rs 64.92 in May 2008.

High-end tea has become dearer in the European market with prices hovering around ?200 a kg level, compared to ?80 a kg a year back. ?Global shortfall has boosted export prices,? said Subodh Pal of Contemporary Tea.

Tea production is down in India too with the first five months of the year producing 215.8 million kg, compared to 240.2 million kg in the same period last year, a decrease of 24.4 million kg.

According to Indian Tea Association (ITA) officials, production is likely to pick up during the second flush and partially compensate losses in the first half of the year. According to S Patra , secretary of the Indian Tea Association, Indian production may pick up as the rainfall has been good in the hills over the last one month. Tea export from India during January-May 2009 has come down by 13.7 mkgs to 60 mkg against 73.7 mkgs for the corresponding period last year.

In May, exports picked up with India dispatching around 9.7 mkgs.

Tea exports dipped in almost all countries except Kenya , Malawi and China . Kenya registered 4.5% growth till April this year.

Production in the CTC growing country had been hit severely last year due to prolonged drought. Export from China was up by 4.5% till April and from Malawi by 23.8% till March this year.

While Sri Lankan exports were down by 17.2% till May this year, export till March this year from Zimbabwe was down by 6.4%, Argentina by 2.1%, Uganda by 9.7% and Indonesia by 24.7%.

Meanwhile, the slump in production has pushed the average tea auction prices up at the major auction centres across the globe except Colombo .

Average auction prices at Colombo have gone down to Sri Lankan Rs 314.01 per kg during the first five months of 2009 from SL Rs 323.50 for the corresponding period previous year. The average auction price at Colombo was at SL Rs 312.61 in 2008 and it slipped to SL Rs 297.16 during the first three months of 2009.

Auction prices at Mombasa auction centre during the first five months have gone up by 4%, a mere increase of 1 US cent per kg, over last year?s average of US cents 235.