Tea Prices Surge Across India due to Floods, COVID and Low Stocks

The recent catastrophic events- Assam Floods and COVID-19 pandemic, results in low stock of tea. Further, the said events will lead to a rise in Tea price across India.

Tea Production in India Takes a Hit

Tea production has taken a massive hit because of the recent floods that are wreaking havoc in Assam. Also, the lockdown with unfavourable weather conditions had a negative impact on tea production. Thus, leading to low inventory levels in Assam and West Bengal. All these factors combined are contributing to the rise in tea prices. Additionally, India might have to import tea for the first time to stabilize prices.

Prices Jump as Farmers Reap Benefits

The situation has been grim for tea producers in the country for the past few months. Initially, tea farmers dealt with movement restriction and labour shortage during the lockdown that had a significant impact on production. Currently, they are crippling under the devastations of floods in Assam.

Addressing that, Prabhat Bezboruah, the chairman of India’s Tea Board, states that a 12% price increase might compensate the 10% crop loss. Additionally, the price rise has come after eight years of stagnation. However, prices might reduce next year because of higher production. The tea producers from the southern part of India had more to cheer about, as the Tamil Nadu Small Tea Growers Industrial Cooperative Tea Factories Federation Limited raised the prices of the green leaf tea. Accordingly, the price rose from 14-17 rupees to 22 rupees per kg for August.

The executive director of the Tea Board (South), Mr M Balaji, mentions that the shortage of supply from the northeast states is because of floods. Also, he highlights that the demand for tea is high due to COVID. Further, he also adds that the quality of made-tea fetched high prices in auction centres. And subsequently, it was distributed to the small tea growers in Nilgiris who benefited greatly from this.

Tea Board Confirms an All-Time High Average Price For Tea

As mentioned previously, the Tea Board has increased district average prices for tea to Rs. 20.99 per kg. According to Mr M Balaji, the decision was made based on the consolidated auction sale (CTC teas from factories). Also, he confirms that this is the highest price fixed so far. Subsequently, Ramesh Chander, President of the Nilgiris Small Tea Growers’ Association said that small tea growers are happy. Further, he mentions that they have advised members to stick with the quality of the leaf to get reasonable prices and high returns.

Chances of Importing Tea for the First Time

Due to the monumental increase in tea prices, tea is imported from countries like Kenya and Vietnam. As the said country’s tea prices have crashed due to excess production. However, the Federation of All India Tea Traders Association (FAITTA) assures that imports will not become the norm. Also, FAITTA highlights that importing fashion is only for this year. Despite the assurance, the Indian Tea Association’s (ITA) chairman Vivek Goenka opposes the import of tea. Further, the association is stern on stopping the import of cheap teas by approaching the Commerce Ministry.

Addressing the hardships, the government is trying to help the tea producers with the price rise. However, bearing in mind the consumers, imports might be essential to stabilise the prices. But, a suitable agreement that satisfies both the parties is crucial.

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