Tea 25% more expensive

After toor dal, your morning tea now promises to burn a hole in the pocket. Wholesale prices of CTC tea have risen over 25% in the last six months and are expected to go up further because of a decline in production.

Tea sold at weekly auctions across north India is priced around Rs25-30 per kg more than normal rate, and on an all-India basis, average prices are higher by Rs20 per kg. Tea production in India has been 12 million kg less until June, and globally there is a shortfall of about 62 million kg.

Other tea producers such as Kenya and Sri Lanka have seen a decline of 18 million kg and 41 million kg respectively until June.

While production has been low, demand and consumption of tea in India is rising. Every year, consumption increases by over 20 million kg. Last year, the domestic market consumed 830 million kg of tea. Estimates by producers suggest prices will continue to remain high till Diwali as the best teas will be used during the festive season, and since the end of the calendar sees much lower crop production.

Aditya Khaitan, managing director, McLeod Russel, said, “On a conservative estimate, we expect a 50-70 million kg shortage in India next year, even as consumption is growing at nearly 3%”. There was a pipeline shortage of 27 million kg in January last year.

At Kolkata auctions, commodity price from January to July last year averaged around Rs86 per kilogram. This year, January to July average price is Rs107, as teas from both Assam and Dooars have become more expensive.