Kolkata: The Indian tea industry is bracing for a significant dip in production this year, with total output expected to fall by over 100 million kilograms due to erratic weather and the early closure of tea gardens, industry stakeholders revealed on Monday. This reduction in output has led to increased production costs for planters.  

From January to October 2024, India produced approximately 1,112 million kilograms of tea, compared to 1,178 million kilograms during the same period in 2023—a drop of 66 million kilograms. The Indian Tea Association (ITA) predicts a further decrease of 45-50 million kilograms as plucking was halted in November, leading to an estimated total decline of 110-120 million kilograms compared to the previous year.  

According to ITA Chairman Hemant Bangur, "The performance of the tea industry this year was not very good as crop output was down while per kg cost of production was up. The industry was in the red in 2023, and although the situation is better now, the industry is not out of the doldrums."  

While tea producers in Assam might see marginal profits or break even, their counterparts in North Bengal are expected to remain in the red, Bangur added.  

The role of climate change  

Erratic weather patterns, driven by climate change, have significantly affected tea production. Joydeep Phukan, secretary of the Tea Research Association (TRA), highlighted that temperatures ranging from 35 to 40 degrees Celsius and reduced rainfall during critical cropping months have reduced production by an average of 20 percent in some regions.  

"The effects of climate change are making Indian tea increasingly uncompetitive. To counter this, the TRA has recommended enhancing soil health, creating water bodies through rainwater harvesting, and improving shade cover to ensure a suitable microclimate in tea estates," Phukan explained.  

Export Ggrowth offers silver lining  

Despite production challenges, Indian tea exports are set to rise, with shipments expected to touch 240-250 million kilograms in 2024, up from around 231 million kilograms last year. The fiscal year 2024-25 could see exports reaching 260 million kilograms, according to Indian Tea Exporters Association Chairman Anshuman Kanoria.  

Kanoria noted strong export performance despite geopolitical challenges and currency issues.

"Tea exports have been good this year. Merchants have shown a high-risk appetite, undertaking marketing drives and absorbing risks to maintain shipment volumes," he said.  

Exports to Iraq, which accounts for 20 percent of India’s tea exports, have seen a significant rise, with 40-50 million kilograms expected to be shipped to the West Asian nation this fiscal year. Indian exporters have also retained market share in West Asia, which they had gained during a slump in Sri Lankan tea production.  

Orthodox and CTC tea trends  

India’s exports of orthodox tea have remained steady, with over 100 million kilograms expected to be shipped in 2024, buoyed by a 50-million-kilogram reduction in Sri Lankan output. During the first eight months of 2024, 64 million kilograms of orthodox tea were exported, slightly higher than the 63 million kilograms in the same period last year.  

Meanwhile, CTC tea exports rose sharply to 87 million kilograms in the first eight months of 2024, up from 62 million kilograms in the same period in 2023, said Sumit Jhunjhunwala, assistant vice president and sector head at ICRA.  

Price surge due to Supply-Demand Gap  
The average auction price for CTC tea surged by ₹48 per kilogram between April and November 2024 due to reduced production and strong export demand. However, prices have softened in recent auctions, ICRA reported.  

Low carryover inventory and reduced production are expected to support strong tea prices into early 2025, likely until May or June.  

Quality and compliance efforts  

The Tea Board of India has been proactive in addressing issues like maximum residue limits (MRL) and promoting quality compliance with international standards. "Steps like more testing, auctioning of 100% dust grade tea, and early garden closures are welcome measures," Kanoria said.  

He also emphasised the need for increased promotion of Indian tea, stringent food safety compliance, and adequate production to push exports beyond the 300-million-kilogram mark.  

Opportunities in traditional markets  

Traditional markets like Western Europe, Russia, CIS countries, the US, and Japan continue to offer growth opportunities for Indian tea exports.  

PTI