Catastrophic Flooding in South India Spikes Tea Prices

Tea plantations and Muthirappuzhayar River in hills near Munnar, Kerala, India. Photo credit: GettyImages.com

Tea production declined sharply and prices spiked due to flooding from unusually heavy rains that closed the Cochin airport and caused numerous landslides, killing nearly 400 people in South India.

More than 1 million residents have been displaced to 4,000 relief camps in what media are calling the world flood in a century. More than 1,000 in seven Indian states have died in flooding since the monsoon season started.

Skies are fair as the new week begins but two weeks of torrential rains beginning August 8 flooded factories and tea gardens causing shortages that raised prices up to 50 percent at local auctions. Kerala state, Karnataka, and Tamil Nadu are major producers of coffee, cardamom, black pepper, and tea. Growers reported major losses of all four commodities. Karnataka, which produces about 70 percent of India’s coffee, was hard hit with crop losses estimated at 15-20 percent. Cardamom losses were 40-60 percent.

The tea auction center at Coonoor was forced to close, skipping a week of sales. Prices there surged 30.6 percent compared to the same sales date last year. Prices at the Coimbatore auction rose 20 percent and tea auctioned at Cochin rose 10 percent.  Annual production is estimated at 235 metric tons but tea harvest totals in South India are down 11 percent during the first six months of the year. The six-month total is 105 metric tons. Growers said that production in Munnar may drop 50 percent.

Ulhas Menon, secretary general, United Planters’ Association of Southern India told the Times of India that “we are yet to ascertain the impact of this devastating floods on tea production in Kerala. Let the flood water recede, only then would we be able to ascertain the loss in production. However, we will see that export commitments are fulfilled.”

Menon said that most of South India’s tea is exported to Russia and Pakistan. Exports prior to the flood totaled 45 million kilograms in 2018 compared to 42 million kilograms in 2017. Exporters including AV Thomas & Co. and Al-Gayathri Trading, purchased additional tea at the auction houses in Kolkata to make up for shortfall.

Logistics is a major concern. Officials estimate 10,000 kilometers of roads are damaged with hundreds of bridges washed out and miles of train tracks and infrastructure inundated.

Source: Times of India