India Tea Exports Constrained

emptycupTea production is booming once again as India taps small growers to meet local demand that appears unquenchable.

The 2013 harvest at 1.2 billion kilos set a record but total exports during 2013 are down 3.5 million kilograms (mkg) to 211.86 mkg compared to the 208.26 mkg exported in 2012. A third of all this tea was produced by small holders.

The auction houses in Kolkata and Guwahati last week reported there was nothing left to sell. Supplies during the weeks just prior to the new harvest are often thin as producers attempt to clear the way for arriving tea but the Calcutta Tea Traders Association (CTTA) announced last week that it was canceling several sales in March.

Demand is very strong in the domestic market, according to the CTTA.

India prices fell 6.61 percent to an average INRs 112.69 per kilo ($1.82) compared to the all-India auction average of INRs 121.05 per kilo ($1.96) in January 2013. Prices in the north averaged INRs 120.23 ($1.95) but in South India prices dropped to INRs 91.11 per kilo ($1.47). The rupee is weak, trading at INRs 62 to the U.S. dollar making this an excellent time for North American retailers to negotiate orthodox shipments timed to arrive this spring.

Global demand is weak right now due to an abundance of tea.

“Global black tea production rose by 153.15 mkg to reach 2203.71 mkg, marking 7.47 per cent growth,” Rajesh Gupta, Publisher of ‘Global Tea Digest 2013’ told Business Line.

Winter weather has also taken its toll on the supply chain. Cold weather encourages at-home tea drinking but harsh weather kept shoppers close to home. As a result retail sales are slack in Europe, Russia and the United States. In the U.K. it is floods, in Japan a cold snap. Political turmoil in the Middle East has also depressed exports.

Source: The Hindu Business Line