Bad weather, low output & high prices concerns for Indian tea industry

Everything doesn't look good with the cuppa that (otherwise) cheers! Indian tea industry, on one hand, is heading for a significant drop in exports to the tune of 30-40 million kg this year as compared to 2020, thanks to the availability of low-cost varieties in the global market and amid trade restrictions in countries that have traditionally been strong importers. On the other hand, during the first quarter (January-March) of the current year (2021) the import of tea has shown a significant jump of 139.36 per cent year-on-year, which is a matter of great concern and would certainly be detrimental to the Indian tea sector.

Going by Tea Board of India figures, for the period between January and March this year, exports fell by 13.23 per cent as against the corresponding period a year ago, and by 29.03 per cent compared to 2019. Altogether, 45.86 million kg tea was exported from India between January to March in 2021. The figure was 52.85 million kg in 2020 and 64.62 million kg in 2019.

The drop on Indian tea exports in the last two-three years can be attributed to very low prices of Kenyan and Sri Lankan tea. Mind you that tea exports to Pakistan, a major market for Indian tea, also came to a grinding halt since the last three years following escalation of tension between the two countries. And then the US sanctions against Iran is also a cause of concern for Indian tea exporters. India had exported 208 million kg of tea out of the total production of 1,255.60 million kg in 2020, while shipments accounted for 252 million kg out of 1,389.70 million kg produced in 2019.

While the tea export share of South India fell by 5.41 per cent in 2021 between January and March compared to the same period in 2020, the decline was 25.85 per cent compared to 2019. In case of exports from North India, the figure for the three-month period was lower by 17.83 per cent as against 2020 and 31.04 per cent compared to 2019.

When it comes to import of tea, according to the United Planters' Association of Southern India (UPASI), the apex body of planters, imports of tea during 2020 was estimated at 23.40 million kg (mkg) as against 15.85 mkg in the previous year, an increase of 47.63 per cent. The domestic tea sector has been witnessing increasing cost of production due to high input cost and high wage cost and any higher intake of teas through import will have a telling effect on this sector which caters to a large segment of the population residing in the remote areas.

During the fiscal 2020-21, India consumed 89.24 per cent of its tea production. It is perceived that the domestic consumption of tea has also gone down since the onset of the pandemic last year in the out-of-home sector (tea sold in railway stations, bus depots and cafeterias).

Amidst all these, what can add further to the worries, the tea industry in North India, which includes the gardens of Assam and West Bengal, is likely to have lost nearly 75 million kg (mkg) of the crop during March, April and May this year, thanks to unfavourable weather conditions.

While some recovery is expected on the exports front, the Centre must closely monitor the import of tea and also implement provisions of Tea (Distribution & Export) Control Order 2005, wherever necessary.