India’s Tea Prices Surge as Extreme Weather Disrupts Production

India’s tea prices have been soaring and are expected to remain high as heatwaves and floods during the peak harvesting season have slashed output in key producing regions. This is a welcome development for the beleaguered Indian tea industry, which has been struggling with rising production costs amid stagnant tea prices in the past decade.

According to Prabhat Bezboruah, a senior tea planter and former chairman of India’s Tea Board, “Extreme weather events are hurting tea production. Excessive heat in May, followed by ongoing flooding in Assam, are reducing output.” Production was also affected by the government’s decision to ban 20 pesticides.

India’s tea production in May plunged more than 30% from a year earlier to 90.92 million kg, the lowest for that month in more than a decade, due to the extreme heat and scant rainfall. In the northeastern state of Assam, which accounts for more than half the country’s output, more than 2 million people have been affected by severe river flooding in July.

The upward trend in tea prices started after the heatwave reduced production from April onwards, amid good demand. In the last week of June, average tea prices surged to 217.53 rupees ($2.61) per kg, marking a nearly 20% increase from a year earlier.

While production improved in June after good rainfall, the flooding in July has again limited plucking in many districts of Assam. Experts estimate that July, typically a peak production month, could see a shortfall of 15 to 20 million kg this year.

Overall, India’s tea production in 2024 is expected to fall by around 100 million kg compared to the record 1.394 billion kg produced in 2023. This production shortfall is likely to drive prices significantly higher, though financially weak and indebted producers are struggling to bargain with powerful buyers during the peak production months.

The price surge, however, is unlikely to reduce India’s tea exports, as many buyers are boosting their purchases following the pesticide bans. India’s tea exports in the first four months of 2024 jumped 37% from a year ago to 92 million kg.

India’s Tea Prices Surge as Extreme Weather Disrupts Production
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