Tea production fell and prices climbed as the first teas of 2017 arrived at auction houses in Sri Lanka, India and Africa.
The ongoing drought in Kenya lowered production 58 percent in February, with black tea production totals falling to 22 million kilos from 53 million kilos in 2016. Tea production in India dipped 21 percent to 13.5 million kilos in February because of poor rains.
Export volumes in Sri Lanka declined 5 percent compared to 2016, the lowest volume of shipments in eight years, but “the value of exports has risen sharply in February following much higher auction prices,” according to Sri Lanka brokers Asia Siyaka Commodities.
Sales volume was 22.4 million kilos in February, according to report in Economy Next. Year-to-date shipments are 42.6 million kilos, down 11 percent compared to the previous year.
Earnings for January-February were SRs17.1 billion or $215 million compared to $200 million, up 12 percent over the same period in 2016. Brokers Forbes & Walker said that average sales in March were SRs639 a kilo ($4.20) an increase of 50 percent compared to 2016.
“It is also relevant to note that this records a gain of Rs.41.91 over the previous best of Rs.596.85 achieved in February 2017,” according to the brokers. March was the highest average for a calendar month, surpassing Srs600 ($4) for medium elevation teas for the first time. High-grown teas averaged SRs635 ($4.17) per kilo.
In Southern India the 65,000 hectare Nilgiris tea producing region is the worst-hit by the water crisis. Tamil Nadu produces 65 percent of the tea grown in South India. According to Ullas Menon, secretary-general, United Planters’ Association of Southern India (UPASI), production has fallen in the last two years. He told The Hindu “In 2016, production dropped by 40 percent due to monsoon failure and water crisis. The larger tea estates somehow manage to get water. It is the small estates that are struggling.”
In the same report K.G. Udaya Bhanu, Assistant Director (AS), UPASI Tea Research Foundation, said: “The tea industry does not require huge rainfall. It needs water distributed equally. The quantity does not matter. It is the distribution pattern that matters. The problem is it rains in one particular zone and the other areas don’t get the same amount of rainfall,” he added.
Yields in North Bengal India, where much of the specialty tea for export is grown, fell 13 percent to 1.99 million kilos from 2.29 million kilos year ago. "It is mostly the weather conditions especially low rainfall that has affected the production of Bengal," P.K. Bhattacharjee, secretary-general, Tea Association of India told The (Calcutta) Telegraph.
"Till mid-March this year there was hardly any rainfall and that led to a drought-like situation in the hills resulting in crop loss," said S.S. Bagaria, former chairman, Darjeeling Tea Association.
The India Tea Board reported production totals in Assam dropped 39 percent to 0.35 million kilos in February down from 0.57 million kilos a year ago. In the past year 12 tea plantations that encompass 4,000 hectares have closed in West Bengal (10) and Kerala, where two closed, according to reports in the New Indian Express.
In Kenya year-to-date production totals revealed a decline to 55.6 million kilos compared to record yields of 94.3 million kilos last year. Only 20 million kilos of tea were sold at the Mombasa Auction in February compared to 37 million kilos in February 2016.
Kenya’s exports for the period were 39 million kilos which is up 22 percent compared to 32 million kilos shipped during the same period in 2016. Auction prices were sh315 per kilo ($3.04), up significantly compared to the previous year when the average was Sh215 ($2.07) per kilo. Auction buyers sought delivery to 39 destination countries, down from 44 countries in 2016.
Source: The (Calcutta) Telegraph, Economy Next, The Hindu, New India Express