Tea production up 9.47% in December

India registered record tea production in 2017 despite a fall in North Indian output, thanks to higher production in the South. According to the Tea Board of India’s production data for December, output increased to 70.06 million kg (mkg) from 64 mkg in December 2016. This increase of 6.06 mkg marked a growth of 9.47 per cent.

But the growing contribution of small growers worries most market watchers. It has grown just a shade below 50 per cent as per the 2017 estimates, said the Indian Tea Association (ITA). In 2017, total production during January-December was 1,348.84 mkg, while the estimated contribution of the small growers was 631.69 mkg. The Tea Board feels that the trend does not augur well and could cause “disruption” in the market.

Tea Board chairman PK Bezbaruah said unless demand increased, the trend would de-stabilise the industry and cause disruption. The logic is simple: the production cost of the bought leaf factories and the small growers is much lower compared with the organised sector and large estates. Small growers are resorting to plucking big sized leaves and a bud to ramp up production. This could lead to fall in overall quality of tea, say sector analysts.

According to ITA statistics, in 2017, India’s production has increased to 1,278.83 mkg from 1,267.36 mkg in 2016. This increase of 11.47 mkg marked a marginal growth of 0.91 per cent. The overall tea output in North India in 2017 dropped to 1,046.42 mkg from 1,054.51 mkg due to adverse weather conditions in many months, marking a marginal loss of 0.77 per cent.

The South Indian output, however, increased to 232.41 mkg from 212.85 mkg, marking a gain of 9.19 per cent. Assam continued to top the country’s production table at 653.53 mkg, but it was less by 15.99 mkg over 2016. West Bengal produced 367.98 mkg (up 11.68 mkg). In the South, Tamil Nadu produced 164.70 mkg (up 18.66 mkg) and Kerala 62.33 mkg (up 0.93 mkg), ITA data suggested.

There is of course some good news on the exports front. India’s tea exports touched a 36-year high of 240.7 mkg during 2017, Tea Board said. The previous record was set in 1981 when exports reached 241.25 mkg. Tea exports in 2017 were 8.20 per cent (or 18.23 mkg) up from the previous year, the Tea Board said, adding the value of exports was Rs 4,731.66 crore, which was an increase of 5.90 per cent over the previous year. Exports from north India touched 148. 41 mkg, while those from South India was 92.27 mkg.

India also emerged as the world’s largest packaged tea market in 2017, consuming 678,200 tonnes of packaged tea, followed by China in second place at 576,800 tonnes, according to a recent study by market intelligence agency Mintel. Turkey (173,400 tonnes), Russia (134,200 tonnes) and Japan (92,900 tonnes) complete the top five in terms of packaged tea sales, Mintel study said.

Meanwhile, the Tea Board has urged the central government to sign a preferential trade agreement with China to help both countries tap each other’s market to trade in tea. The Tea Board chairman, who was in Kolkata to address a 22-member visiting Chinese delegation from Dali, said though India exports 7-8 mkg of black tea to China, Chinese exports to India is insignificant.

China produces 2,600 mkg of tea per annum, of which more than 60 per cent is green tea. India produces around 1,300 mkg per annum, most of which is black tea. Though demand for green tea in India is on the rise, exports of green tea from China is not happening.

He said when it comes to tea trade; the two countries should not look at each other as competitors. Instead, both the countries should complement each other. Ideally, tea trading between India and China should happen at lower duties. The need for a preferential trade agreement with China can, therefore, be hardly over emphasised.

ritwikmukherjee@mydigitalfc.com