The winter has landed a double whammy on tea planters in Assam and West Bengal.
After setting in early, the season saw almost no rains in the hills of the tea growing regions of these two states, a crucial factor that determines the quantity of tea at the beginning of the tea season starting April and also the quality of the prized first flush that commands highest prices among all teas produced during a year.
“The tea industry has been hit by severe drought. Tea production in Assam and West Bengal for 2012 is set to register a sharp drop due to a prolonged dry spell and rising temperatures. Data compiled by our members confirm rainfall deficit for West Bengal at around 31% to 42% during the period January-March 2012 compared to the same period in 2011. Upper Assam estates in the South Bank of the Brahmaputra are also experiencing severe drought conditions,” the Indian Tea Association (ITA) said on Monday.
If an early winter robbed off about 15 million kg of tea in December, absence of rainfall during January to March might cut down production by another 26 million kg.
“Crop is estimated to drop by around 60% up to March compared with 2011. In Assam and West Bengal, it can therefore at best touch 20 million kg as against 46 million kg recorded for the corresponding period for 2011. This dry spell would undoubtedly have an adverse impact on the first flush. The production decline is also evidenced by a drop in the fresh arrivals at the auction centres of West Bengal and Assam,” the report said.
“This is the worst-ever drought seen in the past 15 years,” C S Bedi, chairman of ITA, said.
“Early winter in North East India has affected production during the quarter ended December by approximately 15 million kg,” McLeod Russel India, the largest tea planter in the world, earlier said while announcing its third-quarter results.
Add to this, the global crop output also looks bearish, with Kenya set to report lower crop.
“In Kenya, production in the first quarter of 2012 is expected to be lower than that of 2011 because of dry weather at the end of December 2011 combined with incidences of frost that affected the tea growing areas at the beginning of 2012. As the hot and dry weather conditions continued in January, production for the first quarter of the year is likely to drop by 17% to 70,000 tonnes, compared with the first quarter of 2011, which is likely to affect production marginally by an estimated 2% for the year,” Food and Agriculture Organisation, an arm of the United Nations, recently said in its global tea crop outlook for 2012.
All these factors would now conspire to push up tea prices when the new season tea hits the market next month.
Higher prices, ITA said, might not be able to compensate lower income from drop in production.
“Besides severe cash flow problems, the likely drop in production due to abnormal weather conditions would result in significant revenue loss which will not be compensated by higher prices,” the report said.