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Rains brighten prospects of good first flush tea in North India

Prices likely to rule firm
 
The recent spells of rain in West Bengal and Assam have improved prospects of the first flush tea crop in North Indian estates. The crop is likely to be better in terms of quality and quantity, industry sources said.
 
The lack of rains and resultant dry spell in Assam and North Bengal since October 2022 had left the industry worried about the first flush crop’s prospects. The first flush plucking begins from early or mid-February and typically goes on till April.
 
First flush’s contribution
“Since there have been some rains in both Assam and West Bengal recently, the prospect is looking better both in terms of quality and quantity,” Sujit Patra, Secretary, Indian Tea Association, told BusinessLine.
 
The North Indian estates of Assam and West Bengal witnessed close to 64 per cent rise in production in February 2023 at 3.05 million kg (mkg), compared with 1.86 mkg in the same period a year ago.
 
Total production of tea in North Indian estates stood at close to 126.4 mkg in 2022. First flush typically accounts for around 10-12 per cent of the total crop produced in these estates on an annual basis.
 
Steady demand
Tea prices are currently ruling “soft” and some of the medium grade teas are not fetching good prices, said Vikram Singh Gulia, MD, Amalgamated Plantations.
 
“Lot of teas is not finding a good market. The market is softer than last year,” he said.
 
However, prices of tea in North Indian estates are likely to firm up moving forward given the steady demand and low level of stock in the pipeline.
 
According to a recent report by ICRA, against the cumulative all-India orthodox price increase of nearly 28 per cent during the first nine months of FY2023 the crush-tear-curl (CTC) price rise during the same period was only two per cent on a year-on-year basis.
 
Nominal price rise
This nominal price increase in the CTC variety was entirely contributed by the North India CTC price hike of Rs.5 a kg to Rs.197 a kg as there was a moderation in the cumulative prices of South India CTC tea by Rs.1 a kg to Rs.105 a kg during the said period. The uptrend in North India CTC prices is expected to continue going forward, given the increasing demand and limited supply base of top-quality teas.
 
“Domestic tea production in CY2022 remained flat on a y-o-y basis — nearly 4 per cent lower compared to pre-Covid levels (CY2019). Consecutive three years of lower production, post CY2019, along with significant increase in exports in CY2022, would keep the domestic pipeline stock at a low level and in turn provide some support to prices in the new season till at least the peak production months of July/August,” ICRA said.