Indian tea is expected to benefit from wage hike in Sri Lankan plantations and residue (pesticide) problems in Vietnam, traders said.
Domestic tea production during 2018 is expected to stay more or less the same as last year despite lower rainfall, while exports are expected to marginally increase.
India is the second largest producer of tea in the world and contributes 26% to the global production.
Parimal Shah, vice-president, MK Jokai Agri Plantations, said tea production is estimated to be marginally lower at about 1,300 million kilogram (mkg), against 1,322 mkg in 2017.
“Despite lower rainfall, when compared to 2017, production is seen commendable with December output estimated at 55 mkg. Assam production is likely to end up marginally higher at 614 mkg, against 600 mkg last year,”he added.
According to the state-run Tea Board data , India’s tea production for the January-October of 2018 stands at 1,117.6 mkg, against 1,127.2 mkg in the year-ago period. South Indian tea production for 10 months of 2018 stands at 187.6 mkg, against 197.3 mkg in 2017. North Indian tea production for 10 months of 2018 was 929.98 mkg, against 929.85 mkg in the same period last year.
Shah said on the price front, it has been a modest year with nothing spectacular. “Movement of tea was bit erratic due to the sanction problems in Iran and the prices were low. But, once it becomes clear that India could export to Iran, tea prices have picked up sharply. Wage hike across plantations is a big concern for the organised sector.” He added the share of wages come to 60-65% of the total production cost for organised players for tea plantations.
Average auction prices for the first 11 months of 2018 was `138.20 per kg, against `132.79 per kg in 2017.
The expected wage hike in Sri Lankan plantations is estimated to help South Indian orthodox production , according to Sriram Narayanaswamy, president, Global Tea Brokers.
“We have seen good demand for South Indian orthodox tea with problems seen in Vietnam and Indonesia. An increase in Sri Lankan tea production cost could help South Indian tea, and more producers are seen moving to orthodox from CTC (crush, tear, curl),” he said.
Sriram adds that the export of CTC tea to Egypt and Pakistan is also seen higher for the year.India exports the CTC tea variety mainly to Egypt, Pakistan and the UK and the premium orthodox variety to Iraq, Iran and Russia.
Source: financialexpress.com