The ICRA (Investment Research and Credit Rating Agency) quarterly report is just out. According to the report, the high prices of orthodox tea that the Indian commodity market is enjoying, will continue thanks to the demand-supply mismatch, from the Sri Lankan production disruption. North India CTC prices have been up 5% year on year aided by a rise in auction prices in August. The price premium for top end CTC tea is expected to continue. The report added that prices of CTC from south India for the period April-Aug 2022, have remained lower than the previous two 5-month periods. 

The report also included exports. North Indian exports for the first half of 2022 were up 11.3 mn kilos or about 24% while south Indian exports reduced by 0.8mn kilos or about 2%. Sujoy Saha, VP and Sector Head, Corporate Sector Ratings was quoted as saying, “Notwithstanding the impact of higher wage rates, the financial performance of quality producers is likely to witness an improvement in FY2023 on a YoY basis. Increase in prices of quality CTC and ODX (orthodox) teas would enable the producers to absorb the higher cost of production due to the wage rate revision.”

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This week, the Tocklai Tea Research Association of India, launched the TRA-TOCKLAI GAP-GMP Standard, a sustainability standard towards creating a climate-resilient tea industry. The certification that will be rolled out from January 1st, 2023, was launched at the 58th Annual General Meeting of the TRA, in Kolkata last week. 

In Darjeeling, the famed Glenary’s Cafe issued a protest against Darjeeling tea citing non pay of bonuses to tea garden workers, and refusing to serve Darjeeling tea. The Puja festival is underway, one of the biggest celebrations in this part of India. Following multiple rounds of talks that ended with no consensus from planters or unions, the state government had directed the planters to pay a 20% bonus in two instalments, 15% before Dasara and 5% before Diwali, later in October. Glenarys has asked that all the gardens pay 20% bonuses immediately. It seems to be one more problem to add to Darjeeling’s many woes. 

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The Tea Board has just announced the last dates for plucking for north India. Darjeeling, Sikkim, Himachal Pradesh, Uttarakhand will have to stop plucking from December 3rd, Assam and the northeast India from December 10th, Cachar, Barak Valley, Tripura, the Terai and Dooars from December 17th. 

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Indian media has been abuzz with reports that a significant chunk of Darjeeling tea gardens are up for sale as plantation businesses become increasingly unviable. There has been a build-up towards what could be a tipping point. Multiple factors have contributed to it, including decreased yield, increased cost of production, the loss of markets in 2017 following the Gorka agitation, climate change, and now the increasing volume of cheap and inferior quality tea that comes from Nepal at a 0% import duty under terms of a 1950s Friendship Treaty. All this has brought prices down. As Nepali is being blended or sold as unsold with Darjeeling tea in the markets and producers are unable to recover even the cost of production from the bulk of their teas remains to be seen how things will unfold over the next few months.

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August has been a busy month here, in India. Half yearly reports indicate a healthy increase in tea exports. Between January and June this year, India’s tea exports grew from 86.46mn kilos in 2021 to 96.89 mn kilos. In the CIS block, Russian imports were slightly reduced. However, countries that had to find a replacement for Sri Lanka, increased their orthodox imports from India. UAE imported 15.86 mn kilos (up from 6.76 mn kilos last year), and Iran’s imports were up from 10 mn to 11.4mn kilos for this time period. This has also meant that India has increased its production of orthodox tea, and is expected to see an annual increase of 10-15%.

However, there has also been a corresponding decrease in production, largely attributed to heavy rainfall in the Himalayan foothills. The industry estimates a 30 per cent reduction. South India has also seen a fall in production during the first half of the year. 

In other news, Taiwan has taken steps to engage with India via tea. The Taiwanese representative, Baushuan Ger was quoted in Indian media as saying the the common tea culture between the two countries can facilitate bilateral cultural ties. 

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