Kolkata, Dec 30 (PTI) The tea industry is likely to witness a fall in total production by over 100 million kg this year due to erratic weather conditions coupled with early annual closure of gardens, resulting in an increase in cost per kg for planters, stakeholders said on Monday.

However, the silver lining this year was better price realisation and growing exports.

As compared to around 1,178 million kg output during the first 10 months of 2023, the country produced around 1,112 million kg of tea in the January-October period of the current calendar year, while exports were expected to touch 240-250 million kg in 2024, up from around 231 million kg in the previous year, they said.

The production is down by around 66 million kg during the January-October period in 2024, while there is expected to be a dip in production by another 45-50 million kg as plucking has been stopped after November, Indian Tea Association chairman Hemant Bangur said.

Despite geo-political challenges and currency issues, India's tea exports were healthy and the rise in shipment was due to a high-risk appetite of merchants, Indian Tea Exporters Association chairman Anshuman Kanoria said.

"The performance of the tea industry this year was not very good as crop output was down while per kg cost of production was up with the costs mostly being fixed and there was no commensurating increase in price. The industry was in the red in 2023, and the situation now is better than last year but the industry is not out of the doldrums," Bangur told PTI.

The companies had incurred huge losses across geographical locations in 2023 and the industry will probably break even this year, he said.

"In Assam, producers may make some marginal profit or break even but in north Bengal, they will still be in red... This year, there will be a 110-120 mkg dip in production as compared to last year," he said.

Claiming that climate change and erratic weather conditions are affecting the crop output, Tea Research Association (TRA) has advised the industry to enhance soil health, create water bodies through rainwater harvesting and enhance shade status for achieving good microclimate conditions in tea estates.

"The effects of climate change are making Indian tea increasingly uncompetitive. This year, many tea-growing regions witnessed temperatures ranging from 35 to 40 degrees Celsius and reduced rainfall for a much longer period, affecting tea production by 20 per cent in average in the quality cropping months," TRA secretary Joydeep Phukan told PTI.

However, exporters are bullish on the rising trend of shipments.

"Tea exports have been good this year. We are expecting to close the 2024 calendar year with around 240-250 million kg (mkg) and the 2024-25 fiscal with about 260 million kg," Kanoria said.

There was a sharp increase in shipments to Iraq, accounting for 20 per cent of tea exports, and merchants are expecting to send 40-50 million kg to the west Asian country this fiscal, he said.

Indian exporters, who entered several markets of west Asia when the Sri Lankan crop was low, managed to retain the shipment volumes there, he said.

"Despite geo-political challenges and currency issues, our exports in general have been healthy. The rise in shipment was also due to a high-risk appetite of merchants from the country. They have gone out of their way to undertake marketing drive and absorb the risk," Kanoria said.

He also hailed the Tea Board for proactive steps to address the issue of MRL (maximum residue limit) content and improve quality and compliance with international standards.

"Steps taken by the Tea Board such as more testing, auctioning of 100 per cent dust grade tea and early closure of gardens are welcome," he said, adding that much more promotion of Indian tea, stringent compliance of food safety norms and adequate production are required to push exports to 300 mkg mark.

Kanoria said there is room to grow in the traditional markets of Indian tea such as western Europe, Russia and other CIS countries, the US and Japan.

In terms of exports of orthodox tea, this year is no exception, as the country is expected to maintain over 100 mkg of shipment of such variety, while CTC tea exports have also gone up, rating agency ICRA assistant vice president and sector head Sumit Jhunjhunwala said.

"In the first eight 8 months of 2024, India exported 64 million kg of orthodox tea, as compared to 63 million kg shipped out in the same period last year. The exports of orthodox variety for 2022 and 2023 were 109 mkg and 101 million kg respectively. This trend will continue this year," Jhunjhunwala said.

Over 100 million kg of exports of orthodox variety from India was attributed to fall in Sri Lankan crop by over 50 million kg, he said.

"The eight-month data of this year also suggested that India has exported 87 million kg of CTC, up from 62 million kg during the corresponding period in 2023," he said.

ICRA said the average auction price for CTC tea surged by Rs 48 per kg in the April-November period this year due to a supply-demand gap, driven by a drop in CTC production and higher exports. However, prices have softened in recent auctions.

This reduced production, coupled with low carryover inventory, is likely to support strong tea prices during the early part of 2025, till May-June next year, the rating firm said. PTI BDC MNB ACD