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The world’s largest tea producer, McLeod Russel, doesn’t expect production growth in India in 2017. “The production for 2017 will be at best be similar to 2016 in case the weather remains as conducive as 2016,” a company communique said.
India’s tea production from January to November 2016 stood at 1,176 million kg (mkg) — up 25 mkg over the same period last year.
This, coupled with over-production in Africa, increasing global production by 100 mkg, pushed prices down in 2016.
While global prices are down by $0.4 a kg (approximately ₹27 at the current exchange rate) till September 2016, Indian prices are down by ₹6/kg, the company said, adding that the decline in prices was contrary to its earlier expectations.
McLeod’s teas witnessed a ₹6.60/kg decline in the April-December period. Sales are also down by 5.2 mkg. For the quarter ending December 31, 2017, the company’s net profit declined by 29 per cent to ₹24 crore.
Prices to riseAccording to the release, the company is expecting tea prices to move higher for the new season on improved export demand and growth expectations in rural India.
In the last six weeks prics have risen 30 per cent at the Mombasa auction for Kenyan tea and Kenya is experiencing adverse weather conditions. McLeod is expecting the trend to continue at least till June.
Indian tea prices, the company thinks, will rise, tracking African prices.
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