Tea growers have expressed concern over the drop in prices at the auctions, despite a fall in production during the current calendar year, due to the COVID-19 pandemic. The prices of CTC variety have reduced on an average by Rs 60 to Rs 100 per kg at the last few auctions, sending shockwaves across industry.
Secretary general of the Indian Tea Association (ITA) Arijit Raha said the trends are "very disturbing", and producers fear that coupled with lower production volumes, many companies will see a bleak bottomline. Raha said it is expected that the production drop in 2020 will be around 150 million kg due to prolonged closure of the gardens.
Exports are also down, he added. "The industry was of the view that due to the production drop, there will be shortage, as a result of which prices will rise... it had increased sharply in the June, July sales," he said.
But, now it appears that there has been some oversupply in the market as out-of-home (OOH) consumption has drastically reduced, the ITA official said. "It seems that there is surplus crop in the pipeline, which has led to the price fall," Raha said.
There has been a slight decline in the orthodox variety prices as well.