India’s tea output fell by 54 per cent from a year earlier in April 2020 to 39.02 million kilograms as lockdown restrictions reduced plucking in the top producing north-eastern state of Assam, the state-run Tea Board of India said. For Assam alone, output in April 2020 plunged by 76 per cent from a year ago to 10.99 million kg, the board said.
In the first four months of 2020, India produced 113.36 million kg of tea, down 40 per cent from a year ago because of lower production in March and April, the board said in a statement.
India, the world’s second-biggest tea producer, exports CTC (crush-tear-curl) grade mainly to Egypt, Pakistan and the United Kingdom, with the orthodox variety shipped to Iraq, Iran and Russia.
India’s tea output is likely to drop by 120 million kgs or 9 per cent in 2020 as lockdown measures initially forced plantations to suspend plucking during the opening harvest – the prized first flush – and then operate with about half the workforce.
Traders estimate Indian tea exports may fall 6-8 per cent this year owing to the Covid-19 pandemic. Estimates from the Tea Board suggested that because of the loss of the first flush and the wipe-out of Darjeeling tea from the system, there could be a shortfall of 16-20 million kg this year in export volumes. Moreover, if the production and quality in the second flush, beginning in May, is affected, the export shortfall may worsen.
A 20 million kg shortfall at last year’s unit prices would translate into a trade deficit of over $64 million. Tea exports last year at 248.29 million kg was already on the decline, as compared to 256.06 in 2018 because of various geopolitical factors in West Asia, Brexit, and other issues.
According to the Tea Board, since major exporting destinations — the US, the UK, Japan, and Iran — are currently grappling with the pandemic and their economies are taking a hit, the demand for tea, which is a discretionary spend, may go down. Also, consumers can opt to downgrade their purchase, which will hurt Indian exports.