Spellbound by heat wave: The Indian tea paradox

Adverse weather conditions, particularly high temperatures and insufficient rainfall have posed significant challenges for the tea industry in India. The industry has registered production declines owing to prolonged dry period and extremely high temperatures. This is compounded by pricing pressures in the market.

Data released by Tea Board shows that during Jan-Mar 2024 shows that the output of tea in at an all-India level has decreased by more than 13 million kg. IBT analyses the impact of this shortfall and plausible future scenarios for the domestic market as well as for exports.


Image source: Pexels

The heat is on as mercuries rise across India, and it seems to be catching on to the tea sector as well. According to tea planters, the exceptionally prolonged period of dry weather without rain has adversely affected both production and quality of the premium *first flush teas, which reach the market in April-May period. The quantity of good first flush teas has reportedly been affected due to the extended dry spell.

Extreme heat and inadequate rainfall in the Brahmaputra Valley in Assam and West Bengal have severely affected tea production in the regions. Furthermore, the heavy rain, thunderstorms, and hailstorms in the Barak Valley in Assam throughout April have also raised concerns among tea planters about the second flush teas and overall production.

The dry weather and its impact

Since the tea crop depends heavily on rainfall, insufficient precipitation during crucial months affects the yield of its premium first and second flushes. According to Indian Meteorological Department (IMD) data, the first quarter of this year has seen a rainfall deficit in the tea-growing areas of West Bengal and Assam, ranging from 2-76% below normal.

Lack of sufficient rainfall and excessive temperatures have caused decline in tea production in Assam (-40% YoY) and West Bengal (23% YoY) according to Tea Board of India. Tea estates in Darjeeling have reported a decline of about 40-50% in first flush teas, which is the main source of revenue for the Darjeeling tea industry. In all, North India’s (Assam and West Bengal) tea production for January- March, 2024 has dropped by over 21 million kg, while all India tea production has decreased by more than 13 million kg. South India, on the other hand, has seen a production increase of nearly 8 million kg.

Tea Association of India, citing data released by IMD from March 1-May 13, stated that significantly low average rainfall in February this year in the two major tea-growing states (i.e. Assam and West Bengal), when compared to the same period over the last six years, is hurting the tea industry. The crop loss at this point impacts the output in the months that follow as well as cash flows of the companies.

Some experts predict that crop losses will rise to over 50% if sufficient and well- distributed rainfall is not received immediately.

The table below shows estimated tea production in March 2024.

Table: Estimated production of Tea  for March 2024

(Qty. in million kgs)

Region March 2024 March 2023
State/District BG SG Total BG SG


Assam Valley 7.21 12.04 19.25 13.38 20 33.38
Cachar 1.31 0.02 1.33 0.64 0.02 0.66
Assam 8.52 12.06 20.58 14.02 20.02 34.04
Dooars 5.06 7.45 12.51 8.23 8.45 1 6.68
Terai 1.69 9.76 11.45 2.93 10.21 13.14
Darjeeling 0.09 0 0.09 0.17 0 0.17
West Bengal 6.84 17.21 24.05 11.33 18.66 29.99
Others 0.28 1.03 1.31 0.55 1.2 1.75
NORTH INDIA 15.64 30.3 45.94 25.9 39.88 65.78
Tamil Nadu 4.62 7.14 11.76 4 5.34 9.34
. 3.77 0.78 4.55 3.47 0.71 4.18
Karnataka 0.24 0.03 0.27 0.3 0.01 0.31
SOUTH INDIA 8.63 7.95 16.58 7.77 6.06 13.83
ALL INDIA 24.27 38.25 62.52 33.67 45.94 79.61

Source: Tea Board India; (BG-Big Growers, SG- Small Growers)

At an all-India level, tea production for March 2024 is estimated at 62.52 million kg, down from 79.61 million kg in March 2023.

Compounded challenges

Tea industry is currently experiencing an unusual phenomenon of lower crop yields without a corresponding increase in tea prices. This contrasts sharply with the scenario in 2020, when a drop in production due to Covid closures caused an upsurge in tea prices.

As per Tea Board data for January-March, tea prices in India have continued to decline across auction centers during 2024. Prices have plunged by over 16% between Jan-Mar, 2024, when compared to prices in the same period last year.

The all-India average auction price from Jan-Mar 2024 stood at Rs 128.1 per kg, compared to Rs 144.21 per kg during the same period in 2023. In North India, average price was Rs 134.6 per kg (↓ by Rs 16.30), while in South India, the price was Rs 113.30 per kilogram (↓ by Rs 17.4). Average all India auction prices have declined by Rs 14.81 per kg for FY 2023-24. The weekly average auction price has been constantly decreasing  by  Rs.6 to Rs.33 in all sales starting this calendar year, though there has been a marginal improvement in the all-India auction average price for the last two sales.

As demonstrated by their balance sheets, margins of many tea companies have shrunk sharply, thereby intensifying their financial stress. The state of affairs is especially severe in Darjeeling, where the industry’s viability is being threatened by low yields, declining prices, and competition from Nepal teas. According to sources, some foreign buyers of the Darjeeling tea are showing preference for Nepal tea over Darjeeling tea due to economical considerations. In addition, international demand for tea has remained low primarily due to the Ukraine war and ‘weak’ currency in some importing countries. Indian Tea Association (ITA) asserts that unless there is a financial relief plan, the Darjeeling tea industry’s survival is in jeopardy.

And the silver lining…

Despite there being seen a slight drop in tea production, some analysts are confident that availability of tea in the domestic market won’t be affected. According to noted tea industry expert Sujit Patra, “The March-April period is just an initial stage, when total production is very less. In some areas, the production is 25% less and in some areas it is 30% lower.”

He further adds, “Due to huge carryover stocks from last year there is no panic or shortage in the market. Additionally, in the coming months, we are expecting some rainfall.” So unless there is crop loss in the peak August-September season, there should not be any cause of concern.

India is a leading exporter of tea. It exports black tea, green tea and Oolong Tea. India’s tea exports represent 8.8% of world tea exports, and it’s ranked 4 (after China, Kenya and Sri Lanka). The UAE, Iraq, Russia, US and UK were the top export destinations for Indian tea in 2023-24. Overall, India’s tea exports have done marginally better during the year, growing by 1.04% YoY to reach US$ 826.1 million.  There was a strong decline by 17% YoY for black tea in bulk (US$ 272.3 million), while black tea in packets, tea bags, and other black tea witnessed growth.

The early decline in tea production may not impact India’s tea exports either. According to Mr. Patra, “Our export usually starts from July-August. While exports happen throughout the year, whatever is being exported now is of last year’s contract. And it is not like I am getting a contract today and exporting tomorrow. The tea being exported now is already blended/prepared. So there is no concern on export also.” So, if the hopes for a good monsoon in the coming days are realized, lovers of Indian tea around the world may continue to relish their beloved cuppa.

*A “flush” is a period of time when the tea plants grow new leaves that are then harvested by hand or machine. After the first flush season ends around mid-April, the tea plants go through a short dormancy until the next growth period – the second flush. Second flush season usually begins in late May and continues through the month of June. India’s key tea-producing regions include Assam, West Bengal, Tamil Nadu, and Kerala.

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