Higher shipments from the South boost Indian tea exports; prices seen firm in the near term

South Indian tea made a higher contribution to Indian exports of the beverage in 2024 and the outlook for 2025 is promising as the production in the region has been relatively less impacted by adverse climatic conditions compared to regions in the North.

The tea production fell by 120-130 million kg (mkg) in North and South India during the year. Officials in the sector cited drought, unseasonal rains and pest attacks caused by climate change as the reasons for the diminished production. Higher prices failed to compensate for the crop loss with increasing wages pushing up the production cost.

Cherian M George, CEO & Whole Time Director, Harrisons Malayalam and Chairman, UPASI Tea Committee, said tea production in North and South India suffered in 2024 from erratic weather. North India crop loss for the period from January to October was 58 mkg whereas in South, it was 8 mkg. This led to an overall 6 per cent drop in tea volumes compared with that in 2023. The crop drop percentage for the period from April to October was higher than in January to March.

23% rise in exports

For the year, crop loss could be to an extent of 90-100 mkg, given the early closure in North India and lower crop in South due to climatic challenges.

However, the exports witnessed a 23 per cent jump helped by higher purchases by Iraq from January to October this year. Shipments from North India went up by 13 million, a rise of 16 per cent. South Indian tea export was even better with an increase of 18 million kg over last year thus recording a 33 per cent rise.

“Tea exports from India had an impressive run with total exports expected to record an all-time high of around 260 mkg. The higher exports despite lower production in the country suggest better competitiveness of Indian teas in the global market space.” said K Mathew Abraham, President, Upasi.

Higher quantum exports to Iraq (by 9.58 mkg), Russia (7.28 mkg), UAE (4.57 mkg), Germany (3.07 mkg), the US (2.78 mkg) and Iran (1.93 mkg) made export revival possible.

“South Indian exports performance (till September 2024) stands out with 25.4 per cent increase in quantum exports and its total exports are expected to cross 100 mkg after 2018. South India produces just 17 per cent of the country’s production but accounts for 41 per cent of the country’s exports. Importantly, 56 per cent of the increase in the current year‘s exports had come from the region, which is not only encouraging but a testament to the compliance levels of teas from the region. To sustain this momentum, building a strong brand identity for Indian tea is of utmost importance for regaining the country’s tea legacy,” K Mathew Abraham said.

Prices up 13% in South

Lower crop coupled with higher exports led to a positive trend on the price front. The average tea price in South India was higher by 13.2 per cent and was estimated at ₹128.32/kg, while All-India prices were higher by 18.3 per cent at ₹200.60/kg. “Given the low crop prospects domestically, it is anticipated that prices should be relatively better, at least, during the first quarter of the next year,” Abraham said.

“The demand for Indian teas was driven by countries such as Iraq, UAE and Russia. To a certain extent, the South Indian teas have driven the exports this year” Dipak Shah, Chairman, South India Tea Exporters Association.

The shortage in the domestic market impacted the overall CTC tea prices. CTC tea prices shot up by 19 per cent in North India for ten months ended October compared with the same period of the previous year. The difference narrowed to 13 per cent rise for South India CTC tea. Higher consumption during the 2024 Parliament elections campaign is also considered to have played a part in boosting the prices.

Increased buying of orthodox teas from India this year was reflected in its prices. Orthodox tea prices rose by 36 per cent in North India and by 14 per cent in South India compared with that in 2023.

Localised climate impact

This year climate impact was much localised, impacting each region differently, Cherian said. The crop loss in Tamil Nadu for ten months to October was 2 per cent while it was as high as 9 per cent for Kerala. Although increase in prices helped to reduce the losses to an extent for the tea plantations, it was not adequate to cover the higher cost due to lower crop and steep wages.

Meanwhile, the intermittent showers and overcast conditions during November and December worsened prospects for tea in South India.

North India gardens are under annual closure while in South India, the crops continue to be short as per the closing figures at auction centres. The lower production is expected to sustain the present price levels till March 2025. The increased demand for sustainable and compliant teas, both from domestic and export buyers may encourage the growers to produce more such teas that command better prices.

Cherian said the production was abnormal this year and the outlook will depend on the crop availability in June and July.