The organised tea industry, already reeling under financial stress, has been hit by a double whammy of lower production and lower prices, denting the margins of the gardens.

Data compiled by the Indian Tea Association (ITA) shows that production in north India (Bengal and Assam) was down 21.44 million kg in the first three months of 2024 due to inclement weather conditions.

During the same period, auction prices of north Indian tea declined ₹16.30 a kg, apparently defying the demand-supply dynamics. The fall in auction prices came on the back of a decline witnessed in FY24 over the previous fiscal. North Indian tea had fetched ₹17.03 a kg less in FY24 compared with FY23.

ITA, which represents the organised gardens, said the new season has failed to bring cheer to the tea industry. The margins of the vast majority of companies are sharply declining which reflect on their balance sheet.

ITA secretary-general Arijit Raha said the association is trying to make sense of how and why the falling production failed to lift the prices. “If supply falls and demand remains steady, prices should move up. However, we have not seen that in the tea industry for some time. It is indeed baffling,” Raha told this newspaper.

Data from official sources suggest Indian tea production and exports have remained range bound over the last three years. If the consumption is believed to be growing even marginally (2 per cent), it has failed to lift the price.

ITA data shows that south India tea production registered a growth in production of 7.75 million kg in January-March 2024 over the same period of the last year, even as it suffered a ₹17.39 a kg decline in prices.

The association particularly noted the precarious condition of the Darjeeling tea industry where declining yield met with lower demand and prices, mainly attributable to the influx of Nepal teas in the market.

ITA said that the survival of Darjeeling tea is challenged, without a relief package. “The association has urged the government to extend a financial revival package to the Darjeeling tea sector which was endorsed by the Parliamentary Standing Committee on Commerce in its 171st report,” ITA said in a statement.