According to the Tea Association, production in the first half of the year increased by about 11% beating earlier estimates of a loss of 20 million kilograms (mkgs) even as Kenya reported a decline of output due to drought by 19%. Till May 2006, production was down by 15.4 mkgs to 223.9 mkgs from 239.3 mkg last year.
Till May 2006, production was down by 15.4 mkgs to 223.9 mkgs from 239.3 mkgs last year and exports were down to 59.4 mkgs from 68.5 mkgs. While Kenyan tea fetched USD 2.06 per kg compared to USD 1.59 per kg last year, Indian tea prices dropped from Rs. 1.98 per kg to Rs. 1.81 per kg. Tea Board Chairman Basudeb Banerjee says that “oversupply at times forces down prices.” It is not clear what is causing the “oversupply.”
According to the International Tea Committee, while India and Kenya may have lesser quantities to export this year, there has been a supply growth of 25% over the last 10 years. India and China together produced 53% of the total crop and consumed 40% of the global supply. Prices had been averaging at $1.5 per kg till tighter supply till higher prices and weaker currencies of producing countries have forced inflationary prices from early this year.
