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Tea prices to remain stable this year in domestic and global markets

29th July 2016
KOLKATA: Tea prices are likely to remain firm this year both in domestic and global markets as the demand for tea is increasing across the globe by 2% -3%, according to the annual report of McLeod Russel India Ltd BSE -4.52 % (MRIL) - the largest integrated tea company in the world. 

Global black tea production was lower during 2015 on account of loss of crop in Kenya and India. The global black tea production during calendar 2015 is estimated at 2,900 million kg. Tea production is likely to remain stagnant within a small range depending on weather conditions. 

McLeod Russel said that stagnancy in global production has mainly crept in because of insignificant increase of land under tea cultivation. \"Global demand is likely to grow by 2% -3% thereby creating shortages and lower inventory levels. Indian exports, which were negatively impacted due to geopolitical instability and currency fluctuation amongst major consuming countries in the previous, has seen recovery of demand with stability on geopolitical issues. These factors should have positive impact on prices both in global and domestic markets in medium term,\" the MRIL annual report added.

MRIL added that small tea growers form a considerable part of the industry. The recent revised figures show a total production of around 300 million kg from the small growers in Assam and West Bengal. \"This gives an opportunity to create a segment based more on variable cost as compared to fixed cost for own production,\" MRIL annual report said .