Tea prices to remain buoyant for short to medium term: ICRA

With domestic demand growing at a steady rate and production unlikely to witness a sharp increase due to limited availability of land, tea prices are likely to remain buoyant for short to medium term, according to credit rating agency ICRA.
Tea prices to remain buoyant for short to medium term: ICRA

By PTI

Mumbai: With domestic demand growing at a steady rate and production unlikely to witness a sharp increase due to limited availability of land, tea prices are likely to remain buoyant for short to medium term, according to credit rating agency ICRA.

However, the global demand-supply position and therefore the international prices would continue to influence domestic prices since around 20 per cent of the produce is exported currently. 

With tea being a fixed cost intensive business, the increasing input cost could be further aggravated in the current financial year (FY15), if adverse climatic conditions lead to a significant drop in tea production, the agency said. 

Over a longer horizon of five years, prices have gone up at a CAGR of 8.4 per cent and prices at both north Indian and south Indian auctions have grown at a largely similar rate. 
<span style="\&quot;font-family:" arial,="" sans-serif;="" font-size:="" 13px;\"="">However, the quality teas of north India continued to command a premium over south India tea.

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