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="\"font-family:" arial,="" sans-serif;="" font-size:="" 13px;\"="">However, the quality teas of north India continued to command a premium over south India tea.