Tea production in the southern regions during last month is estimated to have dropped to 14 million kgs from 30.5 million kgs produced during the first two months of the calendar year.

During January 1998, the average auction tea price was Rs 91.79 per kg. This is 77 per cent higher than the prices prevailing during the same month the previous year. Prices are expected to firm up further during the next few months.

In the retail market, tea prices are expected to race past Rs 200 per kg this year. Prices were hovering in the Rs 170-190 band during the last financial year. During 1997-1998, tea production is expected to be about 820 million kg - six per cent higher than the previous year. This growth is also much higher than the two per centgrowth recorded during 1996-97.

Though domestic consumption increased by only two per cent, the six per cent increase in supply did not put pressure on the domestic tea prices. This was possible because of a shortage in international markets arising out of a lower production in Kenya and a strike by Sri Lankan planters.

Infact, the industry is confident of posting record tea exports during 1997-1998. The 1991-1992 export figure of 216.4 million kg is likely to be surpassed for the first time in five years. During the first ten months of 1997-1998, the industry had already exported 141.7 million kg. This has already surpassed exports of 132.7 million kgs recorded during the previous year.

Besides, the steep increase in international tea prices is likely to result in a huge windfall for exporters. The depreciation of the rupee against the dollar too has aided the industry.