October 14, 2014 / 4:05 PM / 5 years ago

Indian tea producer sees drop in output due to erratic rainfall

A worker plucks tea leaves at the Amchong tea estate in the northeastern Indian state of Assam July 11, 2012. REUTERS/Utpal Baruah

MUMBAI (Reuters) - Indian tea producer Harrisons Malayalam Ltd expects revenue to fall by a tenth this fiscal year due to lower prices and also reduced output as a result of erratic rainfall caused by climate change, its chief executive said.

The company’s tea production is expected to fall about 3 percent in 2014 to 15.5 million kg, N. Dharmaraj told the Reuters Global Climate Change Summit on Tuesday.

“It (climate change) is quite serious. The overall quantum of the rainfall has remained the same but the distribution has been very erratic,” he said.

Revenue in the current fiscal year ending March 2015 would also be hit by a drop in tea prices, which are likely to fall by 6-7 percent this year, the CEO said.

Harrisons Malayalam, India’s fifth-biggest tea producer, had revenue of 3.3 billion rupees ($53.8 million) in its 2013/14 fiscal year.

Tea output in India, the world’s second-biggest producer after China, has been affected by a rise in temperatures in tea-growing areas and a change in rainfall patterns.

India’s output in the first eight months of 2014 was 702.14 million kg, down from 709.36 million kg in the same period last year, as a dry spell earlier this year hit plucking in top-producing Assam state, according to the state-run Tea Board.

Dharmaraj said Harrisons’ annual output was expected to rise to about 20 million kg in the next four to five years as it produces more orthodox grade tea for export destinations by reducing output of the crush-tear-curl (CTC) grade that it sells in local market.

The company is also aiming for exports to make up 25 percent of its overall revenue in five years’ time from 15 percent now, with plans to tap new markets in west Asia and North Africa, he said in a phone interview.

Reporting by Sumeet Chatterjee and Rajendra Jadhav; Editing by Pravin Char

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