A drought in India's major tea growing region has led to a dramatic fall in production during the first quarter of the year. While distressing as the event might be, it brings a positive outlook for Tea price as Kenya and Sri Lanka-two competing nations for Indian CTC and Orthodox tea also report lower production. The price gains will mean higher profits for all the Sterling Tea companies of Assam and also the Khaitan group's Mcleod Russell-the largest producer of Tea in India.

Tea growers in the northeastern state of Assam say they produced 12,000-15,000 tons less tea in the first quarter than in the same period last year because of insufficient rain say reports emanating out of Assam.
Assam and neighboring states account for more than 70% of the more than 1 million tons produced by India's $1.5 billion tea industry.

The drop in tea production may not lead to job cuts as the industry would be buoyed by the rising price of tea - partly a result of the falling production. Indian tea plantations employ about 3 million people, generally women and pay about $1.25 a day, plus free housing and subsidized food. Most of the workers are illiterate.

Production also plunged in some other tea growing countries. The Sri Lanka Tea Board said it produced 20,000 tons less in the first two months of 2009 than a year earlier. The Kenyan Tea Board has forecasted a 5 percent fall in 2009 production owing to dry weather.