The price of new season teas in North India has firmed up by nearly ₹30-40 a kg, compared to the same period last year. The first flush tea, which has just started arriving in the market, is fetching an estimated average price of around ₹200 a kg at Sale 14 at the Guwahati Tea Auction Centre (GTAC).
The loss in production of first flush teas on account of the countrywide lockdown due to Covid-19 pandemic and the near depletion of last years’ stock, coupled with steady demand, are the key reasons for the price rise, industry experts said.
According to Priyanuz Dutta, Secretary, GTAC, all the teas on offer got sold at the auction on Tuesday.
“The auctions opened last week and the first sale post lockdown was Sale 13 which only had end season teas that were similar to those sold before the lockdown. Even those teas fetched around ₹25 a kg higher than those sold before the lockdown. In Sale 14 this week, we had a little bit of old season tea, but it was majorly the new season teas. And they fetched around ₹30-40 a kg higher than that earned in Sale 14 last year,” Dutta told BusinessLine.
Sale of tea in the North Indian auction centres of Guwahati and Siliguri commenced last week. However, the auction centre in Kolkata is yet to commence functioning as permission for allied services including warehousing and courier facilities has not yet been granted by the state government.
The auction centres in South India, which had opened for a while in the second week of April, saw prices of low-end teas firming up by nearly ₹10-15 a kg.
“We have received permission for e-auction but unless the buyers, brokers, sellers and warehouses are able to open we will not be able to distribute the samples and conduct the sales,” said J Kalyansundaram, Secretary, Calcutta Tea Traders’ Association (CTTA).
Close to 600 million kg (mkg) of tea is handled annually by the six auction centres in India. These centres are Guwahati, Kolkata, Siliguri, Kochi, Coonoor and Coimbatore.
Lower production – firm prices
North India, which accounts for nearly 83 per cent of the country’s total production, is set to lose 8-10 per cent of the crop this year. The estimated crop loss for March and April put together is close to 100 million kg (mkg).
In volume terms, the first flush crop — which is usually available from end-February to late April — is a small quantity accounting for close to 10 per cent of the overall tea production in North India.
There was a pipeline of close to 50-60 mkg of carryover stock from last year, which has also been used up.
“The pipeline is totally dry and there is a deficit of around 100 mkg. All major blenders would require fresh teas for their blends. So, I expect that demand should be there. However, it is too early to predict,” said Atul Asthana, MD & CEO, Goodricke Group Ltd.
The industry expects prices to remain steady or firm up slightly, moving forward, based on the steady demand.