Tea prices on 6yr high - First flush from Dooars, Terai sells for Rs 90 per kilo

Siliguri, April 30: Consignments of first flush tea from the Dooars and Terai have fetched the best price in six years, thriving on a combination of high demand and low supply.

Figures obtained from the Siliguri Tea Auction Centre (STAC) suggest that this year’s tea is selling at an average price of Rs 91.18 per kilo in Sales 14-17 (see chart). “In the past five years, the average auction price never went over Rs 85 during this period,” said S.K. Saria, chairman, Siliguri Tea Auction Committee.

“The season’s first tea is generally put up for auction from the first week of April (Sale 14, the number corresponding to the week of the year),” Saria said. “A study of Sales 14-20 from 2003 till now shows that this year’s prices have been the best. This time, the average auction price in this period has as been as high as Rs 93.22 (Sale 14). The lowest is Rs 89.43 (Sale 17).”

The prices have been bullish at the Guwahati and Calcutta auction centres as well with this year’s average prices hovering about Rs 10 higher than that of last year. The average price in yesterday’s auction (Sale 18) in Calcutta was Rs 95.14, up from last year’s Rs 79.19, according to figures available with Parcon India Pvt. Ltd.

“We expect the bullish trend, which began with the end of the last season, to continue at least till June-end,” Saria said.

S.K. Bhattacharya, the president of the Siliguri Tea Traders’ Association, said the “dry pipeline” was a major contributing factor. “At no point in the supply chain are there any stocks piled up,” he said. “Plus there is a shortfall in crop production worldwide and India’s increasing internal demand.”

Production in Kenya, India’s major competitor, in March this year was only 16.9 million kg, compared to last year’s 32.2 million kg (Van Rees-Tea Market Report-April 21-25, 2008).

Shortfall in north Bengal because of lack of rain in March has pushed tea prices up. “In Terai, the shortfall is about 25 per cent,” K.K. Mintri, adviser to the Terai Indian Planters’ Association, said.

Mintri, however, said the price rise, though welcome, is “not in proportion to the rise in costs.” “Since the days of the late 90s, workers’ wages have more than doubled, diesel prices have gone up about seven times and coal, four times,” Saria said. “The price realisation is nowhere close to that. The industry has to first recoup the losses it has made in the years of recession.”