A cup of tea is going to be dearer as prices of tea at auction centres across the country shot up due to supply shortage caused by the lockdown. For the first time ever, average tea prices in the country’s auctions rose by 40-60 per cent, driven by strong buyer demand and a huge shortfall.
The COVID-infused lockdown resulted in an estimated crop loss of 150 million kilogram in Assam and West Bengal during March to June, according to a figure provided by the Tea Association of India (TAI).
The fall in production comes when millions of people confined indoors due to the pandemic spiked the demand for the beverage, which is believed to have immunity-boosting properties.
The Indian tea industry is set to lose nearly a tenth of its usual output for the year as estates in West Bengal and Assam are locked down through three vital weeks of the production cycle, with the first-flush crop due for plucking through the early spring likely to be overgrown by mid-April.
Prices of tea, especially the CTC (crush, tear, curl) variant, which is most widely consumed, are on the rise in both wholesale and retail markets after they were stable for around five years.
Wholesale price index (WPI), which measures changes in prices of goods before they are retailed, for tea grew at an all-time high of 79% in August.
The figure for May was -1.8%. While the corresponding figures for June and July were 8.9% and 45.8%, respectively.
The worst hit will be the Darjeeling tea industry that has not been able to sell its first flush teas due to travel bans and lockdown in Europe, the main market for its exquisite first flush crop.
Nearly 35% -40% of Darjeeling tea industry’s revenue comes from first flush tea that constitutes 20%-25% of Darjeeling’s total production of 8.9 million kgs. The average price of first flush Darjeeling tea ranges from Rs 2,000 to Rs 4,000 per kg.
CTC Auction price
Auction Date –
- 1-2 July (2020) price was Rs. 268.38 while last year it was Rs. 175.05
- 22-23 July (2020) price was Rs. 284.65 while last year it was Rs. 177.17
- 6-7 Aug (2020) price was Rs. 309.56 while last year it was Rs. 181.13
- 25-26 Aug (2020) price was Rs. 296.26 while last year it was Rs. 164.82
- 9-10 Sept (2020) price was Rs. 286.34 while last year it was Rs. 163.87
- 22-23 Sept (2020) price was Rs. 275.22 while last year it was Rs. 158.19
After a halt in production due to the lockdown, tea estates in Assam and West Bengal resumed operations from April 12 with a partial workforce. But the plucking operations could not be resumed immediately, as tea bushes had overgrown during the lockdown period and needed to be pruned.
The plucking work had started gaining momentum since June, but the heavy downpours in tea-growing upper Assam districts and North Bengal districts of West Bengal caused the fresh setback.
This would further dip the production and widen the supply-demand gap, the industry sources said.