Sucheta Dalal :Price of your cuppa tea goes up due to demand-supply gap
Sucheta Dalal

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Price of your cuppa tea goes up due to demand-supply gap  

May 16, 2009

 

The price of a common man’s favourite beverage tea is slated to go up by this week-end. The Federation of All-India Tea Traders Association (FAITTA), while raising tea prices by Rs20 per kg, has warned about a similar price hike in June, if the supply situation remains the same at auction centres.
 
The stock position of tea with most traders is poor because we did not get supply in last two months. The tea prices at the auction centre are going up by Rs30 to Rs 40 per kg due to higher demand and less supply, said Harendra Shah, president, FAITTA.
 
The Western India Tea Dealers Association (WITDA) is also organising a six-week chai bazaar from 18th May to counter the rising procurement prices of tea from West Bengal, Guwahati and Kolkata.
 
WITDA president and chief executive of Wagh Bakri Tea, Piyush Desai has said the procurement prices of tea have gone up by Rs 40-50 a kg in the past four weeks. However, with arrival of tea from Kolkata and Guwahati auction centres, the tea producers would be compelled to loosen their grip on the stock.
 
At present, the best quality of tea costs between Rs270 to Rs300 per kg, medium quality is priced at Rs225 to Rs260 while the lower quality comes at Rs220 a kg. All tea prices will go up by Rs20 effective 15th May and another Rs20 by June.
 
According to the Tea Board of India, scanty rainfall has already dealt a severe blow to production of Darjeeling tea, the first flush crop having suffered by more than 20% and the drought has hit the production of both North and South Indian varieties but production in the North has been more affected.
 
Between January and March, tea production in the South dropped by 8.156 million kg (mkg) to 41.34 mkg from 49.49 mkg same period last year. In March alone the tea output dropped by 1.86 mkg to 17.69 mkg from 19.55 mkg recorded in the same month last year.
 
This drop in output has led to a demand surge across the world since production in Sri Lanka and Africa is also down. Together the drop in output in India, Sri Lanka and Kenya would lead to a global shortage of about 80-90 mkg, according to tea association estimates.
 
Currently there is a shortfall of tea but as the weather conditions improve and there is abundant rainfall, we might be able to recover from the situation. Also the government should allow tea import from non-SAARC countries like Kanya, at the same duty of 7.5% applicable for tea imports from SAARC countries, Shah added.
 

Usually, the prices of tea remain high during May-June period due to shortage of low-grade tea. After the arrival new tea in bulk from July, the prices might come down slightly. Till then may be just have your regular cuppa tea, with slightly higher price and enjoy the early arrival of rains. - Yogesh Sapkale with inputs from Pallabika Galguly


-- Sucheta Dalal



 



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