Darjeeling Tea prices fall 50% on quality concerns post-rains

The Economic Times

Darjeeling : Excessive rains and protests by the Gorkha Janmukti Morcha for a separate homeland in Darjeeling hills have hit the tea industry hard in the region. Prices of Darjeeling tea have crashed by more than 50 per cent from the past year and this is likely to affect the bottomline of tea companies in the current fiscal. Darjeeling tea prices have come down drastically in the past three sales (sale 36, 37 and 38) during Kolkata auctions. A kg was auctioned at Rs 211 compared with Rs 423 during the past year's sale number 36. Though prices recovered in the following two sales, they are much lower than the past year's level. In sale 37, Darjeeling tea fetched Rs 283 per kg vis-a-vis Rs 393.64 in 2012. And in sale 38, prices were at Rs 263.39 per kg compared with Rs 385 per kg previous year. "Quality has suffered due to rains and the strike. Tea stocks piled up on the estates during the protests and could not be hauled down to the plains. Moreover, Tata Global BeveragesBSE 0.31 %, one of the biggest buyers of Darjeeling tea, has cut down its exposure in the auctions on quality issues thus pushing down the sentiments further. 

A number of export orders have been cancelled which has increased the availability of tea in the market and has left a bearish impact on prices," said SS Bagaria, chairman, Darjeeling Tea Association. J Kalyansundaram, secretary, Calcutta Tea Traders Association, brushed it aside as a temporary phenomenon and said prices will soon recover. "There are some good quality teas that are yet to come to the auctions. Once they arrive, prices will surely move up," he said. While prices have dropped at domestic auctions, Darjeeling tea has fetched an astronomical price at a charity auction held recently in Moscow. It has been sold for prices as high as 45,000 ruble (Rs 88,000 approximately) per lot of 1.2 kg. Darjeeling tea from the Castleton estate won the highest bid of 45,000 ruble ($1,384) from Dmitry Krasilnikov, the president of the Baltic-Trans group of companies. The second highest bid of 35,000 ruble ($1,076) was offered by Andrew Barinsky of Russia First, a real estate industry, for Chamong Organic. Other varieties were also well-received, with prices ranging from $200 to 500 per lot of 1.2 kg. First-flush high quality Darjeeling teas from 20 estates were the flavour of the auction.