Price lift for tea firms

KOLKATA: Tea companies are expected to reap gains from the rise in tea commodity prices in the range of Rs 10-20 per kg across varieties over the past one year.

While calendar year-end figures for both production and exports are yet to come, initial indications suggest that buoyancy in the tea market is expected in the coming months.

The buoyant prices are likely to continue for a while, industry sources said, bringing respite to a large number of producers.

Sources said that the total tea production in India would be around 950 million kgs, while export should touch 195 million kilos. While exports have not been very forthcoming as expected, domestic consumption has been on the rise almost consistently. Big players like HLL, Tata Tea, Duncans, Wagh Bakri, Girnar and others will be betting high on the retail front. Most of them are also the largest buyers of tea at the auctions.

Tea prices have been on an upward swing after five years in 2006. Tea sold across auction centres in north and south India witnessed an average 10% increase in prices over the weeks, a consistent trend, noticeably after a long time. The bullish flavour was said to be a result of a fall-out of an estimated shortage in the tea crop and offerings at auction houses.

“The year 2006 ended on a higher level and this trend has got into the New Year. Prices of tea have increased after all these years. There was a temporary dent in tea prices in November but that has been reverted and quality tea will be on offer.

The production will generally decline in these months and hence stocks will be lower,” a leading tea producer-exporter said.

“However, it is necessary to find ways to increase export edging out Kenya, India’s biggest competitor in the world CTC markets. While certain markets like Germany or Japan give higher prices, markets like the Middle East and Pakistan are primarily volume markets. The strategy has to be worked on these lines,” he added.