With demand muted in the international market, Darjeeling tea has fetched a lower price at the auctions during the first six months of the year.
Average auction price of Darjeeling tea has fallen by more than R15 during the January-June period. Indian Tea Association estimates show that prices of Darjeeling crop during the January-June, 2011 have come down to R295.65 from R310.83 in the first half of 2010.
First flush or the summer flush of Darjeeling tea, which is harvested during May-June, is the highest revenue earner for the industry.
?The Eurozone crisis had an impact on the overseas buying as Europe consumes a large amount of Darjeeling tea,? admitted Subodh Pal of a tea broking house, Contemporary Tea. According to him, overseas demand wasless this year due to slowdown in the global economy and weakening dollar & euro.
?Unless the European market stabilises, tea export will continue to be hit. While the premium quality is purchased through private auction, there are overseas clients who buy from auction. They have not boughtmuch this year,? he said.
A N Singh, managing director of Goodricke, said while a muted demand has been instrumental in pulling down prices for Darjeeling tea at the auctions, private auctions fetched good prices. ?It is always demand supply situation that is determining the prices. There was a drought like situation and production was low,? he said.
Rupee was at R44.6-45.33 to a dollar in the first week of January this year. While it came down to 44.2 level during the first week of March,it did not cross 45.7 to a dollar. Rupee on the other hand was at 58.52-59.73 to a Euro in the first week of January and at 65.92 in the first week of May.
Kaushik Basu, secretary of the Darjeeling Tea Association, said, ?prices were high last year as production was hit due to drought like situation. Production is normal this year. It seems that the global economic crisis had an impact on overseas sales.?
According to C S Bedi, chairman of ITA, such figures are not indicative of the entire situation as it does not include the premium quality that is exported through private auction. ?What we get at the auction is an inexpensive variety of the crop,? he said.
While production in Darjeeling during the first six months of the year was 3.7 million kg against 3.2 million kg for the corresponding period last year, lesser volume of tea was sold through auction in 2011.
ITA estimates show that while 1.11 million kg tea was sold through auction during first six months of 2010, 0.92 million kg was sold this year.