Darjeeling tea growers see lower production | The Financial Express

Darjeeling tea growers see lower production

“Apart from unfavorable weather conditions, production will be down as most of the gardens of the Darjeeling Organic Tea Estates, one of the largest groups, were closed due to financial troubles,” Indian Tea Exporters Association chairman Anshuman Kanoria told FE.

Darjeeling tea growers see lower production
Facing financial crises, many planters have sold gardens in recent years.

The Darjeeling tea industry is facing a double whammy this year, with both the production of the world-famous aromatic tea and the price realisation from lucrative world markets being significantly lower than the year-ago levels.

Trade circles estimate the production in 2022 to be about 10% lower than last year’s 7.01 million kg, as sunlight and temperature levels haven’t been conducive for good leaf growth. The average price realisation in export markets is “flat to 10% down” compared to last year, they say.

“Apart from unfavorable weather conditions, production will be down as most of the gardens of the Darjeeling Organic Tea Estates, one of the largest groups, were closed due to financial troubles,” Indian Tea Exporters Association chairman Anshuman Kanoria told FE.

In fact, Darjeeling’s tea industry has been witnessing a gradual fall in production over the last more than a decade. “In 2011, tea production was 9.14 million kg, while it was 8.13 million kg in 2016. It came down to 7.01 million kg in 2021,” said J Kalyansundaram, secretary, Calcutta Tea Traders Association. During 2017 and 2020, productions plunged drastically due to local political agitations and Covid 19-induced lockdowns, respectively. Production has been hit by climate change, labour issues, lower productivity and profitability, according to industry insiders. Facing financial crises, many planters have sold gardens in recent years.

Also Read: Telcos’ AGR up 3.5% in April-June; BSNL gains most

“Ironically, despite the crop falling consistently every year, the average price keeps falling. The cost of production has been increasing over the years. Average cost of production is up by more than 30% this year compared to last year,” Kanoria added.

Demands for the Darjeeling tea, the first product to get a geographical identification (GI) tag in India, are weak in Europe and Japan, the two large overseas markets. “Demand from Europe is very weak. The Japanese are not paying more for the tea due to a weak yen. All the major countries which are the buyers of Darjeeling tea are in economic trouble,” Kanoria said. Some overseas markets are purchasing cheap Nepal teas.

In the domestic market too, the aromatic tea is facing competitions from Nepal. Traders are selling the variety from the neighbouring country, which is up to 50% cheaper compared to the Darjeeling variety. Also, the government’s previous norms on blending of imported teas with Darjeeling varieties protected with GI tags impacted domestic demand this year.

Amid concerns that cheap imported teas from Nepal are being mixed with premium orthodox varieties in India, the Tea Board last year had ordered that no registered buyer should blend such imported teas with the Indian crops having GI tags. Following that Tata Consumer Products, one of the large domestic buyers, almost ceased to buy Darjeeling tea, leading to a drop in domestic prices, industry insiders said. The Tea Board superseded its earlier notification on blending only in the last month.

“Auction figures this year are a disappointing. Average selling price is lower than last year. Today, a large part of Darjeeling tea is selling at lower than the cost of the cheapest CTC teas. Darjeeling tea makers are incurring huge losses,” Kanoria said.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

First published on: 24-11-2022 at 03:30 IST