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Darjeeling tea price down by Rs 100 per kg

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KOLKATA: Darjeeling tea prices have fallen by Rs 100 per kg compared to last season, despite production being down by almost 20 per cent .

Prices have dropped as offtake of second flush teas has come down at the auctions and industry attributes this drop to lower purchase by Tata Global BeveragesBSE 0.00 % and HULBSE 1.55 % from the auctions as well as lesser enquiries from the European Union.

A drop in prices has, however, prompted Iran, a traditional orthodox tea buyer, to initiate talks with tea planters to import Darjeeling tea. According to officials of Kolkata tea auction centre, where most of the Darjeeling teas are offloaded, Tata GlobalBSE 0.00 % Beverages and HUL had lifted 29 per cent of the total offerings in 2012 -13.

"In 2013-14, the offtake has dwindled to 17 per cent ," the officials added. In June 30, 84,540 kg of Darjeeling tea was offered at Kolkata auctions, of which only 52,006 kg was sold. The same trend was repeated in the following weeks.

In the last sale, 178,213 kg of tea was of fered but only 73,846 kg was sold. "Prices have dropped Rs 100 per kg in the last few auctions depending on the variety. European buyers are not present and Tata Global and HUL are also not lifting good volumes of teas from auctions," said Sheo Sankar Bagaria, chairman, Darjeeling Tea Association (DTA).

Average price for Darjeeling tea is hovering around Rs 373 per kg this week com pared to Rs 441 per kg last week. Darjeeling second flush teas, which is popular as summer teas and known globally for its musky flavour, come to the auctions during this time. Darjeeling produces 8.5-9 million kg of tea annually.

Fall in demand is not a one-off thing this year, pointed out Anshuman Kanoria, director, Indian Tea Expoters' Associ ation and a leading Dar jeeling tea exporter for last 25 years.

"This has been happening consis tently over the past few years, especially for second flush. The producers are feeling it more as in the last two years. Tata Global has changed their buying strategy and is not pushing prices in the auctions as they did till 2012. They must be buying privately from the planter " he said.
" he said.

In the export market too, Darjeeling tea is facing a crisis. There is still the same demand for first flush teas. It is the second flush and rains teas which are more affected.

Moreover, there is a clear shift in preference in the EU to organic teas. Most of the lower demand and prices are for conventional teas, Kanoria said.

"The first reason for lower demand is that the Germans are fed up with the attempt to push them with threat of legal action under GI. The producers have violated a basic rule of marketing-if you want to increase sales and co-operation, the need is for incentives, promotion and co-operation rather than coercion and threats.

"EU is happy to look for alternative marketing strategies such as Himalayan blend at every opportunity," he added.

Interestingly, a section of planters say that not all of the producers are putting thrust on quality . They allege that there has been total neglect on the quality front.

"We have seen a consistent decline on the quality front in recent years. Almost 70 per cent of the Darjeeling production is below average to poor and below 10 per cent of annual produce can be termed truly good," said a planter who did not want to be named.

Importers worldwide are chasing the 'good' segment and prices and demand for this spiral, as these teas have gone up in a spiraling manner.

The DTA chairman said that planters are now being forced to look at East Europe for exporting teas.

Source: http://economictimes.indiatimes.com

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