Last week, the Union Commerce Ministry announced that they are suspending seven sections of the Tea Act, 1953. Of these seven, Sections 12 to 16 referred to restrictions on tea cultivation, permissions from the tea board to plant tea in normal or special circumstances or run a tea nursery. Section 39 called for a penalty of up to INRs5,000 in case of violation of the earlier sections while Section 40 allowed for tea bushes planted without permission liable for removal. It appears that this is part of several other reforms underway to lift regulations, including the recent relaxation of norms to obtain export and distribution licenses. 

ASSAM FLOODS

Every year Assam sees floods during the monsoon season. However, this year, it was thought that there was a deficient monsoon. Between June 1 (when monsoon officially starts) and August 13, the region of Assam-Meghalaya saw 21% less rainfall although experts were quick to add that this was not abnormal attributing it to monsoon variability. For tea producers and farmers, less rainfall has been a cause of concern. But over the last few days, Assam has been witnessing flooding, bringing with it landslides and damage. Sixteen districts – including several the-growing districts –  have been affected across the state. Over 200,000 people have been affected by the flooding but currently, there has been no reported loss of life. 

MARKETS & PRICES

Overall, in the tea auctions, prices did not vary significantly from the previous week. In the south, Kochi auctions also struggled against rains in the High Ranges, which impacted tea supplies to auction centers. This in turn led to a marginal price increase over the previous week. 

In north India, the Kolkata auction saw good demand for all categories, in particular Orthodox tea. Middle eastern exporters were active for orthodox tea while Tata Consumer Products were active for Darjeeling. 

India Tea Price Watch – August 28, 2021

Source: India Tea Board | India Tea Auctions

*New audio to be uploaded 8-31-2021

PHOTO CAPTION: Scenic view of tea farms in Munnar, Idukki District, Kerala, India. Photo by Parin Parmar | Dreamstime.com

As the political developments in Afghanistan continue to occupy headlines, tea also makes its way to the news. Afghanistan is an importer of green tea and orthodox black tea from India and in 2020-21, about 760,000 kilos of tea was exported from here. At the moment, the movement of cargo between the two countries stands interrupted.

In auctions this week, the Kochi auction was closed due to the state festival of Onam. Other auctions continued as usual. At Guwahati, both Tata Consumer Products (TCPL) and Hindustan Unilever (HUL) were active for leaf teas while at Kolkata, TCPL was active for Darjeeling tea. In terms of sales, north India saw 65% of Darjeeling sold.

Orthodox tea saw better uptake at 90% while 77% of CTC offerings were sold. Meanwhile, in the south, only about half the orthodox leaf was sold. Only CTC dust saw a good uptake, at 92% of the total offering sold, at Coonoor. 

India Tea Price Watch – August 21, 2021

Source: India Tea Board | India Tea Auctions

*New audio to be uploaded 8-26-2021

PHOTO CAPTION: Cinnamara Tea Gardens, Jorhat, Assam. Photo by Sidheswar Kumar Mishra/Assam Tours & Travels

India Tea Price Watch

Prices were similar to the previous week with the exception of Darjeeling which dropped significantly, marking the end of the summer flush. The week leading up to India’s Independence Day was largely uneventful. Kolkata opened to strong demand for orthodox tea. Well-made whole leaf and brokens were selling well. Middle East buyers were active while CIS countries showed fair demand. In Guwahati, the market opened to fair demand. In the south, Kochi saw a busy week with major blenders, upcountry buyers, and exporters active, 75% of the orthodox leaf on offer was sold and about 68% of CTC leaf was sold. Local buyers were active for broken grades. A comparison of Sale 32 between 2021, 2020, and 2019 places this week’s prices as higher than 2019 but lower than 2020. Coonoor also saw improved demand for CTC leaf, with  85% sold, of which nearly 37% was purchased by major blenders. Exporters were selective with whole leaf grades and upcountry and other traders competed for brokens and fanning.

India Tea Price Watch – August 14, 2021

Source: India Tea Board | India Tea Auctions

*New audio uploaded 8-17-2021

India Tea Price Watch

August 7, 2021

This week’s highlight is the news from Darjeeling, of the sale of the estates Jungpana and Goomtee. The new owner is the Santosh Kumar Kanoria Group led by Anshuman Kanoria that also owns the estate, Tindharia, also in Darjeeling. Jungpana was last on the market in 2017. 

The sale follows the news of the struggles that Darjeeling’s gardens are facing, with climate change, decreased production, prices, and exports, among others. 

In other news, McLeod Russell India, India’s largest producer of bulk tea, with 31 gardens in Assam, faces bankruptcy. The company failed to replay an INRs 100 crore ($14 million) loan with interest before 31st March 2019. McLeod Russell issued a statement that they would continue to operate as a normal business on a ‘going concern’ principle.

JAPANESE AUCTION PILOT

In south India, the first pilot of the long-awaited Japanese auction took place last week. This auction system was recommended after a study by the Indian Institute of Management, Bangalore, for better price realization and better participation from buyers.

However, it appears that the pilot was not a success. Speaking on behalf of the buyers, Appu Kurien, Chairman of the Cochin Tea Trade Association, said that the Japanese auction, in its present form, had major defects. Many teas were sold INRs 6 below the highest bid price while others were sold for INRs 2 above the highest bid price. Active lots were supposed to be visible for a minute but bids closed before the minute was up, further adding to the confusion. Kurien said that Association members have voiced their concerns in a letter to the Board.

The Japanese auction system under review is supposed to be inclusive but does not take the small buyers’ constraints into consideration. When large lots (15 bags or more) are offered, small buyers are forced to abstain from bidding as they are required to buy all or none. In Kochi, where 85% of bidders are small buyers, they would find the new system particularly unfriendly.

In Coonoor, Dharmesh R Nagda, the largest single tea buyer in south India, also voiced his dissatisfaction with the pilot. The fact that he cannot bid in an active session, and the lack of competitive prices if he is the single bidder were both points of contention.

The buyers also question the need for a new auction system to replace the existing system, which they feel can be tweaked to address its current challenges. “This is a platform where you can sell primary grades and secondary grades. There is assurance of prompt payment. You may not like having the middleman, but it is a system that is working well.”

PRICES
Assam continues to see a slow shift towards whole leaf teas. This season’s top sellers at the auctions made their appearance this week. A specialty orthodox tea variety from Dibrugarh’s Maijan Tea Estate set a new record on July 31, as it was auctioned for INRs 70,501 per kg at the Guwahati Tea Auction Centre (GTAC). The  Maijan Golden Tips is a handmade tea and only two kilos of this tea were available for sale. The entire lot was bought by Mundhra Tea Company on behalf of a buyer in Belgium.

Kolkata saw good demand for orthodox tea. Middle Eastern buyers were active. Darjeeling saw good demand as exporters were active and Tata Consumer Products lent good support.

India Tea Price Watch – August 7, 2021

Source: India Tea Board | India Tea Auctions

*New audio uploaded 8-12-2021

India Tea Price Watch

July 31, 2021

Continuing the conversation from last week, where the Tea Board of India issued a notice insisting that 50% of the tea produced must be sold via auction, this week saw producer groups responding and raising concerns. The North Eastern Tea Association has asked the Board to reexamine the price of green leaf, stating that it should depend on demand and is a matter between the grower and manufacturer. They add that should the Board want to fix a minimum price for green leaf, it should be linked to a minimum acceptable quality of green leaf. They have also said that if the minimum price of green leaf is fixed, so should the minimum price of made tea. 

Calling the current Minimum Benchmark Price faulty, the association has said that it is neither helping the growers nor the manufacturers. They have instead called for a third-party study to make recommendations that will benefit the industry. 

PRICES

Kochi saw a decline in export ascribed to the rise in COVID in Russia along with sanctions in Iran. Buyers to West Asia were also less active. Orthodox saw only about 51% sold while only 36% of CTC lead was sold. CTC Dust saw better uptake as 80% of the teas on offer were sold. SupplyCo was not very active this week.

In Kolkata, Darjeeling’s second flush is over as monsoon harvest is now underway. There was good demand for orthodox teas and fair demand for CTC. Guwahati saw fair demand for orthodox and CTC. HUL and TCPL were active for Dust. Overall, the volume of tea that remains unsold is high in north India.

India Tea Price Watch – July 31, 2021

Source: India Tea Board | India Tea Auctions

*New audio uploaded 7-29-2021