India has gone into a 21-day complete lockdown and no plucking is taking place.
Usually, this is the high point of the year for the tea industry, with some of the season’s choicest teas from Darjeeling commanding high prices. It’s a season to look forward to but comes with a pall of gloom this year. There are no tourists in Darjeeling, schools and public places have been closed, and in tea gardens, there are no buyers descending from Europe and Japan to see the first flush in all its glory, and more importantly, place their orders.
In Assam, various associations including the Asom Chah Mazdoor Sangha and The Assam Tea Tribes Students’ Association have been calling for a closure of tea gardens to prevent the spread of COVID-19. The 3000-acre Rungajaun Tea Estate run by the Kheta group with 1000 workers and 100 office staff became the first garden to suspend operations with full pay to staff, reports The Telegraph.
With travel restrictions enforced across the globe, annual buyers to Darjeeling will not be coming down to taste, select and buy teas. While this is seen by some as a significant problem, there are others who feel that with Darjeeling, in particular, trust-buying is always there as buyers know these teas very well. Two of the biggest markets for the first flush are Germany, already in a state of high alert, and Japan, which is likely to reduce imports.
The Times of India quoted Indian Tea Association’s Sujit Patra as saying, “Tea exports have not started yet this season. The need of the hour is to get full support from the government in terms of logistics, finance, etc. Shipping lines need to take consignments to countries like Iran, USA, Russia etc.” Two countries hit severely by COVID 19 are also two of the biggest importers of Indian black tea – China, which imported 13 million kilograms from India in 2019 and Iran which tops the list of Indian tea importers with 53 million kilograms. Both of these countries have expressed a note of caution, with Chinese importers reporting two months’ worth of stocks which will be used once the situation normalizes there, while Iranian buyers have said they would review the situation in early April.
Indian black tea exporter, Pranav Bhansali says, “As far as exports are concerned, we haven’t seen any cancellation of existing or planned orders even though bagging new orders has been sluggish. Functioning of port and custom authorities will be crucial.” Bhansali adds that it is still the early days and only the first batches of first flush are out in the market. “We will get a much clearer picture in two weeks’ time,” he said while adding that a general uncertainty hangs in the air.
The first flush accounts for 20% of Darjeeling’s tea production, and sets the tone for the year’s pricing, accounting for 35-40% of the revenue. Last year, the first flush in Darjeeling was delayed when the weather played truant. The season started late and there were concerns about how it would affect the year’s revenue. This year, the weather has been close to ideal. Raju Lama of Darjeeling Tea Leaves said, “There was adequate winter rain, we have good weather and the gardens have started their plucking.” He went on to say that several annual visitors have had to cancel their trips. Lama added that some of his buyers who retail in Europe have had to close their stores with the corona outbreak and it is unlikely they will be ordering in a hurry. He feels that small businesses like his, that cater to small volumes of export, will be hit harder than the corporate houses.
What is being reported is an estimated 10-20% reduction in demand which will certainly impact price realization. The Indian problem is also one of overproduction from last year with a surplus of 50 million kilograms that the industry is saddled with. If the Coronavirus situation is brought under control in the next 30 days, the year’s first harvest can expect to find takers. But should the situation continue or worsen, and the restrictions remain or are tightened further, then it is going to be another tough year for the Indian tea industry. The Tea Board of India seems to be cognizant of this, and has begun to turn its attention to the domestic market, to gain their adoption of orthodox tea. India has a large domestic market which consumes CTC tea while orthodox tea has thus far largely remained for the exports.
At the moment, the reaction is mixed as it is still unclear how the situation will unravel. There is a wait-and-watch scenario where some choose to remain optimistic while others are preparing for the worst.