India Growers Earn Top Prices for Premium Tea

DARJEELING, West Bengal, India

Growers report strong demand and good prices for Darjeeling and export teas.

Offers at auction are up by INR 10-15 (23-34 cents) per kg with English firms like Harrods and Twinings placing large orders, especially for organic teas. Japanese buyers, traditionally a big market, are returning to Darjeeling following the March quake and tsunami that disrupted normal trading. The average unit price of exports jumped from INR 115.84 ($2.60) in 2010 to INR 141.28 ($3.20) kg. Darjeeling brings considerably more per kilo.

“Monitoring of Darjeeling tea prices is a very difficult matter since lots of teas are sold outside the auctions and organic teas are still more elusive and evasive,” explains Rajiv Lochan, an estate owner and former manager of several Darjeeling operations. “We are about 25 million kilos up in production and 8 percent up in prices over July compared to 2010,” he says.

The premium for organic tea “is around 50 percent over ordinary teas, approximately INR 400 ($9) per kg is the auction price for Darjeeling – but nothing is authoritative in Darjeeling," he adds.

Yields have increased 25 percent this year, up from the 8 million kg that Darjeeling’s 87 estates produced in 2010 when drought-like conditions greatly reduced the number and quality of first- and second-flush leaves. Past yields have topped 10 million kg. The Darjeeling Tea Association estimates Darjeeling will produce 9 million kg in 2011.

About 40 percent of Darjeeling’s tea is marketed overseas. First flush, second flush and autumn pluckings are the most desired. The remaining “rain tea” harvested during the rainy season is of lesser quality and generally sold to domestic buyers. This season’s rains are frequent and heavy while domestic demand for the finer teas is strong making premium teas costly.

India’s fast-growing domestic market consumes on average 30 million kg more tea each year, resulting in a per capita rate of 700 grams in 2008, up from 200 g in 1951.

The Tea Board of India estimates 2011 will yield 990 million kg nationwide. May yields were up 3.5 million kg to 76 million kg bringing the January-May total to 243 million kg. The increase is primarily due to better yields in Assam and West Bengal (51 million kgs). Tea production in south India declined slightly from 25.2 million kg in 2010 to 24.4 million kg in May.

India exported 11.3 million kgs in May compared to 11.2 million kg in the previous year. Demand is strong due an estimated global shortfall of 55 million kg. Tea exports fell 9 percent during the first three months of the year and remain below normal. Exports from January through May were 62.3 million kg, down from 77.9 million kg during the same period in 2010.

Overall, India is expected to have a production deficit of 100 million kgs through December.

Source: The Economic Times, Business Standard