Domestic tea industry catches meltdown fever
Sutanuka Ghosal & Anuradha Sharma KOLKATA
GLOBAL meltdown and liquidity crunch have started affecting the Indian tea industry as well. With some leading packeteers shying away from the auctions and buyers opting for a wait and watch policy, prices of tea at Kolkata, Guwahati and Siliguri auction centres have started falling.
The serial blasts in Guwahati last Thursday have also dampened the mood at the auction centres.
On the export front too, Indian tea may take a hit. The major blow is expected to come from Russia. A senior tea industry official told ET: “Association Rusteacoffee, the nodal body of tea and coffee producing companies of Russia, had recently held an anticrisis meet to review the situation. The association has pointed out that one of the main challenges now is the lack of liquidity and high risk of defaults in the distributing network, especially in regions of Russia, other than Moscow and St Petersburg.” In order to minimise such risks, the association has urged the Russian government to allow tea and coffee companies to access financial aid provided to agriculture sector, the official added.
The packeteers from western India have stayed away from the Siliguri auction. “The average auction price came down by Rs 6 per kg in the last auction (Sale 44),” said SK Saria, a tea planter and former chairman of Siliguri Tea Auction Committee.
“Not just a fall in prices, the industry is battling with huge quantities of unsold tea. As much as 43% of tea had to be withdrawn from last auction becausethey could not be sold off,” he added. Mr Saria said overall financial stringency has played a spoilsport to the industry that was looking up after a long gloomy period. Banks are not issuing letters of credits to the exporters and with exports faltering, buyers are not picking up stocks, he added.
Siliguri Tea Traders Association secretary Rajiv Lochan said international buyers have already started tightening their purses. “They have scaled down quantities of purchases and have also delayed buying. We have received communiqués from our buyers in Russia asking us to hold orders till a later date. We do not expect great buying during Christmas this year. The buyers have also asked us to reduce prices by 10-15% on orders that were placed earlier and are awaiting shipment,” Mr Lochan added.
A senior tea industry official said fullfledged auction could not take place due to serial blasts in Guwahati. “Nearly 20 million kg of tea is lying at the Guwahati auction centres. This has also affected the price movement. The buyers are trying to put pressure to lower the prices of tea.”
Kolkata auctions witnessed sale of nearly 90% tea on Monday. “Good CTCs were sold in the region of Rs 100-Rs 120 per kg. Other teas were down by Rs 2-3 per kg. However, we are hopeful that prices will go up in the next few weeks over rising demand in domestic market,” the official said.





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