Thaindian News

Kolkata, Feb 9 (IANS) The humble tea is set to turn a bit pricey. A supply shortage, hike in the wages of tea garden workers and soaring input costs are about to make the favourite beverage of millions of Indians cost more, say industry sources.

This year, retail CTC (crush-tear-curl) tea prices are expected to be higher by about Rs.10 per kg in India, the world’s second biggest producer of tea, compared to last year, according to the sources.

“Currently, there is a shortage in the supply of good quality CTC tea. So the prices of this variety of tea are expected to go up at auctions. It will push up CTC tea retail prices in the domestic market,” Arun N. Singh, managing director and chief executive of tea major Goodricke Group, told IANS over phone.

“CTC tea auction prices stood at between Rs.170 to Rs.200 per kg by December 2011. The auction prices this year are expected to be Rs.10 to Rs.15 per kg higher over the December prices,” Singh said.

Consumers in the country generally prefer the cheaper and strong CTC tea, which has leaves chopped into uniform bits.

Singh said following the revision of tea workers’ wages in the gardens of West Bengal, effective from April 1, 2011, production cost per kg became dearer by Rs.6 to Rs.8 per kg.

Tea company managements and labour unions reached a consensus to increase garden workers’ wages by about 27 percent in November last year.

About 153 tea gardens in the Dooars (foothills of the Himalayas in Jalpaiguri district) and 42 gardens in the Terai in the state produce a total of about 230 million kg of tea annually.

According to Singh, input costs for producing tea are also soaring.

“Due to the rise in tea auction prices, wage hike and spiralling input costs, tea retail prices are expected to go up by about Rs.10 per kg,” he observed.

Indian Tea Association (ITA) chairman C.S. Bedi said, “There is a shortfall in the pipeline due to supply shortage. As a result, the prices of well-made CTC tea is expected to go up by Rs.10 per kg.”

“The prices will be higher till July (this year) compared to last year. After that, the prices will depend on new season productions,” Bedi said.

Kamal Baheti, chief financial officer of McLeod Russel India Ltd, the world’s largest tea producer, said current inventory shortage for the CTC tea would certainly have an upward pressure on prices.

Baheti said there was a shortage of supply of tea as production had been stagnant for the last three to four years in the country.

Total production of tea was expected to be around 990 million kg in India in 2011.

“Production is likely to be stagnant this year also. But for the last three to four years, the demand for tea has been growing at about three percent annually,” he added.

(Mithun Dasgupta can be contacted at mithun.d@ians.in)