Labour woes: Tea prices to rise Rs 10-12/kg

The Indian Tea Association (ITA) is expecting retail tea prices to increase by Rs 10-12 a kg in the new season, due to a 34 per cent rise in labour cost.

“Labour cost in Darjeeling, Assam and Bengal have gone up by 34 per cent. As a result, the retail price will go up by Rs 10-12 a kg in stages,” said Arun N Singh, vice-chairman, ITA, at the Indian Tea Roadshow in Mumbai.

The price realisation of tea has multiplied more than three times in the past three years. But, the onus was on producers to ensure quality. Industry representatives say the consistency in quality is maintained irrespective of manufacturing practice.

Though the industry witnessed a long period of depression between 1997 and 2007, there has been an uptrend after 2008. “Tea consumption is increasing 2.5 per cent every year and prices are also up,” said the chairman of export and import committee of ITA, Azam Monem.

Annual tea consumption is pegged at 860 million kg while availability would be around 795 million kg. Despite good production in 2011, the industry expects good prices in the new season, with rising consumption and a pipeline deficit. The industry ended 2011 with its highest every production at 988 million kg, 23 per cent up over last year.

Representatives at the roadshow also said the e-auctions should be smooth for better price discovery. “While framing the rules and process of e-auctions, there were many anomalies which resulted in improper, unfair and biased price discovery. These anomalies have to be removed from the system at the earliest to have a fair auction system,” said Harendra Shah of Girnar Tea.