Tea prices rise at Kochi auction centre

Traders also attributed the rise to the recent flood in Assam, which impacted local production

Tea prices in Kochi have by Rs 5-7 and industry representatives have attributed the hike to the decision of traders in the city to join the pan-India electronics auction system. Another factor that pushed prices was recent flood in Assam, which impacted local tea production and fostered demand-supply mismatch. Industry is expecting prices to go up by another Rs 2-3 as the festival season is round the corner in the south.

Kochi tea traders had so far been boycotting the auction and an inventory of four million kg had piled up.

J K Thomas, chairman, Tea Trade Association said that traders have decided to join the system after Tea Board agreed to revise the rule on division of lots. Under the original pan-India rules, only lots above 20 bags could be divided between two buyers and lots above 35 bags between three buyers. Since Kochi caters to smaller buyers, the Tea Board made an exception in its case, by allowing a lot of 10 bags to be divided between two buyers who bid for it at the auction. Similarly a lot of 15 bags can be divided three ways and more than 20 bags can be divided four ways.

The Tea Board also agreed to allow splitting of lots after the auction, to facilitate part payment for a lot and part delivery of the lot but changes in the software have not been made as yet, said Thomas.

The other factor, which is pushing the tea price is flood in Assam, which in turn affected the production of tea in the state. As per tea industry estimates, the crop loss in July would be in the range of 21-30 per cent. Assam produced 91 million kg tea in July last year and if that is taken as a benchmark, the dip would be around 20-27 million kg this month.

Assam produced 631 million kg of tea in 2015 and contributed 52 per cent to the country's total tea production.

The Assam Tea Planters' Association (ATPA) has said that this year, the prices of the higher quality tea has come down, which could be attributed to the shift of auction system from regional auction to the pan India.

"The prices for certain high quality tea, at the Rs 175-220 a kilo price range has fallen almost Rs 20-30 per cent here, which is contrary to the general principle of higher quality getting higher value," said Arun Thekedath, chairman of ATPA. There was lot of uncertainities related to the shift in the auction system and there were other global issues, which could be the reasons for the fall. He also observed that the price fall is at a time when certain other teas in the price range of Rs 120-150 a kilo has seen a price increase.