Jagjeet Kandal, former managing director of APPL, who is now associated with TCPL, said, that typically retailers kept two-month of stock with them, however, owing to the lockdown, when around 140 million kg (mkg) of crop was lost and tea procurement lines had dried up, the stock with the retailers also fell.
Although TCPL said that it had sufficient supply of tea, brokers in Guwahati estimate the pipeline with major retailers to have reduced to around 40-45 days.
Kandal said that although retailers lost some sales to tea stalls owing to the lockdown, consumption at home had increased as people stayed indoors.
Given the limited availability of stocks with the retailing firms and the resulting demand from home consumers, an imbalance has been created, which has been depleting stocks with tea retailers fast.
“It is because of this fact that we are seeing aggressiveness from tea retailing companies and procurement levels are going up. Given the shortfall in production and the estimates, I don’t think prices will drop to previous year’s levels,” Kandal said.
Tea prices set a record this year.
According to Tea Board data, in the first auction held in the month of May, prices surged by over 52 per cent to Rs 217.12 per kg at the Guwahati auctions, while in similar auctions in Siliguri, prices surged by around 39 per cent to Rs 204.25 a kilo. By mid-May, prices in Guwahati rose by 61 per cent at R. 217.12, while Siliguri maintained a 39 per cent surge.
“In sale number 25 in the Guwahati auctions, the average price increased by Rs 90.60 as compared to the similar sale last year. This is a world record in any tea auction”, Bihani said.
Given the shortage of tea in the domestic market, tea retailers are reluctant to import tea. A steep import duty of over 100 per cent on teas has also discouraged them from importing tea.
“So, procurement from tea retailers is expected to remain strong which in turn will help plantation companies register higher prices,” Gulia said.
However, higher prices at auctions and from plantation companies have increased the procurement cost of tea raising concerns of price hikes at the retail level.
“We continuously monitor both market conditions and input prices to take commensurate actions, whether this is to increase or decrease prices as the conditions merit,” the TCPL spokesperson said when asked about the possibility of price hike at the retail level.