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Santanu Sanyal

Kolkata, April 1 Tea prices this fiscal are likely to remain firm, increasing 10-20 per cent over last year’s closing prices depending on the weather condition impacting production and the domestic demand, according to Mr Aditya Khaitan, Chairman, Indian Tea Association (ITA). As it is, the year has started with no carryover stocks.

Mr Khaitan expressed the view that the prices must remain firm for next few years as it was critical for long-term viability of tea industry. The unremunerative prices in past few years left industry with no surplus to plough back.

As a result, there was hardly any investment either to uproot old bushes or modernise the factories and take other necessary steps to increase production. Most garden-owners had to borrow to cover costs, the tea being a fixed cost industry. As a cumulative effect of all this, the production suffered. Now that the prices were showing an upward trend, the owners should be able to make some investments in their properties to boost production, he said, emphasising that this trend must continue.

The tea prices were strong last year, but just touching the level of 1999 prices. In the past 10 years, the cost of production increased many times but the prices virtually nosedived. “If one takes into account the rate of inflation in past 10 years, then one would find that the present prices have not yet covered the rate,” he said. “Ideally, the prices should have gone up to Rs 140 a kg to cover the inflation as against the present average of less than Rs 100 a kg,” he added.

The bad weather hit hard the March crop in North India. In Assam, the drop in production, the ITA Chairman estimated, would be around 25-30 per cent. In Dooars (i.e. northern part of West Bengal), the situation was worse as the drop was estimated at 50 per cent. Hopefully, the rain in past few days in Assam revived the hope of a better crop in April; but the situation in Dooars with scanty rainfall continued to cause concern, he said.

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