Tea Board to restrict auction of teas priced below ₹60/kg to ensure quality

As part of its initiative to check the flow of sub-standard teas and help improve the price discovery at auction centres, the Tea Board of India proposes to restrict auction of teas priced below ₹60/kg. The board has sought comments from auction centres in this regard.

While the estimated quantity of the sub-standard teas is not known, in a previous attempt, the Board had restricted production of poor-quality end-season teas.

According to a letter issued on February 15, the minimum price is proposed based on three-year auction average. Though auction centres handle a fraction of the total tea produced in the country, they set the price benchmarks for domestic private sales and exports.

It is, however, not clear to what extent the minimum price benchmark will pull the averages in North India — it contributes nearly 75 per cent of country’s total production — as teas are rarely sold below ₹60 a kg at auctions.

During the peak season of August-September 2018, barely 3.2 per cent of the CTC leaf teas traded at Guwahati auction centre was priced between ₹60 and ₹70 a kg.

The lowest price recorded in Sale-1 at the Guwahati Tea Auction Centre this year was ₹80 a kg, that too only for one lot. Last year’s average price for CTC was ₹140and average dust was nearly ₹156. The average price is even higher in Kolkata, which sells more premium orthodox varieties.

In comparison, South India sells cheaper teas. However, the lowest price recorded for new season teas at Cochin this week is ₹80 a kg.

According to sources, sub-standard teas are mostly sold through the private channel, which accounts for roughly 60 per cent of the total trade.

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