Darjeeling tea rates up 43% as demand rises

Kolkata: Prices of early harvest, or first flush, Darjeeling tea have jumped nearly 43 per cent on improved quality and strong overseas as well as domestic demand, spreading optimism among the planters that 2019 will be a good year.

Darjeeling tea is selling at Rs 3,500 per kg as against Rs 1,500 a kg a year ago. First flush teas from lower elevation gardens, though not in big volumes, have started arriving in the market and its quality is much better this year, traders said, adding that a Tea Board directive issued on October 31, 2018 to close gardens by early December seems to have paid off.

“We are expecting a better 2019,” Binod Mohan, chairman at Darjeeling Tea Association, told ET. Traders said foreign buyers, especially from Germany and the UK, have entered into forward contracts with planters at higher prices compared with last year, indicating a rising demand for Darjeeling tea abroad.

Demand for Darjeeling tea is also rising among Indian tea drinkers but local political unrest and climate issues have kept the production restricted. Darjeeling tea output was hit in 2017 when a strike called by Gorkha Janmukti Morcha forced closure of tea estates for four months. The industry managed to recover only some of the lost ground in 2018. “Last year, the estates had produced less than 8 million kg of teas,” said Mohan. “The production of Darjeeling tea is not going up. On the contrary, it is shrinking. Therefore, we need to get better prices to survive and meet the higher cost of production.”

Mohan said the rising cost of production is a major concern for planters. “If we compare with 2016, there has been a 45 per cent increase in cost of production,” he said. Darjeeling tea is produced in 87 tea estates in Bengal. These estates produce 8-8.5 million kg of tea annually. SS Bagaria, a Darjeeling planter, said foreign buyers are offering 5-10 per cent higher prices for first flush teas that will enter the market in March.