Darjeeling tea prices at auctions last week fell by half compared to the previous week on weak demand from Europe, raising concerns in the industry.
“The Russia-Ukraine war has created an air of insecurity across Europe. Europeans are feeling the pinch of rising inflationary pressures,” Binod Mohan, a Darjeeling planter and former chair of the Darjeeling Tea Association, told ET. “Even if they buy tea, they are not willing to pay more. The price is at the same level as last year, although our production costs have increased due to an increase in the price of coal, fertilizer and other raw materials.”
European buyers are offering Darjeeling producers Rs 10-20 per kg depending on the quality of the tea.
Europe is an important market for Darjeeling tea. The 87 tea plantations in Darjeeling produce First Flush, Second Flush and Rains teas. There are buyers for first-flush and second-flush teas in overseas markets, but the Rains teas find very few overseas buyers.
Anshuman Kanoria, chairman of the Indian Tea Exporters Association, said the Darjeeling tea business has suffered since the riots in the hills in 2017. “The government has made no effort to promote Darjeeling tea in world markets. The war between Russia and Ukraine is undoubtedly felt, but the government should make efforts to revive Darjeeling tea, which is considered the “champagne among teas”” , he said. “The domestic market is flooded with Nepalese teas. Union Trade Minister Piyush Goyal has asked the Tea Board to draw up a package to promote tea in world markets. We are waiting for the package.”
Production of Darjeeling tea, one of the world’s most popular teas, had shrunk to 6.5 million kilograms in 2021, the lowest on record and just half the 13 million kilograms produced two decades ago.