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Buying spree fuels tea high
- Industry hopes for pre-recession boom

Siliguri, Dec. 26: Frantic end-of-season sales have taken tea prices to a new high in north Bengal, making this year the best since the industry went into recession about six years ago.

“It’s boom time with tea prices going up significantly,” said S.K. Saria, the chairman of the Siliguri Tea Auction Centre (Stac). “Although the benchmark set by the golden period of the 90s is still far away (see chart), this year’s is a remarkable gain compared to that of last year, which itself was better than the preceding year. If the trend carries on for the next few years, the tea sector will be able to regain its lost glory.”

The average price during Sale 50, held on December 20, was Rs 74.98 a kilo while that of Sale 49, held on December 13, was Rs 73.24.

“The average price of Sale 50 last year was Rs 62.50,” said Ravi Agarwal, a former chairman of Stac and member of the Siliguri Tea Traders Association. “That is a gain of more than Rs 12.”

According to the latest figures, the average auction price this year — up to December 20 — is Rs 67.44 a kg. The corresponding figure in 2006 was Rs 66.60 and in 2005 Rs 59.29.

“This year’s average price is the best since the recession set in,” said P.K. Bhattacharya, the secretary of the Dooars branch of the Indian Tea Association. “The end-of-season fillip will help keep the prices high until mid-2008.”

Industry watchers said the boom was driven by a combination of factors.

Traders did not stock up tea earlier this year expecting prices to go down. When the demand increased, there was a last-minute scramble to buy tea, pushing up the prices.

Bhattacharya said: “In addition, there was a drop in production by about 20 million kg. The shortfall in supply had an obvious effect on prices.”

“Buyers like Unilever, who were quiet for most of the year, were at their active best as the end approached,” Saria said. “Competition from major buyers firmed up prices further.”

The industry saw a challenge in sustaining the trend.

“We have to ensure that we do not compromise on the quality of tea in our bid to sustain the boom,” Saria said.

An observer said there is often a tendency to compromise on quality in the face of increasing demand.

There will be no plucking from December to March and like in early 2007, the new season is also expected to start with firm prices in the absence of “carry-over stocks”.

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