The Darjeeling tea industry is facing a double whammy this year, with both production of the world-famous aromatic tea and price realisation from lucrative global markets significantly lower than last year. Because sunlight and temperature levels haven't been conducive to good leaf growth, trade circles estimate that production in 2022 will be about 10% lower than last year's 7.01 million kg. According to them, the average price realisation in export markets is "flat to 10% lower" than last year.
"Aside from bad weather circumstances, output would be down since most of the gardens of the Darjeeling Organic Tea Estates, one of the major groups, were shuttered owing to financial difficulties," Anshuman Kanoria, head of the Indian Tea Exporters Association, told FE. In truth, Darjeeling's tea sector has been seeing a slow decline in production for more than a decade. "Tea output was 9.14 million kg in 2011, and 8.13 million kg in 2016." It fell to 7.01 million kg in 2021, according to J Kalyansundaram, secretary of the Calcutta Tea Traders Association. Production fell precipitously in 2017 and 2020 as a result of local political unrest and Covid 19-induced lockdowns, respectively.
"Ironically, despite the yield constantly dropping each year, the average price continues to decline." Over the years, the cost of production has risen. "In comparison to previous year, the average cost of production has increased by more than 30% this year," Kanoria remarked. Demand for Darjeeling tea, India's first geographical identity (GI) commodity, is low in Europe and Japan, the two largest outside markets. "Demand from Europe is really low." The Japanese are not paying extra for tea because the currency is weak. "All of the big consumers of Darjeeling tea are in economic turmoil," Kanoria added. Some global markets buy low-cost Nepal teas.
Aromatic tea is under competition from Nepal in the local market as well. Traders are offering a neighbouring country variation that is up to 50% less than the Darjeeling type. In addition, the government's earlier rules prohibiting the mixing of foreign teas with Darjeeling kinds protected by GI tags had an influence on domestic demand this year. Concerned that cheap imported teas from Nepal are being mixed with premium orthodox varieties in India, the Tea Board issued an order last year prohibiting any registered buyer from blending such imported teas with GI-tagged Indian crops. Following that, Tata Consumer Products, one of the largest domestic buyers, almost stopped buying Darjeeling tea, causing domestic prices to fall, according to industry insiders.
Only in the last month has the Tea Board superseded its previous notification on mixing. "This year's auction statistics are dismal. The average selling price is lower than the previous year. Today, a major portion of Darjeeling tea is cheaper than the cheapest CTC tea. "Darjeeling tea producers are losing a lot of money," Kanoria remarked.