Cut in world market prices: local traders still selling tea at exorbitant rates
Local tea traders are still selling the commodity at exorbitant rates despite a reduction in auction rates of black tea varieties in the international market, sources told this correspondent on Thursday. Sources said that tea stockpiles in the country had swelled over the past few months because of low auction rates in international markets, but consumers were not being facilitated by retailers.
Copyright Business Recorder, 2013
At present, Kenya has had ample rainfall which had a good impact on its tea yield in the current season because of which prices of Kenyan tea in the international market showed a declining trend. Packers and blenders said that Kenyan tea prices had decreased by approximately $0.5 per kg over the past two months.
Industry sources said domestic tea stocks had been sharply reduced over the past six to eight months because of slow and selective imports from foreign markets amidst high price of the commodity. Traders and blenders said that at present, Pakistan had a six-week tea stock. Pakistan, they said, normally used to maintain 12- to 16-week tea stock.
Sources said that tea output in major tea producing countries, including Kenya, Uganda and Rwanda had decreased last year because of adverse weather conditions. Tea packers said that high-quality black tea varieties were being sold at high prices in retail markets despite a significant cut in auction rates in international markets.
"The industry is facing rupee-dollar parity issue, forcing traders to retain tea prices (at current levels) despite low auction rates, especially in Kenya," a trader told this correspondent. Previously, the wholesale price of 'Danedar' (BP-1) tea in the wholesale market was Rs 540 per kg, currently being sold at Rs 495 per kg while its retail price was still Rs 565per kg.
Similarly, the Leaf (PF-1) tea variety is being sold at Rs 565/kg in retail markets against its original price of Rs 485/kg. Prices of Rwandan tea varieties had also been reduced by Rs 30 per kilogram. Industry leaders said that the higher cost of black tea varieties compelled consumers into purchasing low-quality tea. Meanwhile, price of milk powder increased by as much as Rs 80 per kilogram.