The ongoing political unrest on the Gorkhaland demand in north Bengal hills is likely to adversely impact the export of Darjeeling teas, rating agency ICRA said on Tuesday.
The unrest has led to suspension of operations at tea estates in Darjeeling region at a time of production of the second flush tea — a particular variety of very high quality that is almost entirely exported.
“Absence of any plucking activity for the past 20 days is expected to have an impact on the production volume as well as tea quality, even when operations re-start. This in turn is likely to impact the export of Darjeeling teas,” agency’s Vice-President and Sector-Head of Corporate Sector Ratings Kaushik Das said.
He said a plucking cycle of five to six days for Darjeeling teas is followed. Timely plucking of fine leaves contributes to the overall quality of the tea produced during this period.
The agency said the impact of the current situation on revenue is estimated to be in the region of Rs 100-150 crore at present.
“While Darjeeling tea is a niche product catering to specific markets, the reduced availability of second flush Darjeeling tea is likely to lead to some substitution of such tea with that from different geographies,” the agency said.
With an annual production of 9 million kg, Darjeeling tea accounts for only 0.8% of the domestic production.
In the current year, weather patterns have been favourable, leading to good quality and increased production in the first flush.
According to the agency, initial indicators for the second flush were also positive, with average auction prices for Darjeeling tea in the first week of June increasing from Rs 346.6 per kg in 2016 to Rs 360.66 per kg in 2017, an increase of 4%.