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Inflation increases CoP but not Assam tea prices

Cost of Production (CoP) in last 10 years have increased by more than 10 percent

Policy Pulse
Publish Date: Sep 7 2016 3:05PM | Updated Date: Sep 7 2016 3:05PM

Inflation increases CoP but not Assam tea prices
There has been a consistent rise in the prices of almost every agricultural product but inflation doesn’t seem to hit tea production, especially in Assam. Though, the prices of inputs have risen consequently increasing the cost of production, the prices of tea have been stagnant. 
 
 
According to a report of ‘The Economic Times’, input costs in last 10 years have increased at a Compounded Annual Growth Rate (CAGR) of more than 10 per cent per annum while tea prices have increased by 6 to 7 percent only.  
 
 
This year, the average price of Assam CTC and Dust Teas comes out to be Rs 156.12 which against last year’s average price of Rs 163.59. So, the average price has decreased by Rs 5.67.
 
 
Apart from this, the trend of shift in buying patterns from higher selling range to the lower selling range is also problematic. 
 
 
According to the data, between 2014 and 2016, buying in the range of Rs 180-200 has decreased by 15 percent while buying in range of Rs 100 to 129 have risen by 13 percent. 
 
 
This is not it and some producers are bound to sell their produce below the cost of production. 
 
 
However, to tackle such a problem, Tea Board has been introducing Pan- India Auctions but none of them is effective because Tea Board makes it mandatory to channel 50 percent of produce through auction route but it further increases the cost of transportation, warehousing etc. further it does not guarantee that the teas would be sold above the Cost of Production.