The emergence of the bought leaf factory (BLF) sector in creating a dual economic structure in the tea industry and the exploration of of mechanisation and automation by large tea estates were two major trends that marked the year 2018 for the over-a-century-old Indian tea industry.
The year also saw floods in Kerala battering the plantation sector, although tea was not as badly affected as coffee, rubber or other commodities. The BLF sector buys output from small growers, who cultivate tea in their backyard (holding less than 10 acres). The large tea estates supplement their output with the produce of the small growers.
For over a decade since 2008, the share of small tea growers (STGs) has risen from 25% to 47%. They are now a force to reckon with. But this trend has also created a dual economic structure within the Indian tea industry, as large estates are left with a sizeable manpower, and various compliance issues, including adherence to the Plantation Labour Act, leading to rising costs. The unregulated BLF and the fragmented STG, till now, are beyond the purview of many such regulations.
Labour woes
According to an industry study covering 2013-2017 and published in July 2018, auction prices have stagnated at around ₹132 per kg (50% of tea sold by the organised sector has to be auctioned) while all other input costs have increased in various bands.
Most importantly, wage and welfare costs, constituting 65% of the total production costs, have risen for the organised sector.
Despite the recent wage hikes, labour is becoming scarce, with the younger generation choosing to migrate from the sector. If better wages and amenities cannot address absenteeism and productivity, mechanisation will have to be brought in, says Azam Monem, former chairman of Indian Tea Association.
The industry now claims to be paying a composite wage of ₹350 per worker, which includes daily wages and the cash value of the amenities provided to them.
Productivity issues
In North India, where the tea season is around nine months, productivity remains at a third of the levels of South India which has a round-the-year season.
The advent of shear-plucking and mechanical harvesting has now gone beyond the pilot stage, with most estates taking this recourse to improve productivity and tackle absenteeism. The Tea Research Association, a Ministry-funded and industry-backed body, has begun working with a Japanese global leader in mechanised harvesting equipment to try them out in Indian conditions.
The year saw industry regulator Tea Board of India roll out various steps to help small growers improve their quality, which has been an area of concern. This included an app that would help STGs to tackle their real-time farm problems.
Recent floods battered plantation crops in the South. The tea crop loss was estimated at around ₹81.46 crore for big and small growers in Kerala and Tamil Nadu. Around 44 hectares of tea-growing land had been washed away.
Bright spots
Though the Indian tea industry faced challenging times on account of several factors including climate change, non-viability of large growers and labour issues, 2018 did have its bright spots.
One among these were the efforts taken to genetically establish the uniqueness of Assam tea. The other was the signing of an agreement between two of the largest tea-growing and consuming countries — India and China — aimed at promoting sustainable development of the global tea sector.
