India’s 170-year-old tea industry is gasping for survival and needs the government’s help to reverse the downtrend, members of the Consultative Committee of Planters’ Associations said.
Climate change, the CCPA said, has added to tea price stagnation, increasing labour and other input costs, mismatch between demand and supply leading to oversupply, high transaction costs and fair price discovery challenges at the auctions.
The CCPA has asked the government to bail the industry out by taking over schools and hospitals in tea gardens, allowing the estates to use up to 20% of the “tea grant area” for agricultural and commercial diversification to augment income, and backing campaigns for boosting per capita domestic consumption from 786 gm, a low compared to that of other tea-consuming countries.
Second largest producer
“India is the second largest tea producer and the world’s fourth largest exporter. The industry offers direct employment to 1.2 million people and supports more than 3 million dependents of tea garden workers, with women accounting for 50% of the employment. The beverage has contributed significantly to socio-economic development in far-flung, remote and interior areas. But the cup of cheer for tea drinkers is brewing misery for the industry,” said CCPA chairman Vivek Goenka.
Data provided by the CCPA shows that tea production in India has increased from 1,207 million kg in 2014 to 1,339 million kg in 2018. But the average tea auction prices have remained stagnant or dipped. The price per kg was ₹130.91 in 2014, ₹128.60 the following year before increasing marginally to touch ₹138.83 in 2018.
Financial stress
“While tea prices have grown at a compound annual growth rate of around 1% over the last few years, the cost of inputs such as coal, gas, sulphur have increased at a CAGR of 6-7% during the same period. Wages for workers increased by around 22% in 2018 in Assam, thereby increasing the financial stress of the industry further,” Mr. Goenka said.
Seeking repeal of the mandatory sale of 50% of the produce through auctions, the CCPA asked the government to consider taking over the employers’ contribution to the provident fund for at least three years, include non-cash benefits such as housing, medical, and water supply within the definition of ‘wage’ in the Code on Wages 2019.
Total cost
Each worker is paid about ₹170 per working day. Planters say the total cost with other benefits works out to more than ₹350 per day, much higher than in other countries. The resultant cost pressure is increasingly making Indian tea falling to competition from low-priced teas exported by countries such as Kenya and Sri Lanka.
Published - August 22, 2019 01:34 am IST
