Need for revamping the age-old Indian Tea Industry

 Uddhab Chandra Sarmah

(Senior Advisor, Tea Program, Solidaridad Asia.

The writer can be reached at ucsarmah @gmail.com)

The 200-year-old tea industry has been passing through a very critical phase of sustainability at present. All the tea producers appear to have passed through a very difficult time over the past decades in running their estates and businesses, experiencing hardships in profitability owing to the ongoing high cost of tea production, including the maintenance of over one million families to meet their needs and other fixed costs. Going by the general scenario of the Indian tea industry, at present a few areas have been noticed to be of serious concern for all in bringing about sustainable development.

India stands next to China in terms of total tea production, and it is a matter of great pride that total production has been showing an increasing graph in the last few years. It shows from the statistics that in 2009, the total production of India was 982 million kg, whereas in 2022 it was 1365 million kg, which shows an increase of over 13.65% during the 14 years of time. Although the production has reached a reasonable height of expectations, it is all due to the huge contributions of over 52% coming from the unorganised segment of STGs.

It’s an irony that the yield and productivity of the organised estates are gradually showing diminishing returns over the past 10-15 years due to various reasons, out of which the percentage of growth of uneconomic areas crossing over economic threshold limits has reached over 35 to 40% of the total areas of tea cultivation. Owing to the long gestation period coupled with the huge escalated cost of investment in bringing up the young tea areas, most of the big and small tea producers have kept on deferring this most vital aspect of uprooting and replanting operations, anticipating better years to come with higher tea prices and profits. Now the situation has come to such a point that the rate of uprooting the uneconomic areas may have to be carried out at 5% or more per year, which will be a big challenge as far as the financial investments are concerned.

The average per capita consumption of tea in India is limited to about 850 grammes, which is far too low if we compare it with other tea-drinking countries. It exhibits the fact that only about 2.3 grammes of tea per day (not even one cup of tea) per person is consumed! It is obvious that unless the per capita consumption of teas is increased to a reasonable level of over 1.5 kg per head per year, the economic theory of demand and supply will continue to dominate the tea markets for a long period of time, ultimately making the industry sick. It has been noticed in the last few years that there is always a huge backlog of surplus tea available for next year’s market!

The imbalance between the escalated cost of Production and the selling price of teas has been the root cause of the nightmare of this most prestigious and age-old tea industry. When the prices of all edible and non-edible commodities have steadily risen up almost 30–40 times more than they used to be about 10–15 years ago, tea prices have remained almost constant, compelling all producers to dispose of their tea businesses for other profit-making opportunities where liabilities are much less in comparison. “Sentiment does not work in business’’ was the reply to the query by most of the producers shifting to other profitable businesses.

The golden era of the earlier tea Industry and its glorified culture is gradually over now. ‘Sentiments’ of the tea business are being handed over to ‘traders’ eventually, and nothing can be predicted for the existing big companies also selling their prized properties on a regular basis. However, one option is left: how best the segments of STGs, which can be considered the backbone of the industry at present, can be developed into self-independent self-help groups for FPO or FPC and to produce “speciality teas’ or ‘black teas’ with the concept of ‘cottage industry’ in their villages with the help of the associations concerned and the Tea Board? The Government must realise that the increased cost of production of green leaf due to inflation of prices of all agricultural inputs, including wages, has let them down considerably in their income at the close of the season. This segment of ‘small holders’ needs to be brought under the Agricultural Department rather than held under the Ministry of Commerce.

Since customer awareness of quality teas has been increasing and there is always a wide gap in price realisations between common, medium, and good/best brackets of teas, quality produce is a MUST for all producers to come out of the impending danger of natural death.

Another important need of the industry is to bring about a dramatic change for Bought Leaf Productions to take steps for the production of quality teas from the existing rank of “COMMON MEDIUM teas,” which are being used by the Giant Buyers for the purpose of packaging. The total production of teas coming out of the BLF segments is over 700 million kg in India, and over 75–80% of these huge quantities have brought down the total average price realisation not only in India but in Assam too. The role played by the Giant Buyers and packers in exercising their dominance over price scenarios in the auctioning system is noticed as one of the reasons for “stagnated prices” over the years for all producers. This aspect needs the sincere intervention of the Government and Producers’ Associations.

In the same way, the concept of quality TEA, which comes from the field only, must be exercised by all STGs. At the same time, the BLF owners and organised tea producers need to shoulder responsibilities together to produce tea of the desired standard, restoring the glory of this industry. In this respect, there is a very important role to be played both by the Government and the Tea Board.

The ongoing ‘Climate Change’ has had pronounced effects on tea production due to the unprecedented attack of pests and diseases off and on. The use of hazardous chemicals for control measures, paying less attention to the residue limit, has proved to be a major concern for consumers. The “TRINITEA PROGRAMME” undertaken by Solidaridad Asia to provide “Good Agricultural Practises “to STGs from the field to factories for the improvement of quality and safe tea products has proved to be a “BOON” for their socio-economic development.