Tea industry in Assam reeling under financial crisis

 STAFF REPORTER

GUWAHATI: An acute financial crisis has crippled the tea industry in Assam. The depressed price, along with the decline in production in 2023 and the cost escalation of vital inputs, has aggravated the financial crisis. Most of the tea companies are facing working capital constraints.

According to sources, the financial crisis in some of the tea gardens in the state has snowballed into tension as the workers want a 20 percent bonus in one installment on the eve of the festive season. On the contrary, a section of the crisis-ridden garden management wants to pay the bonus in two installments.

According to sources in the ITA (Indian Tea Association), tea prices over the last decade have grown at a compound annual growth rate of around four percent, while the costs of vital inputs like coal, gas, sulphur, etc. have grown by 9 to 15 percent during the period. While tea prices have remained stagnant, the wages of tea garden workers have increased significantly in the past five years.

According to sources, tea prices in 2023 have declined alarmingly compared to the 2022 levels. CTC/dust auction prices in the organized sector declined by Rs 12.49 per kg for Assam. Compared to 2022, the production of tea in the Brahmaputra Valley declined by 1.09 percent, and the decline will be 5.91 percent in the Barak Valley in 2023.

ITA sources said that from January to August 2023, the tea production in Assam declined by 5.42 million kg compared to the decline of 4.06 million kg in West Bengal due to the adverse weather conditions.

According to ITA sources, the export scenario for tea in 2023 appears grim as shipment to Iran continues to remain uncertain. The Iran market constitutes 20 percent of India's total tea exports. The steady decline in shipment of tea to Iran since 2020 due to payment issues is causing financial stress to tea exporters and adversely impacting the demand-supply equilibrium in the domestic market.

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