How can the issue of price decline and drop in production of tea be addressed

Janifha Evangeline

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The Tea Association of India has expressed its concern over fall in costs and fall in production of tea crop. Furthermore, the association has cautioned that the industry could be going towards a crisis. Secretary General of TAI P K Bhattacharya, stated that there has been a “substantial drop” in tea prices in the month of November, in both the states that include Assam and West Bengal.

The planters body also stated that the input prices have also seen an increase. It also added that the total projected crop in the year 2021 is 1330 million kilogram, which is a decline from 1400 million kilogram in 2020 owing to poor weather conditions as well as pest-related issues.

Bhattacharya stated that around twenty-eight percent of the tea crop is produced between the months of October & mid-December.

He said coupled with the price decline, wages have also risen - 201% in West Bengal from 2011-2021 and 186 per cent in Assam during the same period.

Piyush Goyal – the Union commerce & Industry minister requested the tea industry and its stakeholders to submit an elaborate proposal with all aspects that are involving the different segments of the tea industry as it can be examined in for further action.

On Sunday - 21st November Piyush Goyal had an interactive session with the Tea industry’s stakeholders in Guwahati. During the interactions Mr. Goyal raised various issues related to the tea industry specifically in the state of Assam and the issues included MSP for tea leaves, various agricultural benefits for the small tea planters, and other issues that were highlighted were the higher number of large-scale bidders at the tea auction etc.

The union minister discussed issues with the stakeholders and assured that appropriate measures would be taken. One of the ways to regulate the tea supply is by curbing the import of Teas in India, stated the Tea Association of India in its representation to the Mr. Piyush Goyal.

TAI stated that “The country has witnessed a surge in imports of Tea in the last few years to the extent that 60.35 Mkg., of tea imported in last 3 years of which only 23.43 M.kg. were re-exported. The rest 36.92 M.kg were retained in India for domestic use. This imported tea creates additional pressure on demand-supply equilibrium in the domestic market leading to further economic unsustainability of tea industry. The status of Tea in Darjeeling is much more acute as out of domestic production of 7.5 Mkg, import of Tea from Nepal touched almost 10. Mkg.”

TAI also explained that the Tea Industry in Darjeeling is gradually being wiped out and the industry fears that similar fate for other tea plantation places in India would take place if urgent and necessary action on implementation of all legal barriers is not taken in order to arrest this increase in import. Also, the Per capita consumption of India tea is as low as 830 grams per head per year when compared to 1.61 kilogram per head in United Kingdom and even in neighboring countries of india.

Increase demand for tea by generic promotion positioning

An increase of even to hundred-gram per capita consumption would consume another Hundred and thirty-one MKgs, yearly and the need of the hour is to increase demand for tea by generic promotion positioning tea as one of the super food or beverages and pointing the multiple health benefits it offers. And such promotions will actually create equilibrium of both Supply as well as demand resulting in sustainable prices of the produce.

The Tea Association of India also stated that it therefore urges the government of India to allocate separate funds for generic promotion of tea crop and also to entrust this promotion activity to a professional agency. Furthermore, Export tea to Iran has been one of the bright spot for the Tea Industry in India to the extent it touched 53.70 M.kg. in 2019 that has now been come down to 33.37 M.Kg. in 2020.

TAI elaborated, “This state of affairs has arisen due to payment related issues and this needs resolution so that India can maintain its foothold on Iranian Export front. Lastly, I would urge upon you to address issues related to logistic problems. Eg: unavailability of containers, and bringing India to international bench mark related to transport mode where the share of road sector that is 60 percent as against 30 percent in other country is gradually in reduced. The road sector consumes maximum cost on logistics.”

Drop in crop due to weather conditions & pest-related issues

On Monday – the 22nd of November, TAI stated that the tea industry is hurtling towards a substantive crisis position with diminishing crop and fall in prices fetched this month. In a media release issued by the Tea Association of India it stated that against 139.49 million kilograms & 148.99 million kilograms produced in 2019, and the year 2020 respectively, the estimated production in November 2021 has come down by around 10.5 percent and sixteen percent drop against the year 2020 and 2019 tea crop respectively.

The Tea Association of India also stated that the drop in crop can be attributed due to the weather conditions and pest-related issues that include red spider, looper caterpillar, helopeltis and many others. However, the weather parameters anticipate rainfall as compared to the year 2020.