The Tea Business In India Is Sluggish And Needs Certain “Kadak” Remedies.

Chai, the beloved national drink, is the solution for every mood and is now finding its position inferior in the Indian market. Last year, over half of Darjeeling’s tea estates, totalling approximately 35-40, were for sale due to planters’ inability to operate the business. Local real estate players were said to be interested in purchasing these properties. They intended to develop tea tourism by converting 15% of the estate land into resorts. 

• Recessionary pressure in Europe, a significant export market for Darjeeling tea, kept purchasers away from this premium brew. 
• Japan, another big importer, curtailed its purchases from Darjeeling beginning in 2017 when protests in the hills halted estate operations for four months. Because they were concerned about supply concerns, Japanese customers did not return with enthusiasm.

1,200 employees lost their jobs last month when the administration of a tea farm in the Dooars area of the Jalpaiguri district decided to close it.

The estate’s administrative personnel terminated all. A few years ago, the garden fell into disrepair, and for the earlier three fortnights, the management could not even pay its employees’ salaries. For the last four months, the managers also did not get paid. The Murticherra tea plantation, the largest tea garden in Tripura, was shut down indefinitely in January due to reported attacks on the estate’s managers over the non-payment of salaries to workers after the company’s insolvency.

In West Bengal and the Northeast, where 80% of India’s national drink is produced, it is under threat. Tea is an iconic commodity of India and is its second-largest producer after China. If serious action is not taken, the industry may not be able to survive. It is plagued by price, demand, production, and labour issues, among others. If the slowing of global demand wasn’t trouble enough, climate change is now a problem.

A few days ago, the Tea Association of India, representing the national drink growers in Assam and West Bengal, issued a distress call. It wants all interested parties—tea farmers, business titans, merchants, authorities, and specialists—to collaborate to develop fresh ideas for making the national drink a hot commodity.

Changes in the climate.

Assam and North Bengal’s tea industries are struggling with the negative consequences of climate change. Tea production, both in quantity and quality, has been adversely impacted by erratic weather patterns, excessive temperatures, and a lack of rainfall. Due to protracted dry weather, Tripura’s tea growers have experienced a deficit in production. Drought-like circumstances have hurt our productivity. In addition to a lack of leaves, the auction market’s activity has decreased. According to Tripura Tea Development Corporation chairman Santosh Saha, it is tough for them to turn a profit.

Climate has a significant influence on the national drink’s farms. Assam’s tea plantations have suffered recently due to climate change and global warming. It has gotten to the point that the beverage plants are struggling to live without irrigation. The North Eastern Tea Association has held workshops on fertigation and technology-driven irrigation.

• First flush output in north West Bengal has been impacted this year and may decrease by 8–10%, according to Prabir Bhattacharya, secretary general of the Tea Association of India. 
• The second flush season started with rain, but the change in temperature between day and night has caused an insect invasion that has damaged the gardens. According to him, the output shortage is at its most significant level in previous years.

Tea gardens face severe challenges to their viability and production due to climate change, which calls for quick action to prepare for it and lessen its effects. The answer is to create national drink varietals that can survive greater temperatures.

Decreasing demand.

Both domestically and abroad, demand for industry products remains moderate. The decreased demand for ‘the national drink’ has been attributed to several factors, including the excess of tea on the worldwide market and changing customer tastes. New markets need to be established for the sector globally. It also requires the appropriate branding and marketing for that. 

Lack of popularity.

While ‘the national drink’ is becoming less popular, coffee has supplanted it as the world’s beverage of choice. It is necessary to invest in tea lounges and shops that promote the consumption of the national drink, as well as launch creative marketing initiatives that highlight distinctive beverages.

India produces over 1,400 million kg of ‘the national drink’ yearly, with less than 20% exported. According to the Tea Board, exports increased by 15% in volume to roughly 220 million kilograms in 2022, although they have been stagnant for several years. Exports in 2022 are the same as in 2016 and well below those in the previous three years. After China, Kenya, and Sri Lanka, India is the fourth largest tea exporter.

The top importers of Indian national drink are CIS nations such as Russia, Ukraine, and Kazakhstan. The UAE is the world’s second-largest importer. Due to US economic restrictions imposed on Iran, another major buyer of Indian national drink, supplies to the West Asian country have not increased.

Costs of production are rising.

According to Nalin Khemani, head of Bharatiya Cha Parishad (BCP), an organisation of tea planters and factory owners, the cost to the corporation (composite value of wages and social responsibility) of a man-day beyond a certain point is an economic impossibility for the sector.

Wages account for more than 60% of a tea company’s overall budget. This should be the industry’s top priority. However, they must also provide the staff with the necessary processes, training, technology, and tools for output to increase, as Khemani stated at the BCP’s Annual General Meeting last year. According to Mr Khemani, the cost of manpower per hectare in Assam is ₹  787.5, compared to ₹ 341.8 in the southern state.

More than a million employees in India’s tea sector can organise unions and get minimum wages and other benefits. When demand and prices are low, and weather and pests impact output, the high cost of salaries and benefits weighs on farmers. Many national drink farms fail due to an inability to cover payroll costs.

Assam increased daily salaries for the national drink’s garden employees by ₹ 27 last year, in addition to other perks to which they are entitled. Following the amendment, tea workers in Assam’s Barak valley get ₹  210 per day, while those in the Brahmaputra valley earn ₹ 232. Historically, wage rates in Assam and West Bengal have moved in lockstep.

In 2013, the cash component of a labourer’s wage, in addition to free rations and shelter, was ₹ 58 per day. In addition to other benefits, the daily wages of a worker have been doubled to ₹ 176. Coal prices have risen to ₹ 20 per kilogramme, up from ₹ 13 per kg three years ago. However, the price of tea is not growing, Sumedha Das, proprietor of the Shova tea farm in Tripura, recently said. She said that the government of adjoining Assam provided ₹ 63.05 crores as a financial incentive to 370 tea gardens to assist them in managing the negative impact of the COVID-19 pandemic. Still, no incentive has been provided to tea producers in Tripura.

Government assistance.

A draft tea policy in Assam, which commemorates 200 years of the national drink production this year, provides several types of financial assistance to the sector to reduce production costs and encourage direct exports. The government also intends to send a considerable sum of money to promote Assam tea. Other states must do the same. The Tea Board requested ₹  1,000 crores in support from the Centre last year for the next five years.

The industry has also requested a floor price when production costs grow, and the pricing becomes unprofitable. For some years, the sector has been mired in a low-price cycle. According to the Indian Tea Association, West Bengal tea prices have risen at a compound annual growth rate (CAGR) of roughly 4% since 2014, but essential input costs like coal, gas and sulphur have been increased at a CAGR of 9% to 12%.

Conclusion.

As production costs grow, demand falls, and prices remain stagnant, the national drink business must find creative alternatives. It must invest in the branding and popularisation of India’s distinctive national beverages both inside and outside the country. Because conventional markets are saturated, new markets must be created. And hence, the national drink of India must flourish once again.

Proofread & Published By Naveenika Chauhan