India’s ailing tea industry - The Probe

India’s ailing tea industry

If the crisis in the Indian tea industry is not forestalled, it could very well turn into one of the biggest problems facing the sector. The Probe's Ashutosh Dixit explains why the Ministry of Commerce must swiftly act before the situation takes a turn for the worse.

Tea garden in Tripura | Photo courtesy: @BjpBiplab

Earlier this month, the Chairman of the Indian Tea Exporters Association (ITEA), Anshuman Kanoria, was quoted in media reports as saying that several countries had rejected Indian tea consignments because of the high presence of pesticides in them. Kanoria had stated in the press reports that both the international and domestic buyers had rejected a series of tea consignments from India because of the presence of chemicals and pesticides beyond permissible limits.

The Probe’s Ashutosh Dixit speaks to B Kumaran, former Vice Chairman of Tea Board of India on India’s ailing tea industry

Soon, the tea industry went into a tizzy in India. Tea growers’ associations across the country, tea businessmen, traders, exporters and stakeholders went into a huddle after the news broke out. Within hours Kanoria withdrew his statement by saying he was misquoted by the media. He then went on to talk at length about how the crisis in Sri Lanka would help India fill the vacuum and how the Tea Board of India would soon ramp up exports.

An aerial view of the Ella Tea Garden in Nuwara Eliya city, Central Province, Sri Lanka | Photo courtesy: Special arrangement

As per data, in 2020 alone, Sri Lanka exported $1.27 billion worth of tea and remained the world’s top five exporters of the commodity. Though the crisis in Sri Lanka may present an opportunity for India to increase its exports, the Indian tea woes will be far from over.

B Kumaran, former Vice Chairman of the Tea Board of India, says that the Indian tea industry is not just ailing or facing losses but is bleeding. “For the past 20 years, we have not seen any upward trend in the industry. Since 1999, the price of tea has been steadily decreasing. Today, the tea sector is at its lowest ebb. The tea industry is a buyer’s market, and the buyers decide our market. I am at a loss to understand why this has been happening for the last 20 years. Most tea growers have sold their properties and left their states looking for other job opportunities because they have understood that the tea industry cannot help them meet their ends. 2022 is the worst period for the Indian tea industry.”

Several big companies have exited the tea industry in the last many years. The increasing cost of production and decreased earnings have made the tea business unviable for many small businessmen and tea growers.

A tea estate in Darjeeling in West Bengal | Pic courtesy: @TourismBengal

“We have never faced such a crisis in the tea industry before. Today we have to sell the tea below the cost of production. Earlier, our profits were less but now the situation is such that because of the increase in the usage of chemical fertilisers and pesticides in the tea garden, our cost of production has tremendously increased, and the tea growers are forced to sell their products below the cost of production. Today, we spend an average of 20 rupees on producing one kilogram of tea. But the poor tea growers get only 16 to 17 rupees for the product in the market,” says Achyut Prasad Gogoi, Secretary of Confederation of Indian Small Tea-growers’ Association (CISTA).

Kumaran concurs with AP Gogoi. He says that it is meaningless to cultivate tea when the tea growers have to sell their produce below the cost of production. “The Tea Board fixes the Minimum Benchmark Price (MBP) every month for the Green Leaf Tea by calculating the average price sold in the market. In the current month, the Tea Board fixed about 13 rupees per kilogram of green tea, whereas the actual production cost of green tea is about 23 rupees. So, they are fixing it at almost half the price. This is meaningless. When the cultivator cannot recover half of his cost, what is the point of cultivating tea at all?”.

Another predicament is the cheap variety of Nepali tea being flushed into the Indian market. According to industry experts, substandard Nepali tea has been flooding the Indian market and is being rebranded, repackaged and sold in the Indian domestic market as Indian tea.

Satish Mitruka, former President of the North Bengal Tea Producers Welfare Association, says that the Commerce Ministry and the Tea Board of India need to take action to regulate the inflow of substandard tea from Nepal. “We have written several letters to the West Bengal government and the Ministry of Commerce regarding the presence of pesticides in Nepal tea. It is cheap and poses a considerable health risk to consumers. Many companies in India buy vast quantities of this substandard tea from Nepal, and they resell it in India. This cheap tea that is infused into our market is not tested, and its flow is not regulated, because of which our indigenous tea industry is suffering.”

A tea estate in India | Photo courtesy: @dpradhanbjp

The problem of quality not just plagues the Nepalese market. While Indian tea is far superior in quality compared to other countries, our industry still needs to go a long way in conforming to standard practices in production, storage and packaging. A few days ago, Iran and Taiwan rejected tea shipments from India, citing pesticides beyond permissible levels and phytosanitary issues. But the fear of failing revenues forces many industry stakeholders to brush the quality issue under the rug.

“I don’t think that foreign or domestic buyers rejected our tea. The reasons for such rumours are political. Let me explain this. When the consignments are shipped, they take random samples that get checked, and only if they pass the test does it get exported. This is the usual practice. When such rumours are spread, then the buyers try to bid for a lower price in the market by claiming that our tea quality is not good as they are getting rejected in the foreign countries. This way, they bid lower for the tea, and they buy large quantities and then sell it for exorbitant prices in the market. There is a huge conspiracy behind this,” says Kumaran.

All teas sold in India must adhere to the standards prescribed by the Food Safety and Standards Authority of India (FSSAI). According to a recent report by the Federation of All India Tea Traders Association (FAITTA), certain tea samples in India had failed the FSSAI testing parameters. Following the growing concerns over the standards of Indian tea, the Tea Board of India issued directions urging the producers and sellers of the commodity to strictly comply with the norms and standards prescribed by the FSSAI.

“The Tea Board of India itself needs a facelift, and it must be digitised. They have to increase the workforce. They have to hold discussions with the small tea growers more frequently and understand their problems. The small tea growers contribute a lot to the nation’s GDP but are suffering a lot in the country today. The solution is that they should get a reasonable price for the green tea leaves so that they can survive and their basic needs are met. The tea Board must be restructured,” says Gogoi.

In India, tea is cultivated in almost 15 states, of which Assam, West Bengal, Tamil Nadu and Kerala are the major tea-growing states, accounting for nearly 98% of the total production. India is also known for producing some of the finest teas in the world, like the Darjeeling, Assam, Sikkim, Nilgiris and the Kangra tea varieties. However, India’s tea exports declined marginally to around 196 million kg in 2021 from 210 million kg in 2020. Small tea growers and industry stakeholders fear the news of the tea consignments being rejected in the international market may further hit the Indian tea sector.

“While exports are one issue, we should be more worried about our tea industry which is not very organised. There is no money being infused into the industry. There are no infrastructural facilities available. Tea growers don’t have their own land. They don’t get bank loans. We have approached the Tea Board many times with issues faced by the tea industry. There is corruption at every level,” asserts Rajen Bora, President of All Assam Small Tea Growers Association.

The issue of migration of the workforce, absenteeism, the rising production cost of tea and the reducing costs for the product have all added to the woes of the tea industry. The sector can only revive if the government steps in and revamps the tea board, weeds out corruption in the industry, increases testing procedures for samples for domestic and international consumption and takes measures to see that tea growers are not selling their produce below the cost of production. If the crisis in the Indian tea industry is not forestalled soon, it could very well turn into one of the biggest problems facing the sector.

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