BIZ-TEA

'Tea industry in stress with rising cost, stagnating price'
    Guwahati, Aug 20 (PTI) The tea industry has been under
severe stress with increasing production costs and stagnating
prices, which threatened the long term viability of the
sector, its stakeholders claimed here on Tuesday.
    Domestic consumption and exports have not picked up
with rapid increase in production, leading to an oversupply
situation in the sector, they said.
    "The sector is reeling under cost pressures due to
price stagnation in the backdrop of increasing cost of
production, mismatch between demand-supply, high transaction
costs, challenges for fair price discovery at the auctions and
climate change problem," Indian Tea Association (ITA)
Secretary Abhijit Sharma said at a press meet here.
    Providing direct employment to 1.2 million people and
supports to over three million dependents of tea garden
workers with women accounting for 50 per cent of the
employment, the tea sector is confronted with several
challenges which are threatening the long term viability of
the industry, said members of the Consultative Committee of
Plantations Associations (CCPA).
    Sharma enumerated the challenges as stagnant tea
prices vis-a-vis rising cost, causing "severe stress to the
tea sector".
The average tea auction price in Assam was Rs 150 per kg
in 2014 and all India price was Rs 130.90 per kg, Sharma said
adding the price rose only to Rs 156.43 and Rs 138.83,
respectively in 2018.
Wages for tea garden workers increased by around 22 per
cent in 2018 in Assam, thereby increasing the financial stress
of the industry further, he added.
    North Eastern Tea Association (NETA) Chairman Nepul
Saikia said another challenge is oversupply of tea with
country's tea production growing significantly over the last
decade from 979 million kg in 2009 to 1339 million kg in 2018
with the increasing contribution from the small tea growers.
    Per capita domestic consumption at 786 gms per year is
low, compared to some other tea consuming countries, he said
adding the consumption needs to be increased.
    To deal with oversupply, he suggested there is a need
to boost exports from the present level of 256 million kgs.
    India's product mix is predominantly CTC (Crush, tear,
curl) with orthodox production comprising 10-12 per cent of
the total production, tea planters said.
With growing global demand for orthodox or green tea
varieties, a correction of the product mix is required with
higher orthodox production, Saikia said, adding that the high
cost of orthodox production vis-a-vis CTC and inadequate
incentivisation are major deterrents.
    Indian exporters also "face cost disadvantages" in the
global markets by way of higher transaction costs including
inland transportation costs, freight, terminal handling
charges, said Bidyananda Barkakoty, Advisor to NETA.
    He suggested that restoration of demand-supply
equilibrium by boosting exports and domestic consumption,
review of the policy on expansion of tea areas could be of
help.
    He also said there is a need for a minimum benchmark
price for green leaf, auction reforms, a financial package for
the tea industry. PTI ESB BDC
BDC BDC

(This story has not been edited by THE WEEK and is auto-generated from a PTI feed.)