Tea is globally one of the most popular and the lowest cost beverages, next only to water. It is consumed by a wide range of age groups in all levels of the society. It is said, more than 3 billion cups of tea are consumed daily worldwide. Tea is thus considered to be a part of the huge beverage market. India is the second largest producer of tea, the largest consumer, and the fourth largest exporter in the world, after Sri Lanka, Kenya and China. Tea is indigenous to India and is a major foreign exchange earner & contributor to the GNP of the country. It is worth noting that the tea estates employ more than 50% women workers. The range of teas offered by India, from the original Orthodox to CTC (Crush, Tear, Curl), Green Tea, the aroma and flavour of Darjeeling Tea to, the strong Assam and Nilgiri Tea, remains unparalleled in the world. Export performance of tea industry It is found from the data of the Tea Board of India for the period, 1950 to 2016 that, the proportion of Export to Production of Tea in India, which was 72.30 % in 1950, decreased to mere 17.52 % by 2016, whereas the proportion of Domestic Consumption of Tea to Production of Tea in India, which was 27.7 % in 1950, increased to 82.48 % by 2016. Gradual increase in domestic consumption of Tea in India thus explains the gradual decline in Export of Tea by the country. Tea Board of India’s initiative to encourage more tea plantations in new areas Realising the importance of Tea Sector for the economy, in a bid to encourage more tea plantations in new areas, Tea Board of India, vide a notification, dated, August 08, 2021, has suspended the operation of seven sections of the Tea Act, 1953, namely, section 12 to 16, section 39 and 40 of the Tea Act, 1953 with effect from August 23, 1953 until further notice. As such, from now on, permission will not be required to plant tea anywhere in the country. Encouragement to mini & micro factories by small tea growers Way back in 2013, the Tea Board of India in its meeting held in Tezpur, Assam, had given its approval to setting up of mini and micro factories by small tea growers within their plantation areas. The Board had also decided to provide subsidies to improve the quality of tea made by them, by reducing transportation time to retain garden freshness, improving plucking standards, and by ensuring less handling of green leaf from small tea gardens. The meeting also approved setting up of factories by small tea growers without registering themselves under Tea Marketing Control Order (TMCO), 2003. The small tea growers are thus able to set-up their own factories, only by obtaining a certificate from the Tea Board, and are able to sell their teas through auction centres or directly from their factories. Reportedly, so far, more than 300 mini tea factories have emerged in India, making types of tea like, hand-made organic tea and machine-made organic tea. The tea industry considers these mini tea factories “exotic”, with a low production average of 1,000 kg to 10,000 kg per year. In addition, according to Experts, in the emerging circumstances, particularly in the post-Covid-Scenario, governments need to rethink existing bilateral and multilateral treaties, and enter into trade agreements, especially with the countries that are less impacted. Also, both Centre and the State governments need to provide firm support to those who are engaged in tea production, large or small growers, by providing a special stimulus package in the interest of the stakeholders, in particular & the economy in general. Producer Companies – a ray of hope for small growers of Tea leaves The small growers of tea are at the lowest end of the tea value chain & face the same problems as the small farmers. Companies, it has been pointed out, pass on any risk they face, down to the growers. As is revealed by the survey conducted in the 14 districts of the Brahmaputra valley by the Industries & Commerce Department of Assam, out of 68,465 small growers, 93 % or 63,672, had sold green leaf through Agents, while only 4920 growers, or 7 % are found having direct link with the factories. It was also found that the average price fetched per kg of green leaf, by the small growers, did not exceed Rs.13. It was found that the price sharing formula, as per the Tea Marketing Control Order (TMCO), 1984 guidelines, is never followed & the price is fixed at the mercy of the big factories. The plight of the small growers is aptly demonstrated by this survey. Though the survey portrays the picture in Assam, it is likely that it may be true in the case of the small growers in other areas in the country, where tea is grown. According to the Confederation of Small Tea Growers’ Associations of India (CISTA), small growers contribute 51% of India’s annual tea production of 1,350 million kilos, the second-largest in the world after China. However, while countries like Sri Lanka and Kenya, the third and fourth largest tea-producing countries in the world, have measures in place to recognise the role of the small growers, the Indian tea industry has yet to take similar steps. A new model of ownership in Tea Industry Anupam Bezbaruah, Tea Board of India’s Development Officer in Udalguri, Assam, has been working in Udalguri since 2014, the year small growers first began forming Self-Help Groups to improve their conditions. Narrating the developments, Bezbaruah recounts, that two years later, the self-help groups were converted into Registered Tea Producer Companies. In 2018, after a meeting with the small growers, the Tea Board developed a tribal area sub-plan scheme, where small tea producer companies received 30% of their actual cost in subsidies from the Tea Board. The tea producer companies also got loans from NABARD. While expressing satisfaction at the new model of ownership in the tea industry, Bezbaruah, says, it can help the small growers, provided they avail of all the basic certifications. Only then consumers will opt for their tea. They, therefore, have to win over the tea drinkers with taste, look and packaging, he says. In the new model, small growers – farmers who own, between half-bigha (.3 acres) and ten bighas (3.3 acres), collectively set up Tea Producer Companies, that buy their green leaf and process it into tea in their manufacturing units. The “made tea”, or ready-to-brew tea, is then packaged and marketed by the corporation in wholesale and retail. The Tea Board of India in 2013 in its meeting held in Tezpur, had given its approval to set up mini and micro factories by small tea growers within their plantation areas. The Board had also decided to provide subsidies to improve the quality of tea made by them, by reducing transportation time to retain garden freshness, improving plucking standards, and by ensuring less handling of green leaf from small tea gardens. The Tea Board has defined a factory with a capacity of up to 200 kgs of tea production per day, as a micro factory and, that below 500 kgs made tea production per day, as a mini factory. Tea growers having land holding of their plantation up to 10.12 hectare (25 acres) are considered small tea growers. The meeting also approved the setting up of factories by small tea growers without registering themselves under Tea Marketing Control Order (TMCO), 2003. The small tea growers are thus able to set-up their own factories, only by obtaining a certificate from the Tea Board and are able to sell their teas through auction centres or directly from their factories. Bidyananda Barkakoty, Chairman of North Eastern Tea Association (NETA) & a member of Advisory committee of the Directorate of small tea growers, headquartered at Dibrugarh, had opined that, if the small tea growers are able to set up their own factories within their plantation area, the quality of tea will definitely improve because of improvement in plucking standards, less transportation time and less handling of green leaf. It will also generate huge employment at local level, he had said. Exports are essential to earn foreign exchange for the nation and Indian tea has traditionally been a major contributor in this regard. In the early 1980s, Indian tea exports accounted for around 40% of the domestic production. By the end of 1980s, the share fell to 30%. The decline continued till 1994 when exports accounted for only 20% of the domestic production of tea. Thereafter, the proportion of exports improved to around 24% of the domestic production during 2003. However, exports have again declined to 19% of production in 2007, and 21% in 2008. In 2016, exports as the proportion of production have declined to mere 17.55%. India’s tea exports peaked at around 213 million kg in 1989 but declined to a low of 151 million kg in 1994. Exports subsequently increased to 210 million kg in 1998 before declining to 174 million kg in 2003. Exports reached 179 million kg in 2007 & in 2016, export of tea increased to 222 million kg. Losing the leadership position From a leadership position in the International Markets up to 1991, India has lost her market share in the International Market to Sri Lanka, Kenya, and China. A major loss of her market share occurred in the case of the former USSR, where India had occupied an almost monopolistic position from the 1960s to 1990. Since the late 1990s, some recovery in the export volume has occurred, but generally tea exports from India have been on a declining trend over the last two decades. Kenya was the world’s largest tea exporter with exports of 383 million kg during 2008, followed by Sri Lanka with exports of 299 million kg, China with exports of 297 million kg and India with exports of 203 million kg. The major destinations for Kenyan exports in 2008 included Egypt, Pakistan, UK, and Sudan. China’s exports of 297 million kg in 2008 were primarily to Morocco, Uzbekistan, USA and Japan. Green tea dominated China’s exports, with estimated exports of 230 million kg in 2008. In spite of accounting for around 26% of world’s tea production, India accounts for only 12% of Worldʹs Tea exports. Of late, India’s international competitiveness in tea exports is seen to be on the decline with decline in her share in world exports. From being a pre‐eminent supplier of tea in the world, India has lost ground in virtually every export market. Various reasons that have been put forth for the poor performance of export of tea by India include: a) Lower production; b) Collapse of some major markets such as Iraq; c) Increase in production in some major competing countries such as Kenya and Turkey; d) Switchover of major buying countries back to their preferred supplier countries such as the UK and Pakistan from Kenya. Reasons for India losing in foreign markets a) Unfavourable age profile of significant proportion of India’s tea gardens: This, it is pointed out, has resulted in lower productivity, and higher cost of production. India’s exports are dominated by CTC tea, where it is facing increased competition from Kenyan tea. Kenya’s tea business is generally characterised by younger age profile of bushes, higher yields, lower cost of production, and lower prices. b)Tariff and non‐tariff measures: These have been imposed by some tea importing countries. Lower offtake by Russia due to change in consumer preferences, and lower production of orthodox teas, which have a larger demand worldwide, are cited as other causes for the decline. This has resulted in the emergence of Sri Lanka and Indonesia as major exporters, primarily because of their ability to supply good quality orthodox tea, it has been pointed out. c) Changing consumer preferences: Traditionally, loose standard BT (Broken Tea) was the most common format of consumption and import. However, since the 1990s, changing consumer preferences in major importing countries such as the UK and Russia have resulted in higher growth for tea bags vis‐a‐vis loose tea. In Russia, tea bags are preferred by the working class, and consumption in this form has grown. This has favoured Sri Lankan tea in Russia. d) Shift in India’s production: The shift in production from orthodox to CTC tea is cited as another cause. By comparison, other competing countries have continued to produce their respective traditional types of tea, maintaining consistency of type of supplies to their export destinations. e) Decline in quality: This, it is said, has been caused by mushrooming BLFs (Bought Leaf Factories) which produce cheap-quality tea by buying and processing green leaf from small growers. The growing share of poor quality of Tea produced by these players, it is said, not only affects the domestic price levels, but also damages the quality perception of Indian tea in the export markets. Further, blending of Indian teas with cheaper varieties and export of the same as Indian tea, has also impaired the quality perception. f) Spurious varieties: It is pointed out that lower quality of teas are often passed on as Darjeeling tea. Because of its proximity, some Darjeeling tea producers are bringing in green leaves from gardens in Nepal and selling them as ‘Darjeeling tea’, thereby jeopardising the geographical indication value of Darjeeling tea. g) Lack of marketing initiatives: Lack of marketing initiatives is said to have led to the industry’s failure to penetrate new markets and secure preferential duty treatment from countries. The lack of competition in the earlier days, remunerative prices in the domestic markets and buoyant export offtake from CIS, provided little incentive to the Indian tea industry to develop alternative export markets. In contrast, Sri Lanka has been aggressively marketing its produce and penetrating markets, in which it earlier had little presence. India is the world’s second-largest producer of tea after China. Eighty-five per cent of the tea produced domestically is consumed (1,145 million kg in FY2021) in the country itself. Tea worth $704.36 million was exported overseas in FY21; Russia, Iran, UAE, the US and China are leading markets for export of Indian tea, where flavours like Assam, Darjeeling and Nilgiri among the finest in the world, which are recognised for their strong flavours and intense aromas, are popular. Despite this reputation, India has not been able to capitalise on its potential for tea export. It is the fourth-largest exporter (12 percent of global exports) after Kenya (28 per cent), China (19 per cent), and Sri Lanka (14 per cent). A variety of reasons such as, lack of access to capital, inefficient supply chains and non-adaptability to changing trends and technologies can be held responsible for this slide, according to observers. Source: The Times Of India
