OPEN APP
Home / Opinion / Views /  How India's tea industry can rise and shine

An iconic Indian product is losing its global currency, ironically just when India is readying itself as the world’s supplier of goods. Away from the drumbeats of Make in India, tea, which has a brand ambassador in the prime minister of India no less, is an industry in total disarray today.

Forget about Darjeeling tea as a unique GI-tagged heritage product of India competing with coffee in western markets—tea estates in Darjeeling are mired in a deepening crisis.

Nearly half of Darjeeling’s 87 tea estates are up for distress sale, said a recent report in the Economic Times. This calls for remedial action, mediated through Tea Board India.

You might also like

GST on crypto transactions in the works 

Why your fuel bill hasn’t gone down yet 

6 charts explain India's motown revival

Renaissance’s Murarka recounts working with Jhunjhunwala

Tea employs a million workers, who form a largish segment of organized labour in the country, because tea plantations are regulated and obliged to honour workers’ right to form unions and implement minimum wage and offer other welfare measures. Wages of tea workers in India are roughly double their level in Bangladesh, for example.

The tea industry faces a structural problem. As per the Tea Board’s global statistics, total tea production outstrips apparent consumption. While global tea consumption has grown from 5,486 million kg in 2017 to 6,173 million kg in 2021, production has kept pace, with a surplus to the tune of 4-5% each year. And production is growing in every one of the major tea-growing and tea-exporting countries—China, India, Kenya, Sri Lanka, Vietnam and Indonesia—and some other smaller growers that together account for some 14% of the total output. What this means is that for India to sustain a healthy and growing tea industry, it must invest in improving quality and better branding and marketing. While Darjeeling and some Assam teas fetch fancy prices at auctions, according to the Tea Board, the average price per kg for Indian tea is below that for Sri Lankan tea.

The tea plant can live on for a century or so but the quality of its leaves starts fading after about 50 years. Major Indian plantations had not replanted their bushes long decades after these had pushed past their prime. While there was some hectic activity in Assam and Darjeeling about one and a half decades ago, the replanting cycle is not complete. For five years after replanting, the new plants will yield nothing. That makes replanting a capital-intensive business. If a combination of falling quality, price and ever-increasing wages, which account for about 60% of a plantation’s cost, is already daunting, the prospect of no revenue from new bushes can be overwhelming, especially for small growers, defined as those with plantations that are 25 acres or less.

Many plantations have simply abandoned their business, fearing they could not afford to reinvest in their plantations, making long-gestation investments and paying workers their wages while earning no revenue from replanted areas. This has resulted in worker distress, and some creative solutions such as ‘bought leaf factories’ that, as the name suggests, are not appendages of any individual plantation but procure tea leaves from small growers. Small growers now account for a little over 50% of total output.

Some large plantations might be dismantled to re-emerge as small grower outfits, where implementation of statutory worker benefits is less rigorously enforced.

The industry needs holistic solutions. High quality saplings must be produced in large enough numbers to replant every old bush in the country. Producer companies must be formed to take over abandoned plantations, where workers own the plantation and share in both profits and losses. Small growers should be organized into confederations to adopt quality improvement practices and derive pricing power. While all commercial investments should pay for themselves over time, the government might need to intervene to elongate credit tenors and make loans available in the first place. Investing in pesticides and weedicides that leave no harmful residues is something that the Tea Board should incentivise, interacting with the plant chemicals industry. The same goes for investment in packaging that extends shelf life and branding to improve pricing.

The tea industry will face additional challenges from climate change, just as most crops would. Technological solutions such as plant varieties that suit warmer climes must be pursued now.

Tea is rich in anti-oxidants, both green tea and the cured variety. Coffee drinking has acquired a lifestyle gloss with the advent of coffee chains like Starbucks. Tea drinking can benefit from being converted into a habit of the aspiring classes, too. The Tea Board could, perhaps, offer seed funding for a clutch of business plans to promote aspirational tea. The subliminal boost coffee derives from a programming language being named Java (a generic synonym for coffee, thanks to the Dutch who took coffee growing to Indonesia and traded the beans globally) is something tea could gain from, too.

Tea has been a traditional item of competitive advantage for India. That edge must be preserved and enhanced, not lost due to indifference or anaemic, unimaginative interventions.

Elsewhere in Mint

In Opinion, Manu Joseph writes why Roger Federer makes us feel lucky. Josep Borrell says the Kremlin would now find it impossible to turn the tide. Tulsi Jayakumar reveals the mantra to follow for start-ups amid financial uncertainty. Long Story profiles ex-SBI men who saved two banks.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout