Increase in production cost and declining in tea prices puts Assam tea industry in doldrum, writes NJ Thakuria

Aug. 4: Assam’s pride and the century old tea industry is struggling for survival due to tea prices declining below the cost of production (CoP), informed Bidyananda Barkakoty, the adviser to North Eastern Tea Association (NETA). He asserted that unless there is an increase in price of tea, the concerned industry including the small tea growers would face relentless challenges.

“The price realisation of tea is lower by rupees 44.19 per kilogram (which is about 18% lower compared to last year), but the CoP has gone up due to hike in wages and inputs,” claimed Barkakoty, while talking to this correspondent, adding that the cost goes up by rupees 25 per kg of made tea because of recent hikes in daily labour wages (from rupees 167 to 205).

Additionally the cost of tea production has gone up by rupees 7 per kg of made tea due to increase in prices of fertilizer, pesticides, coal, natural gas, diesel, transportation, etc. The net negative impact on the industry till date is to the tune of rupees 76 per kg of made tea, claimed Barkakoty.

He, however, appreciated the state government in Dispur for supporting the struggling tea industry by recently announcing an initiative titled ‘Assam Tea Industries Special Incentive Scheme 2020’. Also informed that the green leaf cess exemption for 3 years (from 1 January 2019) also becomes helpful for the local tea industry.

“The average price realisation of crush, tear, curl (CTC) tea at Guwahati tea auction centre this year (from April to July) remains rupees 208.02 per kg, whereas it was rupees 252.21 during the same period in 2020. Only about 9% teas have fetched above rupees 300 per kg and about 51% products were sold below rupees 200,” said NETA chairman Sunil Jalan.

Jalan also added that the unsold quantity of tea at the auction centre is more than double compared to last year. In 2020, the unsold quantity from April to July was 16.37%, whereas this year, it is 35.16%. Moreover, the rise of imports in the first quarter of 2021 becomes detrimental to the domestic tea sector.

Assam’s total production in the first six months of 2021 is less by about 41 million kg, which is nearly 19% lower than compared to the same period in 2019, stated NETA vice-chairman Kamal Jalan. Mentioning that the production in 2020 was an aberration due to Covid-19 induced lockdowns, he pointed out, tea productions reached up to 220.11 million kg (from January to June in 2019), whereas this year it is only 179.32 million kg.

*Nava J Thakuria is a Guwahati (Northeast India) based journalist, who contributes to various media outlets throughout the world.