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MSMEs

Published on: June 28, 2020, 10:44 p.m.
Quality over quantity
  • The tea industry needs to stand on its own feet

By Sajal Bose. Deputy Editor, Business India

The Indian tea industry has not only grown but also undergone substantial changes over the years. It has faced several challenges due to climate change, declining soil fertility, old age plantations and stagnation of yield level, political and labour issues.

The cost of production has gone up by almost 50 per cent over the past 10 years. Earlier, in the mid-2000s, many large companies like Tata and Hindustan Unilever exited the plantation business to concentrate on marketing. The mantra to survive the tea plantation business is to adopt best practices to beat all odds.

“The industry should adopt technology and innovative strategies for cost-effective production of tea,” says Prabhat K. Bezboruah, chairman, Tea Board of India.

He was recently speaking on a webinar on “Roadmap for Revival in the Tea Sector” organised by the Indian Chamber of Commerce. He also pointed out that branding and promotion of the product is the need of the hour for the Indian tea industry.

The Tea Board has been facing an acute problem of getting funds from the Central government, which in the past five years has been ‘static’. The Tea Board spends 90 per cent of its fund received from the government on subsidy. There is a backlog of replantation subsidy.

Given the current financial situation, Arun Kumar Ray, deputy chairman, Tea Board of India says, “We have taken a decision that replantation has been kept in abeyance till further announcement.” The average productive lifespan of a tea tree is 50 years. It needs to be replaced with new saplings after that to get better yield. Both, Bezboruah and Ray urged the industry to stand on its own feet.

Reacting to the freezing of replantation subsidy by the Tea Board, Rohit Lohia, director, Chamong Tea says, “When the industry is going through a tough time, abeyance is not a good idea. This will affect future production.”

Unprecedented crisis

The Covid-19 pandemic has put India’s tea sector into an unprecedented crisis. Also, the deteriorating global economic conditions and foreign exchange constraints due to the pandemic have hit the segment hard.

The tea production is expected to be down by 150-200 million kg in the current financial year. India is the second-largest tea producer in the world after China. As on March 2020, India produced 1,400 million kg, of which 250 million kg were exported.

To benefit the small tea growers that accounts for 47 per cent of the national tea production, the Tea Board has been granted access to the Climate Change Adaptation Fund through NABARD. “Rs200 crore package for the next three years will go into upgrade the small tea growers,” informed Ray. The focus of the scheme is to improve irrigation systems, pest management, watershed development, planting shed, trees, etc.

Azam Monem, whole-time director, McLeod Russel India – the largest bulk tea producer in the country – says, “The tea industry is cyclical in nature. In line with the present consumer pattern, a revival of the tea market at the consumer level is required. Brand loyalty is crucial.”

He further added that the tea growers need to focus on the quality of the product and make it a plant protective substance. The orthodox tea price for exports will be higher than the Sri Lankan price this year. However, the export volume will be lower by 25-30 million kg.

Another important aspect of the industry is marketing. Around 65 per cent of the country’s population is below 35 years – the ideal age group to tap. Ravindra Suchanti, executive director, J Thomas & Co suggested, “Along with tulsi, ginger, turmeric, the addition of more vitamins and minerals to the tea is needed. More varieties of ‘tasty’ and ‘healthy’ tea will attract more customers. The government should make tea as a part of Public Distribution System (PDS).”

It is important the sector should adopt a new strategy to facilitate transparent and structured research. Sanjay Bansal, chairman, Ambootia group says, “The government funding should be utilised in the area of research which in turn will lead to the production of high-quality tea. The government, therefore, needs to build strong solidarity to deal with the current unprecedented crisis and develop multiple strategic management plans.”

The Tea Board wants to divert the replantation subsidy funds for the promotion of tea. The Board also invites the industry to take active promotional exercise in the neighbouring countries like Thailand and Vietnam where the import tariff is relatively low.

While the world is struggling with the pandemic, Ray says, “The industry should promote tea as an immunity booster to push demand.”

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