Business India ×
  Magazine:
Interview

Published on: Sept. 7, 2020, 12:01 a.m.
"Sustainable quality will make the difference"
  • Prabhat Kamal Bezborua

By Sajal Bose. Deputy Editor, Business India

Q The lockdown has affected tea production. What is the current situation of the industry?

A The tea industry will end up losing around 160 million kgs for the entire 2020 season. It has lost prime first and second flush tea output. However, prices have also increased sharply. The average price level this year is higher by 30 per cent than last year. Hence, the cash flow of tea plantations in the current season may exceed that of last year.
 
Q The increase in production cost is a major concern. What is your suggestion for the industry?

A The only way out is to follow South Indian practices. The output per man-day is 8 kgs in South India on an average, against 2.5 kgs in North India. However, consumers generally consider the quality of South Indian teas to be lower. The challenge before the industry is to increase productivity without affecting quality. Therefore, the research institutes should play an active role in this endeavour.
 
Q The industry blames the Tea Board for not releasing various subsidies. There has been a huge backlog.

A I have advocated that the committed subsidy be released at the earliest. But the Tea Board is facing an acute problem in getting adequate funds from the Central government. However, in the long run, the subsidy will inevitably be phased out, apart from some assistance on replanting and the production of high value, exportable tea variants. The tea industry should stand on its own feet. There are allegations against the government that it only focuses on small tea growers and ignores organised players, who are the ones who actually support social and statutory obligations.

The subsidy programmes of the government are actually focused on all growers. Small growers are important as they now produce 50 per cent of India’s tea. The problem is the violation of the Tea Act. The main objective of the Act was to regulate the supply of tea in a highly supply sensitive market. Undermining the Tea Act and allowing the random planting permitted by the concerned state governments, has caused an oversupply situation. The Tea Board has the great responsibility of enhancing demand for tea within India, so that the huge increases in production can be absorbed at remunerative prices by the market. And to also ensure that substandard teas are weeded out from the system.

Q In the past five-six years there has not been any significant promotion of Indian tea by the Tea Board. Do you have any plans for an active promotional exercise?

A This vital component of Tea Board activities needs adequate funding, which has been the major concern. Perhaps a structure like industry led councils such as EEPC for the engineering industry; MEPC for marine exports, etc, can be tried for our industry to boost exports. For domestic promotion also, a PPP model could be envisaged, where funding is obtained from the government as well as from planters and packers.

Q What are the Tea Board’s plans to modify the existing tea auction system?

A Auction is an important channel but need to be reformed without which they are a drag on the market. One should implement professor Mahadevan’s (IIM-Bangalore) recommendations regarding tea auction and simplifying the process like sampling norms, pan-India participation, and separate catalogue for retail buyers, etc. Also, the present auction platform requires improved technology and better links. Here, the government should be involved in an efficient manner.
 
Q How do you see the export market for Indian tea?

A The government needs to make up its mind if tea export is a priority in its agenda. If it is, the good news is that Assam, Darjeeling and Nilgiris still have solid brand equity. The bad news is that competition from Kenya and Sri Lanka is more intense than in the last century. We need to have a cogent export strategy, where specific markets are targeted with specific teas as well as campaigns to promote the same. Exportable variants of tea should be incentivised. Exporters need to be partners in the whole decision-making process, along with the Tea Board.
 
Q What do you perceive is the future of the tea industry?

A Continuous innovation, augmented quality product mix, strategic market expansion and active promotional exercise, will make the difference in the future for the Indian tea industry.

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