Tea glut hits prices

AVIJIT SINHA, TT, 8 November 2019, Siliguri: An unprecedented rise in the production of tea across India in the past one and-a-half decade that has far outpaced the increase in consumption has become one of the key stumbling blocks for the industry, said representatives of the Tea Association of India (TAI), a prominent planters' organisation.

Mudit Kumar, the TAI president who spoke at the 47th annual general meeting of the association in Calcutta on Thursday, said: "Tea production in India was 878 million kilos in 2003, which increased to 1,338 million kilos in 2018. This rise of around 52 per cent over a period of 15 years has outstripped consumption of tea in the country and has led to a stagnation in selling prices. He attributed the growth in production to the swift emergence of the small tea sector.

In 2003, this sector used to produce around 199 million kilos, or around 22 per cent of the total tea production in India.

"But in 2018, the small tea sector contributed around 646 million kilos, which was around 48 per cent of the total production. Interestingly, the production in tea estates continued to remain around 700 million kilos over this period," Kumar said.

"This has led to a mismatch between demand and supply. Further, the estates are facing an escalation in cost of production. While there has been a rise of 12.36 per cent in workers' wages in Assam and around 12.19 per cent in Bengal, the increase in the average India tea auction price is around 2.95 per cent only," a TAI representative said.

At the meeting, representatives of the planters' association proposed regulation of tea supply to ease the problem.

"Tea estates should decrease their production during periods when their growth and quality drop. Also, exports should be increased and the focus should be on making quality tea. There should be a moratorium on tea cultivation on untapped land for at least 5 years so that the demand can catch up with the supply," a TAI official said.