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The east brings tea industry's cup of woes to the boil
Planters blame periodic wage hike and static prices; TUs allege mismanagement. All agree it's not a cup that cheers
The ongoing crisis at some tea gardens of Duncan Industries in North Bengal seems to be a combination of poor handling, an ecosystem of corruption developed over the years, and an attempt at under-the-radar adjustments to cross-subsidise deals gone wrong. The situation at Duncans could be representative of the tea industry in the East.
Even though not all garden owners in Bengal suffer from the same ailments, a walk through Dooars and Terai brings to light that not everything is right. Reports of deaths due to malnutrition at Duncans’ tea gardens aside, despite being a leading producer for the domestic market — a total capacity of 13 million kg has yielded less than three million kg this year — the company is ailing, and with good cause.
Most gardens under Duncans — 13 in Dooars and two more in Terai — look like jungles due to the last seven months’ neglect as workers stopped coming after wages were not paid since May. In stark contrast are gardens of other big players like Goodricke, Andrew Yule or Luxmi Tea, and even smaller, standalone gardens. That, however, does not mean things are hunky-dory in the region.
Production cost is a concern
Statistics available with the Tea Board, the Indian Tea Association and even independent sources, expose a feverish condition. Although Darjeeling tea is still in demand, as is Assam orthodox tea, and the more commonplace CTC, several issues afflict the industry. Top on the list is the matter of escalating production costs. Industry insiders point out that while wages of workers have been revised at periodic intervals, price of tea has not seen any real increase in the last ten years.
According to an insider, prices of raw material like coal, gas and sulphur have seen massive escalation, but despite being a cash crop, tea hardly saw any appreciation. “Tea is also an agricultural produce, but it has not seen price rise like grains, fruits, or vegetables. Prices of most things needed to produce tea have shot sky-high,” he said. The India Tea Association (ITA), which supports this claim with data, pointed out in a recent bulletin that coal price has gone from Rs 2.91 per metric tonne in 2007-08 to Rs 8.96 in 2014-15, translating into a rise of 208 per cent. Similarly, price of gas underwent a 129 per cent hike, as did prices of ingredients needed for drying tea leaves.
“The price of TD oil has gone up 133 per cent, HSD by 117 per cent, sulphur by 173 per cent, and MOP by 247 per cent. Place this against the Assam auction average, which has gone from Rs 99.60 in 2008 to Rs 156 in 2014, an increase of just 56 per cent,” the insider noted. Added to this is the condition of periodic wage hikes. Wages are not high, but growers also have to provide weekly ration, firewood and living quarters, besides paying utility bills. This might seem like an ideal situation for workers, but owners complain that periodic wage revisions can get difficult. “At Rs 122.50, a day’s wages may not be much, but rising production costs can lend things a different turn,” said an owner.
An ITA bulletin noted that while Bengal’s planters acceded to a wage hike recently for the customary three-year period, gardens in Assam also saw one in January. “From daily wage of Rs 94, it will be hiked by Rs 43 over the three years. In Bengal, the wage agreement is decided at a tripartite meeting with unions, owners and the government, but in Assam, it happens through bilateral discussions between owners and unions,” a source said.
Overstaffed, claim planters
Duncans Chairman G P Goenka, the most ‘controversial’ name in the tea industry at this moment, believes redundancy is inherent in the tea industry.
“Every garden employs a number of people as paniwalla (water boy), who mostly sit idle except serving drinking water to pickers at periodic intervals. This might have been useful a century earlier, but now, it’s easier to just have a water tanker in the garden. I also find a retinue of servants at managers’ bungalows unnecessary,” he said.
Goenka, who admitted that such expenses affected his gardens, among other things, said that instead of retrenching people to save costs, Duncans is now diverting these people to work in gardens.
“We’re not using temporary workers, but using these people for jobs in the garden,” he said. Besides wages, workers are also entitled to an attendance allowance for every kg picked, besides fringe benefits like ration, housing, medical coverage, education and welfare, under the Plantation Labour Act. Planters complain that these issues are often commanded by political decisions.
“A hike of even as little as Rs 21 in daily wage translates into an increase in production cost by Rs 11-Rs 12 per kg of made tea,” said the insider. Likewise, ITA observed that wages and benefits constitute around 60 per cent of the total cost of production.
It’s mismanagement, say TUs
Union leaders, however, refute these claims as a “larger conspiracy” to undermine tea workers. Chitta Dey, Chairman of Tea Plantation Workers Coordination Committee, believes that in case of Duncans and other closed gardens across North Bengal, the union government should intervene.
“When British planters set up tea gardens in the region, they got workers from Bihar and Nepal. It was a form of colonialism that persists even today. Planters just want to pay minimum wages and make maximum profit,” he said. The union leader, with six decades of work among tea workers, believes companies like Duncans have been mismanaging gardens since the early noughties, but the government never took action. “Even now, the state government is making noise with the 2016 Assembly polls in mind. The Left Front also didn’t do much,” he added. Abhijit Mazumdar of the Terai Sangrami Cha Shramik Union alleged that owners like Duncans siphon off money from gardens to invest in other projects. Owners refused to comment on this.
Unwilling to accept an exit policy for tea estates, Mazumdar said, “Past experiences taught us that exit policy usually means real estate development. Although workers are compensated, what they need is a steady source of income, not largesse. One can’t expect a skilled tea worker to work as a janitor or mason just because owners can’t run gardens,” he said.
Although ITA did not comment on matters related to management, the organisation noted that poor rainfall in the last two years is a reason behind the general crisis ailing the industry. “Tea production is under stress due to adverse weather conditions, with droughty and dry spells across most tea areas of Assam and Bengal. This phenomenon was visible in early 2014, resulting in production closing at a shortfall of 15 million kg lower in 2014, as compared with the previous year.”
Goenka said that adverse weather conditions are particularly an issue with Bengal. “Sometimes there’s hardly a drop of rain between October and May, making us more dependent on irrigation, which is expensive and a running cost. Compared with Assam, our costs are higher, yield is lesser, and quality is nowhere near,” he said. Except the small pocket of Darjeeling, where the quality is higher although yield is poor, Assam tea always fetches a better price, he added. An insider pointed out that tea in India is still largely transacted at a commodity level and is subject to forces of overall demand and supply, both in the country, and the global market. “Around 37 per cent tea is of outsourced category, with smaller gardens providing the produce. Almost 60 per cent tea is sold through private sales, and the rest through auction, which effectively decides the price for total volume of tea produced,” the industry player said.
He cited the example of Darjeeling tea, where, of the total of around 10 million kg produced, only some two million is sold through auction. “When tea bought through private sales can’t be exported, it is pushed into the auction system, and the market is dragged down. The government recently notified that at least 50 per cent tea has to go through auction, but absence of a proper regulatory authority is sorely felt. The price of tea has to go up to ensure survival,” the insider noted.
Behind The Strong Cuppa
South India EAST India ALL INDIA
No. of Growers/Estates 84,387.0 74,812.0 1,59,190.0
Area (Hectare) 1,20,181.0 4,59,613.0 5,80,181.0
Production (Tonnes) 2,40,940.0 9,57,440.0 11,96,510.0
Yield (Kgs. / Hectare) 2,004.8 2,083.0 2,062.0
Value of Crop (Rs Crores) 2,533.0 14,872.0 17,408.0
Export - Quantity ( Tonnes ) 87,500.0 1,19,897.0 2,07,400.0
Export - Value (Rs Crores) 1,203.0 2,843.0 4,054.0
Consumed within India (Tonnes) 1,53,440.0 8,34,740 9,89,110.0
Labour Employed (Lakh ) 3.6 9.0 12.6
Even though not all garden owners in Bengal suffer from the same ailments, a walk through Dooars and Terai brings to light that not everything is right. Reports of deaths due to malnutrition at Duncans’ tea gardens aside, despite being a leading producer for the domestic market — a total capacity of 13 million kg has yielded less than three million kg this year — the company is ailing, and with good cause.
Most gardens under Duncans — 13 in Dooars and two more in Terai — look like jungles due to the last seven months’ neglect as workers stopped coming after wages were not paid since May. In stark contrast are gardens of other big players like Goodricke, Andrew Yule or Luxmi Tea, and even smaller, standalone gardens. That, however, does not mean things are hunky-dory in the region.
Production cost is a concern
Statistics available with the Tea Board, the Indian Tea Association and even independent sources, expose a feverish condition. Although Darjeeling tea is still in demand, as is Assam orthodox tea, and the more commonplace CTC, several issues afflict the industry. Top on the list is the matter of escalating production costs. Industry insiders point out that while wages of workers have been revised at periodic intervals, price of tea has not seen any real increase in the last ten years.
According to an insider, prices of raw material like coal, gas and sulphur have seen massive escalation, but despite being a cash crop, tea hardly saw any appreciation. “Tea is also an agricultural produce, but it has not seen price rise like grains, fruits, or vegetables. Prices of most things needed to produce tea have shot sky-high,” he said. The India Tea Association (ITA), which supports this claim with data, pointed out in a recent bulletin that coal price has gone from Rs 2.91 per metric tonne in 2007-08 to Rs 8.96 in 2014-15, translating into a rise of 208 per cent. Similarly, price of gas underwent a 129 per cent hike, as did prices of ingredients needed for drying tea leaves.
“The price of TD oil has gone up 133 per cent, HSD by 117 per cent, sulphur by 173 per cent, and MOP by 247 per cent. Place this against the Assam auction average, which has gone from Rs 99.60 in 2008 to Rs 156 in 2014, an increase of just 56 per cent,” the insider noted. Added to this is the condition of periodic wage hikes. Wages are not high, but growers also have to provide weekly ration, firewood and living quarters, besides paying utility bills. This might seem like an ideal situation for workers, but owners complain that periodic wage revisions can get difficult. “At Rs 122.50, a day’s wages may not be much, but rising production costs can lend things a different turn,” said an owner.
An ITA bulletin noted that while Bengal’s planters acceded to a wage hike recently for the customary three-year period, gardens in Assam also saw one in January. “From daily wage of Rs 94, it will be hiked by Rs 43 over the three years. In Bengal, the wage agreement is decided at a tripartite meeting with unions, owners and the government, but in Assam, it happens through bilateral discussions between owners and unions,” a source said.
Overstaffed, claim planters
Duncans Chairman G P Goenka, the most ‘controversial’ name in the tea industry at this moment, believes redundancy is inherent in the tea industry.
“Every garden employs a number of people as paniwalla (water boy), who mostly sit idle except serving drinking water to pickers at periodic intervals. This might have been useful a century earlier, but now, it’s easier to just have a water tanker in the garden. I also find a retinue of servants at managers’ bungalows unnecessary,” he said.
Goenka, who admitted that such expenses affected his gardens, among other things, said that instead of retrenching people to save costs, Duncans is now diverting these people to work in gardens.
“We’re not using temporary workers, but using these people for jobs in the garden,” he said. Besides wages, workers are also entitled to an attendance allowance for every kg picked, besides fringe benefits like ration, housing, medical coverage, education and welfare, under the Plantation Labour Act. Planters complain that these issues are often commanded by political decisions.
“A hike of even as little as Rs 21 in daily wage translates into an increase in production cost by Rs 11-Rs 12 per kg of made tea,” said the insider. Likewise, ITA observed that wages and benefits constitute around 60 per cent of the total cost of production.
It’s mismanagement, say TUs
Union leaders, however, refute these claims as a “larger conspiracy” to undermine tea workers. Chitta Dey, Chairman of Tea Plantation Workers Coordination Committee, believes that in case of Duncans and other closed gardens across North Bengal, the union government should intervene.
“When British planters set up tea gardens in the region, they got workers from Bihar and Nepal. It was a form of colonialism that persists even today. Planters just want to pay minimum wages and make maximum profit,” he said. The union leader, with six decades of work among tea workers, believes companies like Duncans have been mismanaging gardens since the early noughties, but the government never took action. “Even now, the state government is making noise with the 2016 Assembly polls in mind. The Left Front also didn’t do much,” he added. Abhijit Mazumdar of the Terai Sangrami Cha Shramik Union alleged that owners like Duncans siphon off money from gardens to invest in other projects. Owners refused to comment on this.
Unwilling to accept an exit policy for tea estates, Mazumdar said, “Past experiences taught us that exit policy usually means real estate development. Although workers are compensated, what they need is a steady source of income, not largesse. One can’t expect a skilled tea worker to work as a janitor or mason just because owners can’t run gardens,” he said.
Although ITA did not comment on matters related to management, the organisation noted that poor rainfall in the last two years is a reason behind the general crisis ailing the industry. “Tea production is under stress due to adverse weather conditions, with droughty and dry spells across most tea areas of Assam and Bengal. This phenomenon was visible in early 2014, resulting in production closing at a shortfall of 15 million kg lower in 2014, as compared with the previous year.”
Goenka said that adverse weather conditions are particularly an issue with Bengal. “Sometimes there’s hardly a drop of rain between October and May, making us more dependent on irrigation, which is expensive and a running cost. Compared with Assam, our costs are higher, yield is lesser, and quality is nowhere near,” he said. Except the small pocket of Darjeeling, where the quality is higher although yield is poor, Assam tea always fetches a better price, he added. An insider pointed out that tea in India is still largely transacted at a commodity level and is subject to forces of overall demand and supply, both in the country, and the global market. “Around 37 per cent tea is of outsourced category, with smaller gardens providing the produce. Almost 60 per cent tea is sold through private sales, and the rest through auction, which effectively decides the price for total volume of tea produced,” the industry player said.
He cited the example of Darjeeling tea, where, of the total of around 10 million kg produced, only some two million is sold through auction. “When tea bought through private sales can’t be exported, it is pushed into the auction system, and the market is dragged down. The government recently notified that at least 50 per cent tea has to go through auction, but absence of a proper regulatory authority is sorely felt. The price of tea has to go up to ensure survival,” the insider noted.
Behind The Strong Cuppa
South India EAST India ALL INDIA
No. of Growers/Estates 84,387.0 74,812.0 1,59,190.0
Area (Hectare) 1,20,181.0 4,59,613.0 5,80,181.0
Production (Tonnes) 2,40,940.0 9,57,440.0 11,96,510.0
Yield (Kgs. / Hectare) 2,004.8 2,083.0 2,062.0
Value of Crop (Rs Crores) 2,533.0 14,872.0 17,408.0
Export - Quantity ( Tonnes ) 87,500.0 1,19,897.0 2,07,400.0
Export - Value (Rs Crores) 1,203.0 2,843.0 4,054.0
Consumed within India (Tonnes) 1,53,440.0 8,34,740 9,89,110.0
Labour Employed (Lakh ) 3.6 9.0 12.6
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(Published 15 November 2015, 15:38 IST)
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