Lower price, soaring cost of production worries Assam's tea industry

The average auction prices of tea going below the cost of production has left many tea planters and industry players in Assam worried.

North Eastern Tea Association (NETA), a forum of over 160 tea planters and factory owners on Wednesday said the industry was struggling for survival given the fact that average auction price of tea this year decreased by Rs. 44.19 per kg whereas the cost of production went up by Rs. 25 per kg of due to hike in wages and materials.

"On one hand, the price realisation of tea is 18% lower compared to last year and on the other hand, the Cost of Production (CoP) has gone up by Rs. 25 per kg of made tea due to recent hike in daily cash wage from Rs 167 to Rs 205. CoP has also gone up by Rs. 7 per kg of made tea due to increase in cost of fertilizer, pesticides, diesel, natural gas, coal and transportation. Therefore, the net negative impact on the industry till date is to the tune of Rs.76 per kg of made tea," NETA adviser, Bidyananda Barkakoty told DH.

NETA, a 40-year-old tea producers' body said the average price realisation of CTC tea at the Guwahati Tea Auction Centre (GTAC) this year (April to July) was Rs. 208.02 per kg, whereas it was Rs. 252.21 per kg during the same period last year. "Therefore, the average price realisation this year is lower by Rs. 44.19 per kg. Only about 9% teas have fetched above Rs. 300 per kg and about 51% of teas have got sold below Rs.200 per kg,” said Sunil Jallan, chairman, NETA.

With over 800 big tea estates and thousands of small gardens, Assam contributes to over 50 per cent of tea produced in the country. But stagnant prices since 2014, deficit rainfall and the Covid-19 pandemic have crippled the industry.

Assam’s total production in 2021, from January to June, is less by about 41 million kgs, which is about 19% less compared to same period in 2019. "Production of 2020 was an aberration due to Covid-19 induced lockdown. In 2019, from January to June, tea production was 220.11 million kgs whereas this year it is 179.32 million kgs," said Kamal Jalan, vice chairman of NETA.

He said rise of imports in the first quarter of this year was detrimental to the domestic tea sector. Non-availability of data relating to the break-up of imports for re-exports is another area of concern, Jalan said.

The Assam government recently announced a scheme to offer incentives, cess exemption and other benefits to help the tea industry. But Barkakoty said the industry, particularly small tea growers, would continue to struggle unless there is a rise in prices.