Inflation and Its Impact on Common Man

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SUSTAINABILITY IN TEA INDUSTRY: An Indian Perspective

Ashim Kr. Das
Introduction

The tea Industry in India has a 170 years old history. The credit for creating India’s vast tea empire goes to the British, who discovered tea in India. The East India Company after losing its monopoly in China in 1832 has taken up cultivation of Tea in India (Assam) in 1834. The first commercial batch of Tea ever produced outside of China came from Assam in 1839.

Since then, tea continues to be the most popular drink in India. From official conferences to railway station, tea (chai) remains the favorite hot beverage among Indians (almost 85% of the total households in the country consume about 81% of the total tea produced). This sector is critical to Indian economy. The Tea Industry is one of the oldest organized firm sectors with a large network of tea producers, retailers, distributors, auctioneers, exporters and employees. India is one of the world’s largest producer and consumer of tea (Table 1 and 2), which accounting for 27 percent of the world production and around 12–13 percent of the world tea export. Tea export from India, estimated at Rs 17.31 billion during FY 2006, accounting for 0.4 percent of country’s export in value terms, tea ranks as the fourth-largest agro export item from India. The industry employs around 1.27 million at the plantation work and 2 million people indirectly of which 50 percent are women workers (second largest employer in the organized sector after Indian Railway). In, India, there are about 1700 processing units engaged in tea production; while around 1671 big (more then 100 hectares) planters with an output of 700-725 mkg. The estimated 0.141 million small growers have an annual output of only around 237 mkg. India’s large tea plantations are mostly concentrated in Assam and North-Bengal. Assam alone produces 51 percent of the national production. Tea production in India during 2007, declined by 1.2 percent to 944 mkg, in comparison with an increase of 1.1 percent in 2006; but it is expected to increase to around 960 mkg in 2008. Besides, as an agro-based industry, the development of plantation industry has contributed greatly towards rural development and urbanization of remote hilly areas by optimum use of land, opening up road and other communication network in those areas.

Recent developments
Inspite of its importance, tea industry of India is going through a crisis phase since 1990’s. The industry has witnessed many structural changes during recent years, which include – emergence of small tea growers in place of large plantation and introduction of bought leaf factories (BLF). The present crisis has led to the closure of many tea estates (e.g., 20 estates in Kerala, 30 in West Bengal, about 70 in Assam have close down since the late 1990’s). It is estimated that more than 60,000 plantation workers have lost their jobs since 2002 and livelihood of another tens of thousands are threatened. Workers of the running estates are facing wage cut, tougher picking demand, job insecurity and the casualisation of work, appalling living and working condition etc. In early 2005 the tea industry witnessed major companies withdrawing from production and concentrating on the packaging/ retailing sector (e.g. Tata. Tea, HLL etc in India). They intend to focus on brand building business and on exploring the market substantially, rather than on the plantation business, which is a low margin segment.

The tea industry in this country has some inherent weaknesses–due to poor yield arising out of poor condition of the gardens ( more than 30 percent of the tea grown areas being above the economic threshold age limit), defective auction mechanism, old factory setup (which is affecting tea quality and price realization), poor garden management, frequent changes of garden management/managers, in-experienced owners (like traders who have no previous experience in tea...
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