Stagnant costs lead industry captains to query the long-term sustainability of the tea industry in Assam.
Speaking on the normal assembly of the Assam Tea Planters’ Association (ATPA), the oldest physique of ethnic tea planters within the Brahmaputra Valley, India Tea Board Chairman Prabhat Kamal Bezboruah final month cautioned that if the worth of tea doesn’t improve within the subsequent few years, the industry is not going to survive.
While manufacturing prices proceed to rise, there has “hardly been a rupee increase” per kilo of tea, on common, since 2013, he defined.
“In such a scenario it is a matter of time before the tea gardens will be forced to wind up operations in the Brahmaputra Valley,” he advised planters gathered for the ATPA’s 81st annual normal assembly. Doling out statistics, Bezboruah stated that the worth of tea from the Brahmaputra valley on the public sale facilities since 2013 has averaged: INRs152, INRs156, INRs156, INRs152, and INRs155 respectively.
This equates to a spread from $2.17 to $2.22 per kilogram ($0.98 to $1 per pound at public sale) for the commodity CTC (crush-tea-curl) teas for which Assam is legendary.
He predicted that with out worth reduction the big plantations will splinter with the ensuing small-scale gardens unable to achieve the standard and effectivity requirements. Anarchy will prevail.
“It is just a matter of time before tea gardens in the Brahmaputra valley will close down if such a situation continues for the next few years. Small portions of tea gardens would be taken over by either by musclemen in the respective areas or by garden laborers because owners of these estates would not be able to continue operations,” Bezboruah cautioned.
He stated that the associated fee of manufacturing is spiralling, with wages and inputs seeing year-on-year will increase.
In 2012 the every day wage for tea staff was INRs67 ($0.96) however has now gone as much as INRs167 ($2.38) per day “with the state authorities saying an interim hike of INRs30 ($0.43). Apart from these, each backyard additionally pays rations and different perks to the employees,” he stated.
Continued give attention to amount isn’t an answer. It is time for the industry to take some drastic steps to enhance the standard of tea which might fetch a greater worth, he stated.
“We on the tea board are contemplating an order to close down operations at all tea estates by December 15 every season,” he stated. “This would remove about 35 million kilograms of tea from the market which are considered bad teas,” he stated. Halting manufacturing after the autumnal harvest permits the vegetation to relaxation, which improves the spring flush.
In late July so much of Manohari Gold offered for $556.52 per kilogram (INRs39,001) on the Guwahati Tea Auction Center. The $252 per pound paid by Saurav Tea Traders is an public sale document for India.
While document costs are making headlines, it’s information for the fallacious motive, says Bezboruah.
The pattern within the public sale facilities of tea fetching document costs – INRs1000 a kilogram or INRs2000 a kilogram is misleading. Lots from these “star gardens” are usually not greater than 5 kilograms at most, he defined.
“I strongly believe this hype is not doing any good to the industry, since it gives a misleading picture of the prices of tea and holds up an illusion that other gardens can emulate this strategy to find an orbit out of their financial woes,” he stated.
“This is exactly what this is; an illusion, or if you prefer, a mirage,” he writes.
Selling small tea portions at document costs is a advertising technique undertaken producers in league with the involved dealer or purchaser. The apply attracts consideration respectively to their mark, their brokerage and their shopping for agency and not directly confers a “star” high quality revenue upon themselves and by extension, upon their different teas, Bezboruah observes in an article within the Assam Tea Planters’ Year Book.
Bezboruah says that even CTC heaps that promote at INRs500 ($7.14) a kilogram are extra usually restricted to 10-bag heaps, making the whole deal worth INRs150000 ($2,150).
“The iconic garden that sells its CTC teas at these levels ended 2017 with an average CTC selling price of INRs280 ($4) per kilogram. We are told that its cost of production is INRs250 ($3.57) per kilogram, and its annual output per man-day is 1.8 kilogram of made tea, against the average for Assam which stands at 2.5 kilogram per man-day. Hence, when wages rise say INRs30 ($0.43) per day, this garden’s cost will rise by INRs24 ($0.34) per kilogram, whereas a typical garden’s cost will rise by INRs18 ($0.26) per kilogram. Will the quality premium keep pace with the cost escalation? It is anyone’s guess,” Bezbaruah defined.
“There are tea estates which may survive the impact of a steep wage hike of the workers, but these are gardens with a high yield, a genuinely premium quality profile, coupled with a moderate cost of production sustained by low overhead. Focusing on producing exotic offerings to gain publicity may not be a good strategy as one needs to have a ready and willing customer in place to achieve the desired results,” he stated.
Source: The Sentinel