Tea: India should strive to regain pre-eminence

If the tea plantation industry is to survive and sustain itself, the production margins must improve substantially.

India has lost its leading position in tea exports over the last 20 years due to failure in facing the competition from China, Sri Lanka and Kenya. Unless the margins of major companies in the industry improve, the country will be reduced to a small player in the international markets, according to the findings of a Commerce Ministry Committee on the competitiveness of the industry.

The panel findings gain a renewed significance in view of the statement made by Union Minister of State for Commerce and Industry Jyotiraditya Scindia recently that tea and spices were the two commodities that India could develop as brands in the international markets.

Since the scope for expansion of tea growing areas is limited, the committee, headed by former secretary S. N. Menon, recommends that India should raise its exportable surplus by increasing productivity, which will bring down the unit cost to some extent. India already has a handicap of being a high-cost producer.

Chiding the industry for having failed to respond to the global changes in consumer preferences in terms of product-mix (as the shift towards larger amounts of orthodox production has not been adequate), the panel admits that further cost reduction can take place through a host of measures within the control of managements but reduction of cost of certain items require the cooperation and action by unions, State and Central governments.

As the flag-bearer of Indian teas, Darjeeling should receive some special considerations. Due to its low productivity and high costs, which will continue to be endemic, some measures are needed to mitigate costs. This should include supply of steady and stable grid power and extension of transport subsidy, the panel report says. The average cost of production in the industry is Rs. 350 a kg, which can increase to Rs. 600 a kg during specific periods, the committee observes.
Problems of the South

The committee says that the acute shortage of labour, especially during the peak plucking season, is affecting the entire South and machine harvesting needs to be encouraged.

Tamil Nadu finds a special mention in the report, which says that the Government should speedily resolve the deadlock on the Gudalur Janmam Estates’ case for the tea industry’s benefit. There are also problems on application and interpretation of land and environment laws which should be settled. The State should set up an SEZ in Coimbatore with special facilities for tea, the committee says.
Social overhead costs

On the issue of social costs, the committee calls for a review of the 1951 Plantation Labour Act as it feels that many of the provisions have lost their relevance. Statutory social welfare measures as mandated in this Act add to the garden cost and reduce the competitiveness of the tea industry. It also recommends that as in Sri Lanka, the Union Government may consider the transfer of funds for programmes to be implemented in mitigating the burden of social overhead costs by extension of government schemes to the plantation sectors through a separate trust or an agency under the aegis of the Tea Board.

Indications that the government has already started thinking on these lines were evident during the recent visit of Mr. Scindia when he said that social cost was a major issue for the tea industry and the government was examining the possibility of as to how the Centre and the State could bear this cost.

According to the committee, if the tea plantation industry is to survive and sustain itself, the production margins must improve substantially.

Within the sector, margin improvement can take place by cost reduction. Productivity-linked wages on the lines of West Bengal and Tamil Nadu model will produce substantial cost reduction. There is a substantial difference between farm-gate price and the final retail price, all of which go to layers of intermediaries. A part of this difference must be made available to the producer.

Noting that the tea industry is characterised by high manpower intensity, the committee says that because of historical reasons, the industry has been burdened with social responsibilities to the workmen which should rightfully have been the territory of States. The industry has repeatedly pointed out that these provisions were initiated in early years when employment in remote areas was difficult because of inadequate facilities. However the Plantation Labour Act, 1951, which was enacted to make it incumbent on tea estate managements to provide certain facilities still exist, directly impacting the cost of tea production.

An inter-ministerial committee constituted by the UnionLabour Ministry has dealt with the subject in detail and has worked out the cost of social welfare provisions at around Rs. 5 a kg, excluding concessional rations in the North. The various components of labour welfare are medical, fuel, housing, education, drinking water, sanitation and conservancy. The committee finds that though there has been a substantial recovery in prices in 2009, continuing onto the current year, medium and long-term viability of tea production continues to remain uncertain. In a representation to the 13th Finance Commission, the Consultative Committee of Plantation Associations (CCPA) stated that the high cost production in India has been a critical factor impending India’s export competitiveness. It also sought reimbursement of the welfare expenditure. The report mentions several Central government schemes under the control of the Union Ministry of Rural Development, Panchayat and Urban Development and the Ministry of Social Justice and Welfare.

The schemes which are run by the government and which have the potential of being dovetailed into the tea sector schemes are: social security schemes, heath and hygiene schemes, employment generation and livelihood schemes like NREGs, education schemes such as the Sarva Shinksha Abhiyan.

However, although an indication of the government’s inclination to examine this issue was given by Mr. Scindia during his last visit to Kolkata, it is not easy to provide coverage and benefits from these schemes to the families of the workers living in the tea plantations. Among the issues which make the task difficult is the fact that ownership of land on which the workers stay is neither with them nor with the tea garden managements which only hold it as a lease. Sri Lanka has been able to extend government schemes through a trust through which funds are canalised. This could be examined by India too, the committee observes.


From The Hindu

The Indian Tea Research Stations

Nestled between the meandering loops of the Tocklai River, just south of Jorhat, a once humble market town turned Cosmopolitan City, sits the Tocklai Experimental Station (TES).

Founded in 1911 with just one laboratory and two bungalows to its name the TES, or Tocklai as it is popularly known, is currently at the forefront of tea research; not bad for the oldest research station of its type in the world.

The Tea Experimental Stations in India have a proud place in the nation’s tea history but they are not much known outside their home country.

After the successful creation of its Scientific Department in 1900, the Indian Tea Association (ITA) saw the many benefits gained from further examination into all aspects of tea cultivation and processing.

The ITA realised that much could be gained from further research and examination, and with funding from the industry, the national Government of India, as well the Indian states of Assam and Bengal the Tocklai station was formed. The site was provided by the Jorehaut Tea Company and met all the criteria; located centrally within a major tea producing district, with good rail and river links for transport.

Initially, research was aimed at looking into methods of tea production such as planting, plucking, and pruning. Soon after, environmental contributors such as soil, topography of the land, climate, moisture, a tea gardens proximity to jungle, as well as chemical aspects of tea plants such as disease resistance and type of manure used were all given thorough examination.

Up until this point organised research into tea did not exist in any shape or form, with contributions and advances in research only occurring as a result of the tireless efforts of pioneers working, often, against great resistance from the tea industry.

In 1964 the Tea Research Association (TRA) was founded, with Tocklai at the centre of operations covering all of North East India as well as the creation of a substation in Nagrakata.

Membership to the TRA was voluntary and aimed to pass information and best practice, through its advisory network, to participating tea estates.

Today, the TRA’s advisory network covers 1,076 tea estates spread all over the North and South Banks, Upper Assam, Cachar, Tripura, Dooars, Darjeeling, and Terai.

By Phillip Hogan - All About Tea UK

Govt brews global branding plans for tea industry

The Union commerce ministry has turned to four wise men in the tea industry to secure the identity of Indian tea across the world markets. Tea industry hotshots like Aditya Khaitan of McLeod Russel, Tata Tea's Sangeeta Talwar, Hindustan Unilever's Sanjiv Chatterjee and Bharat Arya of JV Gokal will be part of a core committee that will formulate a global branding strategy to market Indian teas worldwide. What's more, iconic adman Piyush Pandey, who used to be a tea taster in Kolkata many moons ago before he joined the advertising industry in 1982, will hand-hold this elite panel to ensure teas of other origins don't masquerade as Indian tea in overseas locations.

Significantly, the commerce ministry plans to create an umbrella brand for Indian tea under which all categories will be exported across world markets. While the umbrella brand concept is yet to crystallise fully, several options are being tossed. For instance, all `Made in India teas' could have a single uniform logo along the lines of famous `lion logo' that distinguish Sri Lankan teas marketed worldwide.

When contacted, a senior Tea Board official told ET: "Union minister of state for commerce Jyotiraditya Scindia had called a meeting to explore ways to establish Indian tea as a strong brand in the world market. There was a brainstorming session, which was attended by all stakeholders of the industry, following which the decision to create a four-member committee was taken."

Mr Scindia had recently indicated in Kolkata that India can emerge as a brand for commodities like tea in the world market. He had also emphasised that the tea sector needed to focus on value-added products like tea bags to be competitive overseas.

He added that there was a need to integrate the back-end and front-end of the tea industry. "The front-end comprises packeteers and marketers while producers form the back-end. There is no synergy between them," Scindia had said at a recent chamber interaction.

From that perspective, the composition of the four-member panel aims to bring powerful synergies to the table. While Aditya Khaitan is managing director of world's largest tea producing company, Sangeeta Talwar is executive director of Tata Tea. Sanjiv Chatterjee, in turn, is GM (TEC & F&B Exports) at HUL while Bharat Arya, is CEO of J V Gokal, which represents packeteers and marketers of Indian tea industry.

Incidentally, between January and September 2009, India exported 131.22 million kg of tea against 150.25 million kg in 2008. But even though the volumes are less, the unit price realisation has increased to Rs 135.42 per kg compared to Rs 111.93 per kg in 2008.