More fringe benefits for tea workers

Guwahati, Aug. 27: The tea industry has agreed to increase the quantum of fringe benefits to its workers.

It has acceded to increase the quantity of dry tea given to daily workers, the firewood given to sub-staff and the incentives given to workers engaged in spraying operations, as demanded by the Chah Mazdoor Sangha (ACMS).

A memorandum of settlement to this effect was signed in Dibrugarh yesterday between representatives of five employers’ associations and the ACMS, which represents the workers.

The meeting was attended by DoNER minister Paban Singh Ghatowar, who is also the president of Assam Cha Mazdoor Sangha. This is the first tea industry meeting that Ghatowar has attended since becoming DoNER minister.

The agreement was signed after several rounds of bilateral discussions between the ACMS and the Assam valley branch of the Consultative Committee of Plantation Associations.

The chairman of Indian Tea Association, C.S. Bedi, was also present at the meeting.

According to the agreement, permanent workers who earlier got 600gm of dry tea per month per family, according to the 1979 fringe benefits agreement, will get 900gm per month with effect from September 1.

Single workers will now get 400gm of tea compared to the previous 300gm.

The firewood entitlement, which was fixed at 228 cubic feet according to the 1979 agreement, has now been increased to 342 cubic feet. The agreement will be interim till the time LPG is made available.

It was also decided that the sprayers engaged in gardens will get an additional compensation of Rs 3 per day.

“The agreement will have some financial impact but we are doing this for the welfare of the workers since we care for them,” a tea industry official who attended the meeting said.

The industry has been asking the Centre to share half the social cost borne by the plantation industry but nothing has materialised despite various committees’ recommendations.

The social cost is now Rs 9 per kg of made tea.

The social cost incurred in providing housing, health and sanitation to the workers is being borne by the industry.

Tea tragedy on record - Figures on fingertips, Partha lists garden woes

Calcutta, Aug. 26: A death-a-day human tragedy, economic perils and administrative apathy that are striking at the root of Bengal’s tea industry were given a statistical face today in the Assembly as figure after grim figure tumbled out.

Starting with the grimmest, industries minister Partha Chatterjee said 3,500 people died in the last one decade in north Bengal tea gardens because of malnutrition, putting on government record the nearly one-death-a-day figure known by all but admitted by none.

Neither the administration nor the visiting health staff in the previous Left Front government had admitted that the workers in the closed gardens of the Dooars and Terai were suffering from malnutrition, a symptom not associated with square meals but with starvation.

In response to a question, Chatterjee said: “This is on record, 3,500 garden labourers have died of malnutrition in the last decade. It has been quoted in the Supreme Court.”

An industries department official said the apex court got the figure after social activist Anuradha Talwar carried out an on-the-spot survey in the closed tea gardens in north Bengal after instructions from the court in 2003.

“We are trying to improve and intervene in areas where it is practically possible…, starting from assuring payment of wages to the improvement of tea quality. We have to shift from mass production to producing tea of distinction, of which we have a history that we are proud of,” he said.

Chatterjee said tea production in the state has increased by 19 per cent in the last decade but export has come down as quality has been hit, a charge that planters denied.

In 2001, Bengal’s tea production was 192 million kg while in 2011, it had grown to 228 million kg, the minister said. “There had been a 19 per cent increase in the state’s production in the last decade, while the country's production over the same period had increased by 14 per cent,” he added. “Exports, however, had come down over this period because of a fall in the quality of tea,” the minister told the House.

Chatterjee’s observation on quality comes at a time when the industry has been trying to grapple with workers’ shutdowns and strikes for revision of wages.

The minister also said an eight-year-old recommendation that the government and the planters share the social cost of the workers would be looked into.

Planters in north Bengal said Chatterjee’s remark on quality influencing export must have been on CTC tea, which is grown in the foothills or the Dooars and the Terai. “For, the demand for Darjeeling tea has been consistent in the international market,” said K.K. Mintri, a planter from Siliguri.

Mintri, however, said the export of CTC tea has come down because of higher prices that Indian manufacturers are forced to demand from international buyers as a result of the higher cost of production.

“CTC tea has good competition from countries like Vietnam and Kenya which produce similar tea and can afford to sell at lesser prices,” Mintri said. The planter said buyers for CTC are mostly from Iraq, Iran, Pakistan and Russia, unlike Darjeeling tea, which is exported to European countries and the US.

U.B. Das, the principal adviser to the Indian Tea Planters’ Association, claimed that other countries could produce tea at lower cost because the fringe benefits and wages provided to workers there were less than what was given here.

“The only way to slash prices in international market is to bring down the cost of production. This will not be possible unless the state and the Centre shoulder some of the responsibilities,” he said. The workers here get a daily wage of Rs 67 and benefits like PF, gratuity housing, ration, free medical aid and education facilities for children.

The trade wing of Chatterjee’s party, Trinamul, which has been trying to curb bandhs in gardens, has demanded Rs 130, the same amount paid under the 100-days central job scheme. The rural job scheme has been often blamed by planters for absenteeism among workers.

Asked by Congress’s Alipurduar MLA D.P. Roy if an inter-ministerial committee recommendation in 2003 to the government to share the social cost of workers with the planters had been considered, the minister replied it was still pending. “But steps are being taken — a separate secretariat is being set up in north Bengal, and experts are being consulted. The situation will change soon,” he said.

Source: The Telegraph

KOLKATA: The second half of financial year 2011-12 does not appear to be bright for tea companies. With prices sliding Rs 10-15 per kg and the rate of interest going up by 3% on an average, tea companies' cash flow is under pressure.

CS Bedi, chairman of Indian Tea Association, said: "The interest rate has gone up by 2.5-3% on an average. This is putting pressure on the margins of tea companies as the cost of production is going up. Moreover, over the last fortnight tea prices have shown a drop, which is a matter of concern for all tea companies. This is bound to have an effect on the bottomline of tea companies in the second half of the current financial year."

India's tea production rose by 10% to 114.70 million kg during June 2011 on the back of a higher output in Assam and West Bengal. The country produced 104.03 million kg of the brew in the same month last year, according to Tea Board data.

Production in Assam, which accounts for more than 50% of the tea produced in the country, rose by 24% to 62.82 million kg in June 2011 from 50.70 million kg in the year-ago period. Similarly, output in West Bengal rose by more than 2% to 25.95 million kg from 25.34 million kg in the year-ago period. During the January-June period of the 2011 calendar year, tea production rose to 358.32 million kg from 338.96 million kg in the corresponding period of 2010.

With an improvement in production this year, arrivals at auction centres have increased suddenly. "July and August are the two months when generally arrivals for auctions improve. Last year, the scenario was different. Production had gone down due to a pest attack and excessive rains. This had pushed up prices last year. This year, the prices are not going up as last year's levels.

In some cases, there is a drop in prices. However, quality tea are fetching good prices," said J Kalyansundaram, secretary, Calcutta Tea Traders Association. Orthodox tea producers have suffered the most this year as they cannot export their produce to Iran, a major market, due to a payment problem. "Orthodox teas are selling at price which is lower than by Rs 10-15 per kg," said Bedi.

Economic Tmes

The Trinamul Congress has started an anti-bandh campaign in the tea gardens in the foothills through its trade union, asking workers to refrain from strikes and embargoes and instead fight for their rights through talks.

The Trinamul Tea Plantation Workers’ Union also said it would ask the government to help negotiate with planters so that garden labourers in the Dooars and Terai got a revised daily wage of Rs 130, the same amount paid under the 100-day central job scheme (see chart).

The Trinamul trade union’s anti-bandh drive kicks off a day after party chief and chief minister Mamata Banerjee requested all political outfits to refrain from bandhs and blockades as they affected livelihood.

“We are not in favour of calling strikes or stopping despatch of tea. So, we have started campaigns against such activities. Our chief minister has time and again insisted that strikes, bandhs and blockades should be discouraged. On our part, we are trying to take more and more people into our confidence. They should surely fight for their rights but not resort to any action that might affect the tea industry,” said Trinamul trade union leader Joachim Buxla.

The Trinamul trade wing is a constituent of the Defence Committee for Plantation Workers’ Rights that had called a three-day strike in the industry earlier this month. Today, however, Trinamul claimed that it had opposed the bandh then.

“We had instructed our supporters to report for duty,” said Buxla, who switched over to Trinamul from the RSP in 2009.

Trinamul admitted that as far as trade unionism was concerned it had far to go and had managed to form units in only 30 or so gardens. Citu and Intuc are dominant in most gardens, followed by the Akhil Bharatiya Adivasi Vikas Parishad-backed labour union.

“We had started from scratch and right now, we have units in more than 30 gardens in the Dooars. Every week, we are opening new units,” said Buxla. “In terms of forming a trade union base, we have a long way to go but nonetheless, we have started working on our agendas to ensure that tea workers are not deprived of their rights.”

Last week, the trade unions scaled down their demand for revised wage to at least Rs 91. The root of the stand-off in the plains is a deal of Rs 90 a day that the Gorkha Janmuki Morcha managed to clinch for workers of the Darjeeling tea industry. The plains workers now get Rs 67.

“As there is no fixed minimum wage in the state, we consider the NREGS rate as the base for calculation of other daily wages. We have told the labour minister that workers would feel deprived if they are paid less than Rs 90. The revised wage should be Rs 130 or above,” Buxla, today, said.

A deal less than Rs 90, many trade union leaders believe, would upset the 2 lakh or so casual workers more than the permanent labourers. “The 2.5 lakh permanent workers, who get additional benefits like bonus, PF, gratuity, housing, ration and free medical aid, is not much attracted to the national job scheme. But for casual workers, who don’t get these benefits, the Rs 130 a day for at least 100 days is surely more attractive,” said Chitta Dey, a trade union leader.

Union leaders said the low wages in the tea industry had forced many youths to migrate to the north and south Indian states where they earn even up to Rs 250 per day.

Absenteeism is a problem in most gardens in the hills and plains. Hill planters blame the higher wage of the National Rural Employment Guarantee Scheme for irregular attendance — one of the reasons why operations in the Darjeeling gardens are frequently hit, they say. The job scheme is open to all, including permanent workers.

Hill planters said the fringe benefits given to the permanent workers in the industry and daily wage together makes it Rs 130. Plains garden owners put the figure at Rs 120 or so but refused to blame the national rural job scheme for the truancy trend.

“There is a trend mostly among male workers to stay away from gardens. This is because of a number of reasons but it would be wrong to attribute it to NREGS,” said Sanjay Bagchi, the assistant secretary of the Dooars Branch of the India Tea Association, a body of planters.

The garden owners, however, could not provide a break-up of the fringe benefits in monetary units. “We cannot translate for example a housing benefit or a hospital benefit or firewood given for each worker. But when calculated on a larger scale, it comes to around Rs 120 a day if we add the daily wage of Rs 67 to it,” Monojit Dasgupta, secretary general of the Indian Tea Association.

Source: The Telegraph

The storm in Tatas' teacup

Tata Global Beverages' profits may have more than tripled but rising commodity prices and competition will continue to challenge the tea major.

Percy Siganporia, Managing Director, Tata Global Beverages, would do well to take a strong swig of the tea his company brews to brace himself for some turbulent times ahead for the company. After a dip in net profits last quarter, Tata Global recovered with a more than three-fold increase in profits in the first quarter of this fiscal. However, the tough times will continue for the tea major as tea prices increase in most markets along with competition in both the international and domestic markets.

While net sales for the quarter increased by 6 per cent from Rs 1,373.89 crore to Rs 1,455.92 crore, the increase in net profit for the June quarter was backed by an infusion of Rs 88 crore of exceptional items along with lower interest costs whereby consolidated net profit jumped from Rs 45 crore to Rs 161 crore. As Siganporia explains, “While there has been volume growth during the quarter, the increase in profits has been due primarily to the increase in exceptional items.” Exceptional items comprise the sale of non-core assets in terms of shareholding in group company Tata Chemicals.

Maintaining volume leadership in the tea category for the world's second largest tea company with an 18.6 per cent share, Tata Global continued to take slight price increases during the quarter for its brands such as Tata Tea Premium Gold brand.

However, commodity costs have continued to be high and this has affected its margins. “Tea prices at the auctions have been dearer by nearly Rs 10 per kilo and it is only early this month that we found prices dipping,” says Siganporia. However, there is likely to be to no immediate respite from the increasing coffee prices and recovery from commodity costs may take a while, he adds.


Sagarika Mukherjee, research analyst at SBI Cap Securities, says the rising prices of tea and coffee will impact the company. “Profitability is likely to decline from these levels as tea and coffee prices are both going to rise again after a short span of easing in the month of June. Coffee production from Brazil (main source of coffee for Tata's Eight O'Clock) will see an ‘off-year' due to which the prices will remain firm this year. Coffee prices have risen from $1.5/pound to $3/pound in one year and are likely to settle around $2.7/pound, hence there will be continued raw material pressure for Eight O' Clock Coffee,'' she elaborates.

Besides, Kenya (the world's largest exporter of tea) will see a production loss of 50 million kg of tea this year due to which tea prices will remain high. Indian tea, especially from North Indian tea gardens, will continue seeing higher prices (above Rs 150/kg from Rs 136/kg last year) due to shortfall in production worldwide. Inventory levels are low for both coffee and tea worldwide which will exacerbate the situation.


The company's performance in the international markets continues to be mixed. It has integrated its global business in three regions (Canada, South Asia and Great Britain) to strengthen the distribution channel, streamline costs and improve margins.

While in Canada it continues to have market leadership in the black and speciality tea segment, in the US lower volumes and commodity costs have led to its trailing behind its competitors. Its UK performance has also been affected due to phased promotions and competitive intensity while in Russia its coffee performance has been good, according to the company.


Even in the domestic markets competitive intensity is increasing and this is leading the company to explore new categories which do not use tea as an ingredient.

According to Parag Desai, Director, Gujarat Tea Processors & Packers Ltd, which makes Wagh Bakri, “Tata Tea has become a global company now and it is trying to move away from tea into more value-added beverages.''

In fact, in the past quarter when its profits had dipped, the company claimed it was planning to move away from the pure tea category. It has been looking at value-added products such as infusions and powders which use less of tea as a commodity and reduce its dependence on commodity-dependent formats in the tea segment.

“We want higher margins per serving of tea and believe that categories like infusions are going to give us those better margins. We want people to get addicted to categories such as infusions and powders but execution of such value-added categories has to be different,'' explains Siganporia.

Even in the UK market, the company has taken a strong position in speciality categories such as decaf and red bush in spite of having a presence in the black tea segment (which is de-growing).

Considering that the competitive intensity has increased in the UK, Tata Global has decided to focus on the antioxidants-led non-caffeine-based Red Bush category of teas. “While we trail behind in black tea, we have taken significant positions in the red bush and decaf category and intend to promote it,” says Siganporia.

However, the challenges will remain for the tea company. According to analysts, the main challenge will be to maintain margins in a high commodity inflation environment. Besides, Eight O'Clock Coffee has been de-growing since 2008 due to the slowdown in the US and hence passing on the costs to the end user without their downtrading will be a big challenge.

However, there are going to be positive factors affecting the business as well. As Mukherjee of SBI Caps says, “One positive is that the company has reduced its interest expenses significantly; hence that lower cost pushes up the profit after tax. Besides, the underlying 2 per cent volume growth with respect to the 6 per cent increase in net sales is decent given that the company grew by 13 per cent, most of which was volume-driven.''

Siganporia is also looking forward to better times considering the 12 per cent top line growth in the branded business in the domestic market driven by both volume and value (due to the price increases in the last two quarters of last fiscal). In the international markets too, he expects the coffee business to get on track with improved coffee performance in Russia. In the non-branded operations, Siganporia expects improved performance and realisations from the instant coffee units and coffee plantations in India aided by the commodity boom.

In spite of the tough times, Tata Global is bracing itself for the future. “Despite rising commodity costs, intense competitive activity and a challenging trading environment, we will continue to invest in our brands and focus on category development. Strong organic growth together with strategic alliances will help us achieve our vision of being a leader in ‘good for you' beverages,'' signs off Siganporia.

Source: Business Line

CAG finds holes in Tea Board's schemes to raise output

The Comptroller and Auditor General (CAG) of India's performance audit of the “Role of the Tea Board in tea development in India” has found the Board performing poorly in implementing various schemes to improve productivity.

In a damning statement, the CAG has said that the Tea Board has failed to lay down enhancement in production of orthodox tea as a pre-requisite for eligibility of subsidy.

The Board has allowed subsidy despite non-submission of proper documents or without proper verification of factory records, the report said.

A scrutiny of Chapter 4 of the audit report is revealing. According to the CAG, the Tea Board set a meagre target of 5,000 hectares for replanting/replacement planting during the 10th Plan.

This is just 2.63 per cent of the 1.9 lakh hectares of commercially unproductive tea plantation at the beginning of the Plan period.


More interesting is the audit's finding of the Tea Board not maintaining a list of parties to whom subsidies were paid and amounts disbursed under the Tea Plantation Development Scheme.

The CAG said it could not ascertain how many gardens had availed subsidy under replanting/replacement planting.

In response to the CAG's charge, the Commerce Ministry said that since each application was processed separately for each activity, the payment made was reflected in the cash book and ledger. Hence, no separate list of parties that received subsidy was maintained.

The CAG selected a sample of 701 cases covering 309 gardens among the 2,565 cases for which replanting/replacement planting subsidy was given.

On checking the records of the 309 gardens, it found that 192 had got subsidy earlier too, and the Tea Board had not evaluated the impact of the past activities of these gardens.

The production, productivity and quality improvement of these gardens were not checked during pre-approval inspection, it said.

In the remaining gardens, the subsidy was either granted for the first time or the fact was not recorded in the application forms.

“By allowing subsidies without assessing the impact of past activities, the effectiveness of the scheme was compromised,” the audit report said.

The Commerce Ministry, responding to this, said that an assessment by AF Ferguson showed a productivity gain of between 42 and 74 per cent.

But the CAG countered it, saying AF Ferguson evaluated only 1.94 per cent of the 15,000-odd hectares covered under the scheme.


The CAG found that the Tea Board gave priority to tea bushes with high productivity (up to 3,170 kg a hectare). It also found the Tea Board having delayed inspections. In 76 per cent of the cases, the delays ranged between 31 days and 1,161 days for conducting pre-approval inspections. “Further, two or more inspections were done on the same day in many cases. Delays in conducting inspections defeated the very purpose of putting in place a detailed and purposeful monitoring mechanism,” it said.

In respect of 116 tea gardens, the Board paid subsidy on the basis of statement of provident fund dues submitted by the owners without verifying it through the challans. In 11 cases, no clearance certificate was produced by the applicants.


The audit also found the Board releasing subsidy to 12 gardens that began field activities before pre-approval inspection, thereby not finding out the physical suitability of the soil through an analysis.

Stating that the scheme prescribed minimum rehabilitation period of 18 months for plains and 12 months for hills before replanting, the report said no rehabilitation was done in 14 per cent of the cases despite the fact that there was no certificate or recommendation from the Tea Research Associations.

The dates of completion of rehabilitation were not recorded in 32 per cent of the cases, while the Tea Board gave subsidy to some gardens without ascertaining if they had made their soil suitable for plantations.

With regard to rejuvenations, of the 414 cases examined by it, the CAG found that the Tea Board had not checked the impact of rejuvenation on productivity in any of the cases.

At the Board's Coonoor office, the CAG found the beneficiaries were small growers who were not registered with the Tea Board.

“As such, the Board paid a subsidy of Rs 12 lakh to unregistered growers who were not eligible to receive subsidy,” it said.

The report also found fault with the implementation of the scheme to improve irrigation facilities and the scheme to subsidise new planting.

Source: Business line

Bonus pledge nips protest bud - McLeod Russell assures employees of equal perks

Dibrugarh, Aug. 24: McLeod Russell India Ltd, the largest tea producing company in the world, has agreed to “remove all disparity and work out a formula to maintain uniformity in giving bonus to its employees employed in the gardens of Assam”.

This declaration comes in the wake of the declaration of an agitation by the All-Assam McLeod Russell Employees Co-ordination Committee.

The decision was taken during an eight-hour bilateral discussion yesterday between members of the committee and company representatives at the Assam Branch Indian Tea Association (Abita), Zone-I office here.

The meeting started at 2.30pm and went on till 11pm.

A team headed by Girish Chandra Borpatra Gohain, the general secretary of the Asom Chah Karmachari Sangha, represented the committee.

The sangha is the lone recognised trade union for tea garden employees in the Brahmaputra Valley.

Visiting agent Nandu Gangulee led a team of senior executives, which represented the company.

The employees’ committee, which functions under the Sangha, had earlier announced a three-phase agitation from August 22, against the alleged “arrogant attitude” of the company in settling its 19-point charter of demands.

“We had a threadbare discussion on some of the demands raised by the co-ordination committee and assured them that the company would do its best to find a solutions to the demands. We also appealed to the employees’ committee to withdraw their strike to which they agreed,” a company representative said.

“There are certain issues, which we would like to settle through the Consultative Committee for Plantations Association (CCPA), which is the co-ordinating body for all planters associations. We are happy that the discussions were held in a very cordial manner. We have decided to meet soon and finalise the agreement,” he added.

“Since the company had agreed to hold discussions and assured us of a patient hearing, we have decided to keep our agitation in abeyance for a month’s time,” Bhupen Borgohain, the president of the committee and secretary of the Moran circle of the Sangha, said.

McLeod Russell is the largest tea company in the world with 66 gardens.

In Assam, the company has 49 gardens with 2,500 employees.

The main demands of the employees includes increase of the retirement age to 60 years from 58, removal of disparity in payment of bonus to the employees, appointment of regular staff, abolishment of illegal voucher payment to retired staff whose services are extended on a contract basis and implementation of a uniformed seasonal allowance system.

Source: The Telegraph

Govt mum, tea planters fear unrest return

Siliguri, Aug. 23: Tea planters are apprehending that peace prevailing in the gardens in the Dooars and the Terai will be vitiated any moment as the state government has not made any move in the past three weeks to broker a deal on the revision of workers’ wages.

The labour department or ministers entrusted with the task of holding talks with the planters and the trade unions have not got back to either parties after a tripartite meeting was held on August 5.

As the impasse continues, all trade unions, except the one affiliated to the Akhil Bharatiya Adivasi Vikas Parishad, will be holding a convention on Monday to decide on the next course of action.

All the unions have put on hold their agitation for the higher wages, after weeks of general strikes, cease-work and the embargo on the despatch of processed tea from the plantations.

The garden owners said they wanted the government to intervene immediately to end the impasse.

“We are apprehensive about the current state of affairs in the tea gardens and want the government to act promptly to arrange talks to resolve the wage issue. It is a matter of concern that no negotiations have taken place after a tripartite meeting ended inconclusive on August 5. There is a chance that the unions might re-launch their agitation if no decision is reached immediately,” said Prabir Bhattacharjee, the secretary of the Dooars Branch of Indian Tea Association, a planters’ body.

The planters have also pointed out that until and unless a settlement is reached on the wages, they cannot fix the Puja bonus.

“Only a week is left in the current month. We are worried that if the wage issue is not resolved soon, there would be delay in fixing the Puja bonus. Even though fixing bonus rates would be easier than the wage negotiations, it would also take some time,” said the secretary of the tea association.

According to tea industry sources, the bonus will be fixed as a percentage of the revised wage. “As the pujas are round the corner, the wage and the bonus have to be fixed in quick succession. On the other hand, if the trade unions go back to their old demands of Rs 250 and Rs 165 as daily wages and call strikes, the situation will be complicated further. Now that the trade unions have scaled down their demands, the government must sit up and help us offer a realistic hike in the wages,” said a garden owner.

The garden labourers in the plains are paid Rs 67 currently. A new wage agreement was supposed to have come into effect on April 1 for a three-year duration.

Although the Progressive Tea Workers’ Union, affiliated to the Parishad, had initially sought a wage of Rs 250, it later said even Rs 130 would do. The union’s informal stand now is that any rate above Rs 90 will be acceptable to it.

Two apex bodies of labour wings — Defence Committee for Plantation Workers’ Rights and the Co-ordination Committee for Tea Plantation Workers — also reduced their demand from Rs 165 to Rs 130.

“The Parishad had conveyed its decision at informal talks with the ministers and the estate owners. So, any decision taken at such meetings will not be acceptable for us. We have repeatedly requested the labour minister and written to the chief minister to resolve the problem,” said Samir Roy, the convener of the Defence Committee for Plantation Workers’ Rights.

“There has been no communique from the government after the August 5 talks. We have no idea what the government plans to do.”

Roy said the apex bodies of the trade unions would hold a joint convention on August 29.

“We will chalk out our strategy at the convention. However, it seems that the situation will not change unless we approach the chief minister again for her intervention. A settlement on the wage revision has to be reached immediately. Otherwise, it will be difficult to fix the the bonus,” he said.

North Bengal development minister Gautam Deb said a tripartite meeting would be held soon to decide on the wage rate.

The Telegraph

Tea bonus hint: less than 20%

Darjeeling, Aug. 23: The Darjeeling Tea Association today said the planters will not be able to pay Puja bonus to workers at last year’s rate of 20 per cent, an announcement that met with protests from the trade union of the Gorkha Janmukti Morcha.

The planters said rampant absenteeism among tea labourers who are more keen on the 100 days’ work scheme, hike in workers’ wages and lower export orders because of recession had pushed up the cost of production, and hence, they cannot pay bonus at last year’s rate.

In 2010, the Darjeeling tea industry, which produces the world’s premier brew, paid bonus at the rate of 20 per cent for grades A, B and C gardens and at 17 percent for estates in the Grade D category. The 20 per cent bonus is the highest fixed under the Plantation Labour Act, 1951.

The bonus percentage is calculated on the basis of the total annual earnings of a worker.

H.R. Chaudhary, the president of the DTA, today said: “Our production has come down because of several reasons. The production cost has increased by 45 per cent because of inflation and hike in wages by about 33 per cent. As a result, we might not be able to pay the annual bonus at last year’s rate.”

According to DTA officials, the cost of producing a kilogram of Darjeeling tea hovers around Rs 350-370. “The maximum selling price of organic tea at times is only about Rs 400 per kg,” said an official of the DTA.

Sandeep Mukherjee, the principal adviser to the DTA, said: “Our production last year was 7.96 million kg of tea. At one time, the industry used to produce 13 million kg of made tea annually.” This time, the crop production has come down, though the figures are not available yet. Planters said they calculated the profits from the first and second flushes in the beginning of the season.

“One major problem is the absenteeism among garden workers which at times is as high as 25 per cent. Most of them prefer the 100 days work scheme instead of plucking tea leaves,” said Mukherjee.

The daily wage this year has been increased to Rs 90 from Rs 67. Although the hike is the highest in the history of the Darjeeling tea industry, the wage is still less than what the workers get under the 100 days job scheme. The daily wage under the central scheme is Rs 130.

“It is actually not true that we are paying less. Even though we give Rs 90 as daily wage, there are other benefits like provident fund and annual bonus. If we take these into account, our daily wages work out to around Rs 130,” said Chaudhary.

Mukherjee said the only way to stop the absenteeism was if the 100-days work scheme was undertaken between November and February, the lean season for the industry.

“We had approached the district administration but they said it had to be undertaken according to the requirement of the villagers and not during specific months,” said Mukherjee.

The DTA also said the recession in the West was bringing down export orders. “Considering all these factors, it is not possible to pay bonus at last year’s rate,” said Chaudhary.

The DTA has 12 Grade A, 15 Grade B, 16 Grade C and 17 Grade D gardens. The Indian Tea Association, another planters’ body in the hills, has six Grade A gardens, five Grade B and four Grade C estates as its members. Only one Grade D garden is a member of the ITA.

The planters’ announcement has been criticised by the Morcha-affiliated Darjeeling-Terai-Dooars Plantation Labour Union. “What are they (planters) talking about? This proposal will never be accepted. In fact, looking into the overall scenario we want the planters to give bonus at the rate of 20 per cent even to Grade D gardens this year,” said P.T Sherpa, the president of the union.

The union said they had not pressed for other benefits — like construction of new labour houses and repair of existing ones, hospitals in gardens that do not have one and improved medical aid and other fringe benefits — to ensure that the bonus is high

The Telegraph

Unions in war over wages

Siliguri, Aug. 19: Some trade unions have decided to bargain for a tea wage higher than Rs 91 a day, even if it is only Rs 2-3 more, to win back those who had switched loyalties to join the Adivasi Vikas Parishad backed-Progressive Tea Workers’ Union (PTWU).

The decision comes a day after labour minister Purnendu Bose sent a feeler to the planters that the PTWU was ready to settle for Rs 91, a proposed daily wage that planters are not willing to consider.

An apex body of trade unions has also come down heavily on the PTWU for scaling down arbitrarily the demand for wages from Rs 250 to Rs 130 and finally to Rs 91 without consulting other labour organisations.

“The PTWU had initially demanded a daily wage of Rs 250 and during tripartite talks they had slashed it down to Rs 130. The tripartite talks ended inconclusively at the beginning of this month where we stuck to Rs 130. As a follow-up, the PTWU leaders resumed their old demand for Rs 250 but again, at the meetings with state ministers said they were ready to accept even Rs 91 as the revised rate,” Samir Roy, convener of the Defence Committee for Plantation Workers Rights, said. “We want the PTWU to clarify its stand as there is no surety that they will not put forward a fresh set of demands.”

Roy said the PTWU should have consulted the other trade unions and a joint decision taken for a better bargain.

But many trade unions leaders said the PTWU’s new rate has given them a face-saver as well as means to win back their supporters.

“We always knew that the planters would never agree to pay Rs 130. But we could not bring down our rates. Now that the PTWU has done it, it will be easier for us. But we will negotiate for rates like Rs 93 or Rs 95 per day. In that case we can tell the workers that we have got for them more than what the PTWU had got,” a senior trade union leader said.

All trade unions under the two apex bodies will discuss them at a meeting on August 27.”

Tea planters, however, have ruled out paying Rs 91. “Considering several aspects like production cost and tea prices, we had proposed an annual hike of Rs 8 for next three years at the end of which the wage will become Rs 91 after two years,” said Ranjit Dutta, secretary of the NB branch of Tea Association of India. “As of now, it is not possible for us pay Rs 91 as daily wage.”

Other planters said if there was pressure on them to pay even Rs 91, they would be forced to close down of gardens. “Many gardens run with marginal working capital and any sudden shortage may lead to non-payment of wages and other dues, followed by closure of these units,” a planter said.

The Telegraph

With demand for CTC teas rising, cos like Harrisons Malayalam focussing more on the local market

KOCHI: Despite a decline in exports, tea prices are looking up in the domestic market. With the demand for CTC teas rising particularly in the south, big companies like Harrisons Malayalam are focussing more on the local market by launching new brands in the auction market.

South Indian tea prices have risen despite a fall in exports in the first six months due to increasing local demand. The best quality CTC teas are fetching anywhere between Rs 90 and Rs 100 kg. The average CTC price till the middle of August this year was Rs 78.86 per kg, over Rs 4 higher than in 2010.

Encouraged by the response to good quality CTC teas, Harrisons Malayalam recently launched 'Moongalaar Gold', a new bulk brand made from its Peermade-Kumili tea estates, for auctioning.

"The company has decided to focus on the domestic market while continuing to develop the export market," said Pankaj Kapoor, managing director of HML, which had stopped the loss-making consumer packet sales a few months ago. The company is also bringing premium quality teas made from its estates in Nilgiri-Wayanad region and from the high ranges of Munnar regions to the market soon.

Kanan Devan Hill Plantations (KDHP) launched the Ripple brand CTC tea some time ago. "The tea has been receiving encouraging response from the market and we are in the process of consolidating the business," said Mathew Abraham, marketing manager of the company.

According to a leading tea broker, the per capita consumption of tea has gone up from 650 gram a few years ago to 1 kg now and it is growing every year. The festival season starting next week could further raise consumption.

Higher prices for CTC tea due to increasing domestic demand is a good sign as south India's CTC production caters to the local market which is more stable, said Peter Mathias, chairman of The United Planters' Association of Southern India (Upasi).

He noted that despite a drop in production, quantity sold at the south India auction centres were up by 2.3 million kg in the January-June period compared with the corresponding period last year. This pointed to a low carryover stock and hence prices could remain buoyant even if the production rises.

economic times

Tea industry demands 'national drink' status for tea

The tea industry of Assam, a state which is synonymous in the outside world with its tea, has asked the government to declare the beverage as the ‘National Drink’ of India. It also wants tea to be declared as the ‘State Drink’ of Assam.

“In view of its glorious past and in anticipation of its bright future, we sincerely feel that there is a genuine case for tea to be declared as the ‘State Drink’ of Assam. The logical step forward would then be to persuade the government of India to declare tea as the ‘National Drink’ of India,” said Bidyananda Barkakoty, Chairman of North Eastern Tea Association (NETA).

For India, which is the largest consumer of tea and the second largest producer of tea (till 2005 India was the largest producer), declaring tea will have an “integrating effect”, feels Barkakoty. India consumes more than 80 per cent of its domestic production and 20 per cent of the world’s production.

NETA had yesterday submitted a memorandum to Assam Chief Minister Tarun Gogoi in support of its demand. In the memorandum, Barkakoty has put forth at least 33 reasons why tea should be declared as the ‘State Drink’ of Assam and the ‘National Drink’ of India.

“If whiskey can be the national drink of Scotland, sugarcane juice the national drink of Pakistan, vodka the national drink of Russia, tequila the national drink of Mexico, why can’t tea be the national drink of India,” asked Barkakoty.

Barkakoty feels that the tea industry in Assam, with its 180 years of glorious history, has already passed through many turbulent periods and is quite vulnerable to recession. Since the livelihood of millions of people is associated with the industry, it needs adequate support to protect it from being threatened.

He feels that the proposed new status of this beverage would provide a major impetus to the brand building exercise of Indian tea. “Symbolism apart, the declaration will be a good idea for bolstering the marketing of Indian tea. Tea is now accepted as a health drink world over. This fact coupled with the ‘State Drink’ and ‘National Drink’ tag would also attract the large youth population of the country towards this health beverage,” said Barkakoty.

Historically, Assam is the second commercial tea producing region after southern China. Southern China and Assam are the only two regions in the world with native tea plants. Assam produces more than 55 per cent of India’s total tea production and contributes 13 per cent of global tea production.

Business Standard

S. India tea prices surge on global shortage

Kochi, August 17:

With a persisting shortage in the global market, both Indian and global tea prices have been firming up. In South India, average price realisations have been up during January-June 2011, with the number going up to Rs 71.17 a kg.

Mr Peter Mathias, Chairman, UPASI Tea Committee said that it was interesting to note that despite a decline in production in South India, quantity sold in auction centres was higher by 2.3 million kg (mkg) and the supply in the pipeline would be relatively dry. Given the demand supply gap, he expected the prices to remain buoyant.

In addition, the quantity on offer at the orthodox category has come down very sharply and increasing export demand for orthodox teas is expected to have a very positive effect on prices. This comes in the backdrop of a lower Kenyan crop by 34.5 mkg which has led to a shortage in supply during the first six months of the current year. Although this was partially compensated by higher North Indian crop of 23.9 mkg, the global deficit stood at 20.6 mkg.
Less exports

South Indian crop, meanwhile, was down by 4.6 mkg, the fourth year in a row of lower South Indian production. The increase in price realisation from South India was despite lower exports of 9.7 mkg. The lower export from India in general, and South India in particular, was on account of disturbance in West Asia and North Africa region. As the situation in this region is improving, exports are poised to look up, taking up the prices along with it.
Tight supply

A close scrutiny on auction offering at major auction centres such as Mombasa and Colombo suggest that quantity offered at the forthcoming auctions are bound to be very low, suggesting a tighter supply position in the short run. The Kenyan offering at Mombasa Auction has declined from 6.5 mkg in the 23rd sale to around 4.1 mkg in the 31st sale.

Similarly, in Sri Lanka also the quantity offered has shown marginal decline, falling below the 7-mkg mark. With the Iran payment problem being sorted at least partially, it appears that exports are bound to pick up and South Indian tea sector looks forward to a very positive second half.

The Hindu

India tea prices steady; supply pressure weighs

MUMBAI Aug 19 (Reuters) - Tea prices in India, the world's second biggest producer, were steady at this week's auction as a demand boost during festival offset a rise in supplies, dealers said on Friday.

Price of CTC (crush-tear-curl) tea eased 0.66 percent to 127.41 rupees per kg against 128.26 rupees at the previous weekly auction.

Dust tea gained 0.2 percent to 123.77 rupees per kg from 123.52 rupees at the previous auction.

"Supplies have risen significantly since the beginning of this month. Quality of leaf is good. Domestic buyers are putting large orders," said an official at Calcutta Tea Trader's Association.

India's June tea output rose 10.3 percent to 11.47 million kg, while exports dropped 3.8 percent to 12.27 million kg on year, data with the state-run Tea Board showed.

India is the world's second biggest producer of tea after China. It exports CTC tea mainly to Egypt, Pakistan and the U.K., and the premium orthodox variety to Iraq, Iran and Russia.

Prices in the latest auction (Aug 16-18) --------------------------------------------------------------

Variety Offered quantity Sold quantity Avg Price --------------------------------------------------------------

CTC Leaf 3027873 2353232 127.41

Dust tea 1659790 1317945 123.77

Prices in the last auction (Aug 9-11) ---------------------------------------------------------------

CTC Leaf 2944293 2236028 128.26

Dust tea 1699003 1086345 123.52

Source: Calcutta Tea Traders' Association (Reporting by Rajendra Jadhav; Editing by Rajesh Pandathil)

Tea output set to fall by 120 m kg this year

KOLKATA: The Indian tea industry is heading towards a shortfall of 120 million kg this year. Lower domestic production, coupled with a drop in Kenyan output of 37 million kg, has already pushed up tea prices in India.

Global prices have also appreciated in the last four months. All these factors have pushed up the profitability of tea companies in the first quarter of the current fiscal year.

Tea producers say the deficit in the domestic market will be 120 million kg this year. This is despite the fact that the weather condition is generally good this year.

India had produced 960 million kg of tea last year and there was a production shortfall of nearly 30 million kg. The carryover deficit in 2010 was 60 million. In all, the deficit in 2010 was 90 million kg.

"With consumption growing at a rate of 3-3.5%, there is a need for an additional 30 million kg of tea this year to meet this demand. This means that there will be an overall deficit of 120 million kg this year," explained Aditya Khaitan, managing director of McLeod Russel India.

"Tea companies are expecting that FY12 will be a good year performance-wise. Tea prices are already on a firm note. The shortfall in Kenya by 37 million kg is also pushing up global tea prices and Indian tea exporters are leveraging this," said CS Bedi, managing director of Rossell India.

For instance, McLeod Russel's teas are being sold at a premium in India as well as in Mombasa auctions which have jacked up its net profit by 98% to Rs 37.33 crore in the first quarter of FY12 from Rs 18.85 crore in the first quarter of financial year 2011. "Our teas are fetching Rs 15 -16 more per kg compared to previous year. Teas grown in our Ugandan and Rwandan estates are fecthing 50-60 cents more per kg at the Mombasa auctions," said Khaitan.

AN Singh, managing director & chief executive officer of Goodricke Group, said: "The market sentiment is strong and teas are expected to fetch better prices. This will have an imp- act on the profitability of tea firms. However, one has to see whether the cost of production does not go up in the coming mo-nths. Export enquries are strong and tea companies are hoping to have better forex earnings."

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