Guwahati, August 7: Unprecedented slump in demand and plummeting prices because of the pandemic that refuses to ease its grip on the economy, the age-old tea industry in Assam is staring at a severe crisis.
Industry sources said that some of the tea estates in the state are finding it hard to survive the lean phase as demand of made-tea has nosedived as have the prices realised in the hostile market as on date.
“Tea industry is struggling for survival due to prices declining below the Cost of Production (CoP)”, said Bidyananda Barkakoty, Adviser, North Eastern Tea Association (NETA).
The price realisation of tea has lowered by average Rs. 44.19 per kg, which is about 18% lower compared to the last year’s prices, while the Cost of Production (CoP) has gone up due to hike in wages and inputs.
"CoP has gone up by Rs. 25.00 per kg of made tea due to recent hike in daily cash wage from Rs 167.00 to Rs 205.00. CoP has also gone up by Rs. 7.00 per kg of made tea due to increase in cost of inputs like fertilizer, pesticides, diesel, natural gas, coal, transportation etc. Therefore, the net negative impact on the industry till date is to the tune of Rs.76.00 per kg of made tea”, said Barkakoty.
The average price realisation of CTC tea at the Guwahati Tea Auction Centre (GTAC) this year, from April to July, was Rs. 208.02 per kg compared to 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. 300.00 per kg and about 51% of teas have got sold below Rs.200.00 per kg.”, said Sunil Jallan, Chairman, NETA
“Moreover the unsold quantity at GTAC is more than double compared to last year. In 2020, the unsold quantity at GTAC from April to July was 16.37%, whereas this year, the unsold quantity is 35.16%”, said Jallan
“Assam’s total production in 2021, from Jan to June, is less by about 41 million kgs, which is about 19% less compared to the same period in 2019. Production of 2020 was an aberration due to Covid-19 induced lockdown. In 2019, from Jan to June, tea production was 220.11 million kgs whereas this year it is 179.32 million kgs.”, said Kamal Jalan, Vice Chairman, NETA
“Rise of imports in the first quarter of this year is detrimental to the domestic tea sector. Non availability of data relating to the break-up of imports for re-exports is an area of great concern”, said Jalan.
The State Govt is doing its best to help the struggling tea industry by recently announcing the scheme “Assam Tea Industries Special Incentive Scheme (ATISIS – 2020)”. The Green leaf cess exemption for 3 years wef 1st Jan, 2019 has also been helpful for the tea industry.
However, unless there is a rise in the price of tea the tea industry including the Small Tea Growers (STGs) will have to struggle for survival.