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A brewing crisis in Assam’s tea sector

Assam is one of the states of India which is located in the northeast region. It is a tea grown area.  Assam tea industry is at the peak of crises and on the verge of economic distress.  

Presently, Assam Tea is not economically profitable as it used to be earlier on account of rising production costs and stagnant prices of the production. The cost of production of tea is been growing by a compounded annual rate of 10% for the last 10 years while the tea prices increasing by a compounded annual rate of 6% only. 

It drastically reduces the profit margin. Assam and West Bengal produce nearly 80% of India’s tea, and so this situation would impact not only India but tea consumers globally. Recently, Assam govt. has announced a hike in tea workers wage rate to counter crises but it is no solution, it's beyond that, it needs aggregate effort at the micro and macro level.

Why the crisis in the tea industry?  

It has been observed that there are specific reasons which cause the problem to the Tea industry, such as:

  • Indian tea especially Assam tea has been rejected by the global player because of the high content of nitrogen and pesticide residue.  When there is a shortfall of green leave, tea gardens procure from small tea farmers which they don’t adopt any quality standards, use excessive fertilizers and manures to boost production.
  • Increase the cost of labour is reducing the profit margin of growers and producers massively.  Labour cost is almost 60% of production cost. 
  • Workers are having health issues. State government states that sanitation and health facilities in some tea plantations are poor because of which they are having tuberculosis, anaemia, hypertension and leprosy.
  • Tea workers who are agricultural labourer are hit most in these crises because they don’t have another alternative source of income with limited skills set.
  • Closing down of small tea gardens which are taken over by big corporate.

Proposed solutions 

Assam Tea industry is playing a significant role in State. It is imperative to find solutions in present crises. 

  • There must be a certification mechanism by establishing green leave analysis centres for chemical analysis at the time of procurement.
  • Increase in labour cost must be in proportion with market tea prices which is necessary to produce quality tea which is having a better price.
  • There is a need to shut down tea estate operation by December 15 every season that would remove about 35 million kilograms of tea from the market which are considered bad teas.
  • Tea garden must focus on a high yield, a genuinely premium quality profile, coupled with a moderate cost of production sustained by low overhead.
  • There must be active promotional strategies to promote Indian tea worldwide like Shri Lanka Tea.   

Young entrepreneurs in the tea industry 

Tea Board of India motivates young entrepreneurs in tea business at it has big export potential. Youth can play a role in increasing exports and domestic consumption and improving Indian tea quality. 

The real potential of Indian teas is still not fully utilized yet; need systematic and strategic marketing efforts in this direction. The tea industry has a lot to offer young people in terms of employment generations and entrepreneurship development. The role of young people in the tea industry is critical, they must come forward to review this industry by their knowledge and wisdom. Young people can earn 

This industry offers various specialized job opportunities to youth such as tea tester, research, plantation management, tea brokerage consultancy, tea exporter, factory manager etc. This is an agro-based and labour intensive industry. It provides direct employment to 1 million people and indirect employment to 10 million people. This is a very important industry in an agro-based country like India. 

Assam has more than 850 big tea estates and thousands of small tea gardens. Four million people are directly getting a livelihood. It’s a big economic setback for the agriculture economy of the nation if the Assam Tea industry is not running well. Hence, immediate action is needed to revive Assam Tea.

 

Photo credit: India today