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|INDIAN TEA INDUSTRY|
Current Situation in the Tea Industry is Buoyant
||Interview with M. G. V. K. Bhanu, Chairman, Tea Board of India|
What is your assessment of the current situation on the tea industry in India?
The current situation in the tea industry is buoyant. With the fine balance between demand and supply the tea prices remain stable and remunerative to the producers and affordable for the consumers. After the prolonged recession between 1999 and 2007, the prices started moving towards north and continue to do so till date. This has helped the planters at all levels and across all regions to sustain the process of consolidation. Both production and prices moved steadily upwards in tandem over the past five years and over the last two years the production has breached one billion kg mark and it is expected to be a highest ever record crop for the current year as it is expected to touch at least 1185 m.kgs – recording an increase of around 60 m.kgs over the 2012 level.
How do you view the Indian tea sector’s significant progress since independence?
It will be evident from the above table that there had been a significant progress in production, productivity and domestic consumption. While there had been only a modest increase in the area under cultivation (72%), the production had increased more than fourfold (446%). This increase in production could be attributed to the significant contribution of Tea research institutes in developing high yielding quality clones and recommending various improved crop husbandry techniques to the industry because of which the productivity had almost increased threefold (261%). The most striking feature is the phenomenal increase in the domestic consumption from a meager 51 million kg at the time of independence to 891 million kg last year an increase of 1747%. It would imply that almost the entire increase in production had gone to serve the burgeoning domestic consumption leading to a near stagnant export volume hovering around 200 million kg since independence.
Where do Indian tea industries stand compared to international tea sector?
Today more than 36 countries produce tea in the world. In the international ranking India stands at 2nd position in production and consumption next to China and 4th position in exports. The leading exporting countries in the descending order are Kenya, China, Sri Lanka and India. It would however be worthwhile to note China produces mainly green tea, whereas India produces mostly black tea. The share between Green and Black tea in the total world production is in the ratio of 31:69. Amongst the black tea producing countries, India ranks 1st both in production and consumption.
What are the key issues tea sector is facing today?
The most important challenges that the industry is faced with include stagnation and declining production and productivity in the bigger plantations owing to old age with more than 40 of the standing bushes having crossed the economic threshold age limit of 50 year. Tea being a labour intensive crop, scarcity of labour is the 2nd biggest challenge which is more acute in south Indian plantations. With mushrooming of bought leaf factories (stand alone factories sourcing green leaf from small growers) safe guarding the quality image of Indian tea by not allowing any dilution in quality standards is the third most important challenge. It is also important to note that the performance of all tea growing regions have not been uniform – accentuating the distinct and diverse challenges that are evident in different tea growing areas -- climate change, incessant pest attacks, unevenly distributed rainfall to name but a few of the most of important ant challenges for the planters..
Which are the thrust areas for tea sector in India?
Addressing the above noted challenges are the thrust areas for the tea sector. Most importantly over the last five years, the industry having consolidated its losses sustained during the recession period from 1999 to 2007, should now focus on investing on the renovation of field assets by undertaking large scale uprooting and replantation and replacement of old tea areas, introduction of mechanization in the field operations to overcome the shortage of workforce, adoption of good manufacturing practices by the BLFs and good agricultural practices by the small growers. There is a need for balanced and inclusive growth whereby the organized and small grower segments can develop in synergy with each other and not at the cost of one or the other. Need for quality upgradation of the small grower produce and most importantly sustainability safety and compliance issues of the tea grower segment aligned to global standards.
How do you look at the future of Indian tea sector?
Given the steady demand for tea within the country, I feel there is no sun set for the industry and I would look at it as an evergreen industry. Recent scientific evidences of goodness of tea for human health and people becoming more health conscious, particularly the youth, the demand for tea world over would be much more stronger in the future provided the food safety standards are maintained in letter and spirit since discerning consumers continue to demand sustainably produced products.
What will be the future strategy of Tea Board?
Tea Board has drawn up a strategic vision for the tea to address the challenges before the Indian tea industry which are twofold. First one is to ensure that the tea is supplied at a price remunerative to the producers and affordable to the domestic consumers and the second is to produce sufficient surplus to meet the export requirement in order to retain and improve India’s share in the world market. During the course of last four decades the global production has gone up manifold mainly due to entry of new producing countries such as Vietnam and large scale expansion of tea area in African countries and consolidation of small holdings in China. For LDCs, tea is the major export earning crop and hence resorted to expansion and offer tea at a competitive prices. Whereas tea situation in India is totally different from those countries. In India there is a strong domestic demand and it is steadily growing due to population growth. On the other hand because of old age of the plantations, the productivity is declining. Secondly, owing to surplus world production, the tea industry went through one of the longest depression from 1999 to 2007. Given this background, the strategic vision is not to chase the volume but to go in for high value teas. Thus, sustainability of reasonable prices in the domestic market and to maintain and improve the export earnings are the two main objectives and they could be fulfilled, if only the tea industry continues to maintain sustainability in production, productivity, cost control with profit for supporting the livelihood of more than 1.2 million workforce employed in the tea plantations. Keeping this in view, the production and export targets for the XII Plan period have been worked out. The XII plan proposals have been drawn up for fulfilling the desired goals viz: improving Production and productivity, infrastructure for quality improvement, value addition and export backed with suitable R & D support and human resources.
What is your board doing about improvement of the quality and export of Indian tea?
As part of the quality promissory particularly to our global market two separate Tea Councils have been set up one each for North and South India, the primary purpose of which would be to monitor exports and enforce quality. The activities of the Council are not disruptive but reinforce the quality promissory for our global customers. At this juncture I would hasten to reiterate that the quality promise is equally for our consumers at home. Food safety and standards provisions under FSSAI reinforce the food safety promise. The Board accords the highest priority to compliance under these food regulations.
As regards exports, concerted activities are being taken up under the banner of the 5x5x5 programme covering the focus markets of Russia, Kazakhstan, Iran, Egypt and USA. All of these markets are being nurtured save Egypt which saw political and civil disturbance. A strong delegation to Iran – led by the Tea Board Chairman – resulted in increasing tea exports to this market. Clearly Iran with its preference for Orthodox tea – particularly Assam – presents a great opportunity to increase our exports both in volume and value terms. The Rupee payment route furthermore has provided a facilitation that India’s competitors cannot fall back on and we must take advantage in further consolidating the presence of Indian tea in the Iran market. India also put up a strong presence at the recently concluded North American Tea Conference displaying its commitment in terms of both sponsorship and related activity to acquaint the US Tea Trade with the variety and quality profile of Indian tea. The speciality and quality segment has been growing in the US and there are opportunities for growing this segment in the years to come.
On the aspect of export promotion the Tea Board is alive to the need for more inclusive efforts on this front covering the various tea growing regions while Darjeeling, Assam, Nilgiris are household words in a large array of markets abroad the full potential of our Dooars and Terai and Cachar teas have not yet been realized. Tea Board will endeavor to promote these regional teas with greater intensity both in the export and domestic markets.
How do you see the tea industry in the year 2020?
Having already highlighted in pare 6 & 7 above the outlook and strategies for the future, I would see that the industry would remain stronger and continue to be the world leader in production of black tea. With the consolidation of the small holdings, creation of awareness as to the quality standards and more maturing of the younger plantations both in the small sector and organized sector, there shall not be any shortage in the supply of good quality tea to meet the domestic demand in full and at the same time retain a reasonable share in the global market.
What about the recent activities of Tea Board?
Ever since I joined Tea Board in November 2011, I have been working hard for making Indian tea as the world’s most preferred beverage. During the course of last two years stewardship of Tea Board I have taken several initiatives for streamlining the functioning of the Tea Board which would include introduction of biometric attendance, delegation of powers to Zonal offices for effective discharge of regulatory functions and disbursement of subsidy at the quickest possible time, shifting of offices closer to the plantation areas for better interface with the planting community, establishment of new Directorate with adequate technical manpower to render technical and financial support to the small tea growers, constitution of District Monitoring Committees to address the disputes between the growers and manufacturers, formulation of a National Programme for Tea Regulation for ensuring adherence to the Food Safety Standards, revision of guidelines for issuing licences to the factories, setting up of Tea Councils for close monitoring of the quality of tea exported and imported for re-exports, organizing awareness campaign on food safety regulations in all the tea growing regions, cancellation of licences of the bogus exporters etc.
Any comments on the Government policy?
Polices of the Government are more aligned to the initiatives of Board towards overall development of the tea industry in India.
Have you any observations on any other issues?
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