Assam tea industry in 'severe crisis', banks deny loans

After automobiles, aviation and real estate, Assam tea industry, which contributes over 52% of India's tea production is grappling with "severe crisis," mainly due to the rising cost of production and no significant increase in prices and exports since 2014.

Pressing the panic button, the industry leaders on Tuesday sought the government's immediate intervention to save Assam tea, which still enjoys brand value globally.

"Assam tea industry faced challenges in the past but not as severe as in the last few years. Since 2014, auction prices of Assam tea have hovered just between Rs. 153 per kg to Rs. 156.43 per kg whereas the average cost of production has touched Rs 200 per kg. Over 90% of tea is sold below Rs. 200 and 60% at Rs. 150 per kg. This has caused huge distress in the company's cash flow and the situation has turned so bad that banks have stopped giving us loans," said Vivek Goenka, chairman of Consultative Committee of Plantation Associations (CCPA) and Indian Tea Association, here.

CCPA is an umbrella body of Indian Tea Association, Tea Association of India, Assam Tea Planters' Association, Bharatiya Cha Parishad and North East Tea Association (NETA). They represent over 800 big tea gardens but the state has seen the growth of a large number of small tea gardens (above 10 hectares), which contributes about 40% of the state's total production (692 million kg in 2018).

"While prices have grown at around 1%, the cost of vital inputs like coal, gas, sulfur etc have increased by 6-7% in the past few years. Wages for tea garden workers increased by around 22% in 2018 in Assam, thereby increasing the financial stress of the industry further," Goenka said.

"Production has increased from 979 million kgs in 2009 to 1339 million kgs in 2018, largely by small tea growers. Domestic per capita consumption (786 gram per year) has not kept pace with the rapid increase in production and there is an apparent oversupply in the market," he said.

Bidyananada Borkakoty, adviser of NETA said due to the severe crisis, the industry would not be able to pay 20% bonus to its workers like they did last year. "Poor quality of tea is causing a dip in domestic consumption and exports. So there is an urgent need for a special financial package like the one government had offered to the textile industry in 2016. Such package and incentives are needed to protect the jobs and export," he said.

The industry leaders met Union Commerce Minister Piyush Goyal recently seeking the centre's urgent intervention.