Begin typing your search above and press return to search.

Further wage hike will doom industry: ABITA

By Ron Duarah

DIBRUGARH, July 30 � One of the tea industry�s more prominent organisations, the Assam Branch, Indian Tea Association (ABITA) has come up with its own findings in the light of the moves to hike tea workers� wages. In short, the ABITA says the hike could spell doom for tea. Read on. The findings are those of the ABITA, this newspaper is just relaying their views.

The production in the first quarter of 2015 was adversely affected due to extreme drought condition showing a decline of around 4.4 million kgs. Figures from Guwahati Tea Auctions reveal that prices have registered a sharp decline of Rs 6.45/ per kg up to June, 2015 as compared to the corresponding period of the previous year. Record Halmira tea prices are not at all reflective of the average auction prices of tea.

Assam accounts for over 50% of Indian Exports. Exports in 2014 from Assam also declined by 22 million kgs. Small Tea Growers� (STG) tea leaf output account for more than 32% of total tea production. The growth of the STG segment has helped generation of large-scale employment in the rural sector. The success of the STG segment has been largely due to the strong partnership with the Organised Sector with corresponding benefits accruing to both segments.

High cost of production in the industry has been impeding its competitiveness. In the cost structure, 80% of the total costs are fixed in nature with little scope for reduction. Input costs have significantly gone up in terms of electricity, coal, plant protection chemicals and now irrigation. The industry has been receiving power at a level of 30 to 55% of requirement, compelling dependence on self generation at a high cost. Replanting and modernization programmes, putting at risk their long-term viability. If industry does not generate surplus from operations, reinvestments will not happen which have to be undertaken in agriculture-based industries such as Tea.

Labour costs constitute around 55-60% of the total cost of production. The tea industry has recently revised the wages payable from 1.1.15 through a liberal settlement, which enhanced the pre-existing cash wage by Rs 43/- over three years i.e. an increase of 45%. The total cost of employment and thus the effective package paid out to a worker comprises both cash and in-kind benefits. Furthermore, these in-kind benefits are inflation protected. The ITA commissioned study of 147 gardens by an independent auditor has valued the total package of Rs 249.08 per day based on the prevailing cash wage. As per this study, the total cost of employment at the current prevailing cash wage works out to Rs 249/- per day.

Any abnormal increase in cash wage would have far-reaching consequences on the sustainability of the Tea industry, the STG stakeholders and the sectors constituting the entire supply chain of the industry. The industry leaders� views have been stated. Now to see if tea continues to remain lucrative as a business. As of today, nobody is selling his estate, though. Better still, businessmen with cash are still grabbing any opportunity to buy a tea estate in Assam.

Next Story
Similar Posts
Further wage hike will doom industry: ABITA

DIBRUGARH, July 30 � One of the tea industry�s more prominent organisations, the Assam Branch, Indian Tea Association (ABITA) has come up with its own findings in the light of the moves to hike tea workers� wages. In short, the ABITA says the hike could spell doom for tea. Read on. The findings are those of the ABITA, this newspaper is just relaying their views.

The production in the first quarter of 2015 was adversely affected due to extreme drought condition showing a decline of around 4.4 million kgs. Figures from Guwahati Tea Auctions reveal that prices have registered a sharp decline of Rs 6.45/ per kg up to June, 2015 as compared to the corresponding period of the previous year. Record Halmira tea prices are not at all reflective of the average auction prices of tea.

Assam accounts for over 50% of Indian Exports. Exports in 2014 from Assam also declined by 22 million kgs. Small Tea Growers� (STG) tea leaf output account for more than 32% of total tea production. The growth of the STG segment has helped generation of large-scale employment in the rural sector. The success of the STG segment has been largely due to the strong partnership with the Organised Sector with corresponding benefits accruing to both segments.

High cost of production in the industry has been impeding its competitiveness. In the cost structure, 80% of the total costs are fixed in nature with little scope for reduction. Input costs have significantly gone up in terms of electricity, coal, plant protection chemicals and now irrigation. The industry has been receiving power at a level of 30 to 55% of requirement, compelling dependence on self generation at a high cost. Replanting and modernization programmes, putting at risk their long-term viability. If industry does not generate surplus from operations, reinvestments will not happen which have to be undertaken in agriculture-based industries such as Tea.

Labour costs constitute around 55-60% of the total cost of production. The tea industry has recently revised the wages payable from 1.1.15 through a liberal settlement, which enhanced the pre-existing cash wage by Rs 43/- over three years i.e. an increase of 45%. The total cost of employment and thus the effective package paid out to a worker comprises both cash and in-kind benefits. Furthermore, these in-kind benefits are inflation protected. The ITA commissioned study of 147 gardens by an independent auditor has valued the total package of Rs 249.08 per day based on the prevailing cash wage. As per this study, the total cost of employment at the current prevailing cash wage works out to Rs 249/- per day.

Any abnormal increase in cash wage would have far-reaching consequences on the sustainability of the Tea industry, the STG stakeholders and the sectors constituting the entire supply chain of the industry. The industry leaders� views have been stated. Now to see if tea continues to remain lucrative as a business. As of today, nobody is selling his estate, though. Better still, businessmen with cash are still grabbing any opportunity to buy a tea estate in Assam.