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Tea industry facing crisis

By Rituraj Borthakur
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GUWAHATI, July 2 - In more signs of the tea industry slowing and crumbling in the State, Amalgamated Plantations Private Limited (APPL) has posted a loss of Rs 68.50 crore in the last fiscal. While the loss is higher by 140 per cent compared to the previous year, APPL chairman Ranjit Barthakur told The Assam Tribune that this is the fourth consecutive year of loss for the company.

The company has 21 gardens in Assam and four in West Bengal.

The precarious financial statistics of one of the largest tea producers of the country comes in the backdrop of McLeod Russel, once the largest tea producer of the world, selling 19 of the 48 tea gardens in Assam.

�With every passing year the tea industry in Assam and West Bengal are facing new volatilities, uncertainties, complexities and ambiguities as the region is experiencing a major revolution of small tea growers which is empowering communities and workers across the region,� Barthakur said, adding that the industry is facing a competition from within.

This situation has arisen due to the rapid increase in costs of the organised tea sector, without a corresponding increase in prices at the farmgate level. In the last 10 years the realization of tea prices has gone up by only around 4.8 per cent of Compound Annual Growth Rate (CAGR) 2008-2018, whereas the expense on wages, which comprise around 65 per cent of the cost, has gone up by over 10 per cent CAGR. The expense on many other inputs has also gone up by over 7 per cent CAGR.

Prices have not risen due to the mismatch of demand and supply of tea, with supply of tea rising rapidly in the recent past. Tea production in India has risen from 878 million kgs in 2003 to 1338 million kgs in 2018, indicating a 52 per cent of rise in production in 15 years, which outstripped consumption of tea in the country, leading to stagnant selling prices for tea plantations.

The growth in the production is because of the fast emergence of the small grower sector which has grown from about 175 million kgs (20%) of the production in 2003, to 646 million Kgs (48%) in 2018. Between January to May this year, the production share of small growers for the first time crossed 50 per cent.

�But the problem is that unlike the organized sector, there are no regulations for small growers. The organized sector is governed by the Plantation Labour Act, due to which the cost of production is Rs 15-20 more,� the sources said.

The APPL chairman felt it was high time to restructure the industry.

�We need a policy which instead of focusing on new industries should attend to the problems facing this ready-made industry. When we can give concessions to new industries, why can�t we give those to the tea industry which directly employs over 10 lakh people,� Barthakur said, suggesting constitution of a �Tea Commission� to delve into the challenges the industry was facing and come up with answers.

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Tea industry facing crisis

GUWAHATI, July 2 - In more signs of the tea industry slowing and crumbling in the State, Amalgamated Plantations Private Limited (APPL) has posted a loss of Rs 68.50 crore in the last fiscal. While the loss is higher by 140 per cent compared to the previous year, APPL chairman Ranjit Barthakur told The Assam Tribune that this is the fourth consecutive year of loss for the company.

The company has 21 gardens in Assam and four in West Bengal.

The precarious financial statistics of one of the largest tea producers of the country comes in the backdrop of McLeod Russel, once the largest tea producer of the world, selling 19 of the 48 tea gardens in Assam.

�With every passing year the tea industry in Assam and West Bengal are facing new volatilities, uncertainties, complexities and ambiguities as the region is experiencing a major revolution of small tea growers which is empowering communities and workers across the region,� Barthakur said, adding that the industry is facing a competition from within.

This situation has arisen due to the rapid increase in costs of the organised tea sector, without a corresponding increase in prices at the farmgate level. In the last 10 years the realization of tea prices has gone up by only around 4.8 per cent of Compound Annual Growth Rate (CAGR) 2008-2018, whereas the expense on wages, which comprise around 65 per cent of the cost, has gone up by over 10 per cent CAGR. The expense on many other inputs has also gone up by over 7 per cent CAGR.

Prices have not risen due to the mismatch of demand and supply of tea, with supply of tea rising rapidly in the recent past. Tea production in India has risen from 878 million kgs in 2003 to 1338 million kgs in 2018, indicating a 52 per cent of rise in production in 15 years, which outstripped consumption of tea in the country, leading to stagnant selling prices for tea plantations.

The growth in the production is because of the fast emergence of the small grower sector which has grown from about 175 million kgs (20%) of the production in 2003, to 646 million Kgs (48%) in 2018. Between January to May this year, the production share of small growers for the first time crossed 50 per cent.

�But the problem is that unlike the organized sector, there are no regulations for small growers. The organized sector is governed by the Plantation Labour Act, due to which the cost of production is Rs 15-20 more,� the sources said.

The APPL chairman felt it was high time to restructure the industry.

�We need a policy which instead of focusing on new industries should attend to the problems facing this ready-made industry. When we can give concessions to new industries, why can�t we give those to the tea industry which directly employs over 10 lakh people,� Barthakur said, suggesting constitution of a �Tea Commission� to delve into the challenges the industry was facing and come up with answers.

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