The low-cost realization of tea, which has witnessed the tea companies piling on losses over the last few years, has led the Indian Tea Association (ITA) to appeal the government for assistance for the tea industry to tide over its survival crisis.
The ITA, through an appeal to the government published in newspapers, has urged for ‘interventions of the government for revival of the tea sector’, while pointing the need for survival of the tea industry for ‘security of employment of the million-plus workforce’.
The association has pointed that the cost of production has been rapidly exceeding the selling price, with the average production cost crossing Rs 200 per kg in 2018-19 against the average selling price just over Rs 150 per kg.
The average production cost has steadily increased since 2013-14 and has breached the Rs 200 per kg mark last year from being a little less than Rs 150 per kg in 2013-14.
Against it, the average selling price has remained nearly constant during this period at a little over Rs 150 per kg. Among the interventions sought from the government side, the ITA has urged the government to take over PF contributions for workers for three years. It has also sought for a ‘substantial fund for generic promotion of tea’ in the entire country.
Moreover, the association wants a ban on the expansion of tea areas to contain excess supply for five years and fixing a minimum reserve price for tea in the auction, based on the cost of production.
Tea industry sources said there was an immediate need to check the bought leave factories for quality control as poor quality tea was affecting price realization.
“When tea leaves are available at low prices, people are going for it. But in the process quality is taking a beating and this is having an adverse impact on the industry in the long run,” the sources said.
Pointing that high-quality tea had fetched up to Rs 70,501 per kg at auction at Guwahati just yesterday, the sources said it was an indicator that good quality tea will fetch the right price. For reducing the certain expenditure of the tea companies, the social responsibility sectors, such as providing free basic education and health care, can be shared with the government, the sources added.
As per ITA data, total tea production in the country in 2013 was 1200 ml kg, which has increased to 1339 ml kgs (provisional data) in 2018. The auction price was Rs 132.23 per kg in 2013, which has increased marginally to Rs 138.83 in 2018.
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