The Hindu Business Line : Tea industry needs blend of higher productivity, lower costs

Kochi, Nov. 10 With India having signed the free trade agreement with ASEAN countries, the country’s tea plantations and tea industry would get more globalised and integrated into the international commodity trade.

Most plantation sources sounded apprehensive over tea being put on the sensitive list and imports dropping gradually from 100 per cent to 45 per cent in 10 years.

Tea is still being imported duty-free but only for re-exports and that too in very small quantities, sources in the industry said. But with the potential threat of reduction in import duties, cheap teas from countries such as Vietnam could invade the Indian market and pose challenges to domestic consumption.

Competitive markets

Reducing the cost of production and increasing productivity alone will ensure that Indian tea plantation industry is able to survive the fiercely competitive global markets, Mr T.V. Alexander, President of UPASI, said.

But statistics available for several countries show that India does not have much to fear from most competing countries of South East Asia as far as productivity is concerned. India had productivity of 1,663 kg a hectare in 2007, Sri Lanka had 1,615 kg, Vietnam had 1,548 kg, Indonesia had 1,115 kg and Bangladesh had 1,108 kg. Kenya had 2,477 kg per hectare.

Size advantage

And increase in productivity hinges on a variety factors, including higher labour output, mechanisation, higher yields from superior clones and scientific management such as proper and timely application of fertilisers and pesticides as well as plucking of new shoots. With their compact holdings and cost-effective operations, small growers have been able to implement most of these conditions more effectively than the big plantations, where the huge scale of operations and major investments have acted as major deterrents, Mr C.K. Mohan, Manager-Bought Tea Operations, Kanan Devan Hills Plantation Company, said.

With most plantations finding shortage of labour, the introduction of manual and mechanised shearers is expected to boost labour productivity several fold. From an average output of 50 kg of plucked leaves per worker, the productivity would surge to 300 kg with the use of manual shearers and to 600 kg with mechanised shearers. This is bound to increase labour productivity and reduce cost of production. Introduction of superior clones such as UPASI 9, TRF1 and TRI 2025 is also expected to increase productivity.

But, with the legacy of large labour force, most plantations would not be able to replace man with machines immediately, sources in the industry said. Also, given the undulating terrains of tea plantations, application of manual and mechanised shearers may not be possible in all areas. The cost of re-planting with high-yielding clones would be huge for plantations.

Social cost

Plantation sources pointed to the large social cost for plantation labour in India – provision of housing, electricity and water – as being the big burden that other competing countries do not have.

They demanded that the Government share this social cost. While challenges remain before the tea industry in increasing productivity and reducing cost of production, viable and practical avenues are available and import duty of 45 per cent on tea does not mean the end of the Indian tea plantation industry.

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