Tea Board of India has sought an assistance of ₹1,000 crore for the industry over the next five years starting 2022-23.

According to Saurav Pahari, Chairman, Tea Board, the primary focus of the budget which has been submitted to the Commerce Ministry, would be handholding the small tea growers (STGs) which contribute to 52 per cent of the country’s total production.

“We have sought an assistance of ₹1,000 crore in our budget submitted to the ministry. This is for a period of five years starting 2022-23. The fund would be used to support small tea growers (STG), on research and promotion to ramp up domestic consumption of tea. We have proposed an orthodox subsidy,” Pahari told newspersons on the sidelines of the 139th annual general meeting of Indian Tea Association(ITA) here on Thursday.

The Tea Board would look to handhold STGs while not overlooking the big estates. “It is good to note that the tea industry on the whole now acknowledges the contribution of STGs. It should be collaborative effort between the big tea planters and the STGs for the development of the industry,” he said.

Subsidy for orthodox teas

Tea producers were offered a subsidy of ₹3 a kg for production of orthodox leaf and ₹2 a kg for the dust under a subsidy scheme which has been withdrawn since the beginning of this year. The industry has since been urging for bringing back the subsidy scheme to encourage growers to go in for more orthodox in anticipation of a good demand due to lower crop in Sri Lanka on the back of the ongoing crisis.

Orthodox accounts for nearly 10 per cent of the country’s annual production, which stands roughly at around 1,300 million kg (mkg). During calendar year 2021, orthodox production witnessed nearly 17 per cent decline at 115 mkg as compared with 139 mkg during the pre-pandemic period of 2019.

It is to be noted that the cost of production of orthodox tea is much higher as compared to CTC (crush, tear, curl) tea and the price differential between the two varieties has been gradually narrowing thereby discouraging growers from stepping up production of such teas.

According to Pahari, technology has to be adopted to optimise the use of labour in the industry so as to bring down the cost of production.

Demand-supply mismatch

The tea producers are under severe financial stress for the last few years with price realisations not keeping pace with rising cost of production, putting their sustainability in question, Nayantara Palchoudhuri, Chairperson, ITA said.

There is a need to restrict “unfettered addition” of new areas into tea so as to keep the balance between demand and supply and ensure that both big and small growers are able to coexist and the industry remains economically viable.

“Influx of average quality teas from some of the countries of late at cheap landed costs is causing concern. This can compromise whatever correction of demand-supply mismatch has been achieved by production curbs and lead to depression in prices. Import of teas which are not FSSAI-compliant should not be allowed in order to ensure a level playing field for producers,” she said.

She further highlighted the need to bring in auction reforms and it must take into account sellers’ concerns and facilitate fair price discovery.

The country’s tea exports during 2022 are expected to touch 230 million kg (mkg) as compared to 196 mkg in 2021 calendar year. ITA expects exports to touch close to 350 mkg in the next three-to-four years.