Agri Business

Tea estates’ cup of woes boils over

V Sajeev Kumar Kochi | Updated on March 26, 2020

The tea industry is already impacted by higher production cost, lower price realisation and a new wage hike from January onwards   -  THE HINDU

Kerala gardens reeling under a financial crisis

Tea growers in Kerala are keeping their fingers crossed as the current lockdown has forced them to leave their tea bushes unplucked.

The un-harvested leaves, once matured, can neither be used for production nor as tea bush. If the situation continues till April 15, growers will be forced to undertake skiffing (light pruning) to make the bushes productive again.

Prices decline

Sources in the sector told BusinessLine that the emerging situation would further increase the cost of production of tea, which is already hovering above ₹150 a kg. The average price in the auction has also come down to ₹95.8 a kg in March compared to ₹104.50 in the same period last year.

Once the skiffing operations are carried out, tea bushes would require at least 75 days to become productive again. This would make the tea plantations remain income-less for nearly four months, the sources added.

Unprecedented crisis

In such a scenario, most tea estates in the South are staring at an unprecedented crisis which would be severe than the one experienced in 2002 in the midst of the global recession. Of the 39 estates closed during that period, seven are yet to reopen, the sources said.

Considering the gravity of the situation and the impending financial crisis the plantation sector is facing, tea growers have sought the intervention of both the Central and State governments to allow estates to function through strict monitoring by authorities concerned during the lockdown period.

The current lockdown comes at a time when the plantation sector is grappling with issues such as higher cost of production, lower price realisation coupled with the implementation of a new wage hike from January.

Besides, the worldwide curbs in cargo movement have left large quantities of teas unsold at auction centres across the South. Tea exporters are also finding it difficult to send the already contracted material to different destinations. Thus, the majority of the tea estates are holding large stocks without any buyers and this has resulted in a cash-flow crisis. The lockdown has also reduced demand for tea from retail consumers as well.

Published on March 26, 2020

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