Agri Business

Tea industry pegs revenue loss from lockdown at ₹1,400 crore

V Sajeev Kumar Kochi | Updated on March 30, 2020

Seeks financial package from Centre with direct transfer of ₹1,000 per week to each worker

The Consultative Committee of Plantation Associations (CCPA) has pegged the revenue loss to the tea industry at ₹1,400 crore on a production loss of 100 million kg due to the lockdown.

In view of the production loss arising from the lockdown in the peak quality period, as also disruptions in the value chain, the industry is facing severe cash flow problems, impeding its ability to cope with wage and other related obligations, said Vivek Goenka, CCPA Chairman.

He urged the Centre to announce a financial package for the tea sector to tide over the crisis and secure the employment and livelihood of its 1.2 million workers. The daily wage earners resident on the estates would be deprived of their livelihood and earnings as the sector’s weak financial health would not be able to support the large populace of workers and dependants, he added.

“We would require government support during this period to help the industry with direct wage payments to the labour. We would suggest a direct transfer of ₹1,000 per week into workers’ accounts for three months. The impact for around 9 lakh workers in Assam and West Bengal would be around ₹1,100 crore,” he said in a letter to the Union Commerce Minister.

Producers are dependent on the sale of their teas to make wage payments. With production closed, auctions suspended and logistics affected, the sector is unable to sell teas, resulting in no revenue inflow for meeting expenses, he said.

Stagnant prices

According to Goenka, tea prices have remained stagnant while costs have continued to increase, both for inputs and wages. The shutdown at the beginning of the manufacturing season has disabled the sector as seasonal production has ceased. The sector will lose 15 per cent of its annual production in the next 15 days as the recovery of leaf for the bygone period is not tenable, he added.

Tea bushes flush during this period and need to be harvested in a seven-nine days cycle. The prolonged closure would require the overgrown leaf to be skiffed as this is not suitable for tea production. The first and second flush, which is harvested at the beginning of the season, comprises the premium quality, he added.

The tea plantation sector would require a 25 per cent increase in working capital limits up to March 31, 2021, to ensure that estates run smoothly and without any defaults. State Bank of India recently announced a 10 per cent increase in cash credit limits. This needs to be done across the board, Goenka said.

Published on March 30, 2020

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