With production and prices remaining flat, 2017 was not a good year for the tea industry.
The outlook for this year looks uncertain with the demand for the implementation of minimum agricultural wages likely to push up labour costs.
The tea industry ended 2017 on a disappointing note, with production increasing marginally (1.4 per cent) to 1,285 million kg (mkg) and the average price remaining flat at ₹132 a kg. The average price is down by nearly six per cent in South India, while in North India, it is lower by a rupee.
According to industry sources, tea prices remained more or less flat except for a small quantity of premium quality tea that fetched higher prices in 2017. Exports are likely to have registered a decent growth. The cost of production is set to surge in 2018 as unions are insisting on the implementation of minimum wages. The minimum wage for unskilled agricultural workers ranges between ₹213 and ₹240 a day in West Bengal and Assam.
Last month, the West Bengal government proposed an interim 13.6 per cent increase in wages from ₹132 to ₹150 a day till the negotiations conclude. Planters agreed to the proposal but not the unions. Another round of discussion on Thursday ended inconclusively.
The last wage agreement in the State expired in March 2017.
Election effect in AssamThe demand for minimum wage is not new. But it got a push during the 2016 Assembly election in Assam, a State which contributes 50 per cent of the country’s tea production; implementation of minimum wages was an electoral promise of the BJP.
The last wage agreement in Assam expired on December 31, and discussions have just started on a new deal. It will surely be months before the two sides strike an agreement, which will have a direct bearing on Bengal’s tea industry.
Meanwhile, Darjeeling’s small tea industry has demanded a two-year moratorium on wage increases to make up for the losses from the recent closure of units due to the political unrest in the hills. Against a little over 8 mkg production in 2016, Darjeeling produced only 2 mkg tea in 2017.
“The industry lost 68 per cent of production and 80 per cent of annual revenue,” a Darjeeling-based planter told BusinessLine .
The revenue loss is disproportionately high as the industry lost prime second flush production.
According to the planter, tea production in Darjeeling will not begin before February-March.
If that’s not enough, political solution remains a far cry in the hills, where at least 30 per cent of the workforce remains absent.