TEA - AGRICULTURE
News: India tea exports dip in January-June
What's in the news?
● Indian tea exports in the first six months of calendar 2023 saw a slight dip in volume compared with the year-earlier period.
● Data shared by the United Planters Association of Southern India (UPASI) show overall tea exports between January and June this year slid 0.8% to 96.3 million kg this year.
Key takeaways:
● North India exported 59.16 million kg, which is 0.12 % higher than the same period last year.
● However, tea exports from the South registered a 2.25 % decline to 37.33 million kg (January-June 2023) from 38.19 million kg (January - June 2022).
● Worldwide, tea exports have seen a decline, including shipments from major producers such as Kenya, China, and Sri Lanka, said Sanjith Nair, secretary general of UPASI.
Tea Exports:
● India exports almost 17 % of the tea produced.
● Currently, though just 9.56% of Indian production is orthodox tea, it constitutes 47% of exports
Tea:
● Tea is the most popular and widely consumed beverage in India.
● India is the largest consumer of tea, with about three fourth of the country's total produce is consumed domestically.
● India is the second largest producer and the fourth largest exporter of tea in the world.
Climatic conditions:
● Tropical and subtropical climatic conditions are necessary (hot and humid conditions).
● Rainfall should be 150-300 cm level.
● Warm condition and moist frost free condition throughout the year.
● Deep, fertile and well drained soil rich in humus and organic content.
● The ideal temperature for its growth is 20°-30°C and temperatures above 35°C and below 10°C are harmful for the bush.
● Tea is a shade-loving plant and develops more vigorously when planted along with shady trees.
Tea Board:
● It is the statutory body established in 1954 under tea act 1953.
● HQ - Kolkata.
● The Ministry of Commerce is the nodal agency.
● It has 31 members and reconstituted every three years.
Main tea producing areas:
● India is the second-largest producer of tea globally.
● North East India and Darjeeling region in West Bengal are the main tea producing areas.
● The state of Assam is the world's single largest tea-growing region.
● Nilgiris in Tamil Nadu also produces a small amount of tea.
● The northern part of India is the biggest producer at about 83% of the country's annual tea production in 2021-22 with the majority of the production coming from Assam followed by West Bengal.
● The Assam valley and Cachar are the two tea producing regions in Assam.
● In West Bengal, Dooars, Terai and Darjeeling are the three major tea producer regions.
● The southern part of India produces about 17% of the country's total production with the major producing states being Tamil Nadu, Kerala, and Karnataka.
● India's total tea production for the financial year 2020-21 was 1,283 million kg.
Consumption:
● India is also among the world's top tea consuming countries, with 80% of the tea produced in the country consumed by the domestic population.
Export:
● India is among the top 5 tea exporters in the world making about 10% of the total exports.
● Russia, Iran, UAE, USA, the UK, Germany, and China are some of the major importers of tea from India.
● India's total tea exports during 2021-22 in quantity was 201 million kg.
● In the year 2021, the total value of tea exports from India was around USD 687.9 million.
Geographical Indication (GI) Tag:
● Darjeeling Tea also known as "Champagne of teas," worldwide because of its flowery scent was the 1st GI tag product.
● Other two variants of Darjeeling tea i.e Green and White tea also hold GI tags.
Issues in the tea production:
1. Increased competition:
● Stiff competition and improved standards in the world market due to low product prices from Kenya and other countries increasing demand for organic tea and quality assurance that entails environmental justice.
● China produces a lot of black tea which is not consumed domestically. Indian tea exports may be at risk as a result of this.
2. Supply exceeds demands:
● Overproduction is currently the biggest issue the Indian tea sector is dealing with.
3. Low wages for laborers:
● As price realization of tea is very less in the international market and as temporary laborers are used in the peak seasons, usually the wages paid for tea industry laborers are very less.
● This made some of them starve and leave the industry.
4. Decline in productivity and quality:
● Tea bushes must be replanted every five years, but most tea bushes are older than 20 yrs.
● Uneven rainfall due to climate change - is affecting the productivity and quality of Indian Tea leading to lower prices at Tea auctions.
5. High production costs:
● Low yields and high production costs are pulling the legs of small tea growers backward.
● Even the corporate companies are slowly exiting out of the industry and are concentrating only on the retailing part instead of production.
6. Climatic Conditions:
● Unfavourable climatic conditions for tea plantations owing to scanty or very heavy rainfall have badly affected the tea industry.
● Since tea now has a six-digit Harmonized System of Nomenclature (HSN) code, India no longer serves as the place of origin (after some value addition), which poses another danger to Indian export.
● Harmonized System of Nomenclature (HSN):
○ It was developed by the World Customs Organization (WCO) and it came into effect from 1988.
○ India has been a member of the WCO (World Customs Organization) since 1971.
○ The common HSN codes apply to Customs and GST, and importers and exporters have been furnishing these codes in import/export documents.
○ Over 200 countries use the system as a basis for their customs tariffs, gathering international trade statistics, making trade policies, and monitoring goods.
7. Exports decline:
● Tea exports from India dropped for the second consecutive year.
8. Small Tea Growers:
The challenges faced by the Small Tea Growers sector are as follows.
● Not getting the right green leaf price.
● Unlike large estates, STGs are not able to capitalize on scale and marketing of product as a collective is difficult – since it is unorganized.
● Issue of worker's rights – since STG’s are not governed by the PLA, 1951.
● Most of them are not recognized by the Tea Board of India due to land ownership regulations and related procedural problems – this means lesser data available on the state of the STG’s making it difficult for policy coordination.
● No health benefits: Under the Plantation Labour Act 1951, each tea garden should have a health center with proper medical facilities.
● However, the gardens are remotely located and the health centers are located in distant towns.
● The workers do not have proper connectivity to these centers.
● There are no maternity benefit schemes available for the female tea garden workers.
● It has been found that women are engaged in hard jobs even during pregnancy and postnatal period.
Initiatives to promote Tea industry:
1. ODOP Scheme:
● One District and One Product (ODOP) scheme can help spread the glory of Indian Tea.
2. Advertisement for boxed Indian-made tea:
● The program offers assistance with promotional efforts, including up to 25% of the cost reimbursement, exhibition in international department stores, creation of product literature and websites, and up to 25% of the cost of inspection fees reimbursed.
3. Subsidies for Domestic Exporters:
● The Tea Board also offers domestic exporters financial assistance so they can attend international expos and fairs.
4. Tea Development and Promotion Scheme:
● This scheme was launched in November 2021 by the Tea Board of India for the period of 2021-26.
● The objective of this scheme is to enhance the productivity and quality of the production in India.
● There are seven important components to this scheme as follows.
○ Plantation development of small tea farmers
○ Creation of sector specific actions plan for North East India
○ Supporting the tea producers and trader in market promotion activities
○ Worker's welfare
○ Research and development activities
○ Regulatory reforms
○ Establishment expenses
○ Online Licensing System (auto-renewal of 3 types of licenses i.e., exporter license, tea waste license and tea warehouse license).
5. Chai Sahyog Mobile App:
● It addresses various issues of small tea growers.
6. Plantation Labor Act, 1951:
● The Plantations Labor Act, 1951 (PLA) applies to any land used or intended to be used for growing tea, coffee, rubber, cinchona or cardamom or any other plant which measures 5 hectares or more and in which 15 or more workers are employed on any day of the preceding 12 months.
● The State Governments can apply this law to any other land too even if it measures less than 5 hectares and employs less than 15 workers.
WAY FORWARD:
In order to make the tea sector profitable, viable and sustainable, the ‘AROMA’ of tea must be enhanced.
1. Assistance: Support small growers to improve quality with sustainability, increase production to meet domestic and international demand.
2. Re-energise: Create infrastructure to augment exports and focus on high value markets such as EU, Canada, South America & Middle East.
3. Organic: Promote organic and GI tea through brand promotion and marketing.
4. Modernisation: To enable tea farmers to become self-reliant and strengthen local supply chains.
5. Adaptability: Focus on the importance of a risk proof ecosystem, that is, the need for sustainable solutions to make tea plantations meet the challenges of climate change.