The Tea Association of India(TAI) has urged State governments to restrict new lands being brought under tea cultivation for at least five years in order to bring a balance in tea demand and supply.
TAI has pointed out that the economic sustainability of the organised tea plantation sector was in jeopardy due to shrinking margins on account of a mismatch between production costs and tea prices.This has affected the livelihood of over five million people directly and indirectly employed in this sector.
The TAI report said that between 2008 and 2018,tea prices have increased by about 4.8% annually whereas the wage costs have increased by over 10%.Other input expenses have risen by over 7%.
The tea prices have not risen due to the rapid increase in tea supply, especially from the small tea growers(STG) segment.In 2018,this segment accounted for a 48 % share in India’s output as against 20% in 2003.
This rapid growth of the small grower sector has led to the emergence of a dual business model with completely different costs of production and one in which most of the organised plantations are faced with selling teas below their cost of production.
This is mainly because the STG segment is not governed by the same laws like the Plantation Labour Act as the large estates are.
Hence,TAI believes that such a restriction would temporarily slow down the growth in supply of tea and allow tea consumption to catch up thereby re-establishing an equilibrium.
The Indian Tea Association is a trade association of Indian tea producers .The head office is in Kolkata.The association was founded in 1881 to protect the interests of tea planters in British India and to promote the consumption of Indian tea.
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