Brewing Crisis: India's Tea Industry at Crossroads in 2023

As the calendar flips to 2023, India's tea industry is steeped in a crisis of rising input costs and stagnant or declining tea prices, threatening the sustainability of operations. A cup of tea is a staple for most Indians, but the industry that brings this comfort to millions is grappling with challenges that could change the landscape of tea production in the country.

Unsettling Numbers

According to the Indian Tea Association (ITA), tea prices have registered a modest compounded annual growth rate of 4% over the past decade. In contrast, the input costs for essentials such as coal and gas have soared at a much steeper rate of 9-15%. Further, the ITA reports a significant drop in price realisations at auctions in 2023 compared to the previous year, adding to the industry's woes.

The Small Tea Growers Conundrum

The proliferation of small tea growers (STGs), who now represent over 55% of national production, has led to a surge in tea production. However, the rise in production has not been met with a corresponding increase in domestic consumption. This, coupled with export challenges, particularly with the crucial Iranian market, has contributed to a surplus of tea. The Tea Board of India's data indicate a 4.93% decrease in exports from January to September 2023.

Impact on Workers and the Environment

The crisis has already led to the closure of several gardens in North Bengal, impacting thousands of workers. In addition, a recent pilot study in Northeast India sheds light on the environmental impact of the tea industry. It found that tea factories contributed around 3,292±493.91kg of CO2 emissions for every ton of tea produced, underlining the industry's substantial dependence on conventional energy sources. Transitioning to renewable energy alternatives could help mitigate this impact while also addressing some of the cost issues.

Seeking Government Support

Industry bodies like the ITA and the Tea Association of India (TAI) have urged the government to intervene and prevent the situation from worsening. They stress the need for financial aid, particularly in the Darjeeling region and North Bengal, where operational viability is severely compromised. As the tea industry navigates these tumultuous times, the focus is on finding solutions that can ensure its sustainability and preserve the livelihoods of those who depend on it.