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How covid impacted the tea industry in India

The Indian tea industry is grappling with low prices and high input costs

The Indian Tea Association (ITA) has flagged the issue of sustainability of the industry. (Pexels/Nikolay Osmachiko)
The Indian Tea Association (ITA) has flagged the issue of sustainability of the industry. (Pexels/Nikolay Osmachiko)

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The tea industry has been no exception to the ravages of the Covid pandemic over the last two years, as it grapples with low prices and high input costs, with stakeholders calling for more focus on quality and boosting exports.

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Production has seen a decrease in the last few years since the onset of the pandemic due to restrictions on plucking—from 1,390 million kg in 2019 to 1,258 million kg in 2020, 1,329 million kg in 2021 and 1,050 million kg till October this year.

According to industry experts, the fall in production had helped in higher price realisation at the auctions. Secretary General of Tea Association of India (TAI) Prabir Bhattacharya said though the average auction price touched 206 per kg in 2020, it fell to 190.77 per kg the following year.

So far in 2022, the average price has been 204.97 per kg, he said. The increase, however, is concomitant with rise in wages across north India, besides hike in the cost of energy, fertilisers and logistics, Bhattacharya said.

When Covid hit the country, it already had a carryover stock of 50 million kg from the previous calendar. This, according to the experts, added to the woes of the industry in the form of oversupply in the face of falling exports.

Rudra Chatterjee, Managing Director of Luxmi Tea, which owns the iconic Makaibari brand, said at present, the industry is passing through a series of challenges.

"Energy costs have risen and yield has fallen. In such a scenario, we have to focus on quality. Also, there is need for a rise in exports and more value addition,” he said.

The Indian Tea Association (ITA) has flagged the issue of sustainability of the industry and sought a special financial package from the Centre. 

The Darjeeling tea industry, which produces the premium orthodox variety, has also been under financial duress, the ITA said.

With the region home to around 87 tea gardens, the total production is currently about 6.5 million kg, a decline from 10 million kg a decade ago, primarily due to falling yields.

Falling exports of tea is also a major concern for the industry, the experts said. From a peak of 252 million kg in 2019, exports declined to 210 million kg in 2020 and 196 million in 2021. Shipments in 2022 are expected to be around 200 million kg, they said. 

The temporary loss of the Iran market is also a big blow for Indian tea exports. "Nobody is aware why Iran has stopped placing orders of Indian tea. After the CIS block, Iran has been the second largest importer with around 28 million kg of average annual orders,” said Sujit Patra, secretary of ITA.

So far in 2022, the CIS bloc, including Russia, Ukraine and Kazakhstan imported around 39 million kg of the beverage from India, official data showed.

Bhattacharya said if the Iran market is lost forever, there is still a ray of hope for the tea industry. "It is heartening to see that UAE has emerged as the second largest importer at 28.6 million kg till September 2022,” he added.

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Russia is the largest importer among the CIS countries with close to 19 million kg of average annual orders.

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