The Telegraph
Since 1st March, 1999
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Sweetener for tea industry
- Panel to look into ways to cut high social costs incurred by companies

Calcutta, March 6: The commerce ministry has set up a committee to find ways in which the tea industry can limit the social cost of housing, curing and feeding its army of plantation workers. Headed by additional secretary in the commerce ministry, L. V. Saptharishi, the panel’s recommendations should be ready by May.

According to a Tea Board study, the production cost at $ 1.62 per kg in India is the highest among tea-producing nations. What is more, staff expenses make up 50 per cent — or 81 cents — of that.

In addition to the wages paid every month, garden workers are provided subsidised ration, fuel, housing, medical and education expenses to the labourer. This raises labour cost to levels not seen in other countries producing tea.

Speaking at the inaugural session of a three-day international convention on tea, Tea Board chairman N. K. Das said cost reduction was vital to boost exports.

Sri Lanka, where salaries account for 74 cents in the $ 1.46 that firms give away to grow a kilogram of tea, is second to India, Das said. However, countries such as Kenya, Malawi and Indonesia are much better placed on that count.

Apart from the high cost of production, the quality of Indian tea dominated the discussion at the convention. Saptharishi blamed both producers and exporters for being complacent about the kind of fare they put on the shelves.

Tata Tea vice-chairman R. K. Krishna Kumar, who chaired a special session on export, said tea companies must grow out of their dependence on former USSR and bulk exports. Arguing that Indian tea prices were out of line with global trends, he proposed a co-operative model to reduce the social costs of labour.

Anindita Ray, deputy director (tea promotion) of Tea Board, in her presentation on marketing initiatives, said that India would target the top five international tea markets — Russia, UAE, Poland, Germany and the UK — in the coming years.

In the new global marketing strategy adopted by the Tea Board, UAE is seen as the second largest market for Indian tea. Dependence on Russia would be reduced from 50 per cent to 37 per cent in the next five years. Focus would be on production of orthodox tea as there is a distinct shift of consumer preference from CTC, especially in the Russian markets, she added.

Das said that Indian tea exporters would be rated on the basis of their quality and service parameters, which would be available to prospective buyers in the global markets.

He also indicated that continued crisis over Iraq might affect export of tea to Baghdad.

“Iraq is an important market for Indian tea. We are very concerned as the Iraq crisis is adding to uncertainty about tea target,” he said.

Iraq had emerged as a major market for Indian tea with import jumping to over 40 million kg in 2002 from a low of 14.5 million kg in 2001. Das was, however, optimistic that the crisis would not continue for long.

To modernise the tea auction process, IBM has been appointed to put in place a modern electronic system. The government is willing to bear the cost of around Rs 5 crore to Rs 7 crore.

“I hope that by year-end all tea auctions will take place on electronic mode,” Das said.

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