Only a handful of tea gardens will achieve a positive EBIDTA (earnings before interest, depreciation, taxes, and amortisation) this year, Hemant Bangur, chairman of the India Tea Association (ITA), has warned, citing lower market price of tea on the back of higher production led by the small tea growers.
Average auction price in north India declined by ₹16.87 a kilogram from January to August, Tea Board data showed, a drop of 7.59 per cent. The fall in prices was led by a surge in production, with Bengal and Assam — two of the largest tea growing states of India — reporting a 22.03 per cent and 10.31 per cent rise in output, respectively.
Around 80 per cent of the gardens had reported cash losses in 2024, Bangur reported, adding that the situation this year further exacerbated with 77 million kg higher production till August, eroding the industry’s financial foundation further.
“The operating margins of organised tea estates have declined 60.2 per cent between 2020 and 2024, while cash wages during this span increased 49.7 per cent in Assam and Bengal,” Bangur said at the 142nd AGM of the ITA, a body of organised tea producers.
He reiterated calls for a minimum sustainable price to support the unviable operations of the estates saddled with high-cost structures vis-à-vis small tea growers (STG), due to statutory workers’ dues as mandated by the law.
Government view
Assam chief secretary Ravi Kota, who was the chief guest at the AGM in Calcutta, acknowledged the stress in the organised tea sector and said there is ‘merit’ in the industry’s call for minimum sustainable price.
“But the question is not whether it is required or not. But we should look at it in a realistic way. Implementing such a price in tea is far more complex than in normal field crops like paddy, jute or sugarcane. It must be enforceable, market aligned and not distort the incentives,” Kota said.
The top bureaucrat of Assam, the state which accounts for almost half of India’s tea production, also batted for peaceful co-existence of the STGs and large players.
“Large estates operate under the Plantation Labour Act and other regulatory responsibilities, shouldering social and other welfare obligations such as housing, healthcare and education. Small growers operate outside the framework.”
“There is no doubt that this has created a cost differential that the market does not fully recognise. The goal should not be to make both sides identical but to ensure that both are viable and can co-exist without undercutting each other,” Kota said.