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regular-article-logo Monday, 20 May 2024

Crisis in Darjeeling tea industry to top Piyush Goyal's meeting agenda in Calcutta

The industry, reeling under losses for seven years in a row, will be begging for a one-time financial assistance to stay afloat. Buffeted by weak export demand and a deluge of cheap Nepalese variety in India, planters claim that business has become unviable with no direction in sight to turn around

Sambit Saha Calcutta Published 06.01.24, 11:36 AM
Piyush Goyal

Piyush Goyal File picture

When Union commerce minister Piyush Goyal meets representatives of the tea industry in Calcutta on Saturday, the dire state of Darjeeling tea industry could well emerge as a pivotal talking point.

The industry, reeling under losses for seven years in a row, will be begging for a one-time financial assistance to stay afloat. Buffeted by weak demand in the export markets and a deluge of cheap Nepalese variety in India, planters claim that business has become unviable with no direction in sight to turn around.

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About 11 gardens out of the 87 estates that are protected by the GI (geographical indication) tag are closed and a majority of the owners are desperately looking to sell out but finding no buyers. The largest Darjeeling tea producer Chamong Tea Group, which has 13 gardens, are also looking to exit from some estates.

One of the proposals the Darjeeling tea garden owners will put forward before minister Goyal, who is also expected to meet representatives of the jute industry as well during his day-long trip ahead of the general election, would be to financially take care of the permanent workers during the three winter months when plucking of tea comes to naught.

“The need of the hour is for the Centre to provide financial support by providing subsidy for making speciality orthodox teas and providing for 100 days wages for workers during the lean period (December to February),” Atul Asthana, managing director of Goodricke Group and chairman of the Indian Tea Association (ITA), said.

One of the suggestions that emerged from the conversations among planters is that the government could bring the workers under some centrally sponsored scheme during the three winter months, relieving the gardens from paying the salaries for the period. There are 55,000 permanent and 20,000 seasonal workers deployed in Darjeeling tea plantation.

Ahead of Goyal’s trip to the city, Harsh V Shringla, the former foreign secretary who hails from Darjeeling, met the minister and commerce secretary to discuss the situation of the Darjeeling tea industry and options to revive India’s iconic global product.

Darjeeling produced about 6 million kilos of tea up to November 2023, representing about 0.5 per cent of India’s total tea production. However, it is down from an average of 8-10 million kg which it used to produce before.

“The general law of economics say that prices should be up when production is down. In Darjeeling, the price and the production are down together. Tea is my passion but how long can one continue to fund losses?” Ashok Lohia, chairman of Chamong Tea, rued.

Anshuman Kanoria, chairman of Indian Tea Exporters Association, who also owns two estates in the hills, claims most of the gardens are losing Rs 200 a kilo on average. The famed first and second flush, which brought worldwide recognition to Indian teas, are unable to cover the losses which used to be the case previously.

“Only 30 per cent of total production is selling above the cost of production which is very high (Rs 600-700 a kg) in Darjeeling due to low yield. The domestic market for the tea, which is located in and around Calcutta, has been taken over by Darjeeling type cheaper Nepal tea, driving down prices much below cost of production,” Kanoria said.

Auction prices of Darjeeling tea hit an 8-year low in 2023. The tea industry has been lobbying with the Centre to curb free flow of Nepal tea to India. However, the Modi government has so far avoided affronting the neighbour considering geo-political concerns in relation to China.

“The solution to revive the heritage industry is to curb the free flow of teas from Nepal. If that can not be done, there has to be financial handholding for 5 years. One of the ways could be direct financial support to planters. Alternatively, it can support the workers during non-revenue period,” Kanoria said.

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