by Nawaz Sarif and Shahid Akhter 1 May 2020
The strewed COVID-19 has perilously erupted irreversible health and economic disaster at the local, national, and international levels. The outbreak has laid off cross-boundaries transport systems and mutilated global economic activities. The Ministry of Commerce and Industry has expressed deep concerns over the steady rise of corona-virus cases and its devastating impact on India’s major industrial sectors. The tea industry is among the oldest industries in India stretched over the geographical area of 5.78 lakh hectares. The major tea producing regions are North-East India (Assam, Tripura, & Sikkim, etc.), North Bengal (Darjeeling, Terai, & Dooars regions), Kangra, and South India (Nilgiri, Munnar, Anamallais, Wayanad, Travancore, & Coorg). In 2019, Assam was the largest tea producing state (701.35 million kg) in the country and was followed by West Bengal (394.22 million kg), Tamil Nadu (160.15 million kg), and Kerala (60.76 million kg). The lockdown and other containment measures taken by the Indian government have a catastrophe over the total annual production of 1338.63 million kg of tea and could potentially cripple the domestic and international markets.
Tea is one of the most important commercial crops in India. The country has over 1585 registered tea gardens. For the last few years, the industry has been grappling with several irremediable challenges such as ageing bushes, low productivity, high production cost, low quality, low market demand, lack of economic support for small growers, and repeated falling of price in both domestic and international markets, etc. In such a situation, the hastened nationwide lockdown has spiked out downswing trouble in the industry and has endangered the livelihoods of more than 1.1 million tea workers. During the lockdown, the gardens were remained completely barred in the major tea producing regions of North-East India. Later on, the government officials permitted the tea growers to carry the necessary works with a minimum workforce. As of now, looking after a huge shortfall of teas in the market, the state like Assam and West Bengal has allowed 50 percent and 25 percent of a tea estate’s regular workforce to carry skiffing and plucking related activities respectively. Similarly, all small tea gardens to large tea factories including Indco and Tantea of South India had ceased their normal operations. The states like Tamil Nadu, Kerala, and Karnataka had also taken the same strict measures. However, during the second phase, only in a few context-specific tea estates in Nilgiri and other places are continued to partially functional with restricted activities.
The tea plantation is a 180-year old time-sensitive agro-based industry and it requires continuous plucking of young bushes and leaves. The plucked leaves are perishable and need to be processed immediately. But, the plucking has got disrupted amidst the lockdown, leading to overgrow the tea leaves which are bootless for harvesting. This temporal break off caused an unprecedented downfall in the production and market supply. According to the Indian Tea Board, the present crisis has jeopardized the tea industry with a loss of 150 million kg of tea that accounts for 10 percent of its total production. The tea estates faced skiffed problems that caused the fallout of best quality tea leaves from Orthodox Assam tea to Darjeeling to Nilgiri tea. According to Tea Board of Assam, during the first tea flush, the state is expected to lose 40 percent of its best quality tea. Similarly, the Darjeeling Board of Tea has expressed concerns over the loss of its 35 percent premium tea production. Besides, the West Bengal’s Dooars region is also likely to be affected by a lapse of 11 percent of its total production. In South Indian tea estates, around 30-40 percent of the crops remained unplucked which caused a loss of 23 million kg of tea equivalent to 314 crores. The annual tea production of South Indian tea estates is over 230 million kg but this year, it is expected to plummet by 10 percent of its total production. Thus, there is a backlash and a devoid of hope for the Indian tea industry to overcome its huge deficit.
The tea industry has been playing a significant role in the country’s GDP and earns huge exchange from international markets. India is the second-largest tea producing country with a share of about 29 percent of the world’s total tea production. The country markets its best quality of tea over 85 countries and it secured the fourth position in 2018 with a share of around 10 percent of the world’s total export. In 2018-19, India hoarded tea revenue of about 830.90 million US dollars from its international markets. However, this year, it is expected to fall off an estimated loss of 12 percent of its annual tea revenue. India’s most tea export countries like CIS countries, Iran, the UK, UAE, Germany, the USA, Russia, and China are currently under the grip of the COVID-19 disaster. The cutting of all transport systems and restricted capital flows and the foreign exchanges in those countries has put the country’s tea market into a plunge. Additionally, the crude oil crisis in Iran and its political infringe with the USA over the economic sanctions has raised a new strain in the tea exports. According to the Darjeeling Tea Association, as a result of suspending overseas boundaries and freezing of the financial markets in Europe, the industry is surfacing an impediment to supply its most premium quality tea that accounts for 35-40 percent of its total revenue. Similarly, Assam is also facing difficulties to export Orthodox tea to countries like Iran, the UK, and China. In 2019, the industry had a market of over 263 million kg of tea in the international platform. However, it is expected that the recent worldwide crisis will lead to a downturn of 8 percent of its total export.
Unfortunately, the domestic markets are also in the clutch of the pandemic-gripped which constitute the consumption of 80% of its total production. The major tea consuming domestic states are Maharashtra, Uttar Pradesh, Gujarat, Rajasthan, and Madhya Pradesh. The highest per capita states are Gujarat (1.385kg), Haryana (1.385kg), Goa (1.079 kg), Punjab (1.048 kg), Jammu and Kashmir (>1kg), Himachal Pradesh (>1kg), and Bengal (0.705 kg). The transportation cut off and the subsequent closings down of the tea auctions activities caused to restrain the domestic supply to the destined states. Besides, the deficit in the stock market and the failure of logistics systems to pass raw bushes from the gardens to the processing centres to the warehouses to the markets headed the industry towards an unsecured destiny.
As mitigation measures, India’s fight against the pandemic, through the Central-enforced nationwide shutdown is accepted as an effective measure, at the cost of a huge economic pitfall. In such a situation, the country is needed to uphold its wise economic strategies to combat the aroused crisis in the tea industry. The political spat between Central and State governments must be kept aside to put united efforts in building the multistage management systems to battle with the deadly contagious effect and rising economic backlash in the industry. The governments should underline the role of local authorities, factory owners, and community leaders in terms of inspecting and monitoring the COVID-19 hotspots zone in the tea growing regions. To reboot the productivity, both the Central and State governments need to provide stimulus economic packages to the small growers and workers of tea gardens.
Likewise, as around 50 percent of tea workers are women and belong to the weaker sections of the society, the Tea Board should also offer various welfare schemes to support their dependents and livelihoods. The resuming of intra- and inter-state transport systems and tea auctions activities are required to rethink for staggering the domestic markets. Moreover, as the logistics movement cut off across the overseas and the lockdown is continued in many countries, India can shift its physical tea auctions online. The country like Sri Lanka is using the online tea auction strategy to enhance the tea supply amidst the lockdown. The boosting of the tea e-auction platform can be an effective way-out for Indian as well as overseas’ buyers and brokers as it is cost-effective and has greater efficiency and market transparency. Finally, since the major tea export countries are under the grip of the COVID-19 pandemic and consequently facing economic recession, India also needs to rethink its strategic plans over unilateral and bilateral agreements to secure the tea revenue in the financial year 2020-21.