Kolkata: The lockdown has hit the tea industry in West Bengal and Assam hard, with losses in revenue so far totalling around Rs 2,100 crore, according to a statement issued by the Indian Tea Association last week.
Around 1,000 tea gardens in the two states have lost their ‘first flush’, a major contributor to their revenue. This is usually harvested in March, but this time, due to the lockdown and the social distancing and other norms that needed to be maintained upon resumption of activity, production has taken a hit.
The losses come as a double whammy for the tea business in north Bengal’s Darjeeling region particularly, since it had just about started recovering from the losses it sustained due to the violent Gorkhaland agitation and resultant three-month-long shutdown in 2017.
While tea gardens in Assam restarted operations a few weeks into the lockdown in April, this was not possible in Bengal due to a staggered plan of reopening, according to the ITA. Tea is a labour-intensive industry, employing lakhs of workers in these two states.
“The lockdown at the onset of the new season has dealt a big blow to the industry’s viability. In north India, production in Assam and West Bengal has been estimated to have declined by 65 per cent for the period of March-April, and it is estimated that production would further decline by 50 per cent during May,” its statement read.
“Tea estates in Assam and West Bengal, after closure of production for three weeks during lockdown, resumed operations from 12 April 2020 with partial workforce utilisation. However, plucking operations could not be resumed immediately as tea bushes, which had overgrown due to stoppage of operations during lockdown, had to be pruned to make them suitable for plucking,” it said.
“Based on feedback received from ITA member gardens, it is estimated that in Assam and West Bengal, the total loss in production for the months of March, April and May would be around 140 million kg. This would entail a loss in revenue of more than Rs 2,100 crore based on last year’s north India auction prices,” the ITA detailed.
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“With cost of production increasing rapidly, the huge loss in revenue has aggravated the financial stress of the tea sector, disabling its ability to fulfil its financial and statutory commitments. The industry has urged the commerce ministry as well as the state governments of Assam and West Bengal for extending a financial package to the industry,” it added.
However, approached by ThePrint for a comment, North Bengal Development Minister Rabindranath Ghosh shrugged off responsibility, saying the tea industry falls under the central government’s ambit.
“We have complied with the lockdown rules issued by the central government. If the industry needs a financial package, then the Centre should consider this,” Ghosh said.
“The state government has allowed 100 per cent workforce for the gardens now. Tea garden labourers are also covered under the social sector schemes of the state,” he said.
Darjeeling in distress
Of the 275 tea gardens in Bengal, the Darjeeling region is home to 87, which are spread over 17,600 hectares. Darjeeling Tea was the first Indian product to get a GI (geographical indication) tag in 2004-05, and is exported to 40 countries, according to the Darjeeling Tea Association (DTA).
But this year, according to industry insiders, it has faced myriad lockdown-related problems, including severe crunch of input supply, such as raw materials, labour, licensing fees, due to stoppage of transport and closure of supplier premises.
The DTA wrote a letter to the Tea Board of India, stating: “Due to the suspension of work for 20 days during its peak flushing period under lockdown from 24 March 2020 to 14 April 2020, Darjeeling tea has lost the majority of its first flush production. Further, the untimely skiffing of the overgrown tea leaves shall majorly affect the quality and quantity of the second flush.”
It added: “The loss of production and revenue of the Darjeeling tea industry is estimated to be 1.5 million kg and Rs 200 crore respectively in the current season.”
Sandeep Mukherjee, principal adviser to the DTA, explained the impact of the loss of the ‘first flush’.
“The first flush accounts for 20 per cent of the total production and earns more than 30 per cent of the annual revenue. It takes around Rs 700 per kg to produce, but gets sold at around Rs 1,200 per kg. Some extremely good quality teas go for as much as Rs 2,000 to Rs 3,000 per kg,” Mukherjee told ThePrint.
He further added that another problem being faced by the industry is the new protocol workers have to follow due to Covid-19.
“Workers’ efficiency is severely impacted, as they are not used to this new normal of social distancing, wearing masks and gloves, and allowing substantial time for hand and body sanitisation during working hours,” said Mukherjee.
Funds crunch due to 2017 incidents
During the Gorkhaland agitation in 2017-18, the Darjeeling tea industry faced a loss of around Rs 500 crore, with the premium second flush and subsequent monsoon and autumn flush output not being taken to public auctions.
The DTA’s letter to the Tea Board stated: “Unlike the tea industry of other origin, the Darjeeling tea industry has been reeling under severe crisis due to the unprecedented closure in 2017 and since, every Darjeeling tea unit is financially sick.”
It added: “The credit ratings of the Darjeeling Tea Industry have already been downgraded by the banks and financial institutions since 2017. All the financial accommodations have either been withdrawn or substantially decreased making the industry cash strapped.”
A senior DTA member, who handles finances and did not wish to be named, said: “Due to the outbreak, tea consignments will now move slowly in the supply chain, resulting in a further financial crunch.”
He added that as a result of all this, there will be a further impact on the industry. “The flushing and agronomical cycles have been disturbed, which will have an impact for probably one year in terms of general maintenance, weed and pest control,” he said.
Mukherjee concurred: “During the coming months, these problems will further manifest, particularly during bonus (payments for festivals like Diwali and Durga Puja) and winter months, when there is no production. All the stakeholders must plan some contingency during the winter season to continue operations during those hard days.”
Impact on exports
The senior functionary quoted above added that another huge problem was the spread of the Covid-19 pandemic in major tea-importing countries and the suspension of international flights.
“Darjeeling is majorly export-oriented. Suspension of international flights and large spread of the Covid-19 pandemic in importing countries has severely jolted Darjeeling tea sale, and there is an apprehension of substantial market share being lost in future too,” the functionary said.
The DTA’s letter too highlighted this problem, saying that countries like Germany, Japan, the USA and the UK are majorly affected by the pandemic, resulting in an estimated loss of exports of around 50 per cent in the current season.
“Different from other parts of the industry, the Darjeeling tea industry is an export-dependent industry from which 70 per cent of the annual revenue is earned from the export of 95 per cent of the first and second flush teas,” it said.
The situation in the Dooars
In Bengal’s Terai and Dooars region, there are at least 188 tea gardens that produce CTC (crush-tear-curl) tea. These gardens too restarted their operations in a staggered way, initially with 15 per cent of the workforce, which appears to have been inadequate.
However, Chief Minister Mamata Banerjee last week announced that 100 per cent of the workforce was now allowed to return.
Binoy Tamang, working president of the trade union arm of the Gorkha Janmukti Morcha, the north Bengal ally of Mamata’s Trinamool Congress, said the priority was workers’ welfare, not profits.
The GJM’s politics is built around tea gardens in the hills and the Dooars, and Tamang said: “Workers’ health is more important than the profit made by the tea companies. The lives of tea garden workers are our priority.”
The situation in Assam
The crisis affecting the tea industry is not limited to the Darjeeling region — it spreads beyond to the Dooars region of Bengal and the state of Assam.
According to Dinesh Bihani, secretary of the Guwahati Tea Buyers’ Association, Assam’s economy is heavily dependent on its tea industry. The state has around 700 tea gardens and all produce the CTC (crush-tear-curl) variety, as well as other teas.
“We are at present staring at a loss of around Rs 1,000 to 1,200 crore. Our gardens started functioning after a few weeks of lockdown in April, maintaining all rules and protocol. Despite that, we will not be able to compensate for our losses, if there is no proportionate price rise,” Bihani told ThePrint.
“The price for Assam tea has already gone up by Rs 70 — it used to be sold at Rs 150 per kg and now it is being sold at Rs 210 to 220 per kg. We have also shifted to e-auction to avoid crowds,” he said, adding that better quality tea sells at Rs 405/ kg now.
Dipanjal Deka, secretary of the Tea Association of India (Assam branch) added that the loss for Assam tea is a huge chunk of the total loss in the entire industry.
“Of the total Rs 2,100 crore as mentioned by the ITA, we have a share of at least Rs 1,600 crore. For outsiders, it may look as a closure of only two weeks, but tea plantation is a form of agriculture, and it has certain farming rules. Once a bush grows, one needs to prune, and the process takes time,” Deka said.
“We are optimistic about the second flush, but the logistics and the supply chain is badly hit. Now, the second major problem is with reverse migration. In some cases, some workers who are returnees have tested positive in tea garden areas. We cannot afford to close the gardens again, so we are implementing all measures strictly,” he added.
Tea garden workers fear lay-offs
However, the points made by senior members of the tea industry about massive losses have made workers fear for their livelihoods.
Ghanashyam Barhoi, secretary of the Assam Chai Mazdoor Union (Golaghat Branch), told ThePrint that the losses weren’t as bad as they were made out to be.
“During the peak season, a tea garden worker is expected to get 24 kg leaves per month. However, in March, the quantity generally remains below 10 kg, and in April, below 15 kg. March and April are anyway slightly unproductive months for tea growers. This time, the figure for March has been around 5 kg,” Barhoi said.
“In March and April, some man-days were saved as 50 per cent of the total work force was allowed to work in Assam. So, this does not look like an irrecoverable loss and the workers should not be made to suffer. A lot of them lost their daily wages in this period,” he added.
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