In the north, Kolkata saw good demand for all tea types. Among buyers, the Middle East was active for orthodox tea while HUL and TCPL were active for CTC and dust. In Darjeeling, more broken and fannings found takers this week. Guwahati also saw good demand with major blenders active for both leaf and dust. Siliguri also saw good demand for tea, as it did the previous week.
In the south, Coonoor saw good demand for CTC leaf with nearly 96% on offer sold. Cochin and Coimbatore saw better uptake for dust. Of the 692 kilos of green tea on offer at Coonoor, only 173 kilos were sold at INRs 200.
Indian smallholders cultivate tea on 25 hectares or less.
In Assam and West Bengal, an estimated 211,000 growers cultivate tea on 25 hectares or less. Combined, smallholders have planted 200,000 hectares of tea in the past 25 years. As a result, production overall has increased 33%, from 945 million kilos in 2005 to 1,255 million kilos in 2020. In 2021, tea production is up 18% compared to the first eight months of 2020. Oversupply is one of the main reasons India’s tea industry is passing through a crucial stage brought by poor price recovery of made tea, observes Bijoy Chakraborty, President of the Confederation of Indian Small Tea Growers Association (CISTA). In this discussion, Chakraborty emphasizes that what smallholders need most are stable prices for green leaf that recover the cost of production and offer incentives to produce export-grade tea.
Smallholders Will One Day Dominate Indian Tea Exports
By Aravinda Anantharaman
Aravinda Anantharaman: Why is CISTA in favor of India’s mandate that 50% of all tea production sold at auction? What advantages does it offer producers and, in particular, STGs?
Bijoy Chakraborty: For the last 20 years, in India, small tea growers (STGs) have been struggling to get a livelihood price of green tea leaf, even though the Tea Board of India introduced the Minimum Benchmark Price (MBP) for green tea leaf. MBP is fixed based on mandatory submission of an e-form from factories that purchase outsourced leaves to compile a district auction average rate. The MBP is announced monthly and based on a price-sharing formula. But in reality, many factories, even among the Bought Leaf Factories (BLFs), sell most of the production via a private channel. These prices are not reflected in the MBP. Ultimately STGs are deprived of a fair rate. In India, 38-40% of tea is being sold via auction. In Kenya and Sri Lanka (where STGs dominate production), 100% of teas are sold through auction. Smallholders in these countries can get a reasonable price which reflects transparency. In India, CISTA is demanding price recovery with transparency. Price transparency can be achieved in part by selling at least 50% of teas via auction. Producers have the right to get a reasonable price for their product, but the STG also has the right to a minimum livelihood price. Keep in mind, STGs last year crossed the 51% mark for total production.
Aravinda: How has 2021 been for STGs? What have been the most significant challenges?
Bijoy: In 2021, due to scarcity of rain and massive weather changes, mainly in Assam and Bengal tea regions were severely affected during the first and second flush. Due to the loss of production during the first half of the main season, prices were reasonable. But from July onwards, prices have been gradually coming down. STGs faced an acute price realization problem and have had to sell their produce below the cost of production. The main biggest challenge for STGs now is to get livelihood prices and deal with climate change.
Aravinda: How have the green leaf prices varied between the first flush and second flush?
Bijoy: Generally, STGs got a reasonable price for the second flush crop, although the first flush is a premium product that lasts a shorter time.
Aravinda: What is your opinion on the minimum benchmark price in return for 65% or more fine plucking?
Bijoy: The minimum benchmark price in return for 65% fine plucking is not possible practically. The best gardens of Assam have not achieved this target. The Tea Research Association says it’s not possible to offer a fixed recommendation on the percentage of fine leaf throughout the season. It will vary from season to season, during banjhi spells, based on the age of bushes, pruning system, and the requirement for the different types of manufacturing. But there is a stigma on the STGs along with BLFs related to quality. CISTA has, from its inception, advocated quality. Many BLFs focus on quantity, not quality. The mindset should change as the market wants quality.
Related: Tea Quality is a Balancing Act
“CISTA has, from its inception advocated quality.” – Bijoy Chakraborty
Aravinda: How can STGs improve leaf quality and plucking standards? Where does it stand now? Is it realistic to expect the minimum quality standards that are being asked of STGs?
Bijoy: The Tea Board of India, the TriniTea project of Solidaridad, the ITA with regional associations have taken many initiatives by organizing outreach model training programs season-wise to improve quality. We have observed that at the grassroots, quality awareness has been raised. Training and awareness campaigns should be treated as a continuous process. Tea cultivation by STGs needs more field-based training to upgrade quality. It is true that there is a huge scope of improvement of quality in the small sector. CISTA strongly believes that a realistic minimum quality standard of green tea leaf produced by STGs can be fixed as STGs are ready to cooperate to improve quality.
Aravinda: What is needed to make tea farming a viable option for small farmers?
Bijoy: Due to the rise of workers’ wages and other costs like fertilizers, agrochemicals, diesel, etc., the cost of production has increased. The fluctuation or uncertainty of green tea leaf price makes small-scale tea cultivation not as viable an option. In the present situation, STGs should not be dependent on tea cultivation but adopt other cultivation like black pepper, bamboo, bay leaf cultivation, and fisheries for alternative income. Forming farmer producer companies (FPC) by the STGs as clusters could be a viable option offering ample scope for sustainable income.
Aravinda: What sort of support do you seek from the industry, planters’ bodies, BLFs, boards, certification bodies, auctioneers, and brokers?
Bijoy: The tea industry is passing through a crucial stage now. Poor price recovery of made tea has created this situation. Millions of livelihoods are dependent on this industry. It needs a holistic approach from every stakeholder to improve this situation. CISTA maintains a synergistic relationship with all stakeholders related tea industry to strengthen our 170-year-old tea industry.
Aravinda: Would you say that STGs are now integrated within the larger body of Indian tea?
Bijoy: STGs are now the main force of the tea ecosystem because they contributed nearly 51% of national tea production last year. CISTA urges the Union Commerce Ministry to allocate separate funds for the development of the STG sector. STGs from Assam and other northeastern states produce unique exotic organic tea targeted for the export market. CISTA has shared a proposal with the Tea Board for marketing these types of tea on a separate web platform. We are confident that in the near future, Indian STGs tea will dominate the export market.
After a missed week of the auction, North India saw good demand in Kolkata, Guwahati, and Siliguri. Last week saw the highest weekly sale volume for 2021. The focus this week is on the auctions and Sale 42. In Kolkata, 83% of Orthodox tea on offer was sold, and the Middle East remained the top buyer. However, Darjeeling tea saw less uptake. In Guwahati, the market showed good demand for CTC and Orthodox teas, and major blenders were active. Dust tea continued to perform better than leaf in Kochi, Coonoor, and Coimbatore in the south. In Coonoor, buyers from North India were active, reportedly due to demand during Diwali, one of the biggest Indian festivals, coming up next week. Exports continue to be subdued because of container costs: 108 kilos of green tea on offer in Coonoor sold for INRs 300 per kilo.
This week, the focus was on production volumes and exports. Tea Board of India data indicates a 14.4% decrease in tea exports between January and July 2021 as compared to this period last year. The CIS countries have remained the largest importer of tea but their imports have decreased from 30.53 million kilos (Jan-Jul 2020) to 24.14 million kilos (Jan-Jul 2021). Exports to Iran decreased from 21 million kilos (Jan-Jul 2020) to 12.63 million kilos (Jan-Jul 2021). China too imported 3.29 million kilos this year as against 5.74 million kilos for Jan-Jul 2020. The UAE and the US have been the only countries increasing tea imports from India. The non-availability of shipping containers and their high costs has been cited as one significant reason for this.
Meanwhile, media reports indicate that with Kenya fixing the minimum reserve price of tea at $2.43 per kg of processed tea at the Mombasa auction, the difference in price between Indian teas (priced between $3-4) and Kenyan teas has narrowed to India’s advantage. It has brought renewed interest from West Asia, Russia, Kazakhstan, and the US for Indian black teas.
PRICES & MARKET
North India auctions were closed for the Hindu festival of Dusshera, with the Puja being one of the biggest annual celebrations in West Bengal and Assam. The auctions were held as usual in the south. Here, Sale 41 saw better uptake of Dust grades over Leaf. In Coonoor, Homedale Estate earned top prices for its teas, with CTC Red Dust grade fetching ?361 per kilo, CTC Pekoe Dust grade fetching ?356 per kilo. 108 kilos of green tea on offer in Coonoor sold for ?301 per kilo.
INDIA IN-DEPTH
Technology |Markets | Prices | Auctions | Production
All India quantities were higher in week 40 with South India experiencing the greater percentage of sales. Prices were lower across all categories with the sharpest decline in South India dust. The unsold quantity of 7,618 metric tons this week is worrying as larger quantities (estimated at more than 17 million kilos) are expected in north India in the next two weeks.
Sales volumes were lower in Week 40 at the Siliguri Auction with buyers foregoing bids due to increased lot size. The quantity of tea purchased by small and minor volume buyers decreased from 2,415 metric tons in Sale 39 to 1,602 metric tons, a 34% drop in tea purchased. The quantity of tea purchased by large and medium volume buyers increased from 1,358 metric tons in Sale 39 to 1,460 metric tons in Sale 40 (a 7% increase in purchases). Small and minor volume buyers paid an average INRs 165 per kilo (about $2.20 per kilo in US dollars). – Abhijeet Hazarika
PRICES & MARKET
INDIA IN-DEPTH
Technology |Markets | Prices | Auctions | Production
