The Darjeeling Tea Industry: Plen”tea” To Worry About

Posted on October 7, 2010 in Business and Economy

By Pradyut Hande:

The Indian tea industry has borne witness to numerous crests and troughs over the course of the past few decades. However, undeniable is the fact that despite the myriad financial & logistical constraints, vagaries of weather, fluctuating levels of demand and escalating competition prevalent in the international markets; the Indian Tea industry has certainly traversed a long and creditable journey. India has always been regarded as a doyen of tea production, distribution, consumption and export. We have the distinction of being the second largest manufacturer of tea after the industrious Chinese, accounting for almost 30% of the global produce — a most laudable feat. The Tea industry happens to be one of the very few industries where India has succeeded in maintaining its leadership stronghold over the last 150 years. The robust tea industry has an annual turnover of over Rs. 10,000 crores and the average annual foreign exchange generated through exports is about Rs. 1,850 crores.

The aforementioned figures do sound most impressive but come up short when compared with those of the Chinese. However, as is often the case, the numbers obfuscate the real picture and fail to highlight other salient features of the Indian tea industry. The industry produces a plethora of intrinsically disparate products that include Darjeeling, Nilgiri, Assam, CTC and Green tea among others. India is perhaps the only country to offer such a diverse array of tea varieties.

Darjeeling tea is one of the most expensive varieties available in the domestic and international market alike. According to the Tea Board of India, Darjeeling tea means “a tea which has been cultivated, grown, produced, manufactured and processed in tea gardens (see ‘Estates’ section below) in the hilly areas of Sadar Sub-Division, only hilly areas of Kalimpong Sub-Division consisting of Samabeong Tea Estate, Ambiok Tea Estate, Mission Hill Tea Estate and Kumai Tea Estate and Kurseong Sub-Division excluding the areas in jurisdiction list 20,21,23,24,29,31 and 33 comprising Siliguri subdivision of New Chumta Tea Estate, Simulbari and Marionbari Tea Estate of Kurseong Police Station in Kurseong Sub-Division of the District of Darjeeling in the State of West Bengal, India grown on picturesque steep slopes up to 4000 ft. Tea which has been processed and manufactured in a factory located in the aforesaid area, which, when brewed, has a distinctive, naturally occurring aroma and taste with light tea liquor and the infused leaf of which has a distinctive fragrance.” (Quite an extensive definition, but one meant to infuse a degree of clarity with regards to the readers).

In the past few years, there has been a rousing increase in demand for this particular variety, both from domestic and international quarters alike. However, 2010 has been an abysmal year for the Darjeeling tea industry. The projected production figures are pegged to be 10% lower than last year resulting in the production of an insufficient amount of less than 8 million kg. I shall attempt to encapsulate the factors that have fuelled the slump in production and its potential implications.

The Slump in Production:

For starters, the Darjeeling tea cultivating regions have had to content with erratic climatic conditions that have wrecked their profit-generating chances this year. The crop was adversely affected during the “first flush period” (harvested in mid-March following the spring rains) due to drought. Subsequently, the “second flush period” (harvested in June) also failed to yield a decent output, much to the chagrin of most of the 87 Darjeeling tea estates. Another significant contributor to the aforementioned fall in production has been the transition to organic methods of production.

The Consequent Implications:

Courtesy the weather related capriciousness and other factors, Darjeeling tea production has fallen by almost 11% between January and August 2010. Consequently, this has taken a toll on exports to the UK, Germany and Japan amongst others. The inability to meet export commitments has thrown a real spanner in the “profitability wheels”. Reportedly, this year’s projected crops may be the poorest in the last 40 years — a projection that certainly bodes ill for the industry. Despite the discernible beating to its export prospects, domestic demand has picked up significantly by almost 30%. However, the precipitated domestic demand has only enhanced the production pressure on the Darjeeling tea estates. Now although the shortfall in output escalates prices, producers fail to benefit when there is inadequate produce to accommodate the enhanced demand. Also the domestic prices that Darjeeling tea fetches is a lot less than the international prices. In a nutshell, the Darjeeling tea belt has failed to take advantage of the rising domestic demand on account of the low produce. Matters do appear bleak at the moment but if there is one thing that the Indian tea industry has showcased on a continual basis, it has to be its intrinsic ability to tide over such tumultuous times and return with aplomb the subsequent season. The Darjeeling tea industry ought to adapt suitably to their present predicament and hope for a revival of fortunes in the near future.

The writer is a Correspondent of Youth Ki Awaaz.

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