Small Wonder

SMALL is big for the Indian tea industry now. Tea Inc, which has been perennially dominated by output of large estates, is currently ruled by small tea growers (STG), who have produced over 51% of the country’s total produce of 1,344.4 million kg (mkg) in 2021-22 — a first in its history. The latest data released by the agro-industry regulator, the Tea Board of India, shows the STGs produced as much as 691.5 mkg in 2021-22, while big growers (BG), belonging to the organised corporate sector, contributed 652.9 mkg — around 49% of the total volume.STGs’ output in India has leapfrogged from 5% of the total production in 1991 to over 51% last fiscal. STGs’ stake is 58% (237.5 mkg) of the total output of West Bengal in FY22.
The state has the second largest STG pie in India after Assam. With regard to total national production of the STG sector in 2021-22, small growers from Bengal contributed 34% to it.
VOLUME DRIVER
India’s tea production has increased by 38% in the last eleven years — from a level of 966 mkg in 2010 to 1,329 mkg in 2021. Krishan Katyal, former CMD of the world’s oldest tea auctioneer J Thomas, said, “This volume growth has emanated from STGs, which assumes a huge significance. The bushes at small gardens are relatively young, and thus yields are high. This trend would continue naturally for some more years before plateauing out.”
India consumes around 80% of its own tea. “Had there been no STG sector in India, the country would have to import more tea from other nations. So, STGs not only provide for domestic consumption but also save foreign currency,” said Bijoygopal Chakraborty, president, small tea growers’ body Cista.
SUPPLY CHAIN
STGs sell their green leaves to either bought-leaf factories (BLF) or big planters at a cheap rate. BLF and big planters trade this tea in the market via private sales or auctions at higher prices. “Many big plantation companies blend the STG tea with their own produce to cut their average cost of production and make optimum use of their machines. Packers, too, prefer these teas for blending purposes,” the source added.
The Tea Board’s aim is to formulate a plan by which STGs can directly negotiate with the factory owners and fix leaf price in a transparent manner and without any middlemen. The Board had created a separate directorate for STGs for meeting developmental needs and encouraging them to set up their own collectives.
“However,” added Chakraborty, “in 95% cases in India, trading of green leaves is controlled by leaf agents. This is the main reason for problems with quality, weight, water deduction, actual price and overall traceability.”
QUALITY vs QUANTITY
As there was a lack of guidance, volume became the primary objective and quality remained secondary, which exposed STGs to lack of direction. The value realised by the STGs is not commensurate with their total output. To elaborate, the per kg rate of tea at BLFs is much lower than the price fetched by the organised big gardens. “STGs must understand that the quality of tea is made in the field and not in the factory. If the raw material is good, the factories would be able to make better teas and offer better prices,” said Boriah Gangan, former director (tea development) of Tea Board.
SUSTAINABLE INITIATIVE
Solidaridad, an international civil society organisation operational in 50 countries with its decades of experience in global standard setting, has instituted the “India Sustainable Tea Program” called “Trustea” since July 2013 in partnership with the big planters’ body, Indian Tea Association (ITA) and major STG associations. In April 2019, Solidaridad launched the Trinitea programme for not only guiding the STGs in adopting good agricultural practices but also enabling them to move up in the value chain and fetch better prices.
The current skill set of the STGs, according to experts, is not up to the desirable status mainly because of fragmented, small-size holdings and lack of knowledge of tea husbandry techniques. According to Boriah, small growers shouldn’t look for short-term gains and must not dilute their quality and brand equity.
SOLUTION IN HAND
One of the main problems faced by the West Bengal smallholders is low-level technology adoption to cope with climate change and its impacts, feels Solidaridad Asia MD Shatadru Chattopadhayay. “Droughts, floods and severe attacks of pests have been adversely affecting production, quality and costs. Solidaridad has installed weather stations and other low-cost scientific equipment in Assam and is proposing the same for West Bengal this year. These will help capture information on weather, soil moisture, pest profile, leaf wetness, crop growth.”
The advisories are disseminated to growers through the Trinitea application or via a ‘missed call alert’ system for those not having smartphones. “This year, we intend to cover the North Bengal small holders with the same technology, to be managed by them,” he added.
EXPORTS HOPE
Both STGs and experts see tremendous prospects in the exports market with low-cost, high-quality tea. “Many individual small growers are producing handmade or machine-made exotic high value organic tea. If these high value teas are channelised through a proper export line, it will be a game changer. We must be upgrading STGs from green-tea-leaf producers to made-tea producers,” said the Cista president.
According to him, a dedicated brand of STG tea should be introduced by the Tea Board which would help solve traceability issues.
“The low-cost structure of the STG segment can be leveraged for augmenting production of value-added tea and green tea to cater to the export market. This will enhance earnings and improve quality. Finer plucking would address the oversupply situation as well,” said Arijit Raha, secretary-general of ITA. Establishing export hubs should receive priority, he added.
IDEAL BIZ MODEL
As per an analysis done by Solidaridad, by supporting small tea growers to create their tea brand and using the e-commerce route, the net margin will increase from the present Rs 3-7 to Rs 30 per kilo of green leaf. “Adoption of e-commerce can help STGs move up the value chain, establish direct linkage with prospective buyers and enhance the realisation of the sale of ‘made teas’. Also, big and small estates should have a joint platform to face the shared challenges,” advised Chattopadhayay.
Partha Debnath of Progressive Small Tea Growers from Jalpaiguri said: “We are adopting mechanisation, which has improved quality and reduced our cost of production.”
ROAD AHEAD
Improved quality, consistency and compliance with good practices should be given importance for enhancing price and returns of the STGs. “They need to take control of their positioning in the value chain, by moving on from just being suppliers of green leaf to becoming producers of ‘made tea’. This will result in better economic returns,” prescribed Katyal.
If STGs’ output grows like this, it will become 70% of India’s production within 2030, said the president of Cista.