Context:
The tea industry in India, particularly in Assam and West Bengal, has experienced a significant price surge of approximately 13% in 2024. This increase is directly attributed to a notable reduction in tea production this year. Analysts and industry experts point to extreme weather events and broader climate change as the primary causes behind the decreased yield. There is a growing consensus that urgent reforms are necessary to ensure the sustainability of tea production, which is being severely threatened by these environmental changes.
Relevance:
GS III: Agriculture
Dimensions of the Article:
- Current Trends in the Indian Tea Industry
- Challenges Facing the Tea Industry
- Global Impact of Climate Change on the Tea Industry
Current Trends in the Indian Tea Industry
- Production Decline and Pricing: In 2024, tea production in West Bengal and Assam has decreased by 21% and 11% respectively, leading to a 13% surge in domestic tea prices. The decline mainly affects the first and second monsoon showers, which typically produce the highest quality teas, impacting the industry’s profitability.
- Export Market: There has been a 4% drop in export prices this year, presenting a challenge for the industry.
- Subsidies and Financial Impact: The industry has been awaiting promised subsidies from the Tea Board, which have not been disbursed, adding to the financial strain during a year of lowered production.
General Overview of the Tea Industry
- Global Standing: India is the world’s second-largest tea producer, after China, and is among the top five global tea exporters, contributing about 10% to global tea exports.
- Domestic Consumption: India consumes about 81% of its tea production domestically, unlike Kenya and Sri Lanka which export most of their production. The major tea-producing states include Assam, West Bengal, Tamil Nadu, and Kerala, collectively accounting for 97% of the national output.
- Export Composition: Predominantly, India exports black tea, which constitutes about 96% of all tea exports. Teas from Assam, Darjeeling, and Nilgiri are globally recognized as among the finest.
Challenges Facing the Tea Industry
- Environmental Impact: 2024 saw significant production disruptions due to extreme weather conditions, including excessive heat in May followed by flooding in Assam. This led to the lowest tea output for May in over a decade.
- Price Fluctuations: By July 2024, tea prices had increased by 47% since the beginning of the year, driven by production shortfalls.
- Pesticide Ban and Market Dynamics: The government’s ban on 20 pesticides has led to higher production costs due to the need for more expensive alternative pest control methods. Despite these challenges, demand for Indian tea has increased, particularly in countries like Russia, Ukraine, Belarus, Azerbaijan, and Kazakhstan.
- Impact on Small Tea Growers and Local Industry: Small Tea Growers (STGs), who manage less than one hectare each and contribute significantly to national production, are severely impacted by price drops and market shifts. The closure of approximately 13 to 14 tea gardens in regions like Dooars, Terai, and Darjeeling has affected over 11,000 workers and underscores the broader challenges faced by the industry.
Global Impact of Climate Change on the Tea Industry
- Rainfall Extremes: Tea cultivation, reliant on consistent rainfall, faces challenges from excessive rain leading to waterlogging, soil erosion, and reduced arable land, impacting tea plantation areas significantly.
- Drought Effects: Insufficient rainfall results in dust build-up on tea leaves, obstructing essential sunlight and adversely affecting tea production, particularly in India and China.
- Frost Damage: In colder regions like Rwanda and China, frost causes the tea leaves to freeze and break, resulting in significant leaf loss.
- Permafrost Instability: Areas with permafrost are seeing increased ground instability which heightens the risk of rock avalanches and landslides, potentially damaging tea plantations situated on hills.
- Production Costs and Quality: Global warming is escalating the difficulty and cost of tea production, with adverse effects on both the quality and quantity of tea, likely leading to increased consumer prices.
-Source: Indian Express
