The Tea Board of India has undertaken the garden grading exercise for a second time to identify the key strengths and weaknesses of the country’s 1,421 tea estates.
The findings of this exercise, the Board believes, will help it advice tea firms on the exact steps they need to take to better estates and their financial position. Besides, it will also provide the regulatory body with a deep insight into the actual condition of India's tea sector.
Parameters like good agricultural practices, replantation & rejuvenation of bushes, irrigation, effective quality control, condition of the workforce and others, have been taken into consideration in this exercise.
“We are going to have a comprehensive analysis of each of the estates which will provide us a deeper insight into the problems in this trade and how it can be rectified”, A K Ray, deputy chairman at the Tea Board told Business Standard.
This mammoth exercise is also aimed at improving price realisation by identifying productivity per hectare, as well as, tea grade slippages.
“At times, it has been seen that although two tea producing companies are comparable on an equal scale of operations, yet their productivity is different. While one company posts a profit, the other runs into losses. The gradation exercise will help us find the exact causes plaguing a company or an estate”, Ray told the newspaper.
In the last estate gradation exercise, which was carried out three years ago, it was found that while Assam had 8 tea gardens in the country with A+ (highest rank) rank, none of the prized estates of Darjeeling were able to secure the this rank. Even plantations in Dooars and Terai pipped Darjeeling in that exercise.
Sujit Patra, secretary at the ITA, said that the major issue being faced by plantations is ageing bushes, which bring down productivity, as well as, quality.
Except in some crucial pockets like Darjeeling, where a majority of the bushes are over 100-years -old, around 70 per cent of Indian tea bushes, on an average, are between 50 to 70 years old.
“This affects both productivity, as well as, quality”, Patra told this business daily.
The Board has mandated that except in Darjeeling, companies have to go for replantation of two per cent of the bush area in a garden over a 5-year period. In case of Darjeeling, the Board has provided a special provision for rejuvenation of bushes, which is heavy pruning instead of outright replantation.
Industry officials cite high cost of replantation as the major impediment towards improving productivity.
According to Patra, the replantation exercise in Assam takes around five years to complete.
During this period, the plantation company bears the costs and does not receive any income for the replanted area. In case of Darjeeling, the exercise takes more than 7 years.
Citing the financial stress on the sector, many plantation companies have been flouting the Board’s order leading to a fall in productivity and quality of the brew. ITA is of the view that in the last six years, while the price of tea increased by only one per cent CAGR, the cost of production rose by 10 per cent CAGR.
The exercise will also lead to the re-institution Indian Tea Awards, which the Board will revive after around a decade, to encourage companies operating in the tea sector to aim for improvement in various parameters.
The Tea Awards, expected to be given across 25-30 categories, will not just be limited to planters, but will include exporters, packateers, start-ups and others. The awards have also been structured to provide a level playing field for all tea producing states like Assam, West Bengal, Karnataka, Kerala, Tamil Nadu and others.
For instance, owing to its climatic and geographical conditions, coupled with the type of tea bush, the average yield for Darjeeling estates is 400 kg per hectare, while it is 2,000 kg per hectare in Assam. In the Nilgiris, the yield reaches 4,000 kg per hectare in some estates. On the other hand, the cost of production in Darjeeling is around two times more than Assam and the same for Assam is around 20-30 per cent higher than the Nilgiris.
“We are soon approaching the union commerce ministry with the Awards proposal. It is expected that in the coming few months, this ceremony will be held”, Ray told this business daily.