Business Today

Darjeeling tea supply blocked: Revenue loss to amount between Rs 100 cr to Rs 150 cr

Choking supply of Darjeeling tea can only hurt the growers.
twitter-logo Joe C Mathew   Delhi     Print Edition: July 30, 2017
Tea Wars
Photo: Shekhar Ghosh

Officials of Kolkata-based Indian Tea Association (ITA), the oldest lobby group of tea producers in the country, are in a quandary these days. The supply of the exotic, valuable variety of India tea - Darjeeling tea - has been choked because of political turmoil that has gripped the Darjeeling district of West Bengal.

The indefinite strike called by the protestors demanding a separate state, has disrupted the harvesting of tea leaves during the second flush, the dust of which is mostly exported and fetches maximum price. ITA's Darjeeling office remains shut, and the impact of the supply disruption is beginning to be felt.

In volume terms, the quantity of tea that comes from Darjeeling is not huge. In 2016/17, production of Darjeeling tea was 7.96 million kilogram, a small fraction of India's total tea production of 1250.49 million kilogram during that period.

The revenue impact is comparatively higher. Rating agency ICRA estimates that the current disruption will result in a revenue loss of Rs 100 crore to Rs 150 crore. But even this estimated loss will only be a small portion of India's tea exports of Rs 4,493 crore (232.92 million kilogram) in 2015/16.

The worry for the Indian tea industry is not just the production loss or overall revenue impact. It is much beyond that. Darjeeling tea is the face of the Indian tea industry. As Tea Board officials say, "Darjeeling Tea cannot be grown or manufactured anywhere else in the world. Just as Champagne is indigenous to the Champagne district of France, so is Darjeeling tea to India's Darjeeling area." And here lies the importance. It has intellectual property that is valid globally. The Darjeeling word and logo are registered as Geographical Indications in India. Only the produce from the 87 tea gardens of the district can be promoted under this label. And it has to be processed and manufactured in a factory within that geographical area.

By choking the supply of this unique variety of tea at a time when its realisation is the highest, agitators are not doing any service to their cause. "For Darjeeling teas, a plucking cycle of five to six days is followed. Timely plucking of fine leaves contributes to the overall quality of the tea produced during this period. Thus, the lack of plucking activity over the past 20 days is expected to have an impact on the production volume as well as the tea quality, even when operations re-start. This in turn is likely to impact the export performance of Darjeeling teas," Kaushik Das of ICRA Limited points out.

Darjeeling tea output was expected to grow over 30 per cent. Tea auction prices are also lower than the previous year, indicating a glut in the country. Darjeeling tea, with a ready market abroad, would have been an exception.

Agitators should know that they have harmed their own interests by clamping down on Darjeeling tea. ITA can only be a mute spectator.

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