Based on the consumption the total turnover of the tea industry in India is expected to rise to 33,000 crores by 2015 from 19,000 crores oing to increased production over the past to decades. In trading aspect india is an important tea exporter, accounting for around 12-13% of world tea exports.
With nearly six lakh hectares under tea cultivation, the domestic tea industry is growing at a compound annual growth rate of about 15 per cent but over the last 20 years, India’s world ranking as an exporter has come down from number one to number four, in the face of stiff competition from Sri Lanka, Kenya, and China and also due to erratic weather conditions such as flooding and insufficient rainfall in the tea production areas. Some of the constraints facing the Indian tea industry which directly affect production, productivity and quality.
Some other factors that have adversely affected the export potential of Indian tea include – various tariff and non-tariff measures imposed by some tea importing countries. Several measures have been taken up by tea board of india inorder to improve the tea industry and strategies have been adopted to meet up the challenges in global demand for tea in the coming years. INTRODUCTION: India is world’s largest consumer, second largest producer and fourth largest exporter of tea after China and accounts for nearly 30 per cent of global output and nearly 25 per cent of tea produced worldwide is consumed in India .
Branded market accounts for nearly 55 per cent of the total market and is growing at about 20 per cent while the unbranded market is growing at 10 per cent annually. Majority of the tea producing countries are located in the continent of Asia where China, India, Sri Lanka are the major producers. African tea growing countries are located mostly around the tropical regions where Kenya, Malawi,Rwanda,Tanzania,Uganda are major producers. Apart from these regions, some quantities of tea are also being produced in South America (Argentina, Brazil and others), the Near East (Iran and Turkey)and the CIS (Russia and Georgia).
Globally, tea is cultivated in 36, 91,938 ha with an annual production of 4066596 thousand Kg Over the years, both area and production has increased substantially. The global market for hot beverages is forecasted to reach US$69. 77 billion in value and 10. 57 million tons in volume terms by the year 2015 (GIA, 2011). The tea production in the last decade of 20thCentury saw a sluggish rate of increase in total area under tea. During 1991, tea was cultivated globally in 2563. 75 thousand ha which increased to 2661. 88 thousand with a compound growth rate of 0. 42% during that period.
With the advent of 21stcentury the world tea industry saw a steady increase in the overall area under tea. During 2001 the area under tea was 2727. 42 thousand ha which increased to 3691. 89 thousand ha in 2010 with a compound growth rate of 3. 42% during the said period. In terms of area under tea plantation, on an average during the last two decade (1991 – 2010), China lead (45%) the world followed by India (21%), Sri Lanka (7%), Kenya (5%), Vietnam (3%). The total turnover of the tea industry in India is likely to reach Rs 33,000 crore by 2015 from the current level of about Rs 19,500 crore.
Its high time that India should concentrate on improving the production and export of the tea. Production: The trend of world tea production was almost the same trend as in case of area. The production in 1991 was 2631. 05 million Kg which remained almost same till 1997. In 1998 world tea production touched a new height of 3026. 13 million kg. In 2000, it dropped to 2928. 67 m kg with a compound growth rate of 1. 20% during the period of 1991 – 2000. Again, from 2001 onwards production of tea increased steadily and reached 4162.
33 m kg with a compound growth rate of 3. 48% during the period 2001 – 2012. Thus over the two decades tea production has shown an increasing trend due to various reasons like increase in area for tea plantation,improved planting material, advanced technology including integrated package and practices for tea cultivation etc. Export: India is an important tea exporter, accounting for around 12-13% of world tea exports. World tea export recorded a compound growth rate of 2. 31% during 1991-2000 where export increased from 1078. 17 m kg to 1324. 65 m kg.
Almost similar compound growth rate was observed in the first decade of 21st Century where export increased from 1400. 55 m kg in 2001 to 1738. 41 m kg in 2010. On an average during the last two decade, in the export front, both Kenya and Sri Lanka lead the world each with 20% of their contribution followed by China (17%), India (14%) and others (25%). During the last five years, it has been observed that total world exports averages 41% of total world production and 84% of exports accounted for by six countries (India, Sri Lanka, China, Kenya, Indonesia and Vietnam).
The largest tea producers India and China drink away most of their own production and share only a small fraction of exportable tea. Sri Lanka and Kenya, on the other hand, share only 7% and 5% tea growing area, but are world leaders in exports, meeting 20 % each of world export needs. INDIAN TEA : India is the largest producer of black tea as well as the largest consumer of tea in the world. Currently, India produces 23% of total world production and consumes about 21% of total world consumption of tea – nearly 80% of the tea produced is consumed within India.
Over the last 20 years, India’s world ranking as an exporter has come down from number one to number four, in the face of stiff competition from Sri Lanka, Kenya, and China. With nearly six lakh hectares under tea cultivation, the domestic tea industry is growing at a compound annual growth rate (CAGR) of about 15 per cent. Nearly 35 lakh workers are employed in over 1,500 tea estates across India and about 65 per cent of these are employed indirectly. Assam produces over half of India’s tea and accounts for over 12 per cent of annual global tea yield.
The tea production during the current year is likely to stay over 950 million kilograms as against 966. 4 million kilograms in 2010. Awareness about health benefits associated with moderate intake of tea is another significant factor behind this upsurge in its demand as now more and more people are familiar with healing properties of tea. It not only helps combat heart related ailments but also helps lower cholestrol, protects skin, keeps cancer at bay, strengthens bones and teeth and contains no calories, fat and salt.
Historically regarded as a hot beverage, the penetration of tea in the non-alcoholic cold beverage segment is another driving force for this industry owing to the rising affinity towards ice-tea which currently accounts for over five per cent of entire non-alcoholic beverage market in India. ERRATIC WEATHER: Tea production in some regions of Assam and West Bengal, which account for 75% of India’s total tea cultivation, has dropped by up to 40% . Experts attribute this to changing climatic conditions. Between March and May, rainfall was below normal in most tea growing areas in the two states.
This was followed by floods in Assam in June. Seeking alternatives: Workers at a tea garden in Darjeeling. Scientists’ experiments with more tolerant variants of tea bushes to withstand flooding and insufficient rainfall have had limited commercial success making matters worse, a steep drop in temperature in some regions of upper Assam has led to pest attacks normally seen in the winters, Floods aren’t unusual in the Himalayan foothills, but what was striking was the “unique sequence” of a drought and then a flood that damaged crops, Estimates are that daily crop loss in Assam for the month of July 2012 so far at 20-40%.
In West Bengal, production is estimated to have declined in Darjeeling and the Dooars key tea-producing regions—by 30% and 10%, respectively. According to data released, production across the country between January and May fell by about 11% from a year ago to 244 million kg. In Assam, production fell 13% from last year; and in West Bengal and south India, it was down 10-11%,. July is the most crucial month for tea cultivation and the crop loss during this season hurts growers the most.
The tea production at Assam gardens this month is trailing last year’s production by at least 25%; Warren Tea Ltd stated that its tea production so far in July is lower by 40-50. Production hasn’t grown in the past 50 years,despite government interventions such as introduction of statutes making it mandatory to replace old bushes with young ones. CHALLENGES : Almost every tea-drinking nation in the world imports some variety of Indian tea. Due to an existing large domestic market for Indian tea, exports, however, account for less than 20 per cent i. e. domestic production.
Some of the constraints facing the Indian tea industry which directly affect production, productivity and quality, include the old age of bushes with more than 30 per cent of the tea area being above the economic threshold age limit, slower pace of replantation with the rate of replanting being less than 0. 5 per cent as against the desired level of 2 per cent and the consistent fall in its auction prices which has adversely affected the investment in the plantations. The consequent decline in productivity along with increasing input costs have led many gardens to become sick or close down.
The share of Indian tea in the world market, on the other hand, has suffered in recent years due to the stiff competition from other producing and exporting countries like Sri Lanka, China, Indonesia, Vietnam and Kenya. Some other factors that have adversely affected the export potential of Indian tea include – various tariff and non-tariff measures imposed by some tea importing countries, lower off take by Russia due to change in consumer preferences, lower production of orthodox teas which have a larger demand worldwide, quality problems and the higher cost of production and prices of Indian tea.
Initiatives: The Tea Board of India, a statutory body of the Government has been entrusted with the task of the development of the tea industry. It has taken several initiatives to support the tea industry and overcome the challenges it is facing today. During the 10th Plan period, the Board is implementing a number of developmental schemes for enhancing the productivity, quality and marketability of the teas produced in the country. These include financial and technical assistance to various plantation
development activities, such as replanting, rejuvenation, and creation of irrigation facilities. Export is also being focused upon with the implementation of a medium term export strategy. The production of quality teas, especially orthodox type of teas is being encouraged. Media campaigns have been launched to increase consumer awareness for Indian teas besides extension of promotional support to Indian exporters in marketing Indian brands in principal export markets. The total 10th Plan outlay for the Tea Board is Rs. 350 crore which is being utilized to rejuvenate the tea industry.
Special efforts are also being made to address the problems of the small growers of tea. These include measures like fixation of a price sharing formula between small tea growers and the manufacturers to enable the small growers to get a reasonable share of the price obtained for the made tea, implementation of a price subsidy scheme and carving of a Special Tea Term Loan package. One of the most important initiatives taken by the Government in the small sector has been the quality upgradation programme, which was launched in South India in July 2000 and is continuing successfully so far.
The Tea Board has also followed it up by launching a full-fledged scheme for quality upgradation and product diversification, aimed at modernizing the tea factories. The measures taken not only seek to alleviate the income related problems of the small growers, but also recognize the inherent advantages and immense potential of the small grower sector in driving Indian tea exports. Though in the last few months, there has been a recovery in the prices of tea and exports have also started looking up, it is now evident, that with the emerging trends in the globalised economy, markets can no longer be protected.
The Indian tea industry, would have to gear itself up to counter the new forces unleashed by globalization. CONCLUSION: The review of the global scenario of tea in terms of area, production, yield, exports and imports indicated overall increase in the quantity of tea in the world market over last two decades and the trend is increasing. So strategies must be adopted to meet up the challenges in global demand for tea in the coming years. Besides, general consumption of tea, health benefit effects of tea need to be promoted more vigorously to trap the non-conventional areas of tea in the world for an expansion in the consumption.
Value addition and diversification for a wide range of tea products need to be developed for balancing the supply demand chain. Through these ways, the global tea industry can think of sustainability in future keeping in mind the climate change across the globe. REFERENCES : 1. A. Basu Majumder, B. Bera, A. Rajan (2010),“Tea Statistics: Global Scenario”pdf. http://www. teaboard. gov. in/pdf/Tea%20Statistics%20Global%20Scenario. pdf) 2. ASSOCHAM(2011),“Tea industry’s annual turnover to reach Rs 33K crore by 2015”. (http://www. assocham. org/prels/shownews-archive.
php? id=3238&month=12&year=2011) 3. Manish Basu (2012) , “Tea production slumps in July on Erratic weather”. Livemint & The wall Street Journal. (http://www. livemint. com/Politics/7WP59ENFg93p2QhUfbxyiK/Tea-production-slumps-in-July-on-erratic-weather. html) 4. “Tea Industry Overview”(2011). (http://www. island. lk/index. php? page_cat=article-details&page=article-details&code_title=15208) 5. Priya Kumar (2010),”Challenges that Indian Tea Industry faces”. (http://www. commodityonline. com/news/challenges-that-indian-tea-industry-faces-3297-3-3298. html)