The Tea Board of India chairman talks to Roopak Goswami of The Telegraph about the board’s focus areas during the Twelfth Plan.
Where is Indian tea now positioned in the world, not just quantitativ-ely, but qualitatively? The ind-ustry has often been saying that it is quality conscious yet we still do not export that much as we keep on failing on our targets. What is the way out?
A: At the global level India is still the largest producer of black tea. However, in terms of total production, China ranks first and India is the second largest tea-producing country.
Quality-wise Indian teas continue to command a good image as teas originating from Darjeeling, Assam and the Nilgiris are well known for their quality the world over. The depression, which lasted for more than eight years during the past decade, made the industry focus more on quality production. Unlike the other major tea-producing and exporting countries, the situation in India is quite different.
For the leading exporting countries like Kenya and Sri Lanka, tea is a major foreign exchange earner, and they export almost 95 to 98 per cent of their total production. On the other hand, in India there is a strong domestic market and more than 80 per cent of the total production is domestically consumed. Because of this, there is not much of a compulsion on anyone to put stress on exporting teas.
As Indian teas are well known for their quality attributes, the focus now is on exporting only quality teas to get higher value rather than chasing volume.
Q: As the industry now looks towards the Twelfth Plan, do we concentrate on quality or focus on increasing production?
A: The strategy of the board during the Twelfth Plan is to maintain a fine balance between demand and supply with more focus on quality production. The growth rate of domestic demand is around 3 per cent, which entails an additional production to the tune of 20 to 25 million kg per annum just for meeting the domestic demand in full. At the same time, it is also proposed to retain a reasonable share in the global market.
Thus, the production strategy is to meet the domestic demand in full and maintain a share of around 15 per cent in the global market. It is proposed to support long-term development measures such as extension planting to increase the area and uprooting the old and senile plantations to improve the productivity in the organised sector and collectivisation of small tea growers to move up in the value chain.
Q: Is the board working hard on getting new export markets? Which are the new markets where India can think of gaining ground?
A: Yes, a focused approach is being adopted on the export front and keeping in view the increasing competition in the world market, five strategically important markets — the US, Russia, Kazakhstan, Iran and Egypt — have been selected for extensive and intensive promotional intervention through execution of five specific activities over five years.
The activities identified are extensive promotion of the India Tea logo, engagement with the local trading community, consumer-oriented promotion, utilisation of social media and focus on export of value-added teas by putting in place infrastructure enablers.
The above countries have been selected based on the parameters of market attractiveness and potentiality and ability to compete by the Indian tea industry. The foremost objective of the entire exercise is to position Indian tea as an over-arching umbrella brand under which five identified promotional activities would be designed, co-ordinated and implemented by reinforcing Brand India, which connects the target traders and consumers.
This is expected to result in prominent brand recall for Indian tea over a short to medium term so as to translate into significant increase in value market shares in the targeted markets for years to come.
Q: What is being done to boost domestic tea consumption? Any marketing efforts in this direction? CTC or orthodox — which tea gets priority now?
A: Domestic consumers prefer CTC teas and in the global market there is a good demand for orthodox teas. Keeping this in view, both types of teas are given due importance in the promotional work of the board.
However, special support by way of cash incentive is being provided to the producers to increase orthodox and green tea production.
Q: Is the board looking at areas which did not get much focus earlier ?
A: The regulatory role of the board, which is one of its primary functions, would be given due importance.
For effective discharge of regulatory functions, a comprehensive national programme of tea regulation has been formulated for implementation during the Twelfth Plan period.
A number of activities are being given priority and taken on a mission mode for implementation at the national level.
Q: Has the board been able to utilise the sanctioned money for the Eleventh Plan. What are you going to do to see that the money received in the Twelfth Plan is utilised to it’s fullest and targets are met?
A: The board received Rs 745 crore during the Twelfth Plan period and the entire fund received from the government had been fully utilised. The question of non-utilisation of the sanctioned money, therefore, does not arise.
Several refinements have been introduced in order to ensure speedy disbursement of the funds to the eligible beneficiaries. Some such refinements include direct transfer of funds to the accounts of the applicants through online transfer rather than sending the cheques by post.
There would be more decentralisation of the powers to the zonal offices so that they handle the entire disbursement process instead of central processing adopted hitherto in head offices in respect of most popular schemes such as Special Purpose Tea Fund and orthodox subsidy scheme.
Q: A vexed problem has been the price-sharing formula, which has never been sol-ved. What is being done on this?
A: The crux of the problem lies in establishing transparency in the transactions between the bought leaf factories and the growers.
Being very small and highly fragmented holdings and being unorganised, the individual growers end up in disposing their green leaf to agents, who, in turn, supply the green leaf to various bought leaf factories.
In the process, the growers do not get to know which factory has received their green leaf and the price received by the factory for the teas. Under this opaque system, the biggest casualty is transparency.
To address this issue in all fairness, the board has alre-ady set up district price monitoring committees under the chairmanship of respective district magistrates in seven major tea growing districts — five in Assam and two in North Bengal. These have been advised to monitor leaf movement and price-sharing mechanism being adopted by the bought leaf factories.
The board has also assigned a study to the Institute of Cost and Works Accountants of India (ICWAI) on the cost factor involved in production of green leaf at the field level and processing and marketing cost for the factories.
Q: Organic tea production is still very low though it takes a long time to get premium pr-ice. What steps are being taken for promotion of organic tea?
A: Organic production entails additional cost not only during production but also in getting it certified and marketed.
In order to fetch a premium, it is necessary for the producers to go in for direct marketing rather than through intermediaries. Conversion from conventional to organic tea also not only leads to immediate crop loss during the conversion period, but also takes nearly 10 to 12 years to regain the original level of production.
It is proposed to provide special incentives towards cost of replanting/replacement of old tea areas when they are converted to organic. For such activities the subsidy would cover to some extent the value of crop lost during the gestation period.
Incentive would also be provided for new planting and certification cost. Preference would also be given to organic tea producers for participation in international fairs and exhibitions.