Assam: Tea industry suffers 500-cr loss due to lockdown

Assam: Tea industry suffers 500-cr loss due to lockdown

Budget 2021 Budget 2021

The tea industry of Assam, the biggest organised industry in the region, has suffered a loss of Rs 500 crore during the lockdown. The figure was stated by the State Industries Minister, Chandra Mohan Patowary.

In 2019, around 52 percent of India's total tea production was from Assam.  Assam produces 715.49 million kg of India's total production of 1389.70 million kg of tea.  As per reports, production is expected to go down by 32 million kg which translates to losses of more than Rs 500 crore.

As supply lines are hit due to the lockdown and the balance between demand and supply is disrupted, the industry is expected to face tough times ahead. Following the relaxations issued by the govt, tea auction has restarted and warehouses resumed operations in Assam. However, several complex issues still remain.

A multifaceted problem

The first hurdle is that of production. As lockdown commenced, initially, there was a total halt in manufacturing. Then the workers were allowed at 50 percent attendance. This hindered the working capacity of the sector as output was low, leading to a wastage of tea leaves.

Speaking to Inside Northeast, Adviser, North Eastern Tea Association (NETA), Bidyananda Barkakoty says that "problems will get bigger in the upcoming months as the plucking season reaches its peak and there are more tea leaves to be plucked".

The second effect will be that of demand. As consumption lessens in the country and worldwide, the markets to which Assam sells its tea will lower their purchasing requirements. The manufacturers of tea will have no buyers. The NETA advisor says, "that markets in Rajasthan, Maharashtra, and Gujarat which are big buyers of Assam tea, are themselves under severe distress due to the corona epidemic. As they stop buying, then even after good production in Assam, what is the benefit?"

Also, Read: Assam Tea Industry Incurs Rs 1,200 Cr Loss amid Lockdown; Cultivators Look towards Govt for Rescue

Another important factor to be accounted for is labour. About 17 percent of employed people are engaged in the tea production sector, which contributes a sizable amount to the economy. At present, around 8 lakh workers are engaged in the big tea gardens and about 3 lakh workers are working in the small tea gardens.  Bidyananda Barkakoty is confident that unlike other business establishments, the tea sector has always been stable and has never "laid off" workers. So far, 70% of them have been paid their salary and remuneration in the form of rations and other facilities have been provided. "But, if the markets remain disrupted, things might take a wrong turn", says Barkakoty.

Apart from labour, cultivators who provide the raw materials have also been affected. Tea growers who were largely dependent on tea factories for the sale of raw leaves have suffered huge losses. “The leaves lost their quality with time. They could not be sent to factories at the right time. Therefore, we just had to throw away the leaves. As the lockdown has been relaxed, we will have to resume work, and to do that we will need fertilizers and other medicines for the leaves. This is where the real problem lies. Fertilizers are not readily available in the market and the prices are in the higher ranges. Urea, which costs Rs 266, is now being sold at Rs 500. MOP, another necessity for cultivators is now being sold at Rs 1200, while SSP is being sold at Rs 600,” said Mridul Buragohain, a tea grower from Demow in Upper Assam, sharing his concerns with Inside Northeast.

How the working-class will be affected

The tea sector needs intervention to avert a crisis. The NETA adviser has proposed that the govt direct banks to facilitate loans to tea producers. He says, "without monetary fund flow, the investment will stop" and this can impact the sector along with the workers associated with the industry.

The most vulnerable are the working classes. "The labour system dates back to a colonial structure and has suffered historical neglect. That has led to the tea labourers having weak immunity", says Angshuman Sarma, a research scholar from JNU.  With regard to the loans, he wonders how they will be returned if the pandemic intensifies. Sarma raises another important issue regarding the contradictions with monetary backing from the govt. The fiscal stimulus, if given, stands to miss out on a significant population of the workforce with the casualisation of labour that has been rampant ever since the 1970s. The tea industry is now dominated by small players leading to outmigrations of the workforce. These workers are extremely vulnerable as they are employed on the demand intensity of the production which the corona stands to lower further.

Meanwhile, the State Industries Minister said that the state government has engaged the services of UK's consultancy firm, EY, to study the impact of the lockdown on the industrial sector in Assam. With such uncertainties looming ahead, only time will tell how the state govt manages to avert a crisis.

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Edited By: Admin
Published On: May 08, 2020