Kolkata: Apex planters’ body Indian Tea Association (ITA) on Wednesday said a floor price of tea is needed to cover the costs of production, its chairman Vivek Goenka said.
Speaking to reporters virtually, Goenka said ITA had engaged Ernst and Young (E&Y) and Khaitan and Company to do a holistic study on the tea industry, adding that idea of a floor price of tea has emanated from there.
According to him, the floor price will be determined by the cost of production and the auction prices will be above the floor price level.
He said 50 per cent of the teas are being sold below Rs 200 per kilogram, lower than the cost of production. “The tea industry is not sustainable at this price level”, he said.
Coupled with falling auction prices and exports, ITA said it is urgent that domestic consumption levels have to increase. Per capita consumption of tea in India is lower than those of neighbouring countries, he said.
To increase exports, he said the tea industry should be given financial support by the Tea Board and Commerce ministry to conduct global campaigns and hold buyer-seller meetings.
Goenka said an increase in production was mainly due to the small tea growers (STGs), who are contributing to more than 50 per cent of total production.
ITA suggested that there should be regulations to check unfettered expansion of tea areas.
Regarding exports, which dipped to 180 million kilograms in 2021, he said the Iran payment issues is a big deterrent for sending tea to that country, besides shortage of containers and high ocean freight.
ITA also said Tea Board should continue with the orthodox incentive scheme at higher rates to encourage production of good quality tea.
Goenka also voiced concern about the rise in imports in the form of sub-standard tea which was earning a bad name for Indian tea.
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