The spread of the Covid 19 pandemic and the subsequent lockdown last year actually helped tea producers realise better price at the tea auctions as demand surged with an increase in home tea consumption and shortage of tea supply, Dr KK Dwivedi, Principal Secretary, Industries and Commerce, Government of Assam, who is also the chairman of the Guwahati Tea Auction Centre (GTAC), tells Shampa Bahadur of indoasiancommodities.com aout the business of tea in an interview.
How much tea is produced in the country and how is Assam placed in the narrative?
India is the second-largest tea producer in the world delivering about 1400 million kilogram (Kgs) of tea in a year. Of that nearly 52 percent or 750 million kgs are produced in Assam. The state has the largest concentration of tea plantations in the world and is the single biggest tea producing area in India.
Out of the total tea production in Assam, nearly 50 percent, about 300 to 400 million kgs come from small tea growers the rest from large tea estates. In Assam, there are 800 large tea producers cultivating tea in more than 75 hectares of land and about 150000 small tea gardens operating from less than 10 hectares. Nearly 20 lakh people are directly or indirectly associated with the tea industry which includes activities like plantation, plucking, marketing etc.
What is the role of GTAC?
GTAC was set up in 1970 out of the commitment of a few pioneers. Thereafter it has been nurtured and sustained through the joint efforts of the state government and the four segments of tea trade – sellers, brokers, buyers and warehousemen.
Initially, there were only a few members, but today there are 29 members. It is one of the busiest tea trading facilities in the world, it is the second-highest selling centre in the world, recording a total sale of 204 million kg of tea during 2019-20 fiscal of primarily crush, tear and curl, or CTC, tea.
The small tea growers do not participate in the auction process instead they directly sell in the open market. The large tea growers, however, have to sell at least 50 percent of their tea through the auction centre. In GTAC, we are auctioning about 200 million kgs per annum. The rest is sold privately in the open market.
About 200 buyers are registered to participate in the online auction process and to facilitate the sale of tea there are 8 registered brokers who participate on their behalf.
How is the price of tea decided?
Price is essentially a product of demand, supply and quality of the tea. Typically, tea tasters collect samples from various warehouses of different tea gardens. After ascertaining the quality of the tea by tasting and grading they quote a price for the online auction process. Higher the price better the quality of tea. The tea thus valued is auctioned in lots, and dispersed to respective buyers all over the world.
The pricing of tea also depends on demand and supply. For instance, during the initial lockdown phase to control the spread of the pandemic, there was a disruption in distribution which pushed up the demand for tea. Through the auction centre we realised a very good price for tea, which was about Rs226 per kg as against Rs 140 per kg the previous year.
The high trend continued through the year and we are expecting similar price points this year as well. So even though out-of-home tea consumption dropped the home consumption increased.
Is there a thrust to promote speciality teas?
At GTAC, we do not sell packaged or blended tea. We only facilitate the sale of pure tea straight from the gardens.
We realised that in the market we don’t really get pure tea. What is available is mostly blended, or flavoured tea. Therefore to give an experience of pure teas available from our tea gardens, we have started a café, called GTAC tea lounge. There we also sell pure and single-origin quality tea.
What are GTAC’s plans going forward?
Interestingly, in India the per capita consumption of tea is very low, about 750 gms per year, in contrast with Europe, the USA, Middle East among others. In Iran, for instance, the per capita consumption of tea is about 2 to 3 kgs per year.
This per capita level of consumption has remained the same for the last few years. That is why we are planning to promote tea consumption through better awareness and easy access to markets.
The foremost thing we are planning is to improve the quality of tea by lessening the use of pesticides and chemicals. We are talking to FSSAI to facilitate more inspections so that the quality of tea is maintained.
We also intend to set up our own lab in the auction centre so that the tea, which is ready to be auctioned is tested and all the quality checks are met. We are working on this with the union ministry for food processing. They have assured us that they will provide some funds for setting up the lab at GTAC.
We are also exploring the option of auctioning blended tea. The tea that goes out of Assam fetches a much higher price once blended. That only benefits the third party. Companies buy tea at auction for Rs 200 – 300 per kg and sell it to the consumers for Rs 2000 per kg. We want to promote the interest of producers, marketers, and businessmen of Assam by encouraging them to get into blending, packaging and marketing the tea themselves.
In Assam, nearly 75 per cent of tea grown is black or CTC tea. To change that we are also encouraging planters to produce more speciality tea, like organic tea, green tea, orthodox tea, white tea, purple tea among others. Of the 15 types of tea grown here, 7 to 8 are very popular. Silver needle white tea is the costliest tea grown in Assam and last year it fetched Rs 75,000 per kg. the Assam government is also now offering Rs 7 per kg incentive to planters to grow speciality tea.