Thanks to Smallholders, India Tea Exports Rebound to Record Levels

Assam Tea Gardens

Outstanding yields in South India offset declines in Darjeeling as tea production reached a record 1,279 million kilograms in 2017, up about 1 percent from 1,267 million kilograms harvested in 2016. Exports topped 240.7 million kilograms during calendar 2017, a level not seen since 1981, according to the Tea Board of India.

Exports were driven by demand in the Middle East and China, and lower production from competing growers in Kenya and Sri Lanka. Export earnings grew to $736 million (INRs 4,731.7 crore), an increase of 5.9 percent compared to the previous year. Volume rose by 18.2 million kilograms, an 8.2 percent increase, according to Tea Board statistics.

These totals were attained even though many large plantations in Darjeeling and Assam experienced reduced yields. The continued series of records and a return to export tallies not seen since the 1980s reflects the importance of smallholders in meeting production gains critical to meeting domestic demand. The majority of India’s 200,000 smallholders harvest tea on fewer than 25 acres (10 hectares), but their numbers have increased significantly.

Rise of the smallholder

Small tea growers accounted for 44 percent of India’s total green leaf harvest in 2016/17. This is up from 30 percent in 2012. The bulk of small tea growers’ production has come from gardens on forest land from younger stock. Almost 38 percent of the area under cultivation is from tea bushes that are more than 50 years old with 9–10 percent of bushes 11–49 years of age. Only 26 percent are 10 years old and younger, according to a report in The Hindu. The age of a bush is directly linked with yield, making it likely that smallholders will soon produce most of India’s tea.

Pricing remains a challenge. The January “bought leaf” average per kilo was 20 cents (INRs 13), down from 27 cents per kilo last February. Smallholders are pressing for a price floor that will cover production costs including expensive soil inputs and plant protection chemicals used by plantations. Factories that purchase fresh leaf from growers must pay the minimum posted monthly, but this fluctuates and is often lower than expenses.

Tea Board chairman Prabhat Bezbaruah, told World Tea News that many tea gardens in India, especially in Assam, are producing special teas that are fetching good prices in the auction as well as selling directly to retailers.

“Quality tea has good demand in the international market and it’s a good sign that many gardens are taking up to making quality tea vis-à-vis special teas in India,” he said.

North Indian exports grew by 15 percent through October. This augurs well for the country being able to reach its medium-term export target of 270 million kilograms by 2019–20, explains Bezbaruah.

In 2013, the Tea Board, with support from Hindustan Unilever, IDH, and Tata Global Beverages, financed the Trustea (Sustainable Tea Program), which today ensures that about 500,000 metric tons of tea is harvested sustainably by 40,000 smallholders. Compliance with national and international standards will improve the competitiveness of these tea farms.

Plantation owners are also seeking ways to lower costs. One recent development is relief from the burden of social costs mandated through legal frameworks such as the Plantation Labour Act, which requires plantations to provide medical care, housing, subsidized rations, safe water, and sanitation. The tea industry pegs this cost at 10 percent of production. These requirements do not apply to smallholders.

In 2017, the National Health Protection Scheme will provide health insurance coverage of $7,785 (INRs 500,000) per “poor” family nationwide. This includes secondary and tertiary health care. The scheme is expected to benefit 500 million people.

“The sheer size of the scheme lends hope that the tea garden workers would be included within the scheme, thereby extending reasonable health care for a large sector of the tea garden population,” a senior official at Tea Association of India told The Hindu.

Demand rebounds in Middle East

India, the world’s second biggest tea producer, serves a largely “local” export market. Exports are mainly CTC (cut, tear, curl) grades shipped to Egypt, Pakistan, and the United Kingdom and orthodox full and broken leaf teas to Iran, Iraq, and Russia. Tea destined for the U.S. and Canada is often first sent to the UAE for blending.

Egypt imported 6.16 million kilograms more Indian tea in 2017 than the previous year and Iran added 4.15 million kilograms to its annual order.

A growing thirst for black tea has made China a new buyer. Last year, China purchased 2.8 million kilograms more tea than in 2016. In early February, India hosted in Shanghai a tasting for prominent Chinese importers and continues to court overseas markets in Asia.

India is also turning to mechanization to boost yields. To exceed last year’s totals, South India harvested 232 million kilograms and North India, including Assam, produced 1,046 million kilograms, down only slightly from the previous year despite a Darjeeling harvest shortened by three months as workers remained home in protest. Production grew 9.19 percent in South India where harvesting is largely mechanized.

November and December were strong months with output nationwide increasing to 70 million kilograms compared to 64 million kilograms in December 2016. Assam continued to top the country’s production table at 654 million kilograms for the year, about 16 million kilograms less than 2016. West Bengal produced 368 million kilograms (up 12 million kilograms). Tamil Nadu produced 165 million kilograms and Kerala 62 million kilograms.

Exports from North India touched 148 million kilograms while that from South India was 92 million kilograms.

Kenyan tea production declined in 2017 due to a drought. Kenya accounts for around 16 percent of the global black tea production and is the largest exporter of black tea.

Pullock Dutta in Assam contributed to this report.

Sources: The Hindu Business Line, Financial Times

Tea Production India

Year Production
(mln kilos)
Exports (mln kilos)
2017 1,279 240
2016 1,267 222
2015 1,208 228
2014 1,207 207
2013 1,200 219
2012 1,126 208
2011 1,115 215

Source: Tea Board of India