
In late 2018, the Tea Board of India directed gardens in the north to close early to prevent processing low-end tea. Production was expected to decline, but a full-year tally shows the opposite―a new record of 1,350 million kilograms, up from 1,250 million kilograms in 2017-2018.
The rise in production is solely attributed to the small tea growers (STG), whose contribution to total national production stands at 48% (growing from 20% in 2010). For 2018-2019, STGs have produced 653.6 million kilograms compared to 696.5 million kilograms from big estates. The industry views small tea growers with mixed feelings—they make up the “unorganized sector” planting on new forest land, with young bushes that are offering a high yield—as opposed to the heritage plants on the older legacy estates.
In addition to aging trees, large producers complain that production has slowed due to sluggish prices (prices are averaging INR140.1 per kilogram at auction), high wages (in March 2018, tea garden workers in north India saw a wage increase of 22-25%) and a domestic market that has plateaued.
The organized sector—the larger estates—question the quality of tea from the STGs as well as their largely unregulated use of pesticides. This, they claim, adversely pulls down prices at auction. The reality is that the small tea grower is here to stay, and is promising to try to make a better tea.

Bijoy Chakraborty, president of the Confederation of Indian Small Tea Growers’ Association (CISTA) offers some context: regulation of STG began in the 1970s, in Himachal Pradesh, Palampur and the Nilgiris. It mushroomed in Assam and Bengal in the 1980s, peaking after 2001. STGs were prominent in the 1980s, the heyday of Indian tea industry, when Russia was a favorite market. To meet demand, the government set an annual target of 1,000 million kilograms by 2000. Larger estates began planting on barren land in the rural areas. Locals in these villages were inspired to start tea cultivation, seen as a more sustainable agricultural option. Families in the tea regions of Bengal, Assam, and the Nilgiris took to tea planting in small areas.
The STGs plant low maintenance clonals—TB 25, TB 26 are popular—selling the green leaves to factories or estates. The leaf they harvest is for mass market consumption and does not feature in the specialty segment. Their advantage over larger gardens is lower cost of production—significantly lower since most STGs cultivate less than 1 hectare, draw labor from among the immediate and extended family, and are not involved in costly processing and marketing. “Young bushes, intensive care, no managers,” lists Bijoy as reasons why the STGs are succeeding. The disadvantages include a lack of knowledge on how to produce quality leaves and a low price for the small volume harvested by individual growers.

The Indian Tea Association (ITA), a trade association of tea producers, has partnered with Solidaridad to launch TRINITEA, aimed at the STGs. This program, planned for Assam and West Bengal, will address compliance with national and international standards. The goal is better quality production and better prices.
The tea board too has come forward with support and subsidies. In 2012-2013 three processing units were established in Jalpaiguri, to process leaves from STGs. It has been successful, leading to four more processing units planned for this year. These Farmer’s Produce Organizations (FPOs), are part of the agricultural ministry’s attempt to mobilize small growers.
Says Bijoy, “STGs have the capability to produce low-cost, high quality, export-friendly tea, and we are taking the support of the tea board to improve quality.”
Domestic Market
Tea drinking is not as popular today with young people. Producers have urged the tea board to generate more interest by more effectively marketing tea. In April 2018, the tea board appointed Deloitte Consulting to study consumption patterns and offer recommendations. Details of the study are not available publicly, but a summary indicates a shift in consumer behavior in the Tier 2 and Tier 3 cities, with a growing preference for packaged tea, and for green tea. Currently 80% of households in urban India and 75% in rural areas now buy packet tea as it is considered safe and easier to store.
Consumption favors the domestic market, with about 80% of the tea consumed locally compared to 1,267 million kilograms for export. India is second largest producer of tea but the fourth largest tea exporter globally with sales of $837.3 million in 2017-2018. Per capita consumption remains low compared to neighboring countries and the Middle East. Tea is consumed in 88% of Indian households and overall penetration is 96% but relatively little is consumed out of home. Only 7% of households purchase tea from specialty tea retailers.
The ITA has is trying to generate popular interest in tea. In 2015-2016 the association financed a campaign targeted at teenagers in college. The campaign, called Chai ho jaye, introduced a first-of-its-kind tea carnival. Other campaigns targeted school children, encouraging tea as a beverage. Last month, the ITA announced an INR5 million ($72,000) social media campaign targeting 15- to 35-year-olds, to boost tea consumption. The campaign will involve promotions on Facebook, YouTube and Instagram for six months to a year.
The tea board is keen to strengthen the auction system, encourage ecommerce, and collaborate with tea packers to promote the beverage. Citing quality and compliance as the two factors to address, the tea board has launched several initiatives, including an AI-based mobile app targeted at STGs with a focus on monitoring and improving quality.
Results are not expected overnight. A deficit in Kenyan tea production promises some relief. Kenyan tea has managed to maintain production, prices and quality – leading exports to markets such as the UK. This year, however, drought predictions imply low production and exports. Even as India’s second flush prepares to arrive on the market, the tea industry can feel confident that it will be enough to meet demand.
Sources: Times of India, Rediff, Economic Times, Hindu Business Line