SILIGURI, India
Union leaders lifted a tea embargo in the Dooars on condition garden owners and government officials meet this week to resolve a wage dispute.
Garden owners complained of combined losses of INR 20 crore ($4.5 million) a day. The Dooars and Terai region, which is in the middle of the harvest, annually produces 220 million kg of tea. It will take several weeks to clear the growing backlog as thousands of sacks of tea await catalouging prior to auction.
"Tea companies will face cash problem due to this blockade,” predicted A.N. Singh, managing director of Goodricke Group. He told the Economic Times “it will be difficult for them (growers) to pay back as sales of tea have not happened in the last week.”
The Akhil Bharatiya Adivasi Vikas Parishad, a union representing tea workers, is seeking a daily wage of INR 250 ($5.67) from the current INR 67 ($1.52). The two unions represent 300,000 workers. Government officials agreed to meet with union officials and owners Thursday.
On July 26 Progressive Tea Workers’ Union announced a one-day embargo that was extended through Monday. Union members stopped several trucks piled high with processed tea according to The Calcutta Telegraph. The newspaper reports that “the agitation is coming at a time the price of the produce has plummeted because of over-production this year.”
Baijnath Naik, general secretary of the Progressive Union, was quoted as saying, “Our supporters have started halting the dispatch of tea from gardens across the plains. We have decided that the agitation will continue for an indefinite period unless our demand is met.”
The paper reported “there are fears that the price will come down further as the market will be awash with manufactured tea if the embargo is lifted after a prolonged period.”
Similar action last February in the Darjeeling district of West Bengal resulted in a wage increase of 90 INR ($2) per day. In Darjeeling, which exports 40 percent of its tea, prices held steady or were increased to offset the additional cost of production. (SEE: India Growers earning Top Prices for Premium Tea).
The situation is quite different in Dooars and Terai where demand for exports has fallen as production has increased. Since January the region has produced 50,491 million kg compared to the 47,560 kg during the same period last year. Prices at the beginning of the harvest were INR 130 to 150 ($2.95 to $3.40) but have since fallen to INR 120 ($2.70) per kg of CTC black tea.
K.K. Mintri, a planter and a member of the Tea Association of India told the newspaper that “Tea prices are coming down by Rs 4-5 at every auction because of a surge in the supply and dip in exports. In case the embargo continues for a fortnight, the garden owners will face a financial crisis. We are apprehensive about law and order problems as some planters might find it difficult to pay the laborers their wages.”
Traders say prices will fall even more once the embargo was withdrawn. “The market is flush with CTC tea now because of higher supply and less exports. Once the strike is withdrawn, each garden will desperately try to clear its stock and earn money. This would lead to accumulation of tea in the market and further decrease in the price,” said Ankit Lochan, a tea merchant and exporter based in Siliguri.
CTC teas auctioned this week brought INR 126.51 ($2.85) per kg with dust teas earning INR 124.76 ($2.82) per kg on an average.
Source: The (Calcutta) Telegraph, The Economic Times.