Darjeeling tea industry hit by climate change, reduced prices

Planters of Darjeeling, the premium tea belt of the country, are worried by the twin blows of falling productivity and low price realisation in their export markets.

Depressed economic conditions in traditional markets such as western Europe and Japan have led to reduced prices being offered, industry bodies said on Tuesday.

Production volumes of the 87-odd Darjeeling tea gardens, which used to be in the region of more than 8 million kilograms per year, have plummeted to 6.5-7 million kilograms, primarily due to old bushes, climate change and pest attacks, planters said.

"The Darjeeling tea industry is in ICU. The cost of production has increased, while due to the unfavourable climate, the crop is declining. Exports, which had been the mainstay of the premium tea, are also declining owing to the depressed economic conditions of western Europe and Japan coupled with stagnant unit price realisations," Indian Tea Exporters Association chairman Anshuman Kanoria said.

Many gardens in Darjeeling are on the verge of closure as operations cannot be sustained, he said, adding that the association had been trying to sensitise the Tea Board on the burning issue.

"The Darjeeling tea industry has been affected by factors, which are not within its control. The industry cannot survive without government assistance by way of a one-time subsidy to be paid to the tea planters of the region and also funding for promotional activities," he said.

Kanoria also explained that the one-time subsidy is required to keep the industry afloat and prevent sales of gardens to real estate players as the Darjeeling tea industry has "suffered greatly due to free imports from Nepal under the friendship treaty".

Indian Tea Exporters' Association has suggested the introduction of a minimum import price on tea shipped from Nepal to prevent dumping, he said.

Indian Tea Association secretary general Arijit Raha said, "Both production and price realisations have fallen in Darjeeling".

While production in 2016 was 8.13 million kilograms, it declined to 6.60 million kilograms in 2022. The average auction price of the crop, which was Rs 365.45 per kilogram in 2021, fell to Rs 349.42 in 2022, he said.

"Inclement weather in 2023 has adversely impacted tea production in Darjeeling. During March, the crop was down by 43 per cent," he said.

According to ITA, the surge in the import of tea from Nepal in the last few years had adversely affected the viability of the Darjeeling tea industry.

The volume of imported teas from Nepal surpassed the production of Darjeeling itself, causing stagnancy in the prices, he said.

While the quantum of import of Nepal tea was 11.42 million kilograms in 2017, this has shot up to 17.36 million kilograms in 2022, he said.

In this context, ITA had sought a financial package for the revival of the Darjeeling tea industry in the form of enhancement of the working capital loan and five per cent interest subvention, besides introducing a minimum import price for teas from Nepal, Raha added.