A Second Chance for Darjeeling Tea

The weather was just perfect this spring. Almost all tea-growing regions in the country, particularly parts of Darjeeling and Assam, had enjoyed good winter rains. After cloudy weather and a smattering of rain in early March, sunny blue skies stretched over Darjeeling, promising a beautiful spring crop to delight connoisseurs across the world. Then Covid-19 happened. With news of the virus spreading in pockets across India, the Tea Board of India mandated the closure of tea gardens across India until further notice. That was March 23, a Monday. A day later, Prime Minister Narendra Modi declared a 21-day nationwide lockdown. An advisory was sent out asking gardens to “skiff and discard those overgrown leaves and pluck and manufacture only the subsequent growth”. This was issued in order to uphold the quality of Indian teas in the face of a global pandemic.

The Indian tea industry is going through something entirely new. For the first time in history, an entire batch of expensive and exportable first-flush tea leaves has literally been flushed down the drain due to the suspension of operations in tea estates across the country. The spring flush is famous worldwide for light, bright liquors and an intense aromatic experience unlike any other. This is a prized revenue earning period, particularly for Darjeeling planters who produce roughly 25 per cent of their annual output during this time, accounting for 35-40 per cent of the yearly revenue. Nearly 90 per cent of the produce from the Dooars region in West Bengal and throughout Assam has been lost due to the lockdown. In Darjeeling alone, about 0.8 million kg of prime spring flush tea has been laid waste. In total, it is estimated that approximately 150 million kg of production was lost in this period.

In the initial days of the lockdown, planters were hopeful that tea, being an essential commodity, would be exempted so that estates could continue to manufacture and maintain the supply chain. However, this hope was short-lived. On March 26, the Tea Board of India sent out a clarification noting that “all tea gardens in the country are under lockdown and are NOT operational” and advised planters not to believe messages to the contrary doing the rounds of social media.

On March 28, the Government of West Bengal allowed tea estates in the state to conduct spraying and irrigation activities in groups of five or less in a squad. The same day, tea gardens in the Nilgiris were granted permission by the Agricultural Production Commissioner & Principal Secretary to the Government of Tamil Nadu to manufacture and produce tea, subject to normal restrictions like adequate social distancing and other safety precautions.

There was intense pressure from various tea associations in Assam on the State government to allow tea gardens to resume operations from April 1 subjected to all safety guidelines and social distancing protocols being followed. The ground reality was far more bleak. With cases of Covid-19 infections on the rise across India, few tea pluckers willing to report to work.

The Consultative Committee of Plantation Associations (CCPA), the largest apex body of tea associations in India, wrote to the Central Government requesting a relief package. “The tea industry is facing a severe cash crunch, impeding its ability to cope with wage and other related obligations of the 1.2 million workers,” wrote. Vivek Goenka, the chairman of both the CCPA and the ITA (Indian Tea Association). The CCPA was seeking the Centre’s intervention to support wage payments through direct transfers of Rs 1,000 per week into the workers’ accounts for three months. It further requested for the subsidisation of employers’ portion of Provident Fund contribution for three months, with an estimated financial impact of Rs 145 crore. The industry body also pleaded for granting a moratorium for one year on all loan repayments along with interests.

The first sign of relief came on April 3, with the Ministry of Home Affairs, Government of India, granting exemption to the tea industry including plantations, allowing them to continue operations with 50 per cent of the workforce, by an addendum to the Consolidated Guidelines issued earlier.  The addendum noted that social distancing and proper hygiene must be ensured. This meant that estates needed to get permission from the Chief Secretary of the state and the District Administration before deploying workers and reopening the tea estates.

Despite the Government’s initiative to reopen tea estates, north India remained closed even as the southern states of Kerala and Tamil Nadu resumed operations on April 8. Kerala issued safety guidelines prohibiting workers from outside from entering the tea gardens. Only workers residing in the tea estate could come to work. Plucking and processing could be done only within the premises of the tea gardens. According to the guidelines, only one worker could be deployed for harvesting a half-acre block. Product could only be moved from factories to warehouses. Irrigation and pesticide application were permitted but mustering was restricted. The ITA thought this protocol, restrictive as it may sound, could be replicated in the tea gardens of Assam, but some trade unions stood in the way of reopening the gardens.

On April 6, Kaushik Basu, Secretary, Darjeeling Tea Association, was of the opinion that if the gardens opened today, 40 per cent of the first flush teas, the largest revenue earner for the Darjeeling tea industry, could be salvaged. “A further delay will completely ruin the first flush teas,” he said in a media interview. The tea associations counted days as they anxiously waited for the State Governments to implement the relief granted by the Centre. The Assam Government was yet to take a decision and West Bengal Chief Minister Mamata Banerjee gave clear orders that gardens in Darjeeling, the Dooars and the Terai region would remain closed for the duration of the lockdown.

The Centre has failed to support the tea industry in its hour of need, says PK Bezboruah, Chairman, Tea Board India. Himself a planter, he had written to the Centre seeking a package of around Rs 1,500 crore, “Unions want gardens to pay full wages even if we are not operational. If the lockdown continues and the industry is not given benefits, it will be an unprecedented setback,” he says.

The Assam Government allowed gardens to irrigate and spray pesticides, but a decision on plucking and operating factories was put on hold reportedly due to pressure from some groups. On April 9, the West Bengal government allowed skiffing, and decided to permit 15 per cent of the labour force to work on a rotational basis. Finally, on April 11, after almost a fortnight, the Assam Government gave the nod to resume operations at tea estates with 50 per cent of the workforce. Factories have been asked to house workers inside the campus. The district administration will provide ASTC buses for one-time transport of workers to the factory. The Tripura Government, too, has issued a similar order. Some preliminary work has resumed in select tea estates located in Dibrugarh, Jorhat and Darrang districts.

The West Bengal Government, on April 11, issued a much-awaited directive allowing operations including plucking of tea to be resumed with the deployment of 25 per cent of the total workforce at a time, subject to social distancing and sanitisation practices.

Looking ahead: The crucial second flush

Once the estates resume operations on Monday, April 13, it will take a minimum of two to three weeks to get the tea bushes back in shape. Planters in Darjeeling stand to lose Rs 150-200 crore in these three weeks before they can start plucking. Many say it will be difficult to move past the current crisis, considering the industry is already reeling from the loss in market share to other countries during the 104-day-long Gorkhaland agitation in 2017, which saw a closure of tea gardens in the region.

The Indian Tea Exporters Association (ITEA) chairman, Anshuman Kanoria, says Darjeeling tea estates are yet to recover from the slide in 2017. “The incident forced many top global importers to drop Darjeeling tea from the list. Another disruption in supply could be fatal for the variety,” he worries.

Upon resumption of operations, workers will take a fortnight to skiff and pruning the tea bushes, which have overgrown in the interim period of 21 days. The new shoots will start to appear a few days after skiffing. The silver lining here is that if everything goes as planned, India may not lose the second-flush tea crop that constitutes the bulk of the country’s production.

Atul Asthana, Managing Director of the Goodricke Group, which owns 30 gardens, estimates the total loss to the tea industry at close to Rs 1,500 crore. “Even if the gardens open around April 15, we will lose the entire crop of April. Darjeeling will be the worst hit.” The spring flush from Darjeeling is considered the champagne of  teas around the world and it commands high prices from discerning buyers in Germany and Japan. Planters say there have been some enquiries for black tea from regular buyers in Germany, Britain and the US, but the lockdown poses significant challenges in fulfilling those orders. Further, reopening tea estates with 50 per cent workforce means that the ability to bring back the tea bushes back to prime plucking health will also be slow. Sujit Patra, Secretary, Indian Tea Association, points out that courier services and shipping lines have to become operational so that the tea industry can send bills, samples and shipments. Exporters are also worried about the availability of containers to export destinations once the situation eases.

Industry experts predict Indian tea exports may fall 6-8 per cent this year owing to the Covid-19 pandemic, which has paralysed the supply chain as well as pushed the global economy towards recession. Estimates suggest that because of the loss of the first flush in Darjeeling, there could be a shortfall of 16-20 million kg  this year in export volumes. Moreover, if the production and the quality in the second flush, beginning May, are less than normal, the export shortfall could be worse. Since major tea export destinations–the US, the UK, Japan, and Iran–are currently grappling with the pandemic and their economies have taken a hit, the demand for tea, especially luxury tea which is a discretionary spend, may fall steeply. Also, consumers can opt to downgrade their purchase, which will hurt Indian exports.

The challenge for India will be to not lose out on its biggest export market, Iran, which bought approximately 54 million kg of tea in 2019. The disruption resulting from the pandemic comes just at a time when unit prices of Indian tea were on the rise commensurate with better quality. The unit price in the UK improved from $2.96 a kg to $3.07 a kg in 2019, while in Iran, the price improved from $3.73 a kg to $3.91 a kg.

With regular tea production expected to return to normalcy in early May, the industry may be bolstered by a spike in prices of the small volumes of first flush that will hit the market. There were encouraging signs at the recent tea auctions held in Cochin (Sale 13), which saw prices moving up by Rs 10-15 per kg or more, at times with offtakes of more than 90 per cent. This should help an industry struggling with stagnant prices over several years.

Even with uncertainty in exports in the coming months, India’s internal consumption is expected to remain buoyant, which will reflect on prices at the farm level. In more ways than one, 2020 will be a decisive year for the Indian tea industry.

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