Tea Industry Faces Crisis as Prices Rise Amid Production Drop and Climate Challenges

The tea industry in North India ( Assam & Dooars) is facing a severe crisis due to significant drops in production, driven by erratic weather patterns and rising input costs. Data from the Tea Board of India reveals a concerning picture for both Assam and West Bengal, the two largest tea-producing states in the country, where erratic rainfall patterns and pest infestations are leading to substantial crop losses.

As of July 2024, Assam has seen an 11% drop in production, while West Bengal has experienced a steeper 21% decline compared to the same period last year. These reductions are a direct result of adverse weather conditions. Between March and May, key tea-growing regions in West Bengal recorded rainfall deficits of 50-80%, while Assam saw a 10-30% shortfall. The situation worsened with an excess of rainfall during June and July, weakening tea bushes and leading to pest infestations that further reduced yield. The industry is bracing for more crop losses in the coming months, with August seeing a drastic 523.7 mm decrease in rainfall in North Bengal.

The impact of these fluctuations has been catastrophic for production quality, especially as the first and second flushes—considered the highest-quality teas—were most affected. Severe pest and disease outbreaks, including infestations of Helopeltis, Looper Caterpillar, Green Fly, and Red Spider Mites, have compounded the issues. In addition, diseases like Fusarium dieback, Bacterial Blight, and Red Rust have spread across many tea gardens, exacerbating the crop damage.

With these challenges, production figures for 2024 are expected to drop by 160-170 million kilograms, according to revised estimates from the Tea Board of India. While tea prices in North India have risen by approximately 13%, this increase has not offset the financial strain caused by reduced production. Assam has seen a 15% increase in prices compared to an 11% drop in crop yields, while West Bengal, despite a 21% loss in output, has only witnessed a 7% rise in prices.

Internationally, the situation is even more challenging, with export prices falling by 4% to date. The industry's liquidity issues are compounded by the lack of subsidies for developmental work undertaken in prior plan periods. While the government of Assam has extended fiscal incentives, the industry is calling for similar support in West Bengal, especially in light of escalating food grain prices, which are placing additional financial burdens on tea estates.

The future for the tea industry in North India remains precarious, with rising input costs, including wages and bonuses, expected to exacerbate the situation. As natural forces continue to wreak havoc on tea production, the industry is urging both state and central governments to provide necessary financial relief and regulatory flexibility to weather the current storm.

Also Read: Assam's Tea Industry Faces Crisis Amid Climate Change-Induced Production Losses