Anil Tanti

Turkish Online Journal of Qualitative Inquiry (TOJQI)

Volume 11, Issue 4, October 2020: 1174-1183

Research Article

Problems and prospects of Marketing of Assam Tea

Anil Tanti
Senior assistant professor, department of Commerce, Gargaon College, Sivasagar, Assam,
E-mail: a.tanti72@gmail.com

ABSTRACT
Tea is considered one of the key export commodities for India. The state of Assam produces more
than 50% tea in India. Tea Industry is played vital role in the economy of the Assam and
contributing about 15 per cent of the state's total income and 3% GDP. Along with the organized
sector, the production of small tea cultivation in Assam has created vast employment
opportunities in the rural areas giving economic movement as well as employment generation.
About three to four million people engaged in this industry and approximately 6000 crores rupees
deposited into national exchequer. The consumption of tea in India in the domestic market has
increased at a faster rate compared to its production. It is known from auction market official
that most of the good quality tea dose not enters into the auction market and owing to this
reason the price setting of tea has been low at the auction market. The study covered to evaluate
the present scenario of tea market in India Including Assam and its problems and prospects in
Assam.

Key Words: Export, Economy, Market, Employment, Price, Consumption

Introduction: Tea is such type of beverage which is most popular in the world and drink next to
water. It plays a vital role in improving the socioeconomic condition of the state of Assam as well
as India. “Assam has the largest tea growing area in the world, accounting for around one-
seventh of global tea production and over 53 per cent of India's overall tea production. The tea
industry of Assam is about 190 years old. According to Tea Board of India, there are 765 big tea
growers with covering 232399.35 areas in hect. and 101085 numbers small tea growers with
covering 10529135 area in hect. that total covers 337690.35 an area in hectares of land in Assam.
It has been producing some of the finest teas in the world. Indian tea industry has recorded the
highest ever production as well as exports in the financial year 2018. The total tea production
was 1325.05 million kgs, – an increase of 74.56 million kgs as compared to 2016-17. In percentage
terms the increase is around 6%. The total quantity of tea exported during the financial year
2017-18 stood at 256.57 million kgs, while the foreign exchange realized from exports of Indian
tea was $ 785.92 million. In rupee terms, the total value of the exports was pegged at Rs. 5064.88
crores during 2017-18,( Indian Chamber of Commerce). Thus, Assam contributes a remarkable

1174
 Problems and prospects of Marketing of Assam Tea

amount of foreign exchange to the national exchequer. But, according to the Tea Board, India’s
consumption rose to 1,145 million kg (mkg) in 2020-21 from 1,116 mkg in the previous fiscal.
According to the report of Hindu Business Line, shows that India’s consumption average
percentage has increase of 2.60 percent. This sector is critical to Indian economy. The Tea
Industry is one of the oldest organized firm sectors with a large network of tea producers,
retailers, distributors, auctioneers, exporters and employees. The major key player in marketing
of Indian tea are Tata Global Beverages Limited, Hindustan Unilever Limited, Gujarat Tea
Processors& Packers Ltd., Amar Tea Private Limited, Organic Indian Private Limited, Pataka
Industries Private Limited and others. Indian Tea exports to Russia, Ukraine, Kazakhstan, United
Kingdom, Netherland, Germany, Ireland, Poland, U.S.A., Canada, U.A.E., Iran, Saudi Arabia, Egypt,
Afghanistan, Bangladesh, China, Singapore, Sri Lanka, Kenya, Japan, Pakistan, Australia. The tea
market has been segmented based on type, packaging, distribution channel, application, and
Region. By type, the market is divided into green tea, black tea, oolong tea, fruit/herbal tea, and
others. On the basis of packaging, it is fragmented into plastic containers, loose tea (packets &
pouches), paperboards, aluminum tins, and tea bags. By distribution channel, the tea market is
categorized into supermarkets/hypermarkets, specialty stores, convenience stores, online
stores, and others. The tea industry of Assam has its own special nature of problems and
prospects which are from the point of view of producers, participants in marketing and labour
unions etc

Under this point of view, it is felt necessary to analyse the problems and prospects of marketing
of Assam Tea .

Objectives of the study:

The present study is an effort to focus the following objectives:

i) To study the marketing scenario of Assam tea.

ii) To study the problems are faced by the tea industry.

Methodology:

The study is done in both qualitative & quantitative approach and based on both primary as well
as secondary data. In oder to achieve the objectives, information has been collected mainly from
secondary sources. The secondary data have been collected from various periodicals, national and state
government reports and publications, annual reports of Tea Industry, Publication of Tea Board, Guwahati
Tea Auction centre, Journals, Reports of Tea Organization, Statistical Handbook of Assam, and gazettes,
published by the Govt. etc. The useful primary data and information are collected from executives of tea
industries, tea planters, tea entrepreneurs, economists, tea auction committee, NGO and other
organizations related to Tea Industry of Assam.

1175
 Anil Tanti

Analysis and Discussion:

Position of Assam and Indian tea in Global position

The tea industry of Assam is passing and facing financial crises. There is no renovation and
installation of modern equipments, development of infrastructure in the tea gardens and
factories due to lack of adequate fund. The continuous rising cost of production, stagnant price
of tea in auction market, poor quality of tea in order to compete in international market are
major causes. These factors are becoming obstacle in making profit to this industry. Moreover,
according to the report of Trade promotion Council of India, the cost of production of tea has
been growing by a compound annual rate of 10% for the last 10 years, while tea prices are
increasing by a compounded annual rate of 6% only. This severely reduces the profit margin of
tea industry in Assam and it is not only bad impact on tea industry but also on wages of labourers,
investors, suppliers and consumers. Over the last 20 years, India’s world ranking as an exporter
has come down from number one to number four, in the face of stiff competition from Sri Lanka,
Kenya, and China. Assam holds 12% of the global production of tea and in terms of export her
share amounts to nearly 7% of the world.

Table NO.1

PRODUCTION OF TEA (MILLION KGS)

YEAR ASSAM INDIA WORLD

2012 607 1126 4625

2013 629 1135 4907

2014 610 1209 5173

2015 631 1197 5281

2016 642 1233 5503

2017 675 1250 5697

2018 691 1325 5896

2019 716 1350 6150

Source: Tea Board of India

Assam occupies a significant place in production of tea in India. The above table shows the growth of
productivity of tea during 2012-2019. The Trends of production of tea in Assam was increase from

1176
 Problems and prospects of Marketing of Assam Tea

609(M.Kgs) in 2012 to 716 (M.Kgs) in 2019 which shows 17.96 percent growth of tea production in Assam,
it increases from 1126 (M.Kgs) to 1350 (M.Kgs) in India with growth of 16.59 percent and in global level it
increases from 4626 (M.Kgs) to 6150 (M.Kgs) with the growth of 24.80 percent. The growth rate of tea
production of Assam is more than India but less than in the world.

Table No.1

Quantity exported vale and unit price( Rs./Kg) of tea over the period of time.

Year Quantity Value Unit Price

in M.kgs (Rs./Kg.)
(Rs.in Crs)

2000-2001 203.55 1889.79 92.84

2001-2002 190 1695.79 89.25

2002-2003 184.4 1665.04 90.29

2003-2004 183.07 1636.99 89.42

2004-2005 205.81 1924.71 95.28

2005-2006 196.67 1793.58 90.84

2006-2007 218.15 2045.72 93.35

2007-2008 185.32 1888.68 104.61

2008-2009 190.64 2381.68 124.94

2009-2010 213.43 3038.69 142.37

2010-2011 213.79 2995.79 140.13

2011-2012 214.35 3304.82 154.18

2012-2013 216.23 4005.93 185.26

2013-2014 225.76 4509.09 199.73

2014-2015 199.08 3823.64 192.07

2015-2016 232.92 4493.1 192.9

2016-2017 227.63 4632.5 203.51

2017-2018 256.57 5064.88 197.41

1177
 Anil Tanti

Source: www.Indiastat.com

The above table shows the difference in the volume of tea exports and the value realized during eighteen
years from 2000-2001 to 2017-2018. It has been seen that the volume of exports of tea trends has
fluctuated during 2001-2006 while export value has indicated a continuous rise except in 2003-04. There
is a similarity in the trend between the volume and value of tea exports from 2005-06, when there is a
rising trend in both the parameters. Export volumes rose from 196.67 million kg in 2005-06 to
218.15million kg in 2007-08 and maintained the rising tempo to reach the maximum level of 256.57 million
kg in 2017-18. The value of exports of tea from India rose from Rs. 1793.58 crore in 2005-06 to Rs. 2381.79
crore in 2008-09 and further to Rs. 3038.69 crore in 2009-10. Tea exports reached the highest level of
export earnings of Rs. 5506.88 crore in 2017-18.

Placing Of Indian Tea:

The following interlinked modes of disposal of Indian tea are identified;-

1. Direct sale by forward contract to overseas buyers.

2. Consignment to Indian auction.

3. Direct ex-factory sale to Indian buyers.

4. Direct sale by forward contract to Indian buyers.

5. Direct Marketing (loose Tea) in wholesale markets.

6. Self packing and exports of packets overseas.

7. Sale of garden packed tea in Indian Home market.

8. Sale of Indian packed tea aboard.

.Problems of marketing of tea:

The instability in the domestic market coupled with losses in export markets have given rise to
various problems for the tea industry. Among the various constraints that characterise the tea
production, some the problems include poor management practice, old age of tea bushes and
other infrastructural issues. Besides, there are also quality aspects such as lack standardization
and quality with respect to packing, pesticide and MRL problems that affect export of Indian
teas.

1178
 Problems and prospects of Marketing of Assam Tea

Assam tea growers face shortage of fertilizers: Scarcity of muriate of potash (MoP), which is vital
for the tea bushes, has hit the Assam tea industry hard. Captains of industry pointed out that short
supply of MoP will even affect the production in the coming season if the supply is not restored now.

Erratic gas supply hits Assam tea production: Tea production in Assam, the largest grower, is suffering
due to erratic supply of gas and the industry is witnessing production losses. Factories are unable to
purchase leaves for processing due to power supply glitches. Small tea growers will have to stop plucking
and prices of green leaves will be affected.

Floods, pests spoil Assam tea party: Tea companies in Assam, which have been struggling to cope with
the rise in cost of production and lose in international markets, are now in even deeper trouble after the
recent waves of floods coupled with pest attacks. With the unprecedented floods taking its toll in almost
all the tea gardens, especially in the Barak valley, the Assam tea industry has seen a decline in production
of 2 million kg of tea, from 220,560 thousand kg to 218,128 thousand kg till August 2013. Pest attack in
some of the tea gardens in the valley has been another reason in low yield in the first phase. The tea
mosquito bug helopeltis and loopers have played havoc in some of the tea gardens of Assam which have
affected production in some gardens.

Unfavorable weather condition: Unfavorable weather condition affecting in production of tea in the
areas of Upper Assam reported from Indian Tea Association. : Heat wave and scanty rainfall have badly
affected tea production in Assam, India's largest tea producing state, with planters fearing crop loss of
nearly 10% this current year.

Sharp decline in green leaf prices brewing unrest among small tea growers of upper Assam:
Unrest is prevailing in tea producing areas of Upper Assam following sharp decline in the prices of green
tea leaf. The prices of green tea in some areas were plummeted to Rs 6 per kg from Rs 17.50 in 2013.
Regarding this issue the small tea growers stopped plucking and road blockade in four places in upper
Assam. They demanded for the bench mark prices as fixed according to Tea Marketing Control Order
(TMCO) 2003."

Tea companies fear of low profits with increased production cost: A drop in production coupled
with pest attack and less price realization in the export market is likely to affect the profitability of tea
companies in the first quarter,2014. Tea companies fear that despite tea prices going up due to lower
availability, they will not be able to garner higher profits as an increased cost of production will eat into
the profits. The cost of production has gone up by Rs 15 per kg as fertiliser and other input costs have
gone up. Moreover, due to a prolonged dry spell, tea industry opted irrigation facilities which has added
to the cost of production.

Tea industry facing sustainability challenges: India, the world's second largest tea producer, is facing
sustainability challenges in four areas - agricultural issues, quality and safety, rising production costs and
social issues, according to industry experts. Speaking at the 5th Global Dubai Tea Forum 2014 ( GDTF 2014
) here, experts from 30 different tea producing and consuming countries laid emphasis on the need to "go

1179
 Anil Tanti

back to nature" by restoring the environment in the best possible way to combat the sustainability
challenges plaguing the tea industry.

Loss of market and competition: Since the loss of Russian market, export of Indian tea is declining over
the years. Sri Lanka and Kenya were the main competitors eating into India’s share and even small tea
producing countries like Vietnam and Indonesia increased their orthodox tea export, in particular. The
impact of decline in export of Indian Teas had to be born mainly by Assam producing about 53% of Indian
production. Higher prices of Indian tea were also one of the main reasons for it.

Inability to maintain quality: The cost of production in bought leaf factories with the green leaves of
small tea growers is lower. They operate under minimum statutory obligation and their inability to
maintain quality due to absence of control over the maintenance of green leaf standard on procurement
results in inferior quality and law priced tea available in the market; thus, adversely affecting the tea
market as a whole.

Lack of promotional measures: Sluggish demand in domestic market and growing preference of the
younger generations towards aerated drinks due to attractive promotional measures have resulted in full
in prices in addition to the above mentioned factors. Cold drinks seem to be lure away tea drinkers from
tea. This necessitates repositioning of tea in the market.

Poor communication: On account of longer transaction time and high transaction cost, it takes about
35 days for the entire transaction in action. Bad road condition, flood, frequent disturbances in law and
other situation results in high freight.

The imported tea creates additional pressure: The imported tea creates additional pressure on
demand-supply equilibrium in the domestic market leading to further economic un-sustainability
of the tea industry.

Prospect of Tea Marketing:

1. There is scope for improving quality through standard plucking practices with the existing
technique of manufacturing.
2. Research and Development can brings new methods for betterment of tea industry and
able to remove the various problems which are faced by it.
3. Full utilization of existing technology and agro-practices by the industry will improve both
quality and productivity to much higher level than achieved at present.
4. Management should pay attention to motivate the labour for improving productivity and
quality of tea.
5. Tea Board and government can offer number of welfare measures for labour to improve
the condition of human resources which are essential for the industry.

1180
 Problems and prospects of Marketing of Assam Tea

6. E-auction or online bidding recently introduced has tremendous prospects.

7. Indian organic tea has been well received by the high value, health conscious steadily
growing international market. This specialty tea holds good promise in near future.
8. The second flush Assam tea is un-substitutable in the world. Small volume of niche
segments of high priced premium markets can be developed in select countries of the
world.

Recommendations:

The Following recommendations emerge to give future direction for development of the tea
industry of Assam.

1. The tea estates should take up uprooting and replanting, rejuvenation pruning and
infilling with better planting material to get rid of the old and uneconomic tea bushes
availing facilities provided by the Tea Board to improve productivity and quality of tea.
2. Tea industry should pay attention on cost control in production, improvement,
sustenance of quality and factory management practices.
3. Tea organizations should take remedial measures along with state government to solve
the major problems like erosion, flood and water logging of the tea gardens.
4. Management should arrange some incentives for labours in order to motivate and
improvement of their efficiency.
5. The qualified labour youths should be encouraged to learn specialized technical skills to
enlarge their scope of alternative employment opportunity.
6. The auction system of tea is one sided operation which is mainly controlled by brokers.
They have enormous power on price determination. Undoubtedly this partial system
where producers do not have any role to decide the appropriate price for their product
cannot be termed as a good system. Government and Tea Board should go through a
proper scrutiny of the whole system.
7. A second auction center in Assam should be established in upper Assam which will be
nearer to the producing tea estates and would reduce cost, save transaction time and
also help in economic development of the area.
8. Field management practices should improve to maintain for good quality of tea.
9. The government should consider granting pattas to the small tea growers as they
occupied the land for long for growing tea along with horticultural, medicinal, aromatic
plants in non-forest and degraded forest lands.

1181
 Anil Tanti

Conclusions:

To keep the global fame of the tea industry of Assam, need to minimize the cost of production.
It is necessary and essential to emphasize on modern technology such as machines, Geospatial
technology, crop and soil sensors. Products promotional activities must be digitization and
diversifications for the interest of strong marketing strategy. All stakeholders of the tea industry
should be ready to put their effort on man, mandays and money to run the industry efficiently
and economically for sustainable development of the industry.

Reference:

Books:

Awasthi R.C. (1974) Economics of Tea Industry in India; United Publishers; Panbazar; Guwahati; India.

Baruah Dr. Prodip (2008) The Tea Industry of Assam, Origin and Development; EBH Publisher Guwahat; India.

Sarkar G.K. (1972) A study of Tea Prices In: The world Tea Economy, Oxford University Press, London.

Sen Benoy B.(2008) Origin and Development of Tea; EBH Publisher; Guwahati; India.

Pillai R. S. N. & Bhagavathi (1998) Modern Marketing: Principles and Practices, S. Chand & Company Ltd, New Delhi.

Year Book (2006-2007) GTAC, Guwahati, India.

Reports:

Basudeb Banerjee, Chairman,(15TH Dec 2005) E- auction of tea in India, power point presentation, Tea Board of India

Choudhury R. Dutta (27th Nov 2008) Tea industry comes out of slump; The Assam Tribune; an English daily of Assam;
Guwahati.

Das Ripunjoy (23rd June 2008) Assam eyes grades for tea quality; The Telegraph, Kolkata

Karmakar Dr K G (2005) The Tea Industry in India: A survey, dept of Economic analysis and Research. NABARD,
Mumbai, India.

The Economic Times (20th Nov 2008) Outcry goes out of fashion as tea auction goes online, ET Bureau.

Unpublished works:

Bhattaacharyee Monalisha (2004) : “Trend in marketing of tea at Guwahati Tea Auction Centre”; MBA thesis
submitted to dept of Agricultural Economics and Farm Management; Assam Agriculture University; Jorhat; Assam.

Chakraborty Chironjib (2008) “Marketing of Tea in Barak Valley with special reference to Rosekandy Tea Estate”,
Dissertation of P.G. diploma, Dept of Tea Management, Assam University, Silchar, Assam, India.

1182
 Problems and prospects of Marketing of Assam Tea

Das Aswini Kumar (1976) “The Guwahati Tea Auction Market- its origin and development, problems and prospects”.
M Sc. Thesis. Submitted to dept of Tea Husbandary and Technology, Assam Agriculture University, Jorhat, Assam,
India.

Neog Bharoti (1993) “A study on Primary marketing in Jorhat District”. M Sc.Thesis. Submitted to dept of Tea
Husbandary and Technology, Assam Agriculture University, Jorhat, Assam, India.

Online Accessed:

Business Line (20th Nov, 2008) 710 kg of tea offered on first day of E Auction.
http://www.thehindubusinessline.com/2008/11/20/stories/

Fernando Maxwell (1998). The candle that has lit in 1750 will be extinguished in June 1998,
http://www.historyofceylontea.com/Tea_Feature/tea_feat_london

Guwahati Tea Auction Center (GTAC), www.assamteaXchange.com

North East Watch (2nd Oct 2008) E auctioning in Guwahati Tea Auction Centre http://ne.icrindia.org/2008/10/03/e-
auctioning-in-guwahati-tea-auction-centre.

http://economictimes.indiatimes.com/markets/commodities/

www.wikipedia.org/wiki/auction

1183