Tea Board Chairman P K Bezbaruah on Friday said the organised sector is facing the "biggest threat" from the combination of small growers and bought leaf factories (BLF), which are operating at a low cost level.
Small tea growers (STG) contribute about 48 per cent of the annual production of the country while their share is expected to touch 50 per cent by end of 2020.
"The biggest threat that the organised sector is facing is from the STG-BLF combine. Their cost structures are very low compared to the organised sector which has to meet the statutory obligations and some legacy expenditure", Bezbaruah said at the ICC Tea Conclave here.
With ageing bushes and declining soil fertility, the organised tea sector has been dealing with "inflexible" labour laws, he said.
Bezbaruah also said that the other big challenge, faced by the tea industry, is demand-supply mismatch.
"In 2000, India's tea production was 600 million kilograms, which has shot up to 1,400 kilograms as of now. Demand creation and quality upgradation are major issues which the industry has to address as these two have been neglected through ages", he said.
Tea Board deputy chairman Arun Kumar Ray, however, said tea prices in auctions have increased by 3.4 per cent despite slowdown in the economy while exports have witnessed 13 per cent rise in terms of price realisation.
Confederation of Indian Small Tea Growers Association (CISTA) President Bijoy Gopal Chakraborty said small growers are contributing to nearly 48 per cent of the total production.
"This is likely to touch 50 per cent of the total production by 2020. In Kenya, STGs' share is 61 per cent and 65 per cent in Sri Lanka," he added.
Disclaimer: No Business Standard Journalist was involved in creation of this content
