The year 2022 will be a challenging year for the Indian tea industry as the cost of production is higher than price realisation at the auctions, according to a report prepared jointly by Assocham and ICRA.
The report said that FY2021 proved to be one of the best years of the Indian tea industry in recent times for the bulk tea industry, but sustainability remains a crucial issue.
It said that while labour costs increased, production volumes have risen but per capita domestic consumption remains almost stagnant.
This, according to the report, has led to pressure on the prices and FY2022 is likely to face another challenging year.
Manish Dalmia, chairman, Assocham Tea Sector Council, told reporters here that the changing dynamics calls for greater collaboration between the various stakeholders and the immediate need is to increase the level of domestic consumption.
He also said the industry should give more focus on production of good quality tea and higher volumes of the orthodox variety which finds more acceptance in the export markets.
Vice-president of ICRA Kaushik Das said the pressure on prices and rise in the cost of production, particularly wages, has put the industry in a difficult position, adding that productivity per worker has to rise in the gardens.
Increased production by the small tea growers has also led to the pressure on prices and there had been a decline in operating margins of the companies, he added.