Ban cloud on wage deal – Morcha embargo on Darjeeling tea to hit exports hard

The Telegraph

Darjeeling, Feb. 23: The Gorkha Janmukti Morcha’s decision to impose an embargo on the despatch of the first flush of Darjeeling tea could seriously affect the talks for the revision of wages, the three-year-old agreement on which expires on March 31.

The new wages are expected to come into effect from April 1 but if the gardens are unable to sell the first flush tea which commands the highest price in the global market, the wage negotiation for the 55,000 workers in the tea industry could take a beating. The daily wage of tea workers is now Rs 67.

In 2010, the first flush fetched at least Rs 5,000 a kg, according to figures from one garden that did not want to be named because of commercial reasons. A second-flush variety called Muscatel, the quantity of which is low, sold for as high as Rs 10,000 per kg. The autumnal flush drew prices in the range of Rs 700 a kg. The figures are indicative and can vary from garden to garden.

“The first flush is the oxygen for the Darjeeling tea industry. If tea cannot be sold, how can we plough back revenue into the garden? We are very disturbed and concerned after the (Morcha’s) announcement,” said Sanjay Bansal, the chairman of the Darjeeling Tea Association. Bansal has the largest number of tea gardens in the hills.

The Darjeeling tea industry has four plucking seasons. The first flush starts from February end and continues till mid-April, followed by the second flush till May end. Although the largest quantity of tea is produced during monsoon (June to September) and autumn (October to December), the prices fetched in the last two flushes cannot match the figures of the first and second. (See chart)

“Though the quantity of monsoon and autumn flush is large, the tea does not have good flavour or quality and hence, do not fetch good prices. The life of all edible products is short, quality starts to deteriorate and tea is no exception,” said Sandeep Mukherjee, the secretary of the DTA.

Since most of the gardens sell the bulk of the first two flushes to buyers directly, the exact loss that the industry might incur if the Morcha goes ahead with its ban is difficult to arrive at. But a rough estimate can be drawn up from the export figures available with the Tea Board for the whole of India.

According to the Tea Board figures, the UK imported 19.30 million kg of tea from India in 2008 and the value of the transaction was around Rs 215.08 crore.

The 80-odd tea gardens in Darjeeling produce anything between 8 and 10 million kg of tea annually, of which 70 per cent is exported. The Darjeeling tea commands a much higher price than the produce in Assam or south India. In that case, it can be safely estimated that the total export value of Darjeeling tea is over Rs 100 crore annually.

Industry insiders said the first two flushes accounted for around 30-40 per cent of the total transaction.

Bansal, however, refused to give out any figures. “It is simply impossible to calculate the amount,” he said over the phone from Calcutta admitting at the same time that any loss during this period would adversely affect the garden’s annual finances. “More than the money the credibility and dependency on the industry is at stake now.”

Industry insiders maintain that international buyers might opt for Nepal tea grown in regions contiguous to Darjeeling and is posing stiff competition because of low prices.

“As it stands, the production last year was at an all time low after Independence. The Darjeeling industry could only produce around 7.8 million kg of tea because of the drought-like condition. Productions costs have increased by 20 per cent and absenteeism among workers is as high as 30 per cent,” said Bansal. The industry’s highest production was 13.9 million kg in 1991.

As a result, the per hectare tea yield has gone down from 645 kg in 2005 to 562 kg in 2007, according to Tea Board figures, even though plantation area has increased from 17,228 hectares in 2001 to 17,818 in 2008.

Against this backdrop, the negotiation for wage revision could give rise to fresh turmoil. “Despite low production last year, the management had to give a bonus that was the highest in the last 15 years. We agreed to pay bonus at the rate of 20 per cent (the highest prescribed in the Plantation Labour Act, 1951) for Grade A, B and C gardens and at the rate of 17 per cent for Grade D gardens,” said Mukherjee. Bonus is calculated on the total annual earnings of a worker.

Morcha spokesperson Harka Bahadur Chhetri said his party was “alive to the facts” of the industry. “We are alive to these facts and we will have to work a way out as a large number of people are dependent on the tea industry,” he said.

Chhetri, however, said his party had been forced to take a tough stand.

“The government was never sincere in solving the hill issue but now when election is approaching, they want to send a message that they are dealing firmly with us. We have also taken a tough stand this time around,” said Chhetri.

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