Tea industry asks Centre to notify a Minimum Sustainable Price

India's tea producers have asked the Union Commerce Ministry to quickly bring in a Minimum Sustainable Price (MSP) for tea, after a committee set up by the Tea Board of India recommended a benchmark pricing mechanism.

The Indian Tea Association (ITA), Tea Association of India (TAI), United Planters' Association of Southern India (UPASI), Confederation of Indian Small Tea Growers Associations (CISTA) and Federation of Indian Tea Manufacturers Association (FITMA) jointly welcomed the recommendation and urged the ministry to notify it at the earliest, NE Now reported.

How the benchmark would work

The committee has proposed a composite index built on wage movements and the Consumer Price Index to set the benchmark price, with periodic reviews so that it keeps pace with production costs and inflation.

The proposal has not yet been notified. Whether it becomes a pricing mechanism depends on how the government responds to the committee's report.

Costs outrunning prices

According to the associations, tea prices have grown at a compound annual rate of about 2-3 per cent over the years, while input costs are estimated to have risen 10-14 per cent. They say the gap has weakened producers' ability to stay afloat, replant ageing bushes and improve quality and productivity.

Labour accounts for roughly 60 per cent of the cost of producing tea, and the industry expects that bill to grow once the Centre and the states notify floor wages under the Code on Wages.

C.K. Dhanuka, chairman of Dhunseri Tea and Industries, said producers faced mounting costs while price realisations had stayed largely flat. A Minimum Sustainable Price framework was "essential to bridge the widening gap between production costs and market realisations", he said, adding that it would help gardens absorb wage revisions and protect jobs.

Why it matters for Assam

India is the world's second-largest tea producer, making about 1,350-1,400 million kg a year, and Assam grows roughly half of it. Small tea growers now account for nearly 55 per cent of national output.

Most small growers do not make tea themselves. They sell freshly plucked green leaf to bought-leaf factories, which process it for auction and other markets. The price a grower gets for leaf therefore depends on what factories earn for made tea. When auction prices fail to cover processing costs, the squeeze is passed down to growers, which is why small grower bodies see a benchmark price as a cushion.

The demand comes as Assam's tea output recovered in September after a weak August, according to Tea Board data, raising worries among producers about pressure on prices in the peak season.