United Planters Association of Southern India (UPASI) today said that the financial strength of the tea industry had severely eroded due to the continuous and steep fall in tea prices, increase in labour wages, and high input cost.

The current crisis was comparable to the darkest phase in the tea sector during the beginning of this century, UPASI President Vijayan Rajes said in a press release.

Tea was the only plantation commodity where there was no significant difference in the price levels between the pre-crisis period and post-crisis period, suggesting that industry was just about managing without any significant profits for the last many years, he said.

It was also pertinent to note that though the Government of India in 2002 had allowed FDI up to 100 per cent in Tea Plantations with certain conditions, which were omitted in 2013 to attract FDI, but still no worthwhile FDI had flowed into the industry, he said.

“This suggests that the financial strength of the industry is not conducive in attracting foreign investments,” Rajes said.

The industry was gravely concerned about the current price levels which had pushed it to a deep crisis affecting 3.65 lakh workers, 70,000 small growers and their families in South India, he said.

Tea prices in South India during the calendar year 2014 had dropped by Rs 15.85 per kg vis-a-vis 2013, while during the current year up to August, this trend continued as prices further dropped by Rs. 6.08 per kg to reach Rs. 80.42, he said.

At the current price levels, plantations would have no option but to cut production costs by stopping all developmental works and cutting down on input costs, which will in turn
reduce employment.

This being the plight of the industry, the workers must understand the graveness of the situation and in the best interest of this important agro-industry all stakeholders were expected to cooperate so that the industry could tide over these difficult times.