Tea producers welcome proposal for minimum sustainable price for tea
Industry stakeholders support a Tea Board of India committee recommendation to implement a pricing mechanism to bridge the gap between costs and realisations.
Stakeholders in the Indian tea industry on Tuesday welcomed a proposal by a Tea Board of India committee to introduce a Minimum Sustainable Price (MSP). According to The Hindu, the recommendation aims to address the widening disparity between production costs and market prices.
The industry is facing significant financial pressure as input costs have seen an estimated compound annual growth rate of 10–14 per cent, while tea prices have grown by only 2–3 per cent. This gap has impacted the ability of producers to invest in re-plantation, maintain quality, and sustain operations.
C. K. Dhanuka, Chairman of Dhunseri Tea and Industries, said the framework is essential to ensure long-term sustainability and help the industry accommodate wage revisions.
He noted that the industry faces mounting cost pressures while price realisations remain stagnant.
The committee has suggested using a composite index, which would include inflation via the Consumer Price Index (CPI) and wage movements, to set the benchmark MSP. It also proposed regular reviews to keep the price aligned with inflation and production costs.
The proposal has been submitted to the Ministry of Commerce, which is yet to take a decision. Industry associations, including the Indian Tea Association (ITA) and the Tea Association of India (TAI), have urged the Ministry to notify the mechanism at the earliest.
The industry faces further challenges with the implementation of the Code on Wages, which is expected to increase operating expenses. Employment costs currently represent approximately 60 per cent of total production costs.