Commodity Tips, Demand for minimum wages may brew fresh trouble for Assam, Bengal tea units
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With production and prices remaining flat, 2017 was not a good year for the tea industry.
The outlook for this year looks uncertain with the demand for the implementation of minimum agricultural wages likely to push up labour costs.
The tea industry ended 2017 on a disappointing note, with production increasing marginally (1.4 percent) to 1,285 million kg (mkg) and the average price remaining flat at ₹132 a kg. The average price is down by nearly six percent in South India, while in North India, it is lower by a rupee.
Prices remain flat
According to industry sources, tea prices remained more or less flat except for a small quantity of premium quality tea that fetched higher prices in 2017. Exports are likely to have registered a decent growth. The cost of production is set to surge in 2018 as unions are insisting on the implementation of minimum wages. The minimum wage for unskilled agricultural workers ranges between ₹213 and ₹240 a day in West Bengal and Assam.
Election effect in Assam
The demand for minimum wage is not new. But it got a push during the 2016 Assembly election in Assam, a State which contributes 50 percent of the country’s tea production; implementation of minimum wages was an electoral promise of the BJP.
The last wage agreement in Assam expired on December 31, and discussions have just started on a new deal. It will surely be months before the two sides strike an agreement, which will have a direct bearing on Bengal’s tea industry.
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