J. D. Birla Institute Department of Management

Name : PRASHANT MADHOGARIA

Year : 3 rd Year 6 th Semester

Roll No. : 87

Mentor : MS. S. LAKSHMY

Topic : PRODUCTION POTENTIAL OF THE INDIAN TEA INDUSTRY .

DECLARATION

DeclarationTo include plagiarism and ethical statements and word count is a formal requirement.

Declaration:

I declare the following:

1. That the material contained in this dissertation is the end result of my own work and that due acknowledgement has been given in the bibliography and all references to ALL sources be they printed electronic or personal.

2. The word count of this project is around 17548 words.

3. That unless this Project has been confirmed as confidential, I agree to an electronic copy or sections unless of the dissertation to be placed on the e-learning portal, if deemed appropriate, to allow future students the opportunity to see examples of past dissertations. I understand that if displayed on the e-learning portal it would be able to print off copies or download. The authorship would remain anonymous.

4. I agree to my project being submitted to a plagiarism detection service, where it will be stored in a database and compared against work submitted from this or any other school or from other institutions using this service.

In the event to my service detecting a high degree of similarity between content within the service this will be reported back to my supervisor and second marker, who may decide to undertake further investigation that may ultimately lead to discipline actions, should instances of plagiarism be detected.

I declare that ethical issues have been considered, evaluated and appropriately addressed in this research

Signed:

ACKNOWLEDGEMENT

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I would like to thank my mentor, Ms. S. Lakshmy, with heartiest respect and gratitude, for guiding me through my term paper.

I express my thanks to the Director of J.D. Birla institute, Dr. Asit Dutta, for giving me the opportunity to gather such wonderful learning experience.

I am also obliged to my college librarians Mr. Santanu Mondal, Mr. Masiur Rehman and Mr. Swapan Kr. Ber who have assisted me in finding various references for data collection.

I also thank my friends at college for their assistance, on and off campus.

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INDEX

TABLE OF CONTENTS PG NO.

1. INTRODUCTION 01-04

2. LITERATURE REVIEW 05-24

3. HYPOTHESIS 25

4. RESEARCH METHODOLOGY 26-27

5. DATA ANALYSIS 28-34

6. RESULT a. Findings 35

b. Recommendation 36

7. CONCLUSION & LIMITATIONS 37

8. ANNEXURE 38-54

9. BIBLIOGRAPHY 55

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ABSTRACT

This project aims to shed light on the production potential of Indian Tea and whether

there exists a scope for further increase in the production of Indian Tea. From the various

sources we may see how much Indian production of Tea contributes to the global demand

of the same, also to find a relation between the production of tea in India and its exports,

import, domestic consumption. We may also find a relation between the total tea

production and its consumption to decipher how much tea is exported and how much

consumed domestically. Hence by the difference of the production and the consumption

and with an understanding of international demand we may find out the production

potential of Indian Tea.

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1.INTRODUCTION

Looking back at the History of tea, it is said that tea was discovered accidentally by Emperor Shen Nung back in 2700BC. After a lot of trial and error the Chinese were able to find out the required technique to grow tea. But being a closed colony they did not share their secrets of cultivating tea. Hence it was long before other countries were exposed to tea.

The first tea used in England and China , and it wasn’t until the 19 t h

century that tea growing spread to other countries and indigenous tea was discovered in Assam. The UK is the largest importer of tea.By the early 1900’s tea was being cultivated in India, Indonesia, Kenya and other parts of Africa. Presently the United States has been added to the list of tea. 1

Tea is one of the most important agricultural as well as manufacturing products, like other products it also needs a proper marketing channel for disposal. The three main modes referred for the disposal of tea are: (a) through auction (b) ex-factory or ex-garden sale and (c) forward contract. In India marketing process of tea can be divided into two parts, i .e., primary and secondary markets. Primary marketing channels help in moving made-tea from the grower to the bulk tea buyers. It also explains the movement of tea directly from producers to national or international buyers. This channel is used to carry tea from producer to auction centers’ where it changes hands from the producers to the large buyers through brokers. Secondary marketing channel includes the movement of bulk tea through auction trading to ultimate consumers. In this chain tea passes through wholesalers, commission agents, blenders, packers and retailers. 2

Tea is one of the most refreshing and popular beverages of the world. India is one of the largest Tea producers in the world mainly because it accounts for 31% of global production. It is perhaps the only industry where India has retained its leadership over the last 150 years. Indian tea is the finest quality in the world 3 . Tea is being cultivated in the high ranges of northern and southern India. The best quality tea is CTC and orthodox Assam Tea respectively. Tea consumption is approximately above 600 million kgs annually. The market consists of both leaf and dust teas in both the CTC and orthodox grades. 4

India is the Second largest producer of tea, the largest consumer and the fourth largest exporter (after Sri Lanka, china and Kenya) in the world. Four-fifths of the Tea produced in India is consumed domestically. The major tea growing areas of India are: North Bengal, Assam, Tamil Nadu and Kerala. Tea is grown by 130,000 small and large Tea growers under a gross area of over half a million hectares. Tea gardens employed approximately 1.3 million laborers in 2007.

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Tea is an essential item of domestic consumption and is the major beverage in India. Tea is also considered as the cheapest beverage amongst the beverages available in India. Tea industry provides gainful direct employment to more than a million workers mainly drawn from the backward and socially weaker sections of the society. It is also a substantial foreign exchange earner and provides sizeable amount of revenue to the state and Central Exchequer. The total turnover of the Indian Tea industry is in the vicinity of 9000 crores. 5

On the production front India has been the major producer of the Tea in the world. Other major producing countries include china, Srilanka , Kenya and Indonesia. During 1951-1960, India was producing around 40 percent of world production. , declined to 26 percent during 2004. China and Kenya are able to increase their share in world production considerably. The share of china and Kenya during 1951-1960 was 13.59 percent and 2.67 percent respectively, increased to 24.90 percent and 10.30 per cent in 2004. In recent years china emerged as major tea producer in the world. 6

The export markets for Indian Teas are mainly Russia and the CIs countries with almost 90 million kgs of export. This is equivalent to 43% of India’s Tea exports. India exports Tea to most of the European countries, the USA, Japan, west Asia and the Asia Pacific Region. In fact, there is hardly any country where Indian Tea is not found. Exporting Tea has been very profitable for India since the exporting prices are much higher when compared to the Domestic Indian Tea prices. It is also very helpful in selling of the surplus production that has not been consumed domestically. 7

Indian tea industry as it is on a comeback stage with an increase in its production and export during the first 8 months of 2008. Moreover output between January-august, 2008 have shot up to 599.73 million kg in comparative of 576.07 million kg , of what it was in the previous year. Tea export of India has triggered by 4 per cent in volume of august, 2008 due to the diminishing of output in Kenya. Similarly shipments during the first eight months have also risen up by nearly 20 percent.

OVERVIEW OF THE INDIAN TEA INDUSTRY

Tea is one of the most refreshing and popular beverages of the world. India is one of the largest tea producers in the world mainly because it accounts for 31% of global production. It is perhaps the only industry where India has retained its leadership over the last 150 years. Indian tea is the finest quality in the world. Tea is being cultivated in the high ranges of northern and southern India. The best quality tea is CTC and Orthodox Assam Tea respectively. Tea consumption is approximately above 600 million kgs annually. The market consists of both leaf and dust teas in both the CTC and Orthodox grades. 8

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Tea manufacture is the process of converting and treating the tea. Tea, which is to be used as loose leaf, will normally be rolled gently to create a twisted appearance. In contrast, tea, which is to be used for tea bags, is shredded and crushed to produce a small granular product. That is why loose tea usually has a better flavour than the tea in a tea bag. For preparing different types of teas, different methods of preparation are used. But the most commonly used method is to make it in a pot. The brewing temperature for green tea differs from other teas. A temperature of 165-185 degrees is ideal for steeping green tea. 9 The different types of tea are white tea, green tea, oolong tea, black tea.

At the time there had been claims that tea was growing wildly both in the Manipur district and in Nepal. This news and the need for a reliable source of tea resulted in the formation of a ‘committee of tea culture’. This was formed in Kolkata and consisted of people who were thought to be of great intelligence and even greater class.

Tea is also considered as the cheapest beverage amongst the beveragesAvailable in India. Tea Industry provides gainful direct employment to more than a million workers mainly drawn from the backward and socially weaker section of the society. It is also a substantial foreign exchange earner and provides sizeable amount of revenue to the State and Central Exchequer. The total turnover of the Indian tea industry is in the vicinity of Rs.9000 Crores. Presently, Indian tea industry is having (as on 18.12.2009).

1692 registered Tea manufacturers2200 registered Tea Exporters5848 number of registered tea buyers,Nine tea Auction centres.

The Tea industry is an agro based labour intensive industry. It provides direct employment to over 1 million persons. Through its forward and backward linkages another 10 million persons derive their livelihood from tea. In northeast India alone, the tea industry employs around 9,00,000 persons on permanent basis. The tea industry is one of the largest employers of women amongst organized industries in india. Women constitute nearly 51% of the total workforce. There is no longer gender bias with respect to employment benefits.

The apex body of the tea growers in India is the Tea Board Of India. The Tea Board of India performs many financial and marketing functions for the Indian Brand tea as a whole. They even account for the collection of statistics pertaining to this industry. The Tea Board has wide functions and responsibilities under the direction of the central government.

The primary functions of the Tea board are as under:

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Rendering financial and technical assistance for cultivation, manufacture and marketing of tea Export promotion Aiding research and development activities for augmentation of tea production and improvement of tea quality. Extend financial assistance in a limited way to the plantation workers and their wards through labour welfare schemes. To encourage and assist both financially and technically the unorganized small growers sector. Such other activities as are assigned from time to time by the central government.

The project has been chronologically been described in the following order:

Section 1 describes the Introduction.

Section 2 describes the Literature Revi

Section 3 describes the Hypothesis

Section 4 describes the Research Methodology

Section 5 describes the Data Analysis

Section 6 describes the Results

Section 7 describes the Conclusion

Section 8 describes the Annexure

Section 9 describes the Bibliography

2. LITERATURE REVIEW

According to the provisions in the Tea Act 1953, Tea Board is conducting andSupporting tea research. The Board is granting financial support (grant-in-aid) to the

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Tea research institutes managed by the private sector, namely - Tea Research Association(TRA) and United Planters’ Association of Southern India – Tea ResearchFoundation (UPASI –TRF). Tea Board is also having its own Darjeeling Tea ResearchAnd Development Centre at Kurseong for which full financial support is provided fromThe budget of the Board.

Tea Research Association (TRA) and United Planters’ Association of Southern India– Tea Research Foundation (UPASI – TRF) are historically managed by the privateSector. Both the institutes have their own Council of Management and Trustee Boardrespectively to manage the affairs of the organization. The Board is grantingFinancial support to the expenditure on the identified items of research which are mainlyConcerned to field and laboratory research activities and transfer of technology. In the 23Member Council of Management of TRA, where members are mainly drawn from the teaIndustry, four nominees of the Ministry of Commerce and Industry and two nomineesfrom the Tea Board are participating. The tea industry in the North-East is gettingTechnical support from TRA and its seven sub centers spread over in the entire North East India. Similarly, tea industry of South India is getting technical support from the UPASITRF, Valparai, Tamil Nadu and its six sub-centers located in different tea growingregions in South India.

TRA have its sub centers and field laboratories in the North East India located atNagrakata, Darjeeling, Siliguri in West Bengal, Silchar, Tezpur, Dikom in Assam andAgartala in Tripura. The sub centers of UPASI-TRF are located at different tea growingareas like; Coonoor, Gudalur in Tamil Nadu, Meppadi, Munnar, Vandiperiyarin Kerala and Koppa, in Karnataka. The sub centers are manned by senior AdvisoryOfficers who are providing service to the tea gardens in tea cultivation along withLaboratory support like soil analysis, plant protection information and new technology.The Board’s Darjeeling Tea Research and Development Centre (DTR&DC) at Kurseongis conducting research which gives support to the Darjeeling tea industry in the field ofsoil, agronomy, biochemistry and plant protection. In addition to grant-in-aid, the Boardalso has its own sponsored research schemes hosted at different institutes under the 10thPlan. Need based specific schemes are also sponsored for carrying out research atdifferent institutes and universities, especially when the major tea research institutes donot cover such areas.

Tea Board is giving financial support for generation of R&D information for theSmall growers of Himachal Pradesh, sponsoring a research scheme at the HimachalPradesh Krishi Viswa Vidyalaya, Palampur. Similarly a research scheme is in operationat Uttaranchal for the development of the tea industry in the state. G.B. Pant University ofAgriculture, Pantnagar, is providing technical support for operationalizing the schemeand Tea Board is giving 50% financial support to it.

Tea Board is giving financial support to the centrally sponsored research schemes likeapplication of biotechnology in tea by the Dept. of Biotechnology, Govt. of India.Similarly, Ministry of Information and Technology has also supported a scheme hostedby TRA for automation in tea manufacturing using electronic sensors and the scheme has

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been completed.

Assam Agricultural University, Jorhat hosted a scheme supported by the Board, forTechnical manpower generation at graduate level. The technical manpower so fargenerated helped in capacity building for the tea industry in general. Small project onchemical evaluation of teas was organized by the Board under inter laboratory ring testprogramme.

The technical support from the Board is always given to the tea industry by way offeedback on standards/regulations.

Quality requirements of tea particularly in export front, are changing often with theadoption of new sanitary and phytosanitary (SPS) measures like in the EU, US, Japan andother countries. Such information is scrutinized for scientific validation through theresearch institutes and standards were circulated to the trade. Simultaneously, feedbackinformation were also provided to various regulatory authorities about the Indianstandards and efforts were made to harmonize such information to overcome thetechnical barriers in tea trade.

According to the Tea Board of India, Net work programme on automation and integration in manufacture of tea.Plan Schemes (10th Plan)During 10th Plan, eleven research schemes as approved and sanctioned by the Govt. werelaunched at TRA and UPASI-TRF. These research schemes are designed to give specialsupport in booting tea research activities in the North East and South India.Achievements under each of the plan scheme are given as under.

Networking of Regional Centers of UPASI TRF and tea gardens for bettercommunication.As per objectives of the scheme, networking programme of all the TRF centers in SouthIndia has been completed installing V-SATS. Data generation on the field aspects of teacultivation from the garden has been undertaken and setting up of the data bank at each ofthe advisory centers is under progress. Such data bank will be utilized for developingfuture schemes at micro level on need based for the benefit of the tea industry in SouthIndia. The outlay of the scheme is Rs.113.81 lakhs.

Studies on different irrigation systems and critical evaluation of secondary andmicronutrient status in tea soils of south India.The influence of different irrigation systems on hydrology are being studied at four different regions in South India like central Travancore, Karnataka, Nilgiris and Wynaadregions. Similarly, studies on the effects of fertigation with respect to different sources ofNPK fertilizers have also been continued. Metallic contamination in tea and status ofsecondary micronutrients in soil and made tea are being looked into. The equipmentshave been purchased and installed. The samples of soil and made tea are collected fromdifferent experiments and these are being analyzed in the laboratory. The pattern oftreatment influence on the variable agro conditions could not be estimated as yet. Thescheme will be completed by the end of the 10th Plan.

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Studies on the residues of insecticides, fungicides, weedicides and heavy metalsin South Indian tea.The tea samples were drawn for estimation of presence of iron particles and othermetallic contents, estimation of residue in the tea liquor. The methodologies have beenestablished and the training of the scientific staffs was completed. Elaborate survey workfor heavy metals and pesticide residue in South India tea has been undertaken for thecommercially used pesticides like ethion, dicofol, endosulfan, quinalphos, fenpropathrinand lambda cyhalothrin. Simultaneously, field experiments also helped to estimate theresidue content of pesticides in tea at different harvest intervals. It has been found thatpesticide residues in made tea is highly influenced by the harvest intervals and the doseof the chemicals. For the calculation of MRL under Good Agricultural Practice, 7-dayharvest interval was considered and samples were analyzed. Data bank generated so farunder this scheme would help in future support for harmonization of MRLs.

Biotechnological and Bio-control studies on tea blister blight pathogenBiotechnology laboratory has been established with modern scientific equipments forundertaking different biotechnological studies of tea clones. The equipments have beenimported and installed. Methods of DNA extraction and marker identification have beenconsidered. Protocol for isolation of genomic DNA from fungus spores has beenStandardized. Genetic transformation studies are also being initiated and once the methodis standardized, it will help in the transfer of beneficial marker gene in future breedingworks. Related studies in the characterization of tea clones are in progress. It is expectedthat the protocol development will be completed by the end of the plan period when themarkers can be successfully identified and ready for transfer in future breeding works.The micro flora present on tea leaves has been studied and several antagonists of theblister blight pathogen are identified. They are being evaluated in the laboratary and field.

Optimisation of processing parameters to maximize the quality of SouthIndian black teas.Quality of tea is a variable parameter influenced by numerous factors like environment,factory condition, tea clones, soil, and climate and so on. To visualize the qualitysituation of tea as prevailing in the South India tea factory, a detailed survey wasundertaken by UPASI-TRF under the 10th Plan. So far about 50 tea factories have beensurveyed in different areas to draw the samples and to see the manufacturing conditions.It was observed that manufacturing of tea is done under a wide range of factoryconditions right from the standard of plucking, withering, rolling and fermentationprocess in respect of time and machineries. Fermentation and drying conditions werehighly variable. The CTC and orthodox tea manufacturing steps were different; alsoprecisions were important at every step. It was reported that highly variable anduncontrolled manufacturing steps have resulted to poor quality of tea in many of thefactories. Variations were also reported in withering temp., CTC rpm, rolling of tea,and in drying temperature which ranged from 120 - 160° C. A cooling system for thean orthodox roller has been developed by UPASI-TRF. Compilation on the survey workwould reveal the key factors in manufacturing of South Indian tea for suggestingupdating of manufacturing technology in future.

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Establishment of Chain of Quality testing laboratories and strengthening ofexisting analytical facilities at Regional Centre.According to target, TRA has established three quality testing laboratories, one each atJorhat, Nagrakata and Cachar. All the centers have started functioning after procuringscientific equipments and imparting training to the scientific assistants involved in thework. The total out lay of the project is Rs.96.00 lakhs including recurring expenditurefor 5 years for conducting quality testing of teas. All the laboratories are preparing adatabase on quality parameters for the respective region. The field laboratories willanalyze the garden tea samples and advise them on the quality of tea. These centers willalso help in routine testing of teas being exported.

Development of catchments-wise integrated drainage system through remotesensing towards solving water logging problem at macro level pilot area.The outlay of the scheme is Rs.70 lakhs for 5 years for undertaking studies in pilot areasin Assam and North Bengal using satellite pictures for hydrology mapping. Drainagerelief map for different catchments in the tea gardens was the ultimate objective of thisproject for giving ready information to the garden management so that drainage actionplans can be taken up by them. Implementation of the scheme is being done in a phasemanner after procuring topo sheets from the survey of India office for a number of digitalterrains in Assam. Works are progressing.

Development of technology for product diversification and value added itemsin tea.This envisaged project is having an outlay of Rs.125 lakhs for 5 years. The targets wereto standardize and develop methodologies for the production of value added products andby-products of tea. A number of value added products like tea tablets, flavoured tea,canned tea (RTD) have been standardized which are awaiting commercial explorationafter patenting. Tea aroma has also been successfully extracted from tea and this productwill be tested for adding of such flavour in different food items like sweets. Theremaining items of works will be completed within the tenure of the project. Thesedevelopments will help in product diversification in tea to a great extent.

Influence of soil organic mater on productivity of tea under North Bengalcondition.This scheme was launched to study the soil fertility conditions in North Bengal area.Important soil parameters contributing to soil fertility were identified and studied tochange the concept of fertilization. Organic matter is one such important parameter whichhelped in assimilation of all inorganic fertilizers into the tea plant. Studies were continuedfor thorough investigation and to find out its effect in uptake of nutrients. The studyhelped to identify key factors like organic carbon in soil and its minimum requirement foroptimum uptake of chemical fertilizers. The study will also help to understand thephysical parameters of the soil in overall fertility and in new planting.

Special GrantsTea Board was also giving special grants for specific activities like supporting advisoryservices to the small tea growers in Tripura by TRA. On this account, Tea Boarddisbursed Rs.3.00 lakhs per annum sharing the cost on 50:50 basis with the state govt.

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Sponsored ProjectsTea Board was also sponsoring research projects in different areas. The details of whichare given as under: Grant-in-aid to Assam Agricultural University for specialized course in tea atB.Sc Agriculture level.Tea Board was giving recurring grants of Rs.2.00 lakhs to Assam AgriculturalUniversity, Jorhat for running the specialized course in Tea Technology and Husbandryat graduate level. Twenty students were obtaining graduate degree under this courseevery year and they were absorbed in tea industry and also in the commercial banks andresearch institutes.

MRL (Maximum Residue Limit) issues in teaFixation of MRL in tea at the national level and also at the international level is a matterof great concern at the moment since India is consuming large quantity of tea as well asexporting tea to many countries in the world. This issue of MRL has come up as nontariffbarrier. The scenario is two fold- (i) fixation of MRLs at the national level toprotect the consumers in the domestic sector; and (ii) internationalstipulations/regulations/standards fixed by EU and other countries. India is trying to copeup with the situation in both the fronts generating field data. TRA, UPASI-TRF andInstitute of Himalayan Bioresource and Technology are involved in fieldexperimentations supported by Tea Board and funded by National Tea ResearchFoundation.

Data generated at the tea research institutes have been compiled and submitted tothe Ministry of Health for fixation of MRLs at the national level for commercially usedchemicals in tea crop. Such data are under scrutiny at different levels in the Govt. The listof MRL under the PFA (Prevention of Food Adulteration Act) has expanded by inclusionof new MRLs. This is a continuous process going on, so that new chemicals can beconsidered for fixation of MRL.

Indian residue data has been formulated for the Codex Committee on PesticideResidue under WTO, and based on its recommendation; such data have been submittedto the Codex proposing MRL. Data for two chemicals namely Chlorpyriphos andParaquat have been accepted at the international level for fixing MRL. More data areunder process for submission to Codex.

The process of finalization of the documents was a hard task since all drafts had tobe framed in line with the requirements of the Joint Meeting on Pesticide Residue(JMPR). This technical body was looking after the workings of the Codex. Follow upactions have also been taken as to how to make calculations after data generation forformulation of MRL. Actions were also taken to interact with the internationalorganizations of manufacturers of chemicals so that a message could be transmitted tothem for generating residue data for the products they are manufacturing. All such actionshad to be taken through IGG to the member countries.

Circulars, workshops, discussions and special meetings have been arranged during

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the year. The messages on the latest stipulations were issued to the tea industry, researchinstitutes and chemical manufacturers. A number of lectures/presentations on the subjecthave been made in different forums. As a result of all such efforts, MRL issue is beingwidely publicized along with stipulations. Number of complaints in respect of pesticideresidue issue has come down since the Board has made awareness at all level.10

According to the press release on 09 May 2002, New Delhi

INDIA LEADS IN ORGANIC TEA PRODUCTION

India is the leading producer of both non-organic as well as organic Tea in the world. The entire Indian Production of Organic Tea is exported. The major destinations are UK , Germany , USA and Japan. The other major Organic Tea producing and exporting countries of the world are Sri Lanka and China. The major Competitors of India in total tea exports are Sri Lanka, Kenya, China and Indonesia. The Organic tea was introduced to the world market in the mid 1980s. Over the past decade, its consumption has grown by more than 10% per year globally. However in volume terms, the trading in Organic Tea is very insignificant when compared to Black Tea.

At present there are 42 Tea gardens in the country that have given up organic tea cultivation in an area of 6000 hectares and the current level production is around 3.5 million kgs which marks an increase of twenty fold over ten years period, with theproduction in 1990 being only 0.15 million kgs. National standards for Organic products have been formulated and Tea Board of India has been designated as the accreditation agency for Tea. The Tea Board has also submitted a project proposal through the Food and Agricultural Organisations (FAO) aimed at development of technology and system of organic Tea production by setting up model Organic farms, for funding by the common fund for commodities (CFC) . Financial assistance is also being provided by Tea Board for imparting training on organic methods of cultivation. At present , there are no certified small growers in the Organic Tea Sector. However Tea Boards training programmes for development of Organic Tea cultivation will also cover small growers in due course. 11

According to the economic times, Small tea growers up share in output

The Indian Tea Association says factories run by small growers have increased their share in the country's tea production at a time when labour shortage and rising overhead costs hit production at large estates. The association said in a report last month that production at bought leaf factories increased by 12.3% between 1998 and 2007 as against a 0.9% drop in the output of large estates. Bought leaf factories are units that process tea but do not grow leaf. This sector has much lower cost of production which allows it to sell tea at cheaper rates.Industry observers say a large number of established manufacturers are now approaching these factories for tea. "We do buy around 2 million kg of green leaf from the small growers," said Aditya Khaitan, managing director of McLeod Russel India Ltd. "However, we have set our quality parameters and we procure tea according to that standard."

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Premium quality tea produced by small growers sells for over `100 a kg in Coonoor auctions, said Krishnakumar J Shah, an exporter. The tea association said Assam has registered the highest increase in bought leaf factory and cooperative production. Output by small growers here has risen from 21.43 million kg in 1998 to 102.93 million kg in 2007.

Small growers in the Nilgiri region in Tamil Nadu are contributing 90 million kg of tea from their 125 bought leaf factories, according to G Ramamurthy, a scientist with United Planters' Association of Southern India. The yield is high in this area as most of the land is converted vegetable land, he added. The Nilgiri region, comprising Gudalur, Ooty, Coonoor, Kotagiri and Kundah, has 80,000 small growers and 40,000 hectares of land under tea. The growers supply green leaves to bought leaf factories who manufacture black tea and sell it at the auctions. The region has seen a 4% increase in crop this year.

"The less intensive north-east monsoon has led to good crop growth," said S Ramu, president of Nilgiri Bought Leaf Tea Manufacturers Association. "Last year, the growers had suffered severe damage due to floods."

The Wayanad Agro Movement Tea Company in Kerala has over 400 small growers associated with it. An increase in production at bought tea leaf factories has helped the company achieve an average daily production of 2,000 kg of CTC tea. CTC refers to crush, tear and curl, a tea processing method.12

Caffeine content and effects

Tea: Tea has approximately 55 milligrams of caffeine per cup. Various teas contain different amounts of caffeine. Green tea contains the least, about one-third the caffeine as black and oolong about two-thirds as much. The caffeine in tea is said to increase concentration, and enhance the sense of taste and smell. The effect of caffeine in tea usually takes longer to enter the blood stream than coffee therefore, seems gentler to the system. About 80% of the caffeine in black tea can be removed easily at home.13

Medicinal uses of tea

1. To cure loose motions: Lemon tea with biscuits made of husk in two to three doses.

2. To decrease Obesity: Honey tea first thing in the morning. 3. To cure fire burns: Covering the burnt part with a cloth soaked in cold black tea

[no milk, no sugar] and replacing and repeating every half an hour. 4. To remove Phlegm in the body: Basil / black pepper / ginger tea 5. To cure windy troubles: After light lunch, take black tea [very little sugar and

milk, if a must for any individual to relish tea]. 6. Use of tea leaves in gardening: Add strained tea leaves / powder to soil and it is

very good manure. It is being practiced by me with pronounced result for all kind of plants and especially very good for flower plants. 14

According to the Telegraph, Tea output rises in march, 2011.

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Tea production in March saw an upswing of around 16 percent to 56.73 million kg compared with 49 million kg produced during the same period last year. Exports however fell to 11.9 million kg from 23.49 million kg last year.

According to the latest data published by the tea board, higher production was largely on the back of higher output in Assam. Production in the Assam valley was 21.37 million kg against 12.67 million kg produced in March 2010. Cachar production was 2.2 million kg compared with 2.1 million kg last year. Total Assam tea production stood at 23.66 million kg in March against 14.8 million kg during the same period last year.During march Darjeeling produced 0.5 million kg while the output in the Dooars and terai stood at 7.6 million kg and 6.1 million kg , respectively. Total production in Bengal registered a minor dip at 14.36 million kg against 15 million kg during March 2010.Exports showed a negative trend and almost halved in March. In the first quarter of this year estimated exports tea are said to be 39.62 million kg – 22.70 million kg from north India and 16.92 million kg from the southern part of the country. In the January March quarter last year, exports had touched 53.99 million kg.

Manufacture

Tea manufacture is the process of converting young fresh tea shoots into dry black tea. This involves a number of processes from plucking to packing. At the plucking stage, only the top leaf tips are picked every 6 to 7 days. The tip leaves are younger and finer which produce a better quality tea. The fresh green leaves now need to have the moisture removed from them. This is done by blowing air through the leaves for up to 14 hours, leaving a soft and pliable leaf. There are then two ways of treating the tea. Tea which is to be used as loose leaf will normally be rolled gently to create a twisted appearance.

In contrast, tea which is to be used for tea bags is shredded and crushed to produce a small granular product. Rolling and crushing the leaves, results in the rupturing of the leaf cells which allows oxidation to occur. This gives the tea its distinctive black colour and flavour. The tea is then dried at high temperatures to achieve the correct taste. When it has been dried, the leaf tea is of differing sizes and will also contain pieces of fibre and stalk. At this point it is processed to remove pieces of stalk which will then leave tea suitable to be sold as loose tea. The tea is passed through varying sizes of meshes to sort it and has to be passed through very fine ones in order to produce tea fine enough for tea bag production. This process of sorting is a harsh one and it can cause the tea to lose some of its flavour. That is why loose tea usually has a better flavour than the tea in a tea bag.

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Tea is indigenous to India and is an area where the country can take a lot of pride. This is mainly because of its pre-eminence as a foreign exchange earner and its contributions to the country's GNP.

In all aspects of tea production, consumption and export, India has emerged to be the world leader, mainly because it accounts for 31% of global production. It is perhaps the only industry where India has retained its leadership over the last 150 years. Tea production in India has a very interesting history to it .

The range of tea offered by India - from the original Orthodox to CTC and Green Tea, from the aroma and flavour of Darjeeling Tea to the strong Assam and Nilgiri Tea- remains unparalleled in the world.  

Here are some statistical facts about the Indian Tea Industry:

The total turnover of the tea industry is around Rs 10000 crores. Since independence Tea Production has grown over 250% while

land area has just grown by 40%

There has been a considerable increase in export too in the past few years. Total net foreign exchange earned per annum is around rs 1847 crores.

The labour intensive Tea Industry directly employs over 1.1 million workers and generates income for another 10 million people approximately. Women constitute 50% of the workforce.

Tea trading in the domestic market is done in two ways: auction and private selling. Market reports are received from the six major Auctions centres in India namely, Calcutta, Guwahati, Siliguri, Cochin , Coonoor , Coimbatore and teaauction.com.

For many of us, a cup of tea is the best way to kick start a day. As the most loved beverage in India, tea has indeed become an integral part of the lives of its populace. Besides, India is the largest producer of tea in the world with as much as 810 million kilograms being produced annually.  

There are three major  tea-producing regions in India  - Assam, Darjeeling and Nilgiris. Over the years, India has mainly been known to produce black tea. However, there is a shift in the trend now as many tea estates have started producing green, white and oolong teas.  

Assam:One of the largest tea producing regions of the world, Assam is known

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for growing the original Indian tea. Assam tea gardens feature impeccably pruned tea bushes covering about 2,16,200 hectares that produce more than 360 million kgs of tea annually. The tea of Assam has a strong pungent taste that makes it famous the world over. The cropping season in Assam begins as early as March and extends almost to mid December.

Darjeeling:One of the most famous teas in the world, Darjeeling tea is grown in the foothills of the Himalayas at an altitude of six thousand feet above sea level. Considered as one of the best, Darjeeling tea is also referred to as the 'Champagne of teas' . Tea with a class, Darjeeling tea has a strong character and gentle disposition making it an all time favorite of tea lovers.

Nilgiri :Also known as the Blue Mountains, Nilgiris are spread across the southwestern tip of India and lies at an altitude of forty five hundred feet. Grown all the year round, Nilgiri teas are relatively mild and is a mellow, light and clean liquor. Besides, Nilgiri teas are often used in blends.  

Indian Tea Industry can be segmented into two geographical divisions – North India and South India.In North, or particularly, Northeast India, Assam and Sikkim are prominent in producing tea and are better known for representing Indian tea quality all across the globe. For South India, it is, Tamilnadu (Nilgiri), Kerala and Karnataka, who contribute to the remaining production of tea and majorly coffee.It is to be noted that in the current tea production scenario, South India produced 129.29 mkg of total volume of 466.37 mkg in 2006 between January to July whereas, North India contributed three times higher productivity at 337.08 mkg.

The Major Tea Regions

1. India

India is the largest tea-producing country in the world. Although India mostly grows black tea, its teas are widely known for their range and excellence. Main Teas of India:

• Black teas: Indian black teas are bright and lively with medium- to full-bodied flavors. Best known are Assam and Darjeeling. Darjeeling tea is often referred to as the "Champagne of Tea".

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2. China

Chinese teas cover the most range of all tea-producing countries. China produces hundreds of varieties and styles of teas and categorizes them by leaf shape and size and the district name.Main Teas of China:

• Black teas: Chinese black teas are mild, sweet, and full-bodied with a range of smokiness. Best known are Keemun and Yunnan blacks.

• Green teas: Chinese green teas are clean and vegetal with a range of essences from nutty to smoky. Best known are Gunpowder, Lung Ching(“Dragon Well”), Hubei Silver Tip, Young Hyson, Hyson, Chunmee, and Sowmee green teas.

• Oolong teas: Chinese oolong teas are fruity and fragrant. Best known are Ti Kwan Yin and Phoenix Mountain.

• Scented teas: Chinese scented teas boast the subtle flavors of flower petals or blossoms. Best known is Jasmine tea. See article on scented teas for more information.

3. Sri Lanka

Sri Lanka is one of the largest tea exporters worldwide, exporting mostly black tea to Egypt, Iraq, and Syria.Main Teas of Sri Lanka:

• Black teas: Sri Lankan black teas offer brisk and refreshing flavor with mild floral aromas. Best known are Ceylons, Pekoe, Orange Pekoe, Broken Pekoe, and Broken Orange Pekoe.

Tea Cultivation

Rainfall: The average annual rainfall in North East India ranges from 2000-4000 mm. However, more than the total amount, the distribution of rainfall matters a lot for sustained high yield of tea throughout the season. In the North East India, the rainfall distribution is not even. The excess rainfall in the monsoon months of June-September causes drainage problems. The average monthly rainfall during November to March is less than the evapotranspiration loss and the resulting soil moisture deficit affects tea bushes. If this dry spell persists for a longer period, tea plants suffer heavily and crop goes down in spite of having sufficient rainfall in the monsoons.

Temperature and RH: Temperature affects tea yield by influencing rate of photosynthesis and controlling growth and dormancy. In general, the ambient temperature within 13°C and 28-32°C is conducive for

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growth of tea. Maximum ambient temperature above 32°C is unfavorable for optimum photosynthesis more so if it is accompanied by low humidity. In the tea belts of this region, the average winter minimum temperature (Dec-Feb) remains below 12°C and there is hardly any growth during this period. Flushing commences from March with the rise in temperature. Winter dormancy however is the result of interaction of short day length and low temperature. Low temperature causes slower growth and low yield in the hill district of Darjeeling in comparison to the plains of Dooars and Assam. A humid climate and high RH favors growth of tea.

Day length: Day length influences growth and dormancy in tea bushes. When days of less than 11hr 15 min duration last for at least six weeks tea bushes become dormant. Hence the length of growing season decreases with increasing distance from the equator. Seasonal dormancy appears from around 18° North and South latitudes. In the Northeast India (25°-27°N latitude), the tea bushes remain dormant during the winter season for about 3 months on account of the combined effects of short days and low temperature.

Soil: Tea grows well on high land well drained soils having a good depth, acidic pH in the range 4.5 to 5.5 and more than 2% organic matter. Shallow and compacted sub-soils limit root growth. Tea plants grow inn on such soils are liable to suffer from draught during dry period and water logging during the rainy months. There should not be any hard pan or concretions in the subsoil within 2m depths. The depth of ground water table should not be less than 90 cm for good growth of tea. Catchment planning is required for improved soil and water management practices in a tea estate for which land survey designed to identify all major and minor topographical features needs to be carried out.

Tea Production Process Withering: Withering is the first processing step in the factory and is a process in which freshly plucked leaf is conditioned physically, as well as, chemically for subsequent processing stages. Indeed, withering is one of the most important tea processing steps and can be said to constitute the foundation for achieving quality in tea manufacture. Based on achieving the desired level of withering, one can make better quality teas and, on neglect, can invite serious problems in subsequent steps of manufacture. Leaf Maceration: The principal objective of leaf maceration is to undertake cell rupture carried out in a rolling machine where progressive disintegration of cellular organelles takes place. The process results in exposure of cell sap leading to intermixing of

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chemical constituents and enzymes in the presence of atmospheric oxygen to form the important chemical constituents responsible for characteristics of tea. From the moment the maceration starts, the ‘fermentation’, which is primarily an oxidation process, begins. The shoot with different degree of tenderness is subjected to considerable deformation during rolling, and, during the process of gradual rupture of leaf, the epidermis is torn up in pieces, cells are crumpled, the cuticle wrinkled and the intercellular space is increased. The mechanical breaking of shoots at this stage also results in the formation of particles of various shapes and sizes depending on the method adopted and the extent of cell damage. These factors have strong effect on the processing steps that would follow as well as market choices for the made teas. Therefore, leaf maceration is also a key step in tea manufacture. Rolling: Before the advent of tea machinery, the most convenient method for cell rupture was to rub the leaf in between palms. The Rolling table is simple equipment that emulates the hand rolling method in a commercial level operation. The process of rolling applies pressure and twist between leaves as well as between leaf and surface of the equipment used for rolling. The degree of pressure depends upon the quantity of leaf charged as well as the position of the pressure cap. Resulting friction causes heat, which in excess will hasten the chemical reactions to result in the formation of undesirable constituents detrimental to the quality. The cell rupture in the small and tender shoots is completed faster and chemical reactions set in earlier while the coarser leaves require a little more time. Also the leaf, which has already undergone size reduction and twisting after some amount of rolling, impedes twisting of larger leaf, which may extend the period of rolling. Segregation of such leaves is carried out after an appropriate period (30-45m). The leaf is discharged and then passed through a Sifter or a Ghoogie. The Ghoogies and Sifters have perforations of different sizes. The particles passing through the perforation are called fines and the spill is known as ‘Coarse’ leaf, which is sent for further rolling. The fine leaf is taken for ‘fermentation’. The coarse leaf after second roll is subjected to similar process to get the 2nd fine and if need be the 2nd coarse leaf may further be subjected to 3rd rolling. It may be noted that major portion of the leaf grades come from the coarse leaf. Oxidation: The principal difference between black teas and other forms of teas like green tea and oolong tea is the presence of condensed catechins, i .e. polyphenols of higher molecular weight formed through enzymatic oxidation with the help of enzyme polyphenol oxidase (PPO) and peroxidase (PO). The next process objective is, therefore, to allow intimate contact of the catechins with the respective enzymes, which oxidize these catechins in presence of oxygen. The temperature and Relative Humidity also have a role in these oxidation reactions and should be kept at a levels at which the enzyme activity is at the peak.

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Drying: The main objectives of drying are: • To arrest enzymic reaction as well as oxidation, • To remove moisture from the leaf particles and to produce a stable product with good keeping quality.

Sorting: Despite more or less intense sifting, bulk obtained after drying are still heterogeneous. Tea ranges in size from that of a speck of dust to a leaf approximately 4 cm long and 1cm wide. The fractions are to be brought to the desired sizes and forms with adequate uniformity and cleanliness conforming to trade requirement. Tea is, therefore, sorted into pieces of roughly equal size. Four main sizes are produced, namely, Whole Leaf Grades, Brokens, Fannings and Dusts. Within each of these sections tea is further split up into grades of varying qualities. Whole Leaf Grades are the largest sizes produced and depending on the actual grade within the section may range from a long and wiry stem, 1cm to 2cm in length, to a round and knobby twisted leaf similar in size and shape to that of a small garden pea. Of the former style there are the Orange Pekoes and long Leafed Pekoes.

Testing: The dry leaf is generally placed on a piece of white paper and the following points are recorded: Grade: The teas have to be classified as per their grades. Colour of the leaf: Greyness in tea is not desirable as it denotes faulty manufacture; generally during sorting. The thin and varnish like coating on the dry leaf is rubbed off and results in a grey colour. This coating is soluble in water and plays an important part in liquoring properties. If absent, the tea must necessarily have been deprived of its fullest liquoring capabilities. A brown appearance, on the other hand, is often unavoidable with very tippy tea. The reason for this is the hair growth down the shoot, which has been picked for manufacture. The second leaf may have a quantity of hair insufficient to produce a golden appearance known as tip but sufficient to discolour the leaf to that of a brownish colour. Also during rolling some hair may be rubbed off the bud and possibly the first leaf and deposited on the coarser leaf. During firing this hair is affixed to the leaf and results in a brownish leaf appearance. Some teas produce a reddish appearance at certain times of the year. This is generally found during the autumnal period when growth is slow and the tea shoots become less succulent tinged leaf throughout the year. A reddish appearance in dry leaf is undesirable if caused by coarse plucking. In this case the red appearance brought about by hard and coarse leaf is considerably emphasized by the presence of red stalk.

Weed control:  Weeds affect tea by competing with it for moisture, nutrients and sunlight. The ultimate effect is a considerable reduction in yield. Thus, the timing of weed emergence relative to the growth stages of tea is an important parameter in weed management. Apart from directly causing crop losses, weeds in tea areas also acts as         secondary hosts

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for some important pests of tea.  

Pest Management:  The simultaneous presence of different species of mites and insects, each with their characteristic mode of  feeding,  diverse habitat and seasonal cycles, call for optimal  management of the pests   which should be both ecologically and economically sound.

The domestic demand for tea was 825million kgs IN 2009 which is approximately 85% of the production of india.nevertheless, exports have a critical role to play in maintaining the demand supply balance in the domestic market. Although tea is produced in 14 states in India ,five of them, Assam and westbengal in north India , and Tamilnadu, Karnataka and Kerala in south India account for over 98%of India’s tea production. Within that north India alone accounts for around 75% of India’s total tea production, of which 85-90%is consumed in the domestic market. The balance much of it of high quality is exported. Tea is among the most labor intensive of all plantation crops. On an average around 65%of the cost of production is incurred on labor.

India ranks as the 2 n d largest producer of tea in the world behind china but ranks fourth in the export market. The largest exporter of Tea Kenya Exports nearly 90% of its total produce.

Another reason for the reduction in demand for Indian tea globally rose due to a sudden increase in the small tea growers of the nation. The small tea growers were unable to check low quality tea to be traded as a premium Darjeeling branded tea have also affected the brand value of Indian tea globally.

All-India tea production rose by 12.3% to 1.62 lakh tonnes during January-April 2010. The Southern states performed better than the Northern counterparts. The states of Tamil Nadu, Kerala and Karnataka recorded between 13-24% y-o-y growths. Production in Assam–the largest tea producing state in India, recorded a 9.6 per cent growth.

India is the second largest producer of tea in the world with production at 979 million kg in 2009. Following the prediction of a normal monsoon forecast by the India meteorological department, the Tea Board had earlier said that production in 2010 could be around one billion kg. However, achievement of that target looks dicey. This is because Assam has witnessed excessive rains and pest attacks which have already impacted production in Assam, state media reports.

India’s tea exports, which rose steadily in the first four months of 2010, are also expected to be hit. India exports CTC (crush-tear-curl) variety of tea mainly to Egypt, Pakistan and the UK and the premium orthodox variety of tea to Iraq, Iran and Russia.

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Tea exports had declined by 6.2% in 2009 but are expected to rise in 2010. On account of a shortfall in production from the major tea producing countries in 2009, the industry is believed to have begun the year with low opening stocks. On the other hand, global tea consumption is rising at a steady pace. Thus, the tight demand-supply situation in the global market and an increase in the domestic output will enable the Indian tea industry to see a partial recovery in its exports.

Tea prices, which showed signs of easing in March, are already moving northward. Tea prices in India have risen from Rs75.6 a kg in March 2010 to Rs.97.5 a kg in May. However, prices were 16.2% lower than the year-ago level.Aditya Khaitan, Managing Director of McLeod Russel India Ltd said, "The move is a good one by the finance minister. This will help tea companies upgrade and improve overall tea quality. In fact, in his speech the Mr Pranab Mukherjee mentioned that modernisation of this labour-intensive sector is yet to reach the expected level, which is why he has taken the step." Pranab Mukherjee also announced the increase weighted deduction on payments made to national laboratories, research associations, universities and other institutions for scientific research from 125% to 175%. Mr Joydeep Phukan, Secretary of Tea Research Association (TRA) said, "As weighted deduction has been increased by 50%, tea companies will come forward to contribute towards R&D. This will be an incentive for them and will in turn help us to undertake new research activities."

Decline of production

Industry sources said that several reasons can be attributed to the decline in the volume of exports and major reason is that the overall tea production in the world increased considerably, last year which was not the case in India as the production of Indian tea came down. Sources revealed that breaking up of the erstwhile USSR started the decline of exports as at one point of time. India used to export around 140million kilograms of tea a year to the USSR and now Russia only imports around 60 million kilograms. Gradually the entry of Sri Lankan and Kenyan tea in the international market posed a stiff challenge to Indian tea industry.

Tea industry sources told the Assam Tribune that as per the estimates, India exported only around 156.7 million kilograms of tea previous year , recording a shortfall of 62 million kilograms. Sources said that in 2006,around 98.81 million kilograms of north Indian tea was exported and the figure came down to 84.05 last year. Similarly ,around 119 million

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kilograms of south Indian tea was exported in 2006and the figure came down to 72.65 million kilograms last year. With Assam producing more than 50% of tea produced in India , the overall decline of the volume of exports will seriously affect the tea industry in the state in the days to come. 1 5 Another source states that the all India production for tea has fallen by 7.9% to 493.1 million kg from January to July 2004 from 535.4 million kg in the corresponding period last year. In north India, output dropped by 8.2% as it went down to 373 million kg from 406.2 million kg. in south India , i t dropped by 7% to 120.1 million kg against 129.2 million kg in the corresponding period in 2003. At a global level, world tea output during the January-august dropped by 1 % to 1011.1 million kg from 1021.2 million kg. 1 6

High Cost of Production

Sources said that if is becoming gradually difficult for Indian tea to compete in the international market as the other Tea producing countries can afford to sell tea at a much lower price as the cost of production in India is much higher than in all the other tea producing countries and the labour cost amounts to around 50% of the total cost of production. Sources pointed out that according to records available, the cost of production of tea in Kenya is around 30% less than the India and almost similar is the position of the other tea producing countries, which posed a serious threat to Indian Tea in the International Market. Moreover, because of low cost of production and other facilities offered by the Governments of those countries, the Tea companies of sri Lanka and Kenya could afford to give credit to the international buyers for more than two months, which also attracted the buyers. But most of the tea companies in India are not in a position to provide credit to the international buyers because of the ongoing slump faced by the Tea industry and also because of the high cost of production. Industry sources however claimed that quality is not a factor in the decline of exports as “the quality of Indian Tea is definitely not inferior to Tea produced in other countries and these days all the exporting companies take adequate care to maintain quality.” 1 7

Another source states that while market prices for tea have been falling, the costs of production have been on the rise, putting downward pressure on profitability. The rise in costs has been partially outweighed by increases in yields and productivity, but the extent of this varies across regions and according to whether it is a smallholding or a plantation.Governments frequently worsen the problem of high production costs in tea manufacture by levying excise tax, which is disconnected to the sale price and thus punishes factories for the production process itself. Moreover the final manufactured product is routinely underutilized because whatever is left at the final point in the manufacturing cycle gets dubbed “tea residue”, which cannot legally be sold, impeding further use of the leaf by-product. 1 8

Another source states that there was some improvement in the Tea prices

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during 2004, however it may be noted that this was only a relative improvement and as such had not helped the cause of tea growers in any significant manner, as the production cost continues to remain high. 1 9

PRODUCTION AND TRADE

Tea is produced in both tropical and temperate zones. Because it grows at high altitudes, it typically does not compete with food or other cash crops. Asia accounts for about three-quarters of global production, Africa for half the remainder, and several Middle Eastern and Latin American countries for the rest. During 2002-2005 China and India produced more than half of the world’s tea (26 and 27 percent, respectively), followed by Sri Lanka (10 percent) and Kenya (9 percent). Global tea production during this period was 3.25 million tons.

Tea is produced by both smallholders and estates. Tea estates are owned by large companies producing large quantities of tea, normally exceeding 1,000 tons of made tea (sometimes as much as 10,000 tons). Tea estates employ both permanent and seasonal laborers. Often, the permanent laborers reside in living quarters within the estate and receive other benefits, such as basic health care and schooling for their children. The conditions for employment on tea estates are considered very good, and permanent workers are often considered to be "privileged" compared to their seasonal counterparts. Although wages are low compared to Western standards (about $2 per day), they are considered high enough for, say, Africa, where two working adults at this wage rate are able to lift a family of four to five above the poverty level. Conditions of employment are also considered good because estates, often owned by multinational companies, must adhere to international standards and scrutiny concerning wages, hours, and conditions of employment. In addition to the International Labor Organization which sets labor standards, numerous international and local non-governmental organizations and advocacy groups (such as the International Labor Rights Fund) monitor employment conditions.

Because most tea is consumed in low- and middle-income countries, the long-term outlook for tea depends mostly on income growth in these countries. The UN Food and Agriculture Organization (FAO 2001), for example, estimated that the growth in global tea demand for the 2000-2010 decade is unlikely to exceed 1 percent, which is close to the rate of demand growth during the 1990s. Most demand growth is expected to come from increased imports by countries of the former Soviet Union. On the supply side, the FAO expects China, Kenya, and Vietnam to increase their exports. Because tea competes with coffee, as well as soft drinks such as Coca-Cola, tea consumption depends on the growth of these industries. Some growth is also expected to take place in niche markets, such as organic tea and iced tea, both of which are mostly consumed in high-income countries. Another dimension of tea is its perceived health benefits, implying that as consumers become more health conscious, they are more likely to drink more tea. This may be especially the case for green tea, which undergoes less processing at tea factories, and is hence considered a more "natural" drink.Food inflation may have brought tears to the eyes of consumers, but producers have prospered. Indian tea planters are among them, having benefited from higher tea prices, as a slump in global output

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drove prices in 2009.

Initial signs are pointing to better weather in 2010, signalling a possible change in the price trend. Even if prices do not retrace too much, producers may have to live with subdued prices during the year.In 2009, global tea production fell by 2.4% to 1.86 billion kg, according to the Indian Tea Association (ITA). Two major producers, Kenya and Sri Lanka, suffered a 9% decline in output due to poor weather. These countries contributed 33% of the global production in 2009. India, which contributes more than half of the global production, also saw a decline in production due to poor monsoon rains. Overall production in the year was down by 0.2%, chiefly due to a 1.1% drop in southern India while harvest in northern India was flat.

Weather reports are indicating a normal season ahead for tea-growing regions. If so, output will increase. Sri Lanka’s tea production in February rose by 82% to 23.5 million kg due to lower output in the year-ago period. The Sri Lanka Tea Board expects tea prices to ease in the second half of 2010 as the global shortfall decreases. Higher prices have also prompted higher output from other countries, especially in Africa.

India’s tea production had picked up in the last quarter of 2009, and in January, output was estimated to be up by 25%. India’s weather forecast will come out next month, and by the middle of the year, there will be more clarity on its effect in the tea producing regions.Shares of major tea producers such as McLeod Russel India Ltd and Jay Shree Tea and Industries Ltd are down from their 52-week highs reached in January. Once estimates for 2010 are firmed up, more clarity will emerge. But it does appear that the two-year run of rising tea prices is losing steam.

Tea Production from India Drops 12% as Pest Attack Damage Crop, Tea Board

Tea production in India’s biggest growing region dropped 16 percent in June after pest attacks damaged the crop, the state-run Tea Board said. Output in the northern region, which accounts for more than two-thirds of the total, declined to 76.8 million kilograms from 91.9 million kilograms a year ago, the board said on its website today. Production grew 4.5 percent to 212.3 million kilograms in the six months ended June 30, it said. The harvest in Assam, which accounts for more than half of India’s production, may drop by as much as 40 percent during the so-called second flush, Tea Board Chairman Basudeb Banerjee said last month. The crop in the northeastern state shrunk 20 percent in June to 50.7 million kilograms from a year ago, data from the board show. The second flush pickings are typically the best- quality leaves that fetch a premium from buyers overseas.

Prices at auctions in the northeast states climbed as much as 15 rupees a kilogram in the first two weeks of July because of the damage, according to the board. North Indian tea fetched an average 99.2 rupees per kilograms, compared with 95.60 rupees a year earlier, according to the board. McLeod Russel India Ltd. the world’s biggest tea producer, gained 1.9 percent to 236.25 rupees, the highest level in more than three months. Jayshree Tea & Industries Ltd rose as much as 1.1 percent to 318.75 rupees. Countrywide production dropped 12 percent in June to 104 million kilograms, the board

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said. Still, output in January to June totaled 339 million kilograms, compared with 333.9 million kilograms a year ago, the board said. Exports climbed to 83.9 million kilograms, valued at 10.4 billion rupees.

Black tea production World black tea production is projected to increase to 2.4 million tonnes in 2010, an annual average growth rate of 1.2 percent from 2.15 million tonnes in 2000. This growth would result largely from the improvement in yields.Most African producers are likely to see significant production growth as tea bushes reach optimum production age, and production skills of small growers improve. For example, production in Kenya would grow by 2.3 percent a year from 236 300 tonnes in 2000 to 304 000 tonnes in 2010, while growth rates in Tanzania and Uganda are expected to be 1.7percent and 2.7 percent, respectively.

Most producers in Asia would experience a steady growth in production. Indonesia is expected to achieve an annual growth of 1.1 percent, from 130 600 tonnes in 2000 to 147 000 tonnes in 2010. Over the same period, production in India, the world’s largest black tea producing country, is projected to grow by 2.5 percent to 1.07 million tonnes, accounting for nearly 44 percent of global production, compared to 38 percent in 2000. Tea production in Sri Lanka is projected to reach 329 000 tonnes by 2010, an annual average growth rate of 0.7 percent. Black tea production in China is expected to continue to decline to 54 000 tonnes as the balance of production shifts to other teas with stronger market prospects.The three largest black tea producing countries, India, Kenya and Sri Lanka, are expected to account for 70 percent of the world tea production in 2010, compared to 63 percent in 2000.

Black tea exports World black tea exports in 2010 are projected at 1.14 million tonnes, reflecting an average annual increase of 1.1 percent from 1 million tonnes in 2000.Most of this increase would take place in Africa, where production is likely to continue to grow while domestic consumption remains small. Exports from Kenya would increase by 2.6 percent annually from 208 200 tonnes in 2000 to 275 000 tonnes in 2010, giving Kenya 32 percent of global exports. Over the same period, export availability in Malawi would remain unchanged at 38 000 tonnes.Most major tea exporting countries in Asia are expected to experience slight declines in exports in line with expected growth in income and population that would foster domestic consumption. For example, exports from India and Indonesia would decrease by 2.4 percent to 150 890 tonnes and by 1.1 percent to 87 000 tonnes, respectively. Conversely, exports from Sri Lanka would increase from 281 000 tonnes to 293 400 tonnes, an annual average growth rate of 0.4 percent.

Black tea consumption In 2010 world net imports of black tea, a proxy for consumption, would amount to 1.15 million tonnes, reflecting an average annual increase of 0.6 percent from 1.08 million tonnes in 2000. Net imports in the countries of the former Soviet Union would increase from 223 600 tonnes to 315 200 tonnes, an annual average growth rate of 3 percent. Pakistan would increase its net imports by 2.9 percent per year from 109 400 tonnes to 150 000 tonnes. The United States is expected to increase net imports by 1.4 percent a year to 94 300 tonnes, while Japan would increase its net

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imports from 18 000 to 22 000 tonnes, an annual average growth rate of 1.8 percent. On the contrary, net imports by the United Kingdom are expected to decrease by 0.6 percent annually to 125 500 tonnes. These major importers together would account for about 60 percent of global net imports.

The model does not take into account stock levels. Hence, the difference between production and exports is treated as a proxy for domestic consumption in producing countries. In 2010, the quantity of black tea production that would be consumed in these countries is expected to reach 1.27 million tonnes, or 52 percent of global black tea production, compared to 1.14 million tonnes in 2000. Domestic consumption of black tea in India is expected to increase by an average annual rate of 3.7 percent to 919 300 tonnes by 2010, or 86 percent of the black tea produced in the country.

3.HYPOTHESIS

H0: b=0 (i.e., there is no significant influence of other variables on production)

Ha: b≠0 (i.e., there is significant influence of other variables on production)

The other variables are as follows:

Exports quantity

Domestic Consumption

Market size

Sales

Imports Quantity

Number of growers

Actual Rainfall

Tea Area

Tea Yield

Cost

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4.RESEARCH METHODOLOGYWHAT IS RESEARCH?

The advanced learner’s dictionary of current English lays down the meaning of research as “a careful investigation or enquiry specially through search for new facts in any branch of knowledge.” Research comprises defining and redefining problems, formulating hypothesis or suggested solutions; collecting, organizing and evaluating data; making deductions and reaching conclusions; and at last carefully testing the conclusions to determine whether they fit the formulating hypothesis.

WHAT IS RESEACH METHODOLOGY?

Research Methodology 6 is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with the logic behind them. It is necessary for the researcher to know not only the research method/ techniques but also the methodology. Research methodology has many dimensions and research methods do constitute a part of the research methodology. The scope of research methodology is wider than that of research methods. Thus, when we talk of research methodology we not only talk about research methods but also consider the logic behind the methods we use in the context of our research study and explain why we are using a particular method or technique and why we are not using others so that research results are capable of being evaluated either by the researcher himself or by others.There are basically two types of research.QUANTITATIVE RESEARCH : It is based on the measurement of

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quantity or amount. It is applicable to phenomena that can be expressed in terms of quantity. In quantitative research your aim is to determine the relationship between one thing (an independent variable) and another (a dependent or outcome variable) in a population. Quantitative research designs are either descriptive (subjects usually measured once) or experimental (subjects measured before and after a treatment). A descriptive study establishes only associations between variables. An experiment establishes causality.QUALITATIVE RESEARCH : Qualitative research seeks out the ‘why’, not the ‘how’ of its topic through the analysis of unstructured information – things like interview transcripts, open ended survey responses, emails, notes, feedback forms, photos and videos. It doesn’t just rely on statistics or numbers, which are the domain of quantitative researchers. Qualitative research is used to gain insight into people's attitudes, behaviors, value systems, concerns, motivations, aspirations, culture or lifestyles. It’s used to inform business decisions, policy formation, communication and research. Focus groups, in-depth interviews, content analysis, ethnography, evaluation  and semiotics are among the many formal approaches that are used, but qualitative research also involves the analysis of any unstructured material, including customer feedback forms, reports or media clips. CORRELATION : Correlation is a statistical measurement of the relationship between two variables. Possible correlations range from +1 to –1. A zero correlation indicates that there is no relationship between the variables. A correlation of –1 indicates a perfect negative correlation, meaning that as one variable goes up, the other goes down. A correlation of +1 indicates a perfect positive correlation, meaning that both variables move in the same direction together. 2 0

REGRESSION : Regression is the determination of a statistical relationship between two or more variables. In simple regression, we have only 2 variables, one variable (defined as independent) is the cause of the behavior of another one (defined as dependent variable). Regression can only interpret what exists physically, that is, there must be a physical way in which independent variable X can effect dependent variable Y. The basic relationship between X and Y is given by:

Y= a + bX. 2 1

WHAT IS P-VALUE?The P value is a probability, with a value ranging from zero to one. It is the answer to this question: If the populations really have the same mean overall, what is the probability that random sampling would lead to a difference between sample means as large (or larger) than you observed?

WHAT IS A HYPOTHESIS? A hypothesis is like a statement, in an essay it is usually a statement you write at the beginning and the whole essay is about you proving that

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statement , with evidence and research etc. there are basically two types of hypothesis. 2 2 They are:NULL HYPOTHESIS:A type of hypothesis used in statistics  that proposes that no statistical significance exists in a set of given observations. The null hypothesis attempts to show that no variation exists between variables, or that a single variable is no different than zero. It is presumed to be true until statistical evidence nullifies it for an alternative hypothesis. The symbol used for null hypothesis is H0.ALTERNATE HYPOTHESIS:An alternative hypothesis is one that specifies that the null hypothesis is nottrue. .  The alternative hypothesis is false when the null hypothesis is true and true when the null hypothesis is false.  The symbol H1 is used for the alternate hypothesis.

5. DATA ANALYSIS

ANNEXURE 1

TABLE 1: PRODUCTION QUANTITY (IN TONS)

This table shows the production of tea from the year 1995 to 2009. From this graph we can see that the production of tea has increased rapidly since the past 10 years due to increase in consumption. Production of tea has shown a very steady growth in the last 10 years and has been increasing since then. The quantity of production has been 986000 tons.

TABLE 2: IMPORTS AND EXPORTS QUANTITY (IN TONS)

This table shows the quantity of imports and exports of tea done from the year 1995 to 2009. From this graph we can see that during the period of 2001 to 2008 the quantity of exports and imports done were below 2000 tons which gradually increased since in 2009. The value of import of tea has low as India is one of the major tea producing nations. The value of import of tea has been the highest in the 2005 at 31700 tons.

TABLE 3: MARKET SIZE VALUE (RS. CRORE)

This table shows the market size value of tea from the years 1995 to 2009. From this graph we can see that the market size of tea has gradually been rising. The market value has increased from that of 4125.1 to Rs. 7317.4 during the period of 1999 to 2001.After which the market share had fallen to 6716.1in 2002. The value of market share again rose to Rs. 7676.5 in 2008 and to Rs.8488.1 in 2009.

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TABLE 4: DOMESTIC CONSUMPTION VALUE

This table shows the value of domestic consumption of tea from the year 1995 to 2009. From this graph we can see that the domestic consumption of tea has been increasing from Rs. 3161.4(cr) to Rs. 5379.3 (cr)during the period of 1999 to 2001.After which we see a decline in the domestic consumption as it falls to Rs.5067.1(cr)in 2002, it further falls to Rs.4793.5 in 2005.From 2006 we see a rising trend of the domestic consumption as the value of consumption increases to Rs.5936.3(cr).

TABLE 6: SALES VALUE (RS.CRORE)

This table shows the tea value is Rs. from the years 1995 to 2009. From this graph we can see that the value of tea has been on a constant rise from the last 10 years due to factors like increase in the demand of tea,export, and better production facilties.The value of production had increased from Rs.4124(cr)in 1995 to Rs8300(cr) in 2009.

TABLE 7:FORECASTED VALUE OF PRODUCTION QUANTITY

Here we have data on the production till 2009 (Table 1).We forecast value till the year 2020 ,which comes to 118900 tonnes.

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ANNEXURE 2

ANALYZING THE INFLUENCE OF EXPORTS QUANTITY ON INDIAN TEA PRODUCTION

To understand the influence of export quantity on tea production a regression analysis has been done. The regression equation is given by Y= 705.3469621 + 0.912857559x. On the basis of this equation the following null and alternate hypotheses are being tested as follows.

H0: b=0 (i.e. there is no significant influence of exports quantity on Tea production)Ha: b≠0 (i.e. there is significant influence of exports quantity on Tea production)

At 95% confidence level the value of the b is 0.912857559 and value of standard error is 57.37904194. The P-value is 0.506567. The value of R2 is 0.050479633. Since the P-value is greater than the significance value of 0.05, H0 is accepted and the Ha is rejected. This proves that there is no significant influence of exports quantity on Indian tea production.

ANALYZING THE INFLUENCE OF DOMESTIC CONSUMPTION ON INDIAN TEA PRODUCTION

To understand the influence of Domestic Consumption on tea production a regression analysis has been done. The regression equation is given by Y=350.2500354 + 0.100883878x. On the basis of this equation the following null and alternate hypotheses

35

are being tested as follows.

H0: β=0 (i.e. there is no significant influence of domestic consumption on Indian Tea production)Ha: β≠0 (i.e. there is significant influence of domestic consumption on Indian Tea production)

At 95% confidence level the value of the b is 0.100883878 and value of standard error is 0.034557453. The P-value is 0.01705. The value of R2 is 0.486370683 . Since the P-value is less than the significance value of 0.05, H0 is rejected and the Ha is accepted. This proves that there is significant influence of domestic consumption on Indian tea production.

ANALYZING THE INFLUENCE OF MARKET SIZE ON INDIAN TEA PRODUCTION

To understand the influence of market size on tea production a regression analysis has been done. The regression equation is given by Y=400.9082661 + 0.06716524x. On the basis of this equation the following null and alternate hypotheses are being tested as follows.

H0: b=0 (i.e. there is no significant influence of market size on Tea production)Ha: b≠0 (i.e. there is significant influence of market size on Tea production)

At 95% confidence level the value of the b is 0.06716524 and value of standard error is 0.021635886 . The P-value is 0.01263. The value of R2 is 0.51708846. Since the P-value is less than the significance value of 0.05, H0 is rejected and the Ha is accepted. This proves that there is significant influence of market size on Indian tea production.

ANALYZING THE INFLUENCE OF SALES ON INDIAN TEA PRODUCTION

To understand the influence of sales on tea production a regression analysis has been done. The regression equation is given by Y=410.2923598 + 0.066761166x.

36

On the basis of this equation the following null and alternate hypotheses are being tested as follows.

H0: b=0 (i.e. there is no significant influence of Sales on Tea production)Ha: b≠0 (i.e. there is significant influence of Sales on Tea production)

At 95% confidence level the value of the b is 0.066761166 and value of standard error is 0.023501. The P-value is 0.0194 . The value of R2 is 0.472765654. Since the P-value is less than the significance value of 0.05, H0 is rejected and the Ha is accepted. This proves that there is significant influence of sales on Indian tea production.

ANALYZING THE INFLUENCE OF IMPORTS QUANTITY ON INDIAN TEA PRODUCTION

To understand the influence of imports quantity on tea production a regression analysis has been done. The regression equation is given by Y= 823.7698237 +2.992564886x. On the basis of this equation the following null and alternate hypotheses are being tested as follows.

H0: b=0 (i.e. there is no significant influence of Imports Quantity on Tea production)Ha: b≠0 (i.e. there is significant influence of Imports quantity on Tea production)

At 95% confidence level the value of the b is 2.992564886 and value of standard error is 1.894530851. The P-value is 0.1487. The value of R2 is 0.217056072. Since the P-value is greater than the significance value of 0.05, H0 is accepted and the Ha is rejected. This proves that there is no significant influence of Imports quantity on Indian tea production.

ANALYZING THE INFLUENCE OF NUMBER OF GROWERS ON INDIAN TEA PRODUCTION

37

To understand the influence of Number of Growers on tea production a regression analysis has been done. The regression equation is given by Y= 525.511043 + 0.002501126x. On the basis of this equation the following null and alternate hypotheses are being tested as follows.

H0: b=0 (i.e. there is no significant influence of Number of Growers on Tea production)Ha: b≠0 (i.e. there is significant influence of Number of Growers on Tea production)

At 95% confidence level the value of the b is 0.002501126 and value of standard error is 0.000578064. The P-value is 0.00495. The value of R2 is 0.757286986. Since the P-value is less than the significance value of 0.05, H0 is rejected and the Ha is accepted. This proves that there is significant influence of Number of Growers on Indian tea production.

ANALYZING THE INFLUENCE OF ACTUAL RAINFALL ON INDIAN TEA PRODUCTION

To understand the influence of Actual Rainfall on tea production a regression analysis has been done. The regression equation is given by Y= 591.6064414 + 0.326086013x.

On the basis of this equation the following null and alternate hypotheses are being tested as follows.

H0: b=0 (i.e. there is no significant influence of Actual Rainfall on Tea production)Ha: b≠0 (i.e. there is significant influence of Actual Rainfall on Tea production)

At 95% confidence level the value of the b is 0.326086013 and value of standard error is 0.189775444. The P-value is 0.1241. The value of R2 is 0.26957062. Since the P-value is greater than the significance value of 0.05, H0 is accepted and the Ha is rejected. This proves that there is no significant influence of Actual Rainfall on Indian tea production.

ANALYZING THE INFLUENCE OF TEA AREA ON INDIAN TEA PRODUCTION

To understand the influence of Tea Area on tea production a regression analysis has been done. The regression equation is given by

38

Y= 671.5289005 + 0.312136028x.

On the basis of this equation the following null and alternate hypotheses are being tested as follows.

H0: b=0 (i.e. there is no significant influence of Tea Area on Tea production)

Ha: b≠0 (i.e. there is significant influence of Tea Area on Tea production)

At 95% confidence level the value of the b is 0.312136028 and value of standard error is 0.189775444. The P-value is 0.04738. The value of R2 is 0.369182395. Since the P-value is less than the significance value of 0.05, H0 is rejected and the Ha is accepted. This proves that there is significant influence of Tea Area on Indian tea production.

ANALYZING THE INFLUENCE OF TEA YIELD ON INDIAN TEA PRODUCTION

To understand the influence of Tea Yield on tea production a regression analysis has been done. The regression equation is given by Y=942.9694881 + 0.068800329x.

On the basis of this equation the following null and alternate hypotheses are being tested as follows.

H0: b=0 (i.e. there is no significant influence of Tea Yield on Tea production)

Ha: b≠0 (i.e. there is significant influence of Tea Yield on Tea production)

At 95% confidence level the value of the b is 0.068800329 and value of standard error is 0.052105 . The P-value is 0.2193. The value of R2 is 0.162282477. Since the P-value is greater than the significance value of 0.05, H0 is accepted and the Ha is rejected. This proves that there is no significant influence of Tea Yield on Indian tea production.

ANALYZING THE INFLUENCE OF COST ON INDIAN TEA PRODUCTION

To understand the influence of Cost on tea production a regression analysis has been done. The regression equation is given by Y= 596.3626454 + 0.128461919x.

39

On the basis of this equation the following null and alternate hypotheses are being tested as follows.

H0: b=0 (i.e. there is no significant influence of Cost on Tea production)

Ha: b≠0 (i.e. there is significant influence of Cost on Tea production)

At 95% confidence level the value of the b is 0.128461919 and value of standard error is 0.039249. The P-value is 0.011305. The value of R2 is 0.572480267. Since the P-value is less than the significance value of 0.05, H0 is rejected and the Ha is accepted. This proves that there is significant influence of Cost on Indian tea production.

6.RESULTS

FINDINGS:

From the data analysis it is seen that domestic consumption, market size, sales, number of growers, tea area and cost have significant influence on Indian Tea Production.

Domestic Consumption has significant influence on Indian Tea production because if the Production is more, demand for the product will increase and therefore Domestic consumption rises. Market size, too, have a significant influence on production as it causes increase in demand, therefore expanding the market. Sales, too, is directly proportional to production as demand for tea increases in the market which results in further production , which increases the sales and also helps in meeting the global demand as well. Numbers of Growers, who work in plantations field, have significant influence on production as more the number of people employed, greater will be the output. Production also increases as per the area of land available for cultivation of Tea. Lower cost of Production results in economies of scale of Production.

From the data analysis it is seen that exports quantity, imports quantity, tea yield (kg. /hectare), rainfall has no significant influence on Indian tea production.

By the various relations it is found that the production of Tea is independent of the Tea yield and the profit earned. The largest consumer of Tea remains the domestic market which consumes the majority of the Tea produced annually, while a relatively small percentage of it is exported. Consumption of Tea domestically is of the CTC variety and not of the orthodox green variety. These contribute to a small percentage of total production. The latter is what is exported mostly. It is also seen that tea production is dependent on the exports that India does, the domestic consumption, the market size both nationally and internationally, the sales and too some extent the imports as well.

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This means that if the above said increase the production of the tea will also increase.

Other Findings:

Tea production has shown significant growth in India over the considered time frame.

Tea production in India exhibits a positive relationship with acreage over the considered time frame.

Export quantity of tea from India has been unaffected by tea production levels in recent years.

The quantity of tea imported by India has shown a positive relationship with tea production levels in recent years.

Tea consumption in India has shown significant growth in recent years.

Tea Yield has shown significant decline during the period (1999-2006).

RECOMMENDATIONS

The Indian tea industry could reduce wages to market clearing levels across all states through disbanding of unions and complete removal of minimum wage laws. Tea leaf pickers and others employed in the plucking, processing and packaging of tea should be well trained so that the leaves are plucked with extreme care so that it retains its aroma, the yield is maximized and wastages are reduced.

The Indian Tea Industry must focus its exports to countries that absorb most of the tea it exports instead of generalizing. The industry must try and diversify by adding flavors to tea and by branding, which would lead to increased brand monopoly power. The Indian tea industry currently needs to focus on export oriented production. Also the utilization of the Special Purpose Tea Fund will also allow for greater production of tea, thereby reducing the per unit cost of tea.

If economies of scale are achieved, prices can be reduced. Aggressive Marketing Strategies must be taken up for the promotion of Tea globally to promote the Tea brand and thus increase the exports of Indian Tea.

Unlike its key competitors India does not have any powerful brand to support its promotion drive in the international market. To win back the confidence of lost foreign markets, Indian tea producers have to identify the need to revitalize the image of Indian tea in that international market. A vigorous campaign which include Indian Tea logos and making Indian brands acceptable in those most major markets.23

International brands like Liptons, Brooke Bond of HUL and Tetlet Tea of Tata Tea, etc are the market leaders and have great power in price determination in both domestic and international markets. This needs to be stopped and proper investigation is needed to curb the wrong practices in the tea market by introducing new laws to regulate the price

41

movements. 24

The production levels have to rise. There is a constant rise in the domestic consumption but the production levels have not risen at par. They have fluctuated in the middle but towards the end have shown some improvement. We have to introduce better technology and better production know how to in order for the production to rise.

Yield per hectare can be improved by improving the technology for production and using better techniques for effective production. India has to improve this and increase the Yield which in turn will increase production and hance exports as exports as well. Another reason for lower yield is destruction of tea leaves due to obsolete plucking techniques. This can be improved as well. India produces high quality Tea. If India wants to export Tea at high prices it should consider reducing the import duty and import Tea from other exporting countries that can provide Tea at a lower rate.

High cost of production affects the production greatly. Tea industry is labour intensive and the total expenses will be high. All efforts should be made so that these expenses stay minimum and production can be increased. 7.CONCLUSION

This dissertation aims to find out the various factors that influence the Indian tea production like the domestic market consumption, market size, exports and imports, sales and export price of tea and many other factors. Tea is a major crop which is produced and exported in India. It helps a lot in gaining foreign exchange. This study has tried to identify the various factors that cause fluctuations in the tea industry.

LIMITATIONS

Since my project focused mainly on production, it was difficult as we were supposed to work only with secondary data. Availability of relevant data was also a slight problem.Although an extensive study has been made regarding the production potential of the Indian Tea. Certain areas have been omitted from the detail study of this project. The reason for the lack such a detailed study has been omitted due to a scarcity in time and also that the study of the topic is also limitless. In India Tea is sold either through auctions or privately. The figures of the data used are auction houses data. The private sales data is not available. Every company has to be contacted separately to know at what rate they brought Tea. Also the quantitative data was not easily found as a result of which justice could not be done to some of the points. Moreover the data that was found was found in terms of quantity and not in terms of value. The word limit caused some problems too. A lot of editing work had to be done so that the word count was not crossed.

FUTURE SCOPE

The Indian Tea industry is likely to face stagnation in the years to come. The industry is currently facing export stagnation too. However, the demand for Tea in the domestic

42

market is growing, hence leading to an increase in imports. The Tea industry of India, being an export oriented industry, now needs to focus on new and improved production methods and export oriented production and also cater to the needs of the domestic market size in the global population can lead to an increase the consumption of Tea. The production must be increased. The industry can also innovate by adding flavors of Tea to gain footage in the global markets. A study on how to reduce the cost of production can be done to meet globally competitive prices of Tea. The conclusion derived from this project is of great significance and thus can be used for reference for future projects.

8.ANNEXURE-1Table 1:

Years production1995 743.31996 762.41997 775.31998 8381999 850.32000 815.62001 827.42002 842.12003 837.62004 850.52005 830.82006 892.72007 949.22008 947.92009 968

SOURCE: EIS

43

SOURCE: AS PER AUTHORS CALCULATION

Table 2:Year Exports Quantity Imports Quantity1995 150.9 0.21996 158.3 0.61997 138.4 1.21998 191.5 2.61999 201.8 9.12000 177.5 52001 200.9 7.22002 177.6 10.32003 181.6 23.62004 174.2 10.72005 179.5 31.72006 159.1 18.72007 181.3 23.22008 193.5 19.62009 203.2 24.9

SOURCE: EIS

44

SOURCE:AS PER AUTHORS CALCULATION

Table 3:Year market size1995 4125.11996 5352.81997 5926.21998 6517.81999 6814.82000 6925.52001 7317.42002 6716.12003 6623.52004 64132005 6545.32006 6907.12007 7025.12008 7676.52009 8488.1

SOURCE:EIS

45

SOURCE:AS PER AUTHORS CALCULATION

Table 4:

year Domestic Consumption1995 3161.41996 4194.51997 49171998 4676.21999 4655.42000 5177.12001 5379.32002 5067.12003 5035.22004 4860.82005 4793.52006 5264.32007 5180.12008 5739.82009 5936.3

SOURCE:EIS

46

SOURCE: AS PER AUTHORS CALCULATION

Table 5:Year Sales Value1995 41241996 53501997 59201998 65001999 67502000 69002001 72752002 66502003 65002004 63502005 64002006 68002007 69002008 75502009 8300

SOURCE:EIS

47

SOURCE:AS PER AUTHORS CALCULATION

Table: 6Year forecast value production1995 743.31996 762.41997 775.31998 8381999 850.32000 815.62001 827.42002 842.12003 837.62004 850.52005 830.82006 892.72007 949.22008 947.92009 9682010 988.12011 1008.22012 1028.32013 1048.4

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2014 1068.52015 1088.62016 1108.72017 1128.82018 1148.92019 11692020 1189.1

SOURCE: EIS

SOURCE: AS PER AUTHOR’S CALCULATION

49

ANNEXURE-2

FIGURE 1: REGRESSION ANALYSIS OF PRODUCTION AND EXPORTS QUANTITY OF TEA IN INDIA

YEARPRODUCTION

EXPORTS QUANTITY

1999 850.3 201.82000 815.6 177.52001 827.4 200.92002 842.1 177.62003 837.6 181.62004 850.5 174.22005 830.8 179.52006 892.7 159.12007 949.2 181.32008 947.9 193.52009 968 203.2Source:EISSUMMARY OUTPUT

Regression Statistics

Multiple R0.224676729

R Square0.050479633

Adjusted R Square

-0.055022631

Standard Error

57.37904194

Observations 11

50

ANOVA

df SS MS FSignificance F

Regression 1 1575.2917341575.292

0.47847 0.5066

Residual 9 29631.190083292.354

Total 10 31206.48182

Coefficients

Standard Error t Stat

P-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept705.3469621 244.1826068

2.888604

0.01792 152.97 1258 152.97 1258

X Variable 1

0.912857559 1.319701808

0.691715

0.50657 -2.073 3.898 -2.073 3.898

Source: As per Author’s calculations

FIGURE 2: REGRESSION ANALYSIS OF PRODUCTION AND DOMESTIC CONSUMPTION OF TEA IN INDIA

YEARPRODUCTION

DOMESTIC CONSUMPTION

1999 850.3 4655.4

2000 815.6 5177.1

2001 827.4 5379.3

2002 842.1 5067.1

2003 837.6 5035.2

2004 850.5 4860.8

2005 830.8 4793.5

2006 892.7 5264.3

2007 949.2 5180.1

2008 947.9 5739.8

2009 968 5936.3

Source: EIS

SUMMARY OUTPUT

Regression Statistics

Multiple R 0.697402813

R Square 0.486370683Adjusted R Square 0.429300759Standard Error 42.20132166

Observatio 11

51

ns

ANOVA

Df SS MS FSignificance F

Regression 1 15177.9178715177.92

8.52236 0.01705

Residual 9 16028.563951780.952

Total 10 31206.48182

Coefficients Standard Error t StatP-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept 350.2500354 179.80052231.947992

0.08323 -56.487

756.987 -56.49

756.987

X Variable 1 0.100883878 0.034557453

2.919309

0.01705 0.02271

0.17906 0.0227

0.17906

Source:As per Author’s calulation

FIGURE 3: REGRESSION ANALYSIS OF PRODUCTION AND MARKET SIZE OF TEA IN INDIA

YEARPRODUCTION

MARKET SIZE

1999 850.3 6814.82000 815.6 6925.52001 827.4 7317.42002 842.1 6716.12003 837.6 6623.52004 850.5 64132005 830.8 6545.32006 892.7 6907.12007 949.2 7025.12008 947.9 7676.52009 968 8488.1Source:EIS

SUMMARY OUTPUT

Regression StatisticsMultiple R

0.719088631

R Square 0.51708846Adjusted R Square

0.463431622

Standard Error

40.91993565

52

Observations 11

ANOVA

df SS MS FSignificance F

Regression 1

16136.51162

16136.5

9.63695 0.01263

Residual 915069.9702

1674.44

Total 1031206.48182

CoefficientsStandard Error t Stat

P-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept400.9082661

152.839821

2.62306

0.02767 55.1606

746.7 55.16 746.7

X Variable 1 0.06716524

0.021635886

3.10434

0.01263 0.01822

0.116 0.018 0.116

Source: As per Author’s calculation

FIGURE 4: REGRESSION ANALYSIS OF PRODUCTION AND SALES OF TEA IN INDIA

YEARPRODUCTION SALES

1999 850.3 67502000 815.6 69002001 827.4 72752002 842.1 66502003 837.6 65002004 850.5 63502005 830.8 64002006 892.7 68002007 949.2 69002008 947.9 75502009 968 8300Source:EISSUMMARY OUTPUT

53

Regression StatisticsMultiple R

0.687579562

R Square0.472765654

Adjusted R Square

0.41418406

Standard Error

42.75658367

Observations 11

ANOVA

df SS MS FSignificance F

Regression 1

14753.35

14753.4

8.0702 0.0194

Residual 916453.13

1828.13

Total 1031206.48

Coefficients

Standard Error t Stat

P-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept410.2923598

163.6784

2.5067

0.0335 40.026

780.559

40.026

780.559

X Variable 1

0.066761166

0.023501

2.84081

0.0194 0.0136

0.11992

0.0136

0.11992

SOURCE: As Per Author’s calculation

FIGURE 5: REGRESSION ANALYSIS OF PRODUCTION AND IMPORTS QUANTITY OF TEA IN INDIA

YEARPRODUCTION

IMPORTS QUANTITY

1999 850.3 9.12000 815.6 52001 827.4 7.2

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2002 842.1 10.32003 837.6 23.62004 850.5 10.72005 830.8 31.72006 892.7 18.72007 949.2 23.22008 947.9 19.62009 968 24.9Source: EISSUMMARY OUTPUT

Regression Statistics

Multiple R0.465892769

R Square0.217056072

Adjusted R Square

0.130062302

Standard Error

52.10344994

Observations 11

ANOVA

df SS MS FSignificance F

Regression 1

6773.556358

6773.56

2.4951 0.1487

Residual 924432.92546

2714.77

Total 1031206.48182

Coefficients

Standard Error t Stat

P-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept823.7698237

35.37053167

23.2897

2E-09 743.76

903.784

743.76

903.784

X Variable 1

2.992564886

1.894530851

1.57958

0.1487 -1.293

7.27829 -1.293

7.27829

SOURCE: As Per author’s calculation

FIGURE 6: REGRESSION ANALYSIS OF PRODUCTION AND NUMBER OF GROWERS OF TEA IN INDIA

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YEARPRODUCTION

NUMBER OF GROWERS

2000 815.6 112010

2001 827.4 115264

2002 842.1 127801

2003 837.6 129027

2004 850.5 129027

2005 830.8 140713

2006 892.7 143217

2007 949.2 159190

SUMMARY OUTPUT

Regression Statistics

Multiple R0.870222377

R Square0.757286986

Adjusted R Square

0.716834817

Standard Error

23.52394341

Observations 8

ANOVA

df SS MS FSignificance F

Regression 1 10359.50327

10359.5

18.7206 0.00495

Residual 6 3320.255481553.376

Total 7 13679.75875

Coefficients Standard Error t StatP-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept 525.511043 76.774307686.84488

0.00048 337.651 713.4 337.65 713.4

X Variable 1

0.002501126 0.000578064

4.32673

0.00495 0.00109 0.004 0.0011 0.004

Source:As per Author;s calculat ion

FIGURE 7: REGRESSION ANALYSIS OF PRODUCTION AND ACTUAL RAINFALL OF TEA IN INDIA

YEARPRODUCTION

ACTUAL RAINFALL

1999 850.3 826

56

2000 815.6 786

2001 827.4 792

2002 842.1 683

2003 837.6 922

2004 850.5 781

2005 830.8 879

2006 892.7 887

2007 949.2 937

2008 947.9 873

SUMMARY OUTPUT

Regression StatisticsMultiple R

0.519201907

R Square0.26957062

Adjusted R Square

0.178266947

Standard Error

44.25569859

Observations 10

ANOVA

df SS MS FSignificance F

Regression 1

5782.59414

5782.59

2.9525 0.1241

Residual 815668.53486

1958.57

Total 9 21451.129

Coefficients

Standard Error

t Stat

P-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept591.6064414

159.3817515

3.71188

0.0059 224.07

959.14

224.07

959.14

X Variable 1

0.326086013

0.189775444

1.71827

0.1241 -0.112

0.7637 -0.112

0.7637

source:As per Auhor’s calculation

FIGURE 8 : REGRESSION ANALYSIS OF PRODUCTION AND TEA AREA(‘000 HECTARES) IN INDIA

57

YEAR PRODUCTION TEA AREA1996 762.4 427.1

1997 775.3 431.2

1998 838 433.8

1999 850.3 436.1

2000 815.6 504.4

2001 827.4 509.8

2001 842.1 511.9

2003 837.6 507

2004 850.5 602

2005 830.8 603

2006 892.7 595Source: EIS

SUMMARY OUTPUT

Regression Statistics

Multiple R0.607603814

R Square0.369182395

Adjusted R Square

0.29909155

Standard Error

29.95684766

Observations 11

ANOVA

df SS MS FSignificance F

Regression 14726.850958

4726.85

5.2672 0.04738

Residual 98076.714496

897.413

Total 1012803.56545

Coefficients

Standard Error t Stat

P-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept671.5289005

69.35099388

9.68305

4.7E-06 514.646

828.41 514.65 828.41

X Variable 10.312136028

0.136004744

2.29504

0.04738 0.00447

0.6198 0.0045 0.6198

SOURCE: As per Author’s Calculat ionFIGURE 9 : REGRESSION ANALYSIS OF PRODUCTION AND TEA YIELD (Kg./Hectare ) IN INDIA

58

YEARPRODUCTION

TEA YIELD

1996 762.4 1770

1997 775.3 1809

1998 838 1869

1999 850.3 1996

2000 815.6 1656

2001 827.4 1675

2001 842.1 1614

2003 837.6 1652

2004 850.5 1413

2005 830.8 1327

2006 892.7 1387

Source: EISSUMMARY OUTPUT

Regression Statistics

Multiple R0.402842993

R Square0.162282477

Adjusted R Square

0.069202752

Standard Error

34.52176631

Observations 11

ANOVA

df SS MS FSignificance F

Regression 12077.794

2077.794

1.7435 0.2193

Residual 910725.77

1191.752

Total 1012803.57

Coefficients

Standard Error t Stat

P-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept942.9694881

86.68625

10.87796

2E-06 746.87

1139.07

746.872

1139.07

X Variable 1

-0.0688003

0.052105

-1.3204

0.2193

-0.187 0.04907

-0.1867

0.04907

59

29 1SOURCE: Asper author’s calculation

FIGURE 10 : REGRESSION ANALYSIS OF PRODUCTION AND COST OF TEA IN INDIA

YEARPRODUCTION COST

1999 850.3 2336.8

2000 815.6 1989.4

2001 827.4 1887.9

2002 842.1 1750.3

2003 837.6 1883.5

2004 850.5 2001.6

2005 830.8 2010

2006 892.7 1948.4

2007 949.2 2363.7

2008 947.9 2694.3Source: EISSUMMARY OUTPUT

Regression Statistics

Multiple R0.756624258

R Square0.572480267

Adjusted R Square

0.519040301

Standard Error

33.85775565

Observations 10

ANOVA

df SS MS FSignificance F

Regression 1

12280.35

12280.35

10.71259

0.011305

60

Residual 89170.781

1146.348

Total 921451.13

Coefficients

Standard Error t Stat

P-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept596.3626454

82.59323

7.220479

9.06E-05

405.9023

786.823

405.9023

786.823

X Variable 1

0.128461919

0.039249

3.273009

0.011305

0.037954

0.21897

0.037954

0.21897

SOURCE: As per Author’s calculation

61

9. BIBLIOGRAPHY

1. http://www.teauction.com/industry/indhistory.asp2. http://www.nits.ac.in/department/humanities%20new/new_hum/9.doc3. http://www.teauction.com/industry/indiantea.asp4. http://www.teaindustry.com/5. http://www.teaboard.gov.in/pdf/teaindustry.pdf6. http://www.igidr.ac.in/pdf/publication/pp-062-21.pdf7. http://www.maketradefair.com/assets/english/TeaMarket.pdf8. http://www.teaindustry.com/9. http://www.teaindustry.com/teapreparation.htm10. www.teaboard.gov.in/pdf/TEA_RESEARCH.pdf11. http://commerce.nic.in/pressrelease/pressrelease_detail.asp?id=88312. http://economictimes.indiatimes.com/markets/commodities/small-tea-growers-up-share-in-output/articleshow/7108892.cms13. http://www.diffen.com/difference/Coffee_vs_Tea#ixzz1Lw4UHUL614. http://www.diffen.com/difference/Coffee_vs_Tea#ixzz1Lw5HTv6r15. http://www.teanewsdirect.com/2008/02/india-tea-exports-come-down-drastically/16.http://www.valuenotes.com/mafatlal/mf_tea_29may04.pdf?artcd=33830&cat=I&Id=8017. www.nits.ac.in/department/humanities%20new/new_hum/2.doc18. Time for Tea Production cost control, tea and Coffee International volume 175 no 7 July/August 200119. http://www.agricultureinformation.com/mag/?p=281520. Statistical methods pg-30221. Statistical methods pg-30322. Statistical methods pg-30423. http://www.scribd.com/doc/28455965/study-into-the-tea-industry-of-india24. http://www.jayshreetea.com/growth.htm

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