By Heneage Mitchell
Basudeb Banerjee talked to Tea & Coffee Asia recently about the five eventful years he served as chairman of the Tea Board of India since October 2005 and discusses some of the challenges and opportunities facing his soon-to-be-named replacement. We are delighted to offer readers these insights that the chairman developed during his busy and productive term.
Prior to his appointment, Banerjee worked as deputy chairman of the Tea Board between 1998 and 2003. From 2003 to 2005, he was with the Election Commission of India, and before that had worked in general administration in the state government of West Bengal for 15 years. Bannerjee came to the position with some previous experience in the tea sector, since he had done an earlier stint in the Tea Board. He also worked in field postings in Darjeeling in the mid-1980s.
“The tea industry was still passing through a recession in late 2005 when I joined the Tea Board, with more than 35 estates closed and many estates on the verge of bankruptcy,” Banerjee recalled. “Production and exports were stagnant and the auction system under challenge.”
Banerjee swiftly rose to the challenges the sector was facing, and implemented effective strategies to resolve the key issues.
“At the beginning of my term, supply was ahead of demand and the main approach during the five years of my stewardship was on improving productivity of the existing gardens rather than establish new plantations at huge investments, value addition and marketability,” Banerjee told Tea & Coffee Asia. “The action taken to adopt this strategy involved vertical development measures such as replanting/rejuvenation pruning, infilling of vacancies with better varieties and mechanization of operations. In addition, the small grower sector was the focus of new policy initiatives. Conversion to an organic system of tea growing and production of specialty teas was emphasized, along with a thrust towards modernization and quality certification of the existing factories to ensure production of clean teas without any trace of foreign material in the end product. The production of orthodox tea was incentivized.”
Domestic markets also came under scrutiny, and were identified as important elements in the development of a sustainable tea sector.
“It was felt that a strong and vibrant internal market was necessary to create the required synergies for expanding the export market,” Banerjee said. “Keeping this in view, generic promotion campaigns within the country were encouraged so as to increase the per capita consumption and to arrest the declining trend in domestic demand.”
Another important aspect of Banerjee’s term was the emphasis placed on modernization and technological innovation..
“Information technology was given due emphasis during the plan period for making available ready information to the tea industry,” Banerjee said. “A Geographic Information System (GIS) based on remote-sensing by satellite was explored in collaboration with the Indian Space Research Organization for creating a geo-data base covering all aspects of tea plantations. During the previous plan periods, the main research and development thrust was directed towards improving production and very little attention was paid to technological advancement, particularly on tea engineering. It was noticed that there was wide disparity between the energy consumed by processing machinery and the output obtained. Steps have been initiated for a re-look at the existing machinery and equipments used for processing and also for developing new methods of processing tea. This task has been assigned to national institutions with proven capabilities in the engineering.”
Perhaps the most notable and, in the long term, the most important innovation introduced during Banerjee’s term is the electronic auction system that replaced the original public auctions that have been a part of the tea industry for almost 150 years.
“Without doubt, the successful introduction of electronic auctions, replacing the public outcry system prevalent since 1861, was one of the most exciting developments to be introduced during the last five years,” Banerjee told us. “Other significant achievements include the opening of new offices of the Tea Board in the areas of small growers concentration, launching of a special purpose tea fund for financing large scale uprooting and replanting of old and uneconomical sections of tea gardens, the reopening of 26 out of 35 closed tea gardens which I inherited, the creation of enhanced infrastructure for Tea Research, Training and quality laboratories, hosting the 19th session of FAO-Intergovernmental Group on Tea in Delhi in May 2010, launching of na organic tea development project with support from CFC- Common fund for commodities, FAO and IFOAM and launching a pilot project for looking at the scope for minimizing the energy requirements in the tea processing factories, with support from UNDP-Global Environment Facility.”
No man is an island, least of all the chairman of such an important institution as the Tea Board. Banerjee is quick to recognize the individuals and groups that helped to ensure the effective management of the Indian tea industry throughout his tenure as chairman.
He cited the Ministry of Commerce, Planning Commission, Ministry of Finance, Indian Bankers Association, NABARD and producer Associations for helping the Board in formulation and implementation of Special Purpose Tea fund, UNDP-Global Environment Facility and TIDE –an NGO for implementation of the Project on Energy conservation in Tea Factories, FAO-IGG on Tea, IFOAM, CFC, TRA, UPASI TRF, DTR&DC, and other stake holders for implementation of Organic Tea Development Project.
Other institutions that supplied pivotal support include the Indian Space Research organization for assisting the Board in mapping of tea growing areas in Assam and West Bengal.and the Indian Institute of Technology for undertaking an R&D Projects towards innovations in processing technologies and machinery development
But there are still challenges facing the incoming chairman, who has yet to be named as we go to press.
“Some of the principal problems that need to be addressed include stagnation in productivity in the organized sector of the industry mainly due to old age of the plantations and acute shortage of manpower: the labor cost, is the largest cost overhead accounting for about 60% of the total cost of production of Indian tea,” Banerjee informed us. “With increase in wages and inputs, the cost of production is much higher when compared to other producing countries. Collectivization of small growers (whose number has gone up many fold during the course of last one decade) and helping them to move up in the value chain is another important step that needs to be taken, together with relieving infrastructural bottlenecks due to remote locations of the plantations.”
So what would Banerjee offer by way of advice to the incoming chairman?
“I would tell him to listen patiently to all stake-holders but to ultimately take decisions that benefit the sustainability of this important employment-intensive sector, even if those decisions are unpalatable,” he said.
Looking further afield, Banerjee had this to say to foreign buyers and lovers of Indian teas:
“For the international buying community, the message is that they must respect the origin - after all, tea is a finished product when it leaves the tea estate and I feel that blending, packing and marketing devours an unsustainable share of the price the consumer pays,” according to Banerjee. “There is an element of market failure here. Lip service to the workers’ livelihood and environmental concerns will not wash away this hard fact. With high growth rates of GDP in China and India, the demand side of the market will transform before we realize the consequences. The supply side constraints in terms of land and labor shortages in the traditional tea-producing must also be looked into.”
These issues will now become the oncoming chairman’s responsibilities as Banerjee moves on to fresh challenges and successes.
He will be remembered with gratitude and respect by the industry as a far-sighted and fair-minded chairman whose legacy will live on in the reforms and innovations he accomplished during his effective and popular term during which he oversaw the revival of the tea industry in India and the introduction of electronic auctions.