India’s tea output misreported for years

This brew is sure to leave an unsavoury after taste in the government’s mouth.

In a shocking development, the commerce ministry and the Tea Board have discovered that tea production has been under-reported for years.

Officially, annual tea production, as disclosed by the Tea Board has been in the 950-990 million kilogram (kg) range for years and was 988 million kg during 2011.

But these figures may have left out as much as a quarter of the production, the ministry suspects.

“It might be that the crop coming from the small growers and bought-leaf factories was not being fully captured by the official figures all these years,” said an industry insider who claimed the Tea Board chairman had discussed the development with him.

“About 26% of country’s tea production is accounted for by this segment. While there are about 800 tea factories in the organised sector, there are thousands of bought-leaf factories, and many of them don’t report,” said the official, requesting anonymity.

The commerce ministry chanced upon this anomaly accidentally while calculating tea production backwards from the amount of cess collected on tea production.

“The amount of crop revealed from figures of tea cess of 50 paisa per kg of all tea produced in the country under the Tea Act and collected by the central excise authorities is higher than what is disclosed by Tea Board as the country’s total tea production, based on figures submitted by tea producers,” the official said.

The revelation comes at a time when the Tea Board has hiked the outlay (read subsidies and incentives) for the sector for the 12th Five Year Plan (2012-17) by a whopping 265% to `3,000 crore, purportedly to boost production. The outlay for the previous plan period was Rs820 crore.

Tea production rose from 949 million kg in 2005-06 to 976 million kg in 2011-12, riding on production efficiencies and bringing 27,760 hectare under re-plantation and rejuvenation, by the Tea Board’s claim.

The area under tea plantation, however, has increased only marginally in all these years. Production in 2006-07 was 567,020 hectare. During 2007-12, around 2,224.72 hectare was brought under tea plantation.

Tea Board chairman M G V K Bhanu has now initiated a massive effort to arrive at the true picture by collating and cross-checking figures from multiple sources, including aggregating receipts of various taxes paid, apart from cess, and even figures from various ports through which tea is exported.

Though the exercise is still on, the commerce ministry has started studying the data collected so far. The findings would have far-reaching consequences for both tea industry dynamics and government programmes for the segment.

This could explain why Tea Board is holding back on the official release of tea crop figures for August and September.

“The crop figures for August would have been out by now. Tea Board may come out with the figures only after they are reworked,” an industry representative said, requesting anonymity.

Yet another fallout may be the recent notice issued by the Tea Board to over 150 registered tea exporters, threatening them with cancellation of licence if monthly returns are not submitted.
This move will ensure it gets the export figure right.

“It is not enough to know how much is being produced in the country. It is equally important to know how much is being exported. All inaccuracies or leakages that are there in reporting of exports has to be plugged in the same way,” said the representative.

“Tea Board is checking figures from customs authorities at the ports. The customs code of 00902 is meant for tea shipments, and all bills bearing that code is being compiled to get the true picture of shipments,” he said.

Accurate production and export figures alone can reveal the domestic consumption, which has a bearing on local tea prices.

“Nobody has a capture of how much tea is being consumed within the country. While retail packet sales are available, significant amount of loose tea sold through thousands of small shops across the country is not accounted for,” said the representative.