The Indian Tea Association (ITA), comprising mostly large estates owners, has proposed a rating system for packet tea to make consumers aware of the quality of the produce.

The Association suggested that the rating system, akin to star marks on electrical appliances, should remain voluntary initially before making it mandatory for all packets sold in the market.

“We need to make consumer aware of the quality of the tea that he/she is consuming. A grading will allow consumers to make informed choice,” ITA chairman Hemant Bangur said.

In the wake of concerns raised about traces of banned chemicals and pesticide in the tea, there has been a growing demand from the organised tea producers for testing of tea to ensure the product is compliant. The Tea Board’s directive to 100 per cent auction of dust tea introduced earlier this year was a step in that direction.

There have also been concerns that substandard teas with potential health hazards due to chemical residues are flooding the market and finding way to packet tea.

“Tea Research Institute says that the cost of production of compliant tea is about ₹250 a kilo. But teas are being retailed in the market at ₹200 per kilo. Red flags should be raised if such teas are compliant,” Bangur said on the sidelines of the 141st annual general meeting of ITA in Calcutta on Friday.

Bangur said there should be a choice available before consumers to pick up what he or she likes. But the choice should be an informed one. He suggested that while producers and packers are aware of the quality, the knowledge is not being disseminated down the line to consumers.

“Epidemiological studies suggest the inverse relationship of tea with life threatening diseases. Recent research by TRA to assess the impact of leaf maturity on quality of processed CTC tea has shown that as leaves mature, the anti-oxidant activity decreases. This opens up the scope for a quality benchmarking code and redefining quality standards. Conclusive research can provide consumers the knowledge to differentiate between various kinds of teas in terms of their qualitative and health related advantages as well as enable intervention by introduction of a statutory scientific quality grading system with one leaf to five leaves mark,” the ITA chairman said in his address.

He suggested that a committee consisting of the Tea Board, TRA and outside professionals who can scientifically analyse every single blend which is available in the market and give it rating.

Tea growers believe a pivot towards quality tea would allow organised estates making compliant tea fetch a better price.

The last decade has witnessed tea prices growing at a CAGR of 2.88 per cent only but trailing the escalating costs of inputs at 10-12 per cent CAGR. Wages have surged by 117 per cent in Assam and 122 per cent in Bengal in the last 10 years. The FAO’s projection of the decadal price growth of teas for 2018-2027 states that the prices in real terms would actually decline by 3.6 per cent which in effect means negative margins.

“Tea has become an EBITDA negative industry from an EBITDA positive state,” Bangur remarked.

Organised players complain that they are pitted against unfair competition from small tea growers who now account for more than 50 per cent of India’s tea production. STGs do not have to follow the compliance of providing minimum wage, health and ration to workers that large players are legally required to. As a result, STGs can work on a much lower cost structure than the estates, they argued.

Supply of cheaper teas, which are often alleged to be non-compliant, has kept the prices under check in India over the last decade. With a sharper focus on quality, organised players are hoping to turn the tide.