Would you be willing to pay 15% more for your cup of tea so that a tea worker could receive a 25% wage increase?
Well, if you’ve heard how many workers in the tea industry struggle to subsist on low wages, it’s a no-brainer.
Consider Assam, where strikes are possibilities (Bolton 2018) and salary negotiations are ongoing (Ghosal 2018)—and tea producers are weighing the balance between wages and profits.
The vice president of Corporate Sector Ratings notes that if wages go up 25% in Assam:
organized bulk tea players based in North India would witness a considerable deterioration in operating margins, unless there is a commensurate rise in prices of tea on a sustainable basis. . . . a minimum price increase of around 15% would be required to cushion the impact of higher wages. (Ghosal 2018)
- tea is “the most important crop in Assam”
- Assam tea ranks among the world’s best
- over half of the tea produced in India is from Assam
- one-sixth of the world’s tea is from Assam
- the largest CTC tea auction center, and the “second largest in terms of total tea,” in the world is in Assam
- 17% of Assam’s work force works in the tea industry
- Assam has more than 2500 tea gardens and 850 tea estates
So it seems an easy fix to simply raise wages and tea prices, but we all know that things are never ever that simple.
Assam, in northeast India, is bisected by the Brahmaputra River. The unique environment—humid and hot—contributes to the malty flavor that is characteristic of Assam teas.
This unique environment also means that:
- the lowland grown-tea is on the boundary of tea-growing regions, making it quickly affected by any temperature increase (Kahn 2015),
- the river has too much silt, so is susceptible to erosion—and flooding—during heavy rains, and
- because tea is sensitive to precipitation levels, vacillations in rainfall are devastating—and in the past several years, Assam has been beset with periods of drought alternating with heavy rains.
There are many factors to weigh when calculating wages vs profits. The entire enterprise must be sustainable in the face of climate change, which will directly impact the tea industry.
And the problems that plague the industry of course directly impact the lives of millions of people in Assam.
Something to keep in mind if the price of your favorite Assam does indeed go up. . . .
–Arya, N. “Growth and development of tea industry in Assam,” International Journal of Scientific & Engineering Research 4(7):226–73. 2013.
–Bolton, D. “Assam tea workers consider strike for higher minimum wage,” World Tea News, March 27, 2018.
–Ghosal, S. “Profit margins of tea producers to improve: ICRA,” The Economic Times, April 3, 2018.
–Kahn, B. “Global warming changes the future for tea leaves,” Scientific American, June 4, 2015.