A Bitter Cup of Tea

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Value Chains

A Bitter Cup of Tea

Siddharth Bargate / Flickr Creative Commons

If you want a clean conscience, you might want to think twice before pouring that cup of English Breakfast tea.

Even after a BBC exposé of tea plantations in Northeast India forced tea brands to address issues within their supply chains, a living wage remains a pipedream for the majority of India’s tea laborers.

The investigation, broadcast last September, revealed a litany of health, labor, and human rights violations on plantations owned by two of the world’s largest tea producers, McLeod Russel and Assam Co.

The report’s findings raised questions about the validity of ethical certifications and put pressure on the United Kingdom’s largest tea brands to improve the sourcing of their tea.

Tea brands responded to the report in haste, with three of the UK’s most popular tea brands – Twinings, Yorkshire Tea, and Fortnum and Mason – suspending business with Assam Co. until it improved conditions on its estates.

The ethical certification organization Rainforest Alliance, which had certified all of the estates in the investigation, stripped several of Assam’s estates of its green frog seal - an indicator of socially and environmentally conscious practices - and added the provisions of adequate housing, water supply, and sanitation to its auditing criteria.

The response was quick but skirted the root of the problem, according to labor organization Centre for Workers’ Management. Traders and tea brands, it claims, aren’t paying plantations a fair price for their tea, driving plantations to skimp on wages and equipment for their laborers.

A few powerful global corporations dominate the buying and retail side of the tea market, according to the labor group’s 2013 report, Brewing Misery. The corporations manipulate leaf prices and concentrate profits upstream in the supply chain, leaving the plantations at the bottom of the supply chain reluctant to expend even a modest amount on their employees.

The lopsided supply chain lets tea buyers pay low prices for high quality tea and encourages plantations to pay their workers next to nothing, according to the report.

Although plantations in the southern states of Kerala and Tamil Nadu sell their leaves for a higher price than plantations in the northern state of West Bengal, tea auctions fetch nearly 40 percent more for the higher-quality northern tea, according to statistics provided by Tea Board of India.

This paradox reflects two major market failures: The lack of competition among tea brands and auction houses and a dearth of non-tea-related jobs in Northeast India’s tea-growing regions.

Assam and the northern region of West Bengal – home of the Darjeeling hills, the Terai plains, and the Daoors foothills – were sparsely populated regions of India until the mid-19th century, when the Assam Co. began transporting laborers to the region to work on the fields of its expanding tea empire.

With few options for better-paying jobs in the remote northern region, tea laborers have limited clout to demand higher wages. Instead, they must accept unfavorable terms, including wage cuts for failing to meet the nearly impossible harvest quota.

Their counterparts in the more densely populated states of Kerala and Tamil Nadu not only have more sway when clamoring for higher wages; they also have the luxury of higher-paying jobs outside the tea sector. Still, wages in the south are low, and living and labor conditions are often shoddy.

Until traders and brands pay the plantations the true price of their product, ethical certification organizations, such as the Rainforest Alliance and Fairtrade International, have limited power to improve wages and living conditions.

After a July 2013 article in the Observer called attention to Fairtrade International’s lax standards for certifying tea estates, Fairtrade issued a statement in which it acknowledged that its wage requirements in Assam fell short of a living wage. But it argued that brands, retailers, and consumers must all pay higher prices for tea before plantations can raise wages.

Currently, Fairtrade-certified plantations in Assam must pay their employees at least the local industry wages, which, in Assam, is roughly $1.50 a day – well below the state’s minimum wage of $2.60. Tea estates justify such low pay by providing in-kind benefits and non-wage allowances, like housing, primary education, medical care, firewood, and subsidized grain. Only when these payments are monetized, tea laborers in Assam make more than the national minimum wage, according to a study on tea estate wages by Oxfam and the Ethical Tea Partnership.

But many of the estates aren’t providing these services, and the Indian government has begun to assume responsibility for the laborers’ basic needs, according to the Centre for Worker’s Management.

Life on the tea estates is so tenuous that traffickers lure girls into domestic slavery by promising a better life. The practice is so rampant in Assam that Kailash Satyarthi, winner of the 2014 Nobel Peace Prize, founded the organization Bachpan Bachao Andolan (BBA) to track down and return these children. Satyarthi’s organization rescued 2,600 children between 2011 and 2013, but Delhi alone is believed to house more than 100,000 children living in domestic slavery, the Observer reports.

“The owners of these international tea estates don’t care for these people,” Satyarthi told the Observer. “They don’t pay them minimum wages. Forget about the decent wages. They don’t even pay survival wages.”

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