Would co-operatives make tea taste better?

Pay and conditions in the industry are in a race to the bottom says Stirling Smith – but legal changes in India offer glimmers of hope

Tea is the most popular drink in the world, after water. And most tea drinkers – in the UK at least – associate tea with India. Rightly so, because by the end of the 19th century, British-owned tea plantations provided the bulk of tea drunk in the UK.

All the tea in China

All the tea imported into Britain in the 18th century came from China. To pay for it, in 1776 the East India Company created a market for opium, grown under government control in India. The opium was sent to China and exchanged for tea. Only in 1907 did Britain finally agree to stop this opium trade – but that is another story.

To reduce reliance on China, the British began to grow tea in Assam, north-eastern India, in the 1840s. The co-op movement was part of this: in 1902, the English and Scottish Joint Co-operatives Wholesale Societies bought tea estates in Ceylon (now Sri Lanka); in 1915 the first estates were bought in India.

These were sold off many years ago. But tea from India will be found in most blends sold in the UK – along with tea from Indonesia, Kenya, Malawi, Rwanda and Sri Lanka. There is usually tea from at least four or five countries in every tea bag. Around half of all the black tea drunk in the UK comes from Kenya.

Living wages?

In recent years Oxfam and other groups have warned of poor wages and living conditions in the industry, especially in Assam where half of all Indian tea is produced. 

Last year the Fairtrade Foundation asked me to investigate the region. Out of Assam’s 800 tea estates, only a handful are Fairtrade certified and most of the crop is not sold as Fairtrade.

My brief was to make sense of the complex puzzle of different obstacles to better pay. The Fairtrade Foundation cannot simply tell the tea estates to pay workers more; it would be a different story if the market for Fairtrade tea were rapidly expanding – but it is not.

Low wages  – a national problem

India has a chronic low wage problem. 50% of workers in India currently earn below 166 rupees a day – about £1.70.

That is roughly what workers get in the tea industry, but workers’ cash wages are supplemented with in-kind benefits including education, housing and healthcare; these are a legal requirement under the Plantation Labour Act, 1951.

Related: How do you calculate a decent living wage rate?

And in Assam, collective bargaining agreements between the trade unions and the employers provide for a basket of subsidised basic food stuffs, known as ‘rations’, to be distributed to workers.

All these ‘in kind’ elements – housing, schools, health care and the ‘rations’ are counted when calculating the workers’ wages.

This year, the Indian government is pushing through the biggest changes in labour law for 70 years. Under the new Wages Code, the ‘in-kind’ benefits will no longer be counted as wages.

According to the International Labour Organisation it is, in theory, OK to pay worker ‘in kind’ but there are several conditions which are not met in the Indian tea industry. For example, health outcomes on plantations are poor. Anaemia rates for women are shocking; maternal mortality
rates in upper Assam are twice the national average, and three quarters of these deaths are in tea plantations.

It is time for government to take over the schools, hospitals and housing on tea estates (as the industry has been asking) and run these as public services.

The Covid-19 epidemic has only highlighted the need for good retail access in tea growing communities. These are usually remote places, and workers need to supplement the rations with additional purchases, and get other commodities, which are not provided by the management. Workers – always women – have to travel to urban centres or more local
weekly markets.

Travelling off plantations is difficult at the best of time with poor roads made worse for several months of the year during the monsoon – which is the best time for growing tea.

But with Covid-19, the situation will get even worse.

So, what is needed is good quality retail outlets on estates, providing a wide range of goods, at fair prices and with quality assurance. They could also be the focus for other services like information, possibly savings.

Sounds familiar? 

That was just the role that the first retail co-ops played in Britain, in the 19th century.

In the Indian system, fair price shops are part of the Public Distribution System, which targets people living below the poverty line. In some enterprises and sectors, fair price shops operate on a “no profit no loss” basis and can be organised by the employer, or by a trade union in the workplace. They are often set up as a consumer co-operative.

This is what needs to happen on each tea estate – let the government move in, take over the subsidised rations, but hand over the distribution to consumer co-operatives run by and for the tea workers.

But if that is one space where co-ops would help to make life better, there is another part of the tea industry where I am more sceptical.

India is itself a huge market for tea and the government has encouraged the spectacular growth of small tea growers – defined as less than 12 acres.

Around half of all tea grown now comes from these small tea growers, who sell their tea to factories that specialise in processing their tea.

This is exclusively for the domestic market. No attention has been paid to the environmental costs of the expansion of the small tea sector, with indiscriminate use of agrochemicals. Much of the expansion has been on land previously used for growing food.

Quality is poor – and if you don’t fancy pesticides in your tea, avoid the tea grown in the small tea farms. Luckily for us, it is not exported.

Nor are there any of the safeguards of the organised plantation sector: no trade unions, no “in-kind” benefits, and lower wages. Everything is sacrificed to maximising production.  

This is a race to the bottom, with traditional, organised (and unionised) large plantations now operating on very thin margins. They are being undercut by the small tea growers.

In the co-operative movement, we have a different experience of small tea growers. In Kenya, with support from the Co-operative Group, the Co-operative Colleges in the UK and Kenya, and Finlays, 12,000 small tea growers were helped to form co-operatives and their tea has been Fairtrade certified. It now forms part of the 99 blend.

That does not seem to be an option for the small tea growers in India, unfortunately. They are too oriented towards the domestic market, and are driving proves down.

The future for tea

While global demand for tea is static at best, and the areas where tea is being grown expands, tea prices will remain low.

We can do our bit to help workers in India, and small tea growers in Kenya, by drinking Fairtrade tea but the fact is it remains a niche product.

In India, changes in the law may provide an opportunity make improvements for all workers – not just those of Fairtrade certified estates, and co-operatives could be a part of that change.