2025: What strategies can sustain growth in India’s plantation sector?

By Pune Media On Jan 5, 2025 19

In this episode of businessline’s State of the Economy podcast, Vishwanath Kulkarni speak to K. Mathew Abraham, President of the United Planters Association of Southern India, and Managing Director & CEO of Kanan Devan Hills Plantations Company (P) Ltd, on the current state of India’s plantation sector in 2024, discussing its challenges, opportunities, and what the future holds for this vital industry.

The year 2024 proved to be a mixed bag for the plantation sector. While commodities like tea, coffee, cardamom, and rubber saw bullish price trends, several external factors created hurdles. Erratic climate patterns, geopolitical tensions, and rising costs deeply affected production and profitability.

Abraham highlights how global conflicts, including those in Ukraine, Russia, and West Asia, disrupted maritime trade routes like the Suez Canal, compounding logistical costs. He remarks, “Price increase was largely a supply side phenomenon rather than a demand side factor, as there has been a decline in production due to the adverse impact of climate change, which is indeed not a very encouraging scenario.”

The discussion also underscored that higher commodity prices did not translate to higher profits due to escalating input costs. Wages, fertilizers, fuel, and pesticides have seen significant price hikes, further straining margins. Abraham explains, “The present price rise therefore mostly gets nullified and as a matter of fact, in real terms, the commodity prices are still on a decline.”

Looking ahead, Abraham acknowledges a mixed short-term forecast. While coffee and spices show positive price trends in the short term, commodities like tea are expected to face more challenges. He stresses the need for structural changes to overcome hurdles and sustain growth.

“Importantly, what needs to be done is to have a holistic approach for all plantation commodities to enable the sector to be cost competitive in the marketplace by optimizing mechanisation while simultaneously also investing in long-term field developmental programs,” Abraham notes. He emphasises the importance of government subsidies, R&D investments for climate-resilient clones, and marketing efforts to boost global demand for Indian plantation products.

Listen in!

(Host: Vishwanath Kulkarni; Producer: Rowan Barnett, Siddharth Mathew Cherian)

About the State of the Economy podcast

India’s economy has been hailed as a bright spot amid the general gloom that seems to have enveloped the rest of the world. But several sectors continue to stutter even as others seem set to fire on all cylinders.

Published on January 5, 2025

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