Guwahati: A new status paper on small tea growers (STG) brought out by the Confederation of Indian Small Tea Grower Associations (CISTA) has made important observations on the constraints under which small tea growers are working and the interventions needed to help them out.
Though the small tea growers produce more than 50 per cent of tea in India, they are handicapped by limited bargaining power due to the lack of scale of production.
Many small tea growers have land holdings of less than one hectare, limited support and access to finance and lack of access to several schemes available to small farmers in the agriculture sector.
The report points to a new danger that small tea growers may be moving away from tea cultivation may turn out to be a reality in India due to low sub-optimal price realisation.
“Such sub-optimal price realisation may put a question mark on the business viability of the STG segment, which may have serious socio-economic repercussions in terms of livelihood. Given the STGs are located in the remotest part of the country, where there are limited opportunities, tea is a major employment generator. Currently, over 5 lakh people are involved in the STG segment directly and over 10 lakhs are involved indirectly. The livelihood of 1.5 million people can get affected due to such issues,” the paper points out.
“ If the long-lasting price problem of the green tea leaf is not solved soon, the existence of small tea growers will be in the question mark shortly in Assam and Bengal who are contributing 90% of small sector tea. People have shifted from tea to other crops in South India mainly in the Nilgiri district of Tamilnadu. In 2015-16 small tea growers of Nilgiri contributed 78% of total tea production, which has now come down to 48 per cent in 2022-23 due to non-remunerative green tea leaf prices.
There have been numerous protests by small tea growers on the low green leaf prices fetched, but has not seen much headway in this regard.
The status paper has been prepared by the Confederation of Indian Small Tea Grower Associations (CISTA) to bring out the current status and challenges faced by the small tea sector in India and to seek policy intervention from the Government of India in the Ministry of Commerce and Industry for addressing the challenges and ensuring remunerative economical returns to the small growers and manufacturers.
According to the status paper, there are currently 2.4 lakh STGs having a production of over 691 million kgs of tea( 52 per cent of India’s tea production) and a combined area of around 2 lakh hectares under tea cultivation. Currently, over 5 lakh people are involved in the STG segment directly and over 10 lakh are involved indirectly. The livelihood of 1.5 million people can get affected due to such issues.
The Tea Board of India defines a Small Tea Grower as a person with a tea cultivation of up to 25 acres.
The report says the economy of the regions with high STG presence, is largely dependent on the economy related to tea plantation. Many such regions have seen a stable change in the improvement of the local economy with the income from tea cultivation in the region. “Poor price realisation by STGs also impacts the development of such regions,” the paper says.
“While trends are already observed in South India regarding the migration of farmers from tea, this can intensify if the small tea growers (STG) do not get remunerative prices to even cover their cost of production. This may have a serious impact on the production of the STG segment. It is pertinent to mention here that one of the key reasons for the rapid growth of the STG segment is their relatively young bush profile. However, as these get older there might be investments required for plantation development activities which otherwise would impact yield and reduce overall production. This could create a potential supply-demand gap in the industry” the status paper points out.
The growth in green leaf price has been at 2% CAGR which is much lower in comparison with the increase in the cost of production of tea increasing almost at over 5%. that the major cost borne by the STGs is on human labour (46%) as most of the plantation activities are done manually such as plucking.
More importantly, the price realisation of STGs is linked to the price of tea made in the auction. However, due to various factors, the auction prices are not the right barometer to determine the price of green leaf for STGs and more importantly slow growth rate in auction prices, the growth in price realisation to growers has been lower compared to the growth rate in cost of production.
Interestingly though the people working on small tea farms in Assam should get a wage of Rs 232 equal to workers working in the organised sector, the same still has not been implemented.
A large majority of STGs sell their green leaves to Bought Leaf Factories( BLF) through agents. Only around 7-8% of the overall STG population sells directly to BLFs. Agents play a vital role in the tea value chain as they collect the leaves from STGs, aggregate and transport them to the factories. The emergence of agents has been pronounced mostly because STGs lack scale and limited financial capability to develop leaf collection, storage infrastructure and transportation facilities. Various socio-economic factors play a critical role in making STGs overly dependent on the agents.
The growers receive a disproportionately lower share of the consumers’ wallets, which makes it imperative to move up the value chain and get direct market access to have a better price realisation.
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In sharp contrast with the organised segment, which has inherited the legacy created by British planters and is maintaining the plantation development activities (though the degree of development activities has come down significantly over the past few decades due to low investment) the STGs have limited knowledge about the planting materials, the modus operandi of planting, the optimal usage of inputs, even field practices such as pruning, plucking which considerably have an impact at the quality of the green leaf produced and consequently on the made tea.
The status paper says interventions are required around Plantation Development, support in the formation of Collectives, Support around quality upgradation and value addition, support in establishing market linkage, Encouraging innovations in the industry and encouraging adoption of technology, Intervention areas around R&D to promote a sustainable future ready tea and inputs around regulatory aspects and streamlining the supply chain.
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