The Hindu Business Line : Price-sharing formula for tea purchases by April 1

Industry sources told Business Line that the Board, in a communiqué to the industry, has said every registered tea manufacturer purchasing tea leaf from growers must share the total gross proceeds from the sale of such manufactured tea with the growers supplying the leaf at a rate not less than 60 per cent. In other words, out of the auction price realised, irrespective of grade, 40 per cent will be the factory share with 60 per cent being passed on to the growers.

"The Board has said details of the guidelines will be issued shortly," the sources said.

The price-sharing formula in the ratio of 60:40 is to be implemented in Assam, West Bengal, Nilgiris, Tripura, Bihar and Karnataka. For Himachal Pradesh and Uttaranchal, the formula has been prescribed at 52:48.

The Board has also said the reasonable green leaf tea price per kg payable to tea growers by every tea manufacturer purchasing tea leaf from tea growers would be based on made tea `out turn' percentage, with a rate of 23 per cent being fixed for Tamil Nadu and 21.5 per cent for the rest of India.

The formula was evolved by the Board to end the price discrepancy between the factories/manufacturers and small growers.

To this purpose, it had appointed the Institute of Cost and Works Accountants of India in 2003 to carry out a study on the cost of cultivation for growers and cost of manufacturing for factories across various regions.

Industry sources said with a price-sharing formula in place, the small grower would no longer be at the mercy of the producers. "At present, there are no fixed norms, and the growers' share is as per the whims of the producer. A benchmark price would at least compel them to share their profits with the growers," they said.

Such a move is also expected to improve the quality of leaf.