Agri Business

Tea Board plans new purchase norm to help small growers

Santanu Sanyal Kolkata | Updated on March 12, 2018

To benefit the small tea growers.

Proposal forwarded to Commerce Ministry for approval

The Tea Board has decided to amend the Tea (Marketing) Control Order 2003 to benefit small tea-growers.

A proposal in this regard has already been passed by the board of directors and forwarded to the Commerce Ministry for approval.

Once the approval is available, the Tea (Marketing ) Control Order 2013 (Amendment) will replace the present Tea (Marketing) Control Order 2003.

A small tea grower is one whose holding size does not exceed 25 acres.

There are over two lakh such growers in the country and together they account for nearly one-third of the country’s total tea production of over one billion kg.

The Tea Board decision follows the directive of the Commerce Ministry to comply with the judgment of the Madras High Court.

In an order passed on October 12, 2012, the Madras High Court had directed the Tea Board to arrive at a scientific price sharing formula to ensure a reasonable price of green leaves produced by the small growers in the Nilgiri district after re-visiting the ICWAI report and conducting any other study, if required, for the purpose.

Accordingly, the Tea Board had engaged the Indian Institute of Plantation Management for carrying out the study.

The IIPM report has since been received by the Board. A major amendment being sought by the Tea Board is amending the Clause 21 of the order such that bought leaf factories (BLFs) buying leaves from small growers and operating at 65 per cent capacity will, henceforth, mandatorily sell 70 per cent of their production through the auction system.

Other amendments include, obtaining Tea Board approvals being made mandatory for the factories undertaking capacity expansion and forming the district level monitoring committees in each tea growing district to monitor the price of green leaf being paid to the small tea growers.

Even in the present Tea (Marketing) Order 2003, there is a provision for sale through auction by BLFs.

But it is not mandatory as the quantity to be sold is not specified.

As a result, the factories are free to sell their produce in the way they like.

The BLFs generally opt for private sales, a source of grievance of the small growers who complain that they do not get know the exact price at which BLFs sell their produce.

There being no transparency in the deals, the growers, it is complained, do not always get the remunerative prices and, therefore, lose.

The growers are paid for their green leaves by BLFs according to the price sharing formula.

However, different tea-growing regions follow different formulas — 65:35 in Niligiris and Assam; 58:42 in Dooars and Terai regions of West Bengal.

In other words, a small grower in Nilgiris and Assam is supposed to get 65 per cent of the made price at which a BLF has sold its production.

Since the production of one kg of made requires 4.65 kg of green leaves, the remuneration of a green leaf grower, therefore, will be determined accordingly.

But such a formula makes sense only if there is transparency in pricing.

In a private sale, such transparency is absent.

In an auctioning system, on the other hand, there is transparency and it is easy to know the price. The district level monitoring committees will also ensure a fair deal for the small growers.

The Tea Board has also noted that many BLFs have gone for capacity expansion without informing the board.

Published on June 30, 2013

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