Agri Business

TN plantation sector seeks Govt intervention to avert financial crisis

L N Revathy Coimbatore | Updated on January 22, 2018

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The plantation industry in Tamil Nadu has sought immediate Government intervention for a bailout from the impending crisis.

"It is unprecedented; if not checked immediately, the situation would only worsen and running this industry would become economically unviable in the years to come," V Suresh Menon, Chairman, Planters' Association of Tamil Nadu, said.

Caught between under-recovery in price realisation on the one hand and heavy crop loss due to pests and diseases on the other, the tea industry in the State is heading towards a looming financial crisis.

The average price at the tea auctions has slipped by almost Rs 7 a kg to Rs 80.75 a kg during the first seven months of the current calendar year compared to the corresponding period of the past year.

This is much lower than the production cost of a kg of tea in TN, which at present hovers at around Rs 125. This cost of production includes not only wages and wage-related payments, but cost of inputs, which has spiralled over the years, enhanced electricity charges, and expenses incurred by plantations on several welfare measures such as housing, medical, education, etc, required to be provided free-of-cost to their workers, in strict adherence to the statutory provisions.

Coupled with this, tea plantations have, during the past three months, registered heavy crop loss ranging between 30 and 40 per cent due to pests and diseases, including severe attack by tea mosquito bugs.

As there is no expected crop to be harvested, several man-days have also been lost, resulting in huge loss in price realisation. The industry has appealed to the State to do away with the discriminatory VAT rate on sale of tea by the corporate tea factories, relax land reform provisions by permitting crop diversion, and sharing of social costs, among others.

Published on September 20, 2015

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