Calcutta, April 5: With tea prices not improving over the past three years, small growers in south India are converting their gardens into spice-producing units.
Some of them are even closing down their estates since the returns are not enough to run tea operations on a daily basis. Small growers are ones that use 20 acres.
Except a few, big companies are implementing cost-cutting measures, such as a wage cut, to weather the slump. B. Radhakrishnan, senior advisory officer of United Planters Association of India (UPASI), said: “The situation is alarming. We fear that the production target of 205 million kgs for this year will not be met.”
Last year too, the south Indian planters were not able to produce the planned 210 million kgs, finishing at 198 million kgs.
Small growers are the mainstay of south Indian tea output. “They make up more than more than half of the producers,” said Radhakrishnan. These are the people converting their gardens into cardamom and other spice-growing plantations. “The returns are higher in spice business,” said a source in the industry.
Prices of south Indian tea have fallen below the cost of production in the past three years. A kilogram costs Rs 60 to produce, but fetches only Rs 35-40 in auctions.
The other reason driving small growers out of business is Tea Board’s freeze on funds for new plantations. It has withdrawn a scheme under which Rs 40,000 was provided for every hectare. Instead, money will be offered for estates in non-traditional areas. Board officials said there had hardly been any investment in new plantations over the last three years.
Accounting for the wave of closures in south Indian gardens, Radhakrishnan said the wages of workers have gone up in recent years to Rs 120 per day. This amount includes the money spent on infringement benefits.
The Gulf war has deepened a crisis thrown up by poor prices. Iraq, which imports around 37-38 million kgs of tea, mainly buys the orthodox variety from south India. “We waiting to see what happens. It is a matter of great concern to us,” the industry officials said.
Upasi tea futures core committee has finalised business plans for its tea futures exchange, the first such exchange in the world.It has been named ‘Upasi Commodities Exchange Ltd and will be a public limited company.