 "South Indian tea growers face crisis as prices fall")
Tea prices have fallen 19 per cent to Rs 85 a kg in October as against Rs 105 a kg in the corresponding period last year. Planters are suffering from a net loss of an average Rs 20 a kg this year as the cost of production is in the range of Rs 105-115 a kg.
In addition to this, adverse weather conditions that prevailed in most of the tea-growing regions of South India during the summer months have impacted production in the first half of 2014.
“Tea prices in South India are at unviable levels, with the average price during the year 2014 up to September dropping to Rs 85 a kg from Rs 105 during the corresponding period last year. At the same time, wages have gone up between 9 and 19 per cent in the three tea producing southern states of Karnataka, Tamil Nadu and Kerala,” Vijayan Rajes, president, United Planters’ Association of Southern India (Upasi), said.
The increase in wages, which has no linkage to productivity, coupled with spiralling costs of other inputs such as fertilisers, has crippled the tea plantations and they are on the verge of collapse, he said.
Rajes said the co-relation of wages and the price level was an easily accessible health indicator of the tea industry. When the daily wage in Tamil Nadu was Rs 8.20 in 1980, the average price was Rs 12.66 a kg. The equation gradually changed and in 1995 both were almost on a par — the daily wage at Rs 39.88 and the average price at Rs 41.25 a kg.
“If one indexes it on a scale of 100 with 1995 as the base, the wage in 2014 has gone up to Rs 528 in Tamil Nadu, Rs 485 in Kerala and Rs 681 in Karnataka whereas the average price is at Rs 207. In addition to the basic wage, the organised sector spends an additional 75 per cent for discharging the obligations of social costs. Central and state governments are yet to provide support for the sustenance of tea plantations,” Rajes said.
There are around 70,000 small and marginal tea growers, with a land holding of approximately 49,000 hectares in South India depending wholly on tea. Almost half of South India’s tea production is contributed by this segment with the tea leaves supplied to the Bought leaf factories.
During the period from January to August 2014, South India's tea production stood at 158.49 million kgs compared to 147.73 million kgs, showing a year on year increase of 7.3 per cent. During 2013, the production stood at 241.79 kgs, a marginal growth of 1 per cent.
Plantation sector is additionally burdened with social costs providing housing, medical, educational and other infrastructural facilities to the huge population it supports, which in the normal course is provided by the local administration and the Government for the local population.
While the large amounts are saved as the basic civic amenities to the estate population are provided by the estate management, no concessions are given to taxes and other levies. The recommendations and assurances given by many expert Committees for reimbursing part of the expenses incurred for social costs still remain in paper, Rajes added.