Budget tea prices may shoot up in western India shortly as procurement cost of the produce is likely to increase following the implementation of two government orders, an official said on Monday.
"The revision of minimum wages for tea estate labourers in Assam and West Bengal has escalated costs while implementation of the Tea (Marketing) Control (Amendment) Order (TMCO) may eventually push out a section of small tea growers from business," Piyush Desai, president of Western India Tea Dealers' Association, told media persons here.
He said these two factors will push up the cost of tea during the auctions for blenders from west India and this higher cost of procurement will ultimately be passed to the consumer.
While the bigger tea estates may find it easier to absorb the higher costs arising from implementing the wage revision, the small tea growers may not be able to absorb the cost and may have to shut down the gardens which will create production shortage, Desai said.
He said the smaller tea growers from the hills of north Bengal and Assam would now have to compete against the bigger players in the auctions, a development which will lead to a surge in cost of procurement by the tea blenders.
"The cost of tea from these small producers are lower by Rs.30-40 a kg, but if the TMCO is implemented, the cost of procurement will also shoot up," the official, who is also the former chairman of Federation of All India Tea Traders' Association, said.
TMCO makes it mandatory for the small tea growers to sell a minimum of 70 percent of their produce through auctions.
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The industry veteran said the small tea growers do not have the proper infrastructure and warehouses in place in the auction markets in Kolkata and Guwahati and as a consequence it might deter their participation in the auctions.
The small tea growers account for at least 30 percent of the total tea consumed in India and supply at least 35 million kg of the medium-budget quality tea consumed in west India.
In 2014-15, small tea growers produced 394 million kg of tea.
"The additional costs involved in implementing the TMCO and the wage revision may force the small tea estates to close down their estates... In Siliguri, in north Bengal, 30 small tea growers' gardens have been closed down," he said.
He said the concern would be taken up with the Prime Minister's Office.