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The manufacturing sector isn't the only one facing land hurdles. Now, the organised tea sector, too, is grappling with similar problems.
Tea requires large tracts of arable high land. “State governments don't have land to allot; so, in the last five years, the organised tea sector has not grown,” says Azam Monem, additional vice chairman of the Indian Tea Association and director, McLeod Russel (India).
Also, tea bushes in the organised sector are 50-70 years old. “The only way forward is replanting and uprooting,” said A N Singh, chairman of Indian Tea Association and managing director and chief executive of Goodricke Group. That, however, is a tough decision for proprietors, as replantation and rejuvenation would lead to a two-three per cent crop loss, say most sector representatives.
Does this mean the sector is headed for a J-curve? Experts feel it is possible, considering the organised sector essentially stands for quality; if the sector doesn’t expand, prices are likely to remain high. Data released by the Tea Board of India could corroborate the basis for this notion. Last year, the sector clocked record production of 1,200 million kg, against 1,126 million kg in 2012. However, average prices in the April-December 2013 period have been flat at Rs 130.39 a kg. Clearly, domestic consumption is on the rise.
“Three sales (auctions) have been dropped in Kolkata and three are likely to be dropped in Guwahati, despite record production. The year, however, had started with a deficit of 100 million kg,” Monem said.
Higher prices may not necessarily translate into higher realisation. For the organised sector, costs are disproportionately high.
Representatives from the organised sector are peeved that the unorganised sector is getting away without having to pay for the bulk of the costs. “Some of them can hardly be called small growers, as the producing area could be as high as 500 acres and as small as an acre,” says an expert.
