Southern planters in grave crisis

Planters in south India have described the present state of affairs in the plantation sector as "one of the darkest phases in history".

Plunging prices continue plague the sector and planters said this had pushed thousands of small growers into the red. Despite these factors, south India continued to dominate the plantation sector.

A background paper on the plantation sector released on at the 110th annual conference of the United Planters' Association of South India (Upasi) here pointed out that revival in prices of coffee and natural rubber had made these plantations viable once more. But tea and spices growers continued to be under pressure owing to declining exports and stagnant prices.

Plantation played a vital role in the economy of the southern states of Kerala, Tamil Nadu and Karnataka. All plantation crops and almost all spice crops were grown in the region. South India accounted for 23 per cent of the national production of tea and the entire production of coffee, natural rubber, cardamom and pepper.

South India estates accounted for 68 per cent of the total area of 1.5 million hectares under plantation in the country with nearly 90 per cent of 1.3 million growers and 55 per cent of the 2.8 million labourers also from this region.

"Higher production cost, rising wages, falling exports and price realisation and increased taxation are responsible for driving tea producers into the red," Ullas Menon, secretary-general, Upasi, said.

Declining tea prices in the current fiscal had hit small growers, especially those with plots of 1-10 acres, the hardest. Exports were hit by declining orders from Iraq and Russia in the first half of this fiscal.

Export of tea to Russia and former Soviet republics dropped 25.6 per cent in January-June 2003. In the same period, exports fell 95.3 per cent to Iraq owing to the war.

Tea industry experts said these factors gave exporters from Sri Lanka, Kenya and China an opportunity to gain a significant lead over their Indian counterparts.

The only relief for tea came from the marginal increase in domestic price realisation in the current year. Prices in the January-June 2003 period touched Rs 57 per kg from Rs 53 per kg in June-January 2002.

Upasi sources said the situation was only a little better in coffee. Problems like decline in exports and lower price realisation due to stagnant prices in international markets dominated the Upasi meeting.

Around 77 per cent of the coffee produced in India was exported. Exports declined 5.6 per cent in fiscal 2002-03 from 2001-02 levels. Earnings fell to Rs 1013 crore from Rs 1050 crore.

Pepper suffered a sharp decline in production to 62,000 tonne in 2002 from a high of 80,000 tonne in 2001, a fall of 22.5 per cent. Earnings slumped to Rs 166 crore in 2002 from Rs 212 crore in 2001.

Natural rubber was the only product doing well in the plantation sector, both in terms of production and prices. Global production increased 1 per cent to 726,000 tonne in 2002-03 but output in India rose 2.9 per cent to touch 649,000 tonne.

The trend in the current fiscal indicates that domestic production would go up 13.5 per cent while global output would rise 6.5 per cent. This has raised some fears of a glut ahead.