The plantation industry in Tamil Nadu is heading towards a looming financial crisis in view of persistent under-recovery in price realisation, particularly in the tea sector, an industry body has said.
The average auction price (south India) per kg for January-July 2015, for which data is available, was Rs 80.75, compared to Rs 87.71 for the corresponding period last year, Planters Association of Tamil Nadu (PAT) Chairman Suresh Menon said here today.
The bulk of tea production in south India emanates from Tamil Nadu and if teas originating from the state are taken separately, the average price realisation is much lower than the south India average, he claimed.
This "abysmal" price realisation is lower than the average cost of production of a kg of tea in Tamil Nadu, which is hovering around Rs 125, Menon said.
The production cost includes not only wages and related payments, but also the increasing cost of inputs, enhanced electricity charges and money spent on welfare measures like housing, medical and education provided free of cost to workers in strict adherence to statutory provisions, he added.
Adding to the peril, for the past three months, tea plantations experienced unprecedented crop loss, ranging between 30 to 40 per cent, due to pest and diseases, including severe attack by tea mosquito bugs, Menon said.
As there is no expected crop to be harvested, several man-days were lost consequently. The tea quality was also badly affected, resulting in substantial monetary loss on price realisation, he added.
To initiate action for effective pest control, plantations have to incur heavy expenditure compared to previous years, which also contributed to heavy losses suffered by them, the PAT chairman said.
Stating that coffee prices had also been plummeting and the dire situation in natural rubber prices was well known, Menon said the industry was seeking immediate relief measures from the state government to tide over the crisis.
"Discriminatory" VAT rate of five per cent on teas sold by corporate tea factories, as against just one per cent for Bought-Leaf Tea Factories and Indcoserve Tea Factories, not only for auction but also private sales, should be done away with, he added.
