The Smallholder Tea Economy and Regional Development: Perspectives from India 303151811X, 9783031518119

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Abdul Hannan

The Smallholder Tea Economy and Regional Development Perspectives from India

The Smallholder Tea Economy and Regional Development

Abdul Hannan

The Smallholder Tea Economy and Regional Development Perspectives from India

Abdul Hannan Department of Geography Sikkim University Gangtok, India

ISBN 978-3-031-51811-9 ISBN 978-3-031-51812-6 (eBook) https://doi.org/10.1007/978-3-031-51812-6 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Paper in this product is recyclable.

Dedicated to my beloved Parents…

Foreword

The foundations for growth of the world economy in the early modern era were laid by the new commodity markets that began to flourish with the commercial plantation of sugarcane in the Caribbean, and complementary plantation crops of tea and coffee in India and elsewhere. Bolstered by the huge acquisitions of territory made in the colonies by European powers, the large-scale colonial plantations also triggered simultaneous inflows of capital and a large labour force for planting out the new dominions. An early institutional adaptation witnessed in the West Indian sugar plantations allowed the just-discredited practice of African slavery to be supplanted by voluntary contracted labour. Under the Indian Indenture system first devised by John Gladstone for implementation on his sugar plantations, massive migrations of Indian coolie (labour) took place to new diaspora colonies in plantations across the Caribbean, the Indian Ocean and the islands of Oceania. On nearly similar lines, a nineteenth-century system of internal indenture brought tribal Adivasi families from Central India to the new tea plantations being set up in Assam and the adjacent Bengal Dooars. Set up to reduce the inequities of enslaved labour markets, the plantation labour system tied entire families for several generations into a reproducible workforce for plantation work. However, as noted by the scholars studying colonial plantations, the focus of the plantation sector on preserving its singular mode of labour organization traditionally limited the rate of mechanization and technical innovation in the sector. Research on the global plantation economy till the end of the twentieth century generally focused around themes defined by large plantation estates. Plantation studies examined the intrinsic economies of scale that characterized their highly capitalized modes of production and export marketing. Plantation labour studies looked critically at the economic clash perpetually generated by historical engagement of a captive and unfree labour force within large-scale manufacturing enterprise. More recent reorganizations within the global plantations have seen many of their characteristics change. With growing economic initiatives for smaller plantations, a marked movement has taken place towards greater decentralization and informalization of plantation manufacturing and plantation enterprise. In the new small-scale Indian tea plantations, these emerging changes are seen as a form of organizational vii

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innovation that represents a desirable erosion of the tied labour system. But with the overall dearth of evaluative studies comparing the two modes, it has been difficult to arrive at a final word on whether the new tea plantations do in fact represent such an advance. The present volume presents findings deriving from the post-doctoral research undertaken between 2017 and 2021 by Dr. Abdul Hannan on the nature of evolutionary change within the Indian tea economy over the last three decades. As an integral unit in his study, the scholar has conducted the first exhaustive investigation into the rise of Small Tea Growers (STGs) plantations across all major tea regions of India, including the Nilgiri hills in Tamil Nadu, and Kerala and Karnataka in South India; Himachal Pradesh in Northwest India; Assam and other tea growing states in Northeast India; and the northernmost region of West Bengal. Concomitant with these changes, he has also studied the shifts in the new patterns of tea enterprise and investment and tea enterprise that are leading to evolution within the long-standing plantation estate model patronized by colonial planters in the heyday of plantations, when Indian tea grew to dominate the global tea trade. Laying out a formal foundation for this study, the scholar has first explored the emergence of alternative paradigms in the theory of regional development, in terms of the developmental role played by small tea plantations in Kenya, Sri Lanka and China as well as four other major tea growing countries across Asia and Africa. The regional analysis of the competing tea economies of Kenya, Sri Lanka and India, all three of them being in strong mutual competition with each other in world tea markets, forms a valuable part of this baseline of analysis. Extending beyond this foundation, the researcher distinguishes two alternative production models that now dominate in the India tea sector, namely: (a) Organized sector tea production in large-sized traditional integrated tea plantation estates, which embody the colonial norm of overseas capital investment on acquisition and development of plantation leases, with the engagement of labour services provided by a captive pool of unfree plantation labour imported from outside the plantation region. In the organized sector, tea production still maintains this strict separation between plantation capital and plantation labour even today. (b) Tea production in the unorganized sector takes place in an open-enterprise market model, with small tea growers acting as free agents and engaging in onfarm production and sale of unprocessed green tea for purchase and industrial processing into made tea by downstream Bought-Leaf Factories (BLFs). In unorganized sector tea production, strict separation is thus maintained between tea farming and downstream tea processing activities. From their early beginnings in the colonial era, large-scale tea estates sprang up on uncultivated lands in newly-annexed colonial territories like Assam and North Bengal, which had large areas of forest and fallow lands with sparse populations to start with. Quite unlike the tea estates which had offered a lucrative outlet for investments of foreign corporate capital, the STGs plantations that began to spring up in South India from the mid-twentieth century largely represented the conversion of

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existing croplands to small-scale permanent plantation operations. Instead of foreign planter capitalists, the investors in STGs operations were local crop farmers who shifted voluntarily to more profitable plantation agriculture. While this is also the primary nature of the smallholder tea economy that has now taken root in the major Indian tea regions of Assam and North Bengal, it becomes pertinent to observe that the STGs plantations newly established in these regions have come into direct conflict with the long-dominant tea estate sector. In these two Indian tea regions, as also in India’s primary global competitors Kenya and Sri Lanka, the STGs model thus represents a viable alternative to the traditional model of large-scale estate cultivation of tea, with completely different apportionment of tea production and labour costs and market risks. In fact, in the two competitor countries, the STGs model has now become the dominant mode of tea production and marketing. As such, the researcher observes that the market dynamics within the newlyascendant STGs sector in these two traditional regions of India is deserving of separate focus and study, which he makes by bringing attention to bear on existing relations between farm size, land relations and sectoral livelihoods on the Assam and North Bengal STGs plantations. Special attention is also drawn by the researcher’s study to long-persisting problems like the mechanisms for price determination and price sharing continually confronting STGs in the unorganized tea sector, and to the respective roles that will have to be played in resolving such persisting difficulties by the union government, the respective state governments and the Tea Board of India. Meanwhile, in the face of several weaknesses in top-down sectoral regulation by these multiple agencies, the STGs have also recently launched their own cooperative model of price determination and market regulation voluntarily controlled by STGs federations. A long-existing and viable model for smallholder production and processing of tea in India exists in Industrial Cooperative (INDCO) tea factories set up in the early 1960s by the Government of Tamil Nadu to serve the smallholder tea plantations established on a widespread scale in the Nilgiri mountains by Indian Tamil tea workers repatriated back to India from Sri Lanka under the Shastri-Sirimavo Pact. The researcher’s critical analysis of the INDCO experiment, to which a whole chapter has been devoted in his study, holds valuable insights in resolving the problems being encountered by STGs in other tea regions elsewhere across India. The research study now looks more closely at the formation and operation of cooperative Tea Producer’s Societies through the active agency of Non-Governmental Organisation (NGO) as a collective market manoeuvre to reorganize STGs in the two tea regions under special study. To add more detail to this part of his analysis, the researcher has made separate case studies of operations by three Tea Producer’s Societies in Jalpaiguri district of North Bengal, making a comparative assessment of how these are performing. For underlying reasons, the operational performance of the three societies diverges considerably, pointing to the need to evolve and institute new institutions for efficient governance of the STGs tea sector. The operative focus in the research study is now brought to bear on setting up District Green Leaf Price Monitoring Committees (DGLPMCs) for each STGs district under the aegis of Tea Board of India through a 2015 notification of the Union

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Ministry of Commerce and Industry. Owing their initial establishment to the International Tea Agreement negotiated between major tea-exporting countries to relieve the global commodity-trade crisis experienced during the Depression era of the 1930s, Tea Boards were set up by Sri Lanka and India to mutually regulate ruinous gluts in tea production through voluntary agreements that controlled the export-quantities of tea placed in the global tea market by each producer country. During the heyday of large tea estates till the end of the 1950s, the Tea Boards played an important role in stabilizing tea prices and outputs in international tea markets. In India, the difference between tea production and tea exports was absorbed by rapid growth of domestic tea consumption in Indian markets. The ascendancy of Kenyan tea during the 1960s and 1970s as a major competitor to tea produced by large estates in Sri Lanka and India considerably altered the economics of the global tea trade by establishing BLF tea production as a major competitor to estate-produced tea. Being nominally free of the International Labour Organisation (ILO) Conventions regulating plantation labour, the BLF factories and STG growers experienced a substantial downscaling in tea production costs and a considerable upscaling in tea sales and tea revenues. While favouring independent BLF-producers who were manufacturing low-cost made tea by remaining outside the ambit of the Indian Tea Board’s Tea Marketing Control Order (TMCO) which governed tea production on large estates, the marketing of green tea to BLFs by Small Tea Growers worked against the economic interests of STGs, by depressing the prices and profits of producing green leaf. As several price and profit aberrations crept into the prevalent tea-marketing mechanisms in India, large estate-producers also began to delve in low-cost green leaf purchase from independent Small Tea Growers for processing by their own factories, instead of using their own plantation labour to pluck the tea bushes spread out across the estate plantations. In effect, this aberration directly pitted the interests of estate labour against the interests of STGs, causing growing mutual losses for both sections of poor tea labour and small tea growers, while the difference being added to the profits earned by the estates and BLFs. No uniformity was seen across the STGs districts in the relation between teaauction prices and the realization of green tea prices by small growers, making the economic future of smallholder tea production in India very insecure. Mandatory establishment of DGLPMCs in each STG tea district is thus an attempt to regulate production and marketing of tea in the smallholder sector in the interests of STG growers. Interestingly, in terms of the relevant Government of India notification, such a regulatory function devolves directly to the Tea Board, to prevent rapidly emerging conflicts between BLFs, estate-producers, and between the livelihoods of STGs and plantation labour on large tea estates. However, in his analysis of the performance of DGLPMCs across the STGs districts in India, the researcher points to several operational reasons that are responsible for underperformance by these DGLPMCs. Such persisting operational difficulties in fact point to the failure of the Indian Tea Board to engage constructively with its new responsibilities for the STGs sector, in preference to the highly visible and lucrative large tea estate sector which the Tea Board has always traditionally regulated. For amelioration of this deep-seated problem, substantial revision and updation in operational approach followed by the

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Union Ministry of Commerce and Industry and the Tea Board of India in the case of STGs becomes pressingly necessary, if the smallholder tea sector in India is to evolve into an efficient competitor in domestic and international tea markets for India’s traditional competitors like Kenya and Sri Lanka. Overall, as the very first book-length research study into an emerging sectoral problem that has major auguries for long-term viability of India’s tea sector, the research undertaken by the scholar is timely and welcome, and fills an important research gap that has long been affecting the twin processes of tea production and marketing in India. All tea researchers will benefit from the new perspective brought to bear upon the organization and performance of the STGs plantations in India in comparison with the large tea plantations. An integrated study of the Indian tea economy now becomes possible.

Gangtok, India August 2022

Prof. Jeta Sankrityayana Retired Professor of Economics, North Bengal University and Sikkim University

Acknowledgements

This book is an outcome of Post-Doctoral Fellowship Research (2017–19) titled Plantation Economy and Regional Development: A Shifting Paradigm with a financial support of the Indian Council of Social Science Research (ICSSR), New Delhi. The author is thankful to ICSSR and sincerely acknowledges for the grants received in the form of salary and fellowships of the current research. It has given the scholar an opportunity to venture and dig the research problems faced by the small-scale tea economies in India. I am thankful to Prof. Jeta Sankrityayana, Department of Economics, Sikkim University, to guide, mentor and share ideas and innovative thoughts to my research. His long association and experience in tea industry and expertise in research have widened my understanding. I am also obliged and sincerely thank to Prof. B. S. Butola, Centre for the Study of Regional Development, Jawaharlal Nehru University, in sharpening my thoughts and developing the concepts and theories in understanding the issues relating to plantation economy and regional development. I do acknowledge the support of Mr. Bijay Gopal Chakraborty, President of the Confederation of Indian Small Tea Growers Associations (CISTA) and Mr. J. John, Executive Director Centre for Education and Communication. I also mention the support and help received of the officials of Tea Board of India and Government of West Bengal, Tea Associations and Smallholders during fieldwork. I deeply acknowledge the support provided by Sikkim University and granting the study leave for a period of two years which has made the author capable to avail the Post-Doctoral Fellowship Programme of ICSSR under Salary Protection Scheme. I further place on record the facility and opportunity provided by the Department of Geography, Sikkim University, and the support of Colleagues in the Department for which I am indebted always. I thank Prof. V. Krishna Ananth, Department of History and Dr. Nitish Mondal, Department of Anthropology, Sikkim University and Ms. Dixchen Golay, Ph.D. Scholar, Department of Geography, for their support. I place on record for assistance of Mr. Tulsi Sharma and preparation of maps in the GIS Laboratory of the Department of Geography.

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Lastly, I do assent the support of my family and relatives all along without whom the present research and the book would not have been completed and Master Hariz, my son, needs special mention during my research journey. Gangtok, India August 2023

Abdul Hannan

About This Book

Chapter 1 begun with discussing the idea of regional development and bridges the plantation economy and its characteristics in general terms and tea economy in particular. Thereafter, the concept and definitions of smallholder’s tea sector are elaborated and their geographical distribution and growth history are analysed in Afro-Asian countries. A comparative analysis of three major countries, i.e. Kenya, Sri Lanka and India, is explained and the size of the smallholder tea economy is explored in terms of volume of production, tea cultivation areas, production systems and processing characteristics, institutional arrangements and policy perspectives. Chapter 2 is dedicated to spatio-temporal pattern and growth of the small-scale tea economies in Indian states. It highlights the production, tea areas, estimated employment, livelihood patterns and market structure in relation to government policies and programmes. Chapter 3 specifically deals with two major tea-producing states of India, i.e. Assam and West Bengal, where smallholders have emerged as sizable presence in tea industry in 1990s. It explains their farm size, land relations and trade relations between Bought-Leaf Factories (BLFs) and STGs in both the states along with some development initiatives from below. It is found that the growth history of the smallholder sector is different and the states of Assam and West Bengal are of recent development (1990s) whereas southern states like Tamil Nadu have longer period of existence and it has the presence of some kind of institutional set up in the form of Industrial Cooperative (INDCO) tea factories. Hence, the states of Assam and West Bengal have been dealt separately. The policies of regulatory bodies like Tea Board and Ministry of Commerce, Government of India and its effectiveness measured and policy gaps are identified and discussed. Chapter 4 analyses the growth of INDCO tea factories in Nilgiris of Tamil Nadu in the Post-Reform period. It is the only state where state-supported cooperatives are found since 1960s and reported to have an organized institutional set up. It is observed and evident that the withdrawal of state has pushed the INDCO tea factories into margins and privately-run BLFs have maket monopoly in the smallholder tea supply chain in Nilgiris. Chapter 5 investigates the growth of Self-Help Groups (SHGs) model in smallholder plantations introduced by Tea Board in India and captures their success stories. It was found from the field survey that the Dooars region was successful in implementing SHGs xv

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About This Book

model and transformed the tea landscape and elevated smallholders owning the tea processing factories: three such case studies have been discussed and explained. The chapter also highlights how various types of institutions of governance emerged in post-1960s and how it has been gradually descending down to district and sub-district level in decentralizing the plantation governance. Chapter 6 examines the policies like Tea Marketing Control Order (TMCO), 2003 and 2015, and reports that how Tea Board of India (TBI) and its Sub-Regional Offices (SROs) have inadequately addressed the implementation of District Green Leaf Price Monitoring Committees (DGLPMCs) which has serious implications on farm-gate prices of smallholders in the tea supply chain. In conclusion, it is found that there is a structural change and a shifting paradigm in tea economy whereas there is an absence of coordination among the institutions which governs the smallholders in tea sector at district and sub-district level. This may lead to series of vulnerabilities and inefficiencies particularly to unorganized sector which may impact of millions of livelihoods in tea economy in India. The book concludes with the policy suggestions and in-depth analysis of alternatives to overcome the current crisis which urges of digital interventions in bringing market transparencies in supply side and market literacy to the demand side for the small tea growers. Hence, the book would fill up the research gap in tea sector and would be helpful for practitioners, policy planners, academics and researchers, government agencies and the regulatory body like Tea Board of India. Apart from them, the book can be of great help in Smallholder Tea Associations and Federations, SHGs and Cooperatives, and NGOs which exist in tea supply chain and also work for the unorganized sector in India. The book would be a conglomerate of information and database developed from various secondary and primary sources and illustrated through case studies. It can be a useful document for better planning, policy making and strategies for Local Economic Development (LED). August 2023

Abdul Hannan

Contents

1 Plantation Economy and Regional Development . . . . . . . . . . . . . . . . . . . 1.1 Theoretical Approaches to Regional Development . . . . . . . . . . . . . . . 1.2 Plantation Economy: A Conceptual Overview . . . . . . . . . . . . . . . . . . 1.3 Origin of Tea Plantations in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 Definition of Small Tea Growers (Smallholders) in India . . . . . . . . . 1.5 Small-Scale Tea Plantations in Other Countries . . . . . . . . . . . . . . . . . 1.5.1 Kenya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5.2 Sri Lanka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5.3 Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5.4 Malawi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5.5 China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5.6 Nepal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5.7 Bangladesh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 Regional Analysis—Kenya, Sri Lanka and India . . . . . . . . . . . . . . . . 1.7 Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 2 2 8 9 12 12 14 15 18 18 19 20 22 23

2 Emerging Unorganized Sector of Tea Economy in India . . . . . . . . . . . . 2.1 Tea Economy in India and Upcoming Divide . . . . . . . . . . . . . . . . . . . 2.2 Defining Unorganized Sector of Tea Industry . . . . . . . . . . . . . . . . . . . 2.3 Regional Dimension of Smallholder Tea Economy in India . . . . . . . 2.3.1 Tamil Nadu—Nilgiris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.2 Kerala and Karnataka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.3 Himachal Pradesh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.4 Assam and North-East India . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.5 North Bengal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Spatio-Temporal Pattern of Small Tea Growers (STGs) in India . . . 2.5 Employment and Livelihoods in Tea Industry . . . . . . . . . . . . . . . . . . . 2.6 Market Structure of Unorganized Sector in Tea Industry . . . . . . . . . 2.7 Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25 26 29 30 30 31 32 32 34 36 43 45 47

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3 Smallholder Tea Economy in Assam and North Bengal . . . . . . . . . . . . 3.1 Smallholder Tea Economy in Assam and North Bengal . . . . . . . . . . 3.2 Farm Size, Land Relations and Livelihoods in Assam . . . . . . . . . . . . 3.3 Farm Size, Land Relations and Livelihoods in North Bengal . . . . . . 3.4 Trade Relations and Small Tea Growers (STGs) . . . . . . . . . . . . . . . . . 3.4.1 ‘Price Stabilisation Fund Scheme’ (PSF) and Ministry of Commerce (GOI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.2 ‘Price-Sharing Formula’ and Government of West Bengal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.3 ‘Price-Sharing Formula’ and Tea Board of India . . . . . . . . . 3.5 District-Level Green Leaf Price Monitoring Committee (DGLPMC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 ‘Development-From-Below’ and Small Tea Growers (STGs) . . . . . 3.7 Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

49 50 51 57 61

4 Development of INDCO Tea Factories in Tamil Nadu . . . . . . . . . . . . . . 4.1 Beginning the INDCO Model in Tamil Nadu . . . . . . . . . . . . . . . . . . . 4.2 Mapping the Journey of INDCO Factories . . . . . . . . . . . . . . . . . . . . . 4.3 Employment Pattern in INDCO Factories and Their Farm Hinterland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Disparities in Performance of INDCO Factories . . . . . . . . . . . . . . . . . 4.5 Issues of Cost of Production: Farm and Factory . . . . . . . . . . . . . . . . . 4.5.1 Cost of Farm Production (Green Leaf) . . . . . . . . . . . . . . . . . . 4.5.2 Cost of Factory Production (Made Tea) . . . . . . . . . . . . . . . . . . 4.6 Differential Outcomes of INDCO Factories in Post-reform Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 Unhealthy Competition of Cooperatives and Bought-Leaf Factories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

71 72 76

5 Mapping the Tea Producing Societies (SHGs) in India . . . . . . . . . . . . . . 5.1 Tea Producing Societies (SHGs) and Collectivization of STGs . . . . 5.2 Growth of Tea Producing Societies (SHGs) in India . . . . . . . . . . . . . 5.3 Financing and Skill Development of ‘Tea Producing Societies’ (SHGs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 Tea Producing Societies (SHGs) and Agrarian Relations (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4.1 Farm Size, Farm Registration and Associated Aspects . . . . . 5.4.2 Fund Status and Society Management . . . . . . . . . . . . . . . . . . . 5.4.3 Aspects of Cultivation, Leaf Procurement and Trade . . . . . . 5.4.4 Trade Relations of STGs and BLFs in the Supply Chain . . . 5.5 Tea Producing Societies (SHGs) in Processing and Marketing (2017) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5.1 SHGs Case Study-I: The Panbari STGs Society . . . . . . . . . . . 5.5.2 SHGs Case Study-II: The Jai Jalpesh STGs Society . . . . . . . 5.5.3 SHGs Case Study-III: The Naba Jagaran STGs Society . . . .

93 94 96

61 63 64 65 66 68

78 80 81 81 84 86 89 91

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5.6 Governance and Emergence of New Institutions (1960–2017) . . . . . 110 5.7 Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 6 An Introspection of ‘District Green Leaf Price Monitoring Committee’ (DGLPMC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Introduction of DGLPMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Geographies of Tea Economy Today . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Trends of District-Level Auction Prices of CTC Teas in India . . . . . 6.4 Practices of Minimum Benchmark Price (MBP) of Green Leaf . . . . 6.5 Tea Marketing Control Order (TMCO), 2003 and 2015 (Amended) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 Execution of TMCO and DGLPMC . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7 Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

115 116 117 118 119 130 133 138

7 Conclusions and Policy Suggestions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

About the Author

Abdul Hannan is serving as Associate Professor in the Department of Geography, Sikkim University, Gangtok, India. He is trained in Regional Development at the Centre for the Study of Regional Development, Jawaharlal Nehru University (JNU) during his doctoral studies programme. His research focuses on Plantation Economy, Border Studies, Cooperative Farming and Sustainable Development. He teaches economic geography, agricultural geography and geographies of development. He was awarded prestigious Indian Council of Social Science Research (ICSSR) PostDoctoral Fellowship (2017–19), Government of India, New Delhi, and accomplished his work on Plantation Economy and Regional Development: A Shifting Paradigm. He has published several research papers in national and international journals such as Transactions, Institute of Indian Geographers (IIG) Pune; Review of Development and Change, Madras Institute of Development Studies (MIDS), Chennai; North Eastern Geographer, North-East India Geographical Society, Guwahati; Social Change and Development, OKDISCD, Guwahati, etc.

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Abbreviations

AASTGA BLFs CISTA CPFs CTC DGLPMC INDCO INDCOSERVE ILO KTDA MBP NABARD NBSTPA NOC NGO NTRF PMGAY PSF SGDD SHGs SROs SSTEs STGs STPs TBI TMCO TPS TRA

All Assam Small Tea Growers Association Bought-Leaf Factories Confederation of Indian Small Tea Growers Associations Cooperative Factories Crush, Tear, Curl District Green Leaf Price Monitoring Committee Industrial Cooperatives Tamil Nadu Small Tea Growers’ Industrial Cooperative Factories Federation Limited’ International Labour Organisation Kenya Tea Development Agency Minimum Benchmark Price National Bank for Agriculture and Rural Development North Bengal Small Tea Planters’ Association No-Objection Certificate Non-Governmental Organisation National Tea Research Foundation Pradhan Mantri Gramin Awaas Yojana Price-Sharing Formula Small Growers Development Directorate Self-Help Groups Sub-Regional Offices Small-Scale Tea Economies Small Tea Growers Small Tea Plantations Tea Board of India Tea Marketing Control Order Tea Producing Societies Tea Research Association

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TSHDA UFSTGA UPASI

Abbreviations

Tea Smallholder Development Authority United Forum of Small Tea Growers Associations United Planters Associations of South India

Chapter 1

Plantation Economy and Regional Development

Abstract The pattern of ownership and production structures in tea plantations has changed in recent decades and the emergence of Smallholders is the outgrowth of this new trend in countries like India, Sri Lanka, Kenya, Indonesia, Malawi, Nepal, Bangladesh, etc. Now Plantations, in general, cannot be considered as a ‘lopsided development’ of regional economy which grows in isolation from its surrounding regions or areas popularly known as ‘enclave economy’. There seems to be an apparent contradiction and differences between Plantations and Smallholders; it is so because plantations in general and tea plantations in particular have always been associated with large estates along with many fundamental characteristics. Most of the plantations emerged during the financial phase of capitalism, and in India, the first tea plantations started after 1840s. These plantations were started by the foreign entrepreneurs particularly British and were capital intensive and highly mechanized. The workforce was brought by the planters through forced migration, mainly tribes, from Central India. Most of the plantations functioned like enclaves having minimum interaction with the immediate surrounding areas and communities. Unlike the Plantations, the occurrence of Smallholders has brought changes in the plantation system and its geography today. The owner-worker relations in Smallholder gardens have replaced the traditional labour relations that were based on social hierarchy in the estate gardens; sharp division of final production of made tea between farms and Bought-Leaf Factories (BLFs); large-scale units of production (estate gardens) have been replaced by small-scale production; individual ownership (small family farms) of land in lieu of corporate or company ownership; employment of local labour instead of migrated labour and preference of direct recruitment of workers over other methods particularly recruitment through the middlemen, etc. This could better be termed as ‘subaltern economy’ which favours to the local economy and more participatory with the marginal and small farm owners. Keywords Plantations · Smallholders · Lopsided development · Enclave economy · Subaltern economy

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 A. Hannan, The Smallholder Tea Economy and Regional Development, https://doi.org/10.1007/978-3-031-51812-6_1

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1.1 Theoretical Approaches to Regional Development The term Regional Development does not mean the exploitation of virgin territory or the domination of one culture over another but is the process of continuous improvement of the conditions of social, economic and material well-being of the people of chronically underdeveloped regions or the regions undergoing cyclical changes. Raza (1988) describes Regional Development as an integrated system of ideas, practices, methodologies and approaches. It is an expression of the contemporary realization that man as an element of the ecosystem cannot conquer non-human nature but must learn to live in harmony within a system of interdependencies. Therefore, it should be understood as the articulation of qualitative changes in the geo-bio-technosocial complex of interdependent phenomena in such a manner that the quality of human life improves within the framework of the integrity of the ecosystem. Arthur Nelson (1993) conceptualizes that there are two dominant approaches in the process of Regional Development. The development-from-above approach views Regional Development as essentially emanating from the core and growth centres and trickling out to the periphery and hinterlands. The development-from-below does not dispute the path of development-from-above but argues for regions to take control of their own institutions to create the lifestyle and levels of development desired in the region. Hence, the development-from-below aims to create regional autonomy through integration of all aspects of life within a territory defined by its culture, resources, landscape and climate (Nelson, 1993). On the other, the developmentfrom-above aims to achieve functional integration between regions. In this context, tea plantations in India started with foreign capital and institutions with indentured labour as Estate model where agriculture, processing and marketing were operated as an integrated enterprise (Dasgupta, 1983; Hannan, 2006). This model continued even in post-independence period. Later on, in post-1990s particularly in North-East India, there has been a shift in the existing trends and the Small-Scale Tea Economies (SSTEs) began to be part of tea industry (Hannan & Mondal, 2021). This experienced a kind of structural changes in tea economy and emergence of local entrepreneurs in the tea business and livelihoods. Hence, Plantations (Estate) and Smallholders or Small Tea Growers (STGs) in tea economy may be considered and identified as development-from-above and development-from-below process, respectively.

1.2 Plantation Economy: A Conceptual Overview Generally, a plantation is an economic unit producing agricultural commodities for sale and employing a large number of unskilled labourers whose activities are closely supervised. Plantations usually employ a year-round labour crew of some size and they usually specialize in the production of only one or two marketable products. They differ from other kinds of farms in the way factors of production, primarily management and labour are combined to conduct the production processes (Jones,

1.2 Plantation Economy: A Conceptual Overview

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1980). Hla Myint distinguishes the plantation from peasant agriculture by its largescale enterprise which normally requires more labour per unit of land (Bhowmik, 1980). On the other hand, Bhowmik argues that both the definitions are narrower and a mere description of its economic features as Myint has done, or simply dealing with the production unit itself as Jones has done, is not sufficient. A sociological definition of the plantation cannot be restricted to an enumeration of some characteristic features such as scale of production, single crop pattern, export-oriented market and immigrant labour. Such descriptions overlook two vital aspects which are important for understanding the production relations. Firstly, how the prevalent production relations emerge in a plantation, and secondly, as the plantation is a part of the wider social system a change in that will cause a change in the prevailing production relations. Dasgupta (1983) writes that the pattern of production in plantation economies has so organized that capital and management were brought from the imperialist countries whereas land and labour were made available in conditions advantageous to the entrepreneurs in the colonies. Gunnar Myrdal (1968) in his famous book Asian Drama compared plantations with a desert economy. A pipeline across a desert cannot be expected to generate secondary effects. It would not make much difference to the desert economy if all the Sheiks cut down on their concubines and cadillacs and used the capital thus saved in complementary activities to pipeline. The only complementary activity is the maintenance work on the pipe and much of plantation investment had this pipeline character. Chaudhuri (1995) argues that plantation enclaves are not integrated to local economy and opined that plantations could contribute to the growth of the hinterland area, if wages of plantation workers had been higher than the requirements of a narrowly defined minimum subsistence. The local agricultural production and the small-scale manufacturing sector dominated by potters, weavers, blacksmiths, cobblers, etc., would have been stimulated by an increased demand for food and simple manufacturers from the workers. Secondly, the essential commodities such as rice and cereals, pulses, kerosene and mustard oil, salt and gur (jaggery) were supplied by the management to the workers at subsidized rates and a class of agents and intermediaries thrived from their connections with the plantations. Local markets were not benefitted from substantial demand from the large resident labour force of the tea gardens (Chaudhuri, 1995). Thirdly, the high-salaried managerial staffs in the plantations were mostly Englishmen and most of their consumption spending were accustomed articles supplied from their home and their savings were sent out of the country or taken home. Lastly, the foreign owners, as well as Indian owners later, were withdrawing the surplus generated from the plantations and invested outside the region or country. Hence, in the matter of capital transfer to the non-agricultural sector of the plantation economy, the foreign and Indian planters behaved similarly (Chaudhuri, 1995). All these factors resulted to the backwardness of the plantation regions even today and the lack of reinvestment and surplus transfer is a cause of worrisome. Consequently, the Smallholders or Small Tea Growers (STGs) in India are of recent development in tea economy. Local people and first-generation entrepreneurs

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have shifted from other traditional agricultural crops to tea cultivation. Generally, the size of land holdings is small, fragmented and at times uneconomic too. Contrary to that direct personal supervision and management, use of family labour makes them viable in the market over the years even though they are at the receiving end in the tea supply chain. They consist of the first-generation entrepreneurs, rural unemployed youths and traditional farmers in their respective regions. They did not have a skill and knowledge in tea husbandry. Therefore, the STGs are integrated to tea economy as their natural process of existence and may be known as ‘Subaltern Economy’. Hayami (2002) articulates that small family farms and large plantations are the two contrasting modes of agricultural production in tropical Asia. According to him, the term plantation refers to a large farm or estate producing a crop (or crops) for commercial purposes, using a large number of hired wage labourers organized under a centralized management hierarchic system. It is a new system innovated and brought by the west to extract tropical agricultural products for export to home countries (Hayami, 2002). It became common especially after the 1870s with innovations in modern transportation such as the use of steamships including the opening of the Suez Canal and railways (Hartshorn & Alexander, 2012). On the other hand, the family farm is an old institution and existed since time immemorial where the smallholders lived in communities and established credentials. Therefore, family farms are equally efficient producers of tropical export crops with their own family labour characterized by low supervision costs compared to plantations which thrive on hired labour. This advantage of family farms further incentivized with the improvement in rural infrastructure and growth of population. Broadly speaking plantations are considered as large farming units. A plantation is an economic unit producing agricultural commodities . . . for sale and employing a large number of unskilled labourers whose activities are closely supervised. Plantations usually employ a year round labour crew of some size, and they usually specialize in the production of only one or two marketable products. They differ from other kinds of farms the way factors of production, primarily management and labour, are combined to conduct the production processes. (Jones, 1968).

Plantations in most parts of the world by their origin and characteristics have been considered as ‘an instrument of colonization’ and known as one of the most representative examples of colonial economies (Deb, 1979). It could perhaps be justifiably identified that most of the plantations were established to suit and serve the metropolitan interests within colonies in the tropics, predominantly in the underdeveloped regions. They constituted an important part in the system of economic linkages between the imperialist countries and their colonies. Thus, by its very nature, internally it developed as an autonomous institution and externally continued to be dependent to the outside world particularly the world markets. Thus, plantations can be considered as one of the most representative examples of an ‘enclave economy’; that is, when a particular sector of an economy develops as separate clusters in isolation from the rest of the region in which it operates, it may be described as an enclave (Dasgupta, 1983). Therefore, the existence of the enclaves creates a kind of lopsided development in the region and plantations constitute an example of one such case. The economy of plantation enclaves thus enables us to study and examine the effects

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of plantations on the development pattern of the regional economies. Since these plantations exist in a larger geographical context, a comparison of the development experience of the plantation system with rest of the region would help to highlight the delicate relations and interactions between the two. Plantation economies played a major role in the financial phase of capitalism during the late nineteenth and first half of the twentieth centuries (Dutt, 1979). After the World War II, there had been major qualitative changes in the nature of ownership and production structures of plantations. Till the first half of the last century, European owners had exclusive monopoly over the ownership of the plantations, but today the traditional plantations form only one type among others. Therefore, the integration of SSTEs within the folds of enclave economies of the past centuries has been one of the most significant changes in the history of tea plantations. These changes can be explained and attributed to; firstly, the efforts made by the governments in the developing countries and secondly, the desired support of these governments received from the employers’ associations which made it possible to group together small-scale producers into more viable units and also facilitated them in exporting their crops to the national and international markets (Hannan, 2006). Moreover, it is often noticed that the governments in these countries too promoted the formation of Associations, Federations and Cooperatives of small growers with anticipation to achieve economies of scale and improving outputs. In some cases, this policy has been accompanied by the setting up of specialized and dedicated governmental agencies such as: the Federal Land Development Authority (FELDA) and the Rubber Industry Smallholders Development Authority (RISDA) in Malaysia; and the Kenya Tea Development Authority (KTDA) in Kenya, to name only a few (Sajhau, 1986). These organizations intervened more directly as partners in joint collaborative ways to public and private companies, in participation with foreign or local private capital. Similarly, in other countries, large private or public plantations have allowed village plantations or nucleus estates to grow up around them with an idea of catchment planning. The SSTEs are owned by smallholders, but they received benefits of market and technical assistance including use of the infrastructures created by the large production units. In Indonesia, the Nucleus Estate Smallholders Programme led smallholders to be able to gain entry into the palm-oil market and have improved their position in the tea and natural rubber markets (Sajhau, 1986). Likewise, Tea Board of India adopted the idea of Nucleus Tea Estate during Eighth Plan (1990–95) of the Board as policy measure to integrate the local small-scale producers (Bhowmik, 1991). It, therefore, proposed as follows: The small growers will be located in the periphery of the large estates. This will enable them to have a tie-up arrangement with the large estates for technical know-how and sale of green leaves. The small grower will be adopted by the nucleus tea estate and this arrangement will continue for at least 10 years.

It is clear as stated above that plantations as a socio-economic activity have changed their nature and fundamentals over the years. Plantation which was restricted to certain selected crops mostly grown in the tropical and subtropical regions has

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expanded to other crops and regions. Moreover, they have changed in terms of the scale of the economy. Originally, the plantations were considered as large-scale economic enterprises, but off late these are also produced and marketed at small scale with different nature of employment and working conditions. These are not superficial and cosmetic changes. On the contrary, these are deeply rooted in the anti-colonial economic structures of the post-colonial countries (Hannan, 2006). Though it is still premature to outline the complete future route map of the SSTEs particularly in India, this introductory chapter attempts to contextualize some internal and external dynamics of this small-scale sector. Generally, Plantations are defined as follows: Any agricultural undertaking regularly employing hired workers which is situated in the tropical or sub-tropical regions and which is mainly concerned with the cultivation or production for commercial purposes of coffee, tea, sugarcane, rubber etc.; it does not include family or small-scale holdings producing for local consumption and not regularly employing hired workers. (Government of India, 1968).

Although Plantations are referred as an industry, it is not strictly an industry in the real sense of the term. According to the Rege Committee, ‘work in plantations is essentially agricultural, though the plantation system has many features in common with organized industry’ (Government of India, 1968). The Indian ‘Plantation Labour Act, 1951’ defines Plantations as follows: To any land used or intended to be used for growing tea, coffee, rubber or cinchona which measures 10.117 hectares or more and in which 30 or more persons are employed or were employed on any day of the preceding twelve months.

The International Labour Organisation (ILO) notes that the term plantation first referred to a group of settlers or the political unit formed by it, under British colonialism, especially in North America and in the West Indies (Bhowmik, 1980). However, with the colonization of African and Asian regions by British and European entrepreneurs, it acquired a broader connotation and came to denote large-scale enterprises in agricultural units and the development of certain agricultural resources of tropical countries in accordance with the methods of Western industry. Hla Myint distinguishes the plantation from peasant agriculture by its large-scale enterprises which normally absorb more labour per unit of land (Bhowmik, 1980). Jones (1968) defines Plantations as follows: An economic unit producing agricultural commodities … for sale and employing a relatively large number of unskilled labourers whose activities are closely supervised … [it differs] from other kinds of farms in the way in which the factors of production, primarily management and labour are combined.

There are vertical hierarchies exist in the plantations with skilled supervisors or managers directing production process undertaken by unskilled labourers whose primary skill is to follow orders and instructions. Typically, the Plantations are large-scale farm organizations, but it does not derive its essential character from its size alone. Many so-called family farms are also larger in their size, completely mechanized, and often their scale of production is also much bigger than many estate

1.2 Plantation Economy: A Conceptual Overview

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farms (Jones, 1968). Similarly, neither the plantation organization of agricultural production is a necessary consequence of large ownership units, nor does it require large land ownership. When extensive methods of cultivation are appropriated, the large holding may be farmed as a unit by highly mechanized methods with a small labour force. When more labour-intensive methods are economical, the landlord may lease out his property to tenants who take most or all of the management decisions. On the other hand, Plantations may lease a number of small ownership units to form an economic unit, or numerous landowners may pool their land to form a cooperative plantation. Thus, it is extremely difficult to estimate the volume of total employment on plantations since the definition of the term plantation given in the Plantations Convention, 1958 (No. 130), has not yet received universal acceptance (Sajhau, 1986). The legislation of a country such as India does contain a definition of Plantations and lays down precise criteria: type of crops, minimum area and minimum number of workers employed (Hannan, 2006). As per the Plantation Labour Act, it is defined as: A plantation, is a piece of land of five hectares (fifteen acres) or more in size which is being used for growing tea, coffee, rubber, cinchona or cardamom and on which fifteen or more persons have been employed for even one single day during the previous twelve months. (Bhowmik & Xaxa, 1994).

But in other countries the concept of a plantation is vague and linked more with the cultivation of particular crop than with any such formal definition. Another difficulty arises from the lack of separate statistics in many countries for plantation workers. Most often these are included under the general heading of agricultural employment (Sajhau, 1986). Under such circumstances, it would be difficult to try to aggregate data covering different realities and then come to a generally accepted and concluded definition (Hannan, 2006). The situation becomes further complicated when one includes the recent changes that have taken place within the tea plantation economy. This is particularly related to the emergence of the SSTEs. Let us have an statistical picture of tea economy in the world major countries. The total extent of tea areas in the world is 4,891,118 ha of which Asia has 4,429,387 ha, Africa with 371,811 ha and others 89,920 ha (Ministry of Plantation Industries, 2018). The continent-wise production levels of tea (2017) are 5049 Metric Tons (Asia), 654 Metric Tons (Africa) and 109 Metric Tons (others). In Asia, China, India, Sri Lanka, Vietnam and Indonesia are major producers while in Africa, Kenya, Uganda, Tanzania and Malawi contribute maximum of tea production. Argentina (South America) and Georgia (CIS Region) are known as other tea producers. The ratio of top four tea-exporting countries and their value (2017) is 278.2 Metric Tons/ 1459 Million Dollars (Sri Lanka); 355.3 Metric Tons/1610 Million Dollars (China); 247 Metric Tons/729 Million Dollars (India); and 415.7 Metric Tons/1250 Million Dollars (Kenya) (Ministry of Plantation Industries, 2018). The shares of three types of manufacturing of world tea production are Orthodox (23%), CTC (38%) and Green Tea (39%). Table 1.1 and Fig. 1.1 highlight that the tea-producing countries and major players are China, India Sri Lanka, Kenya, Indonesia, Nepal and Malawi. Recently,

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Table 1.1 Distribution of world tea planted areas (in thousand hectares) Country

2001

2005

2008

2009

2010

2011

2012

China

1141

1352

1719

1849

1970

2113

2280

India

509

556

578

579

579

578

580

Sri Lanka

184

212

212

209

205

204

203

Indonesia

151

139

128

125

124

124

121

Nepal

14

16

17

17

17

17

17

Kenya

124

141

158

158

172

188

191

Malawi

19

19

19

19

19

19

19

Source Computed from the data accessed from Statistical Information on Plantation Crops (2012), Ministry of Plantation Industries

Fig. 1.1 Country-wise tea production (in thousand metric tons)

Bangladesh is also expanding tea cultivation. All these countries are important in respect of SSTEs and have been separately described below.

1.3 Origin of Tea Plantations in India As stated above, Plantations were the product of colonialism with an objective to produce for export. In some cases, rubber and cinchona were established to provide raw material for industries in the mother countries. In case of tea, coffee and sugar, their markets lay in the developed colonizing countries. The growth of tea plantations in India was a result of a rise in popularity of Indian tea in Britain (Hannan, 2006). The aromatic quality of ‘Indian tea’ scored over ‘Chinese tea’ and it was popular in the early nineteenth century because of its thicker brew. Hence, plantations in the

1.4 Definition of Small Tea Growers (Smallholders) in India

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colonies were fundamentally international in character and India was considered as one of the native homes of the tea plant. The indigenous tea plant growing in a wild condition in Assam was first discovered about 1820 (Chaudhuri, 1978). It is also said that the Major Bruce was the first person who actually discovered the tea plant in India in 1823. As early as in 1834, a committee was appointed by Lord William Bentick, the Governor General of India, to study a plan for the accomplishment of the introduction of tea cultivation in India and for the superintendence of its execution (Awasthi, 1975). The expert committee found that some areas were suitable to tea growing such as the foot hills and valleys of the Himalayas including Mussoorie and Dehradun, the North-East Frontier provinces (Arunachal Pradesh), the Nilgiris in Tamil Nadu and the mountain areas of Central India (Awasthi, 1975). Later the Expert Committee decided to expand tea cultivation in different parts of India. Accordingly, the ‘East India Company’ at Lakhimpur in Assam started the first tea plantation on an experimental basis in 1835. After working it for five years, the East India Company handed it over to the ‘Assam Company’, the first Indian Tea Company (Awasthi, 1975). Commercial cultivation of tea began in Assam in the late 1830s after the supply of tea from China became somewhat uncertain. Tea was the first major plantation industry to be developed in India under the ownership, management and control of British private investors (Hannan, 2006). In the early stages of its growth, the tea industry was severely affected by a shortage of local labour in Assam; earlier experimental tea cultivation in the government nurseries in the 1830s had depended to some extent upon imported Chinese labour (Siddique, 1995). Local wage labour was almost non-existent during the beginning of tea cultivation in Assam. As one of the largest organized sectors in India, tea industry holds a key position in terms of providing employment and potential domestic market for the economic development in India. Today, tea is the most important industry in India stretching over more than 6.35 lakh hectares of land (Tea Statistics, 2019). The states of Assam, West Bengal and including other states of North India produce an overwhelmingly large quantity of the tea approximately 85%, whereas in South India Tamil Nadu and Kerala contribute approximately 15% of the total production of the country (Tea Statistics, 2019). Small areas of tea are also found in Punjab, Uttaranchal, Bihar, Tripura, Arunachal Pradesh and Himachal Pradesh in the North and Karnataka in the South (Hannan, 2017). Today, West Bengal is second only to Assam in terms of tea production in India. It is worth mentioning here that the highly flavoured Himalayan tea popularly known as Darjeeling Tea grows only in West Bengal and the traditional tea cultivated areas of the state are spread over Jalpaiguri and Darjeeling districts.

1.4 Definition of Small Tea Growers (Smallholders) in India According to the Tea Board of India, a Small Grower is one who holds less than 25 acres or 10.12 ha of land under tea cultivation (Bhowmik, 1997; Hannan, 2006). Though this definition seems to have wider institutional acceptance, the Small Tea

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Growers’ Association has different opinions and justifications. The ‘North Bengal Small Tea Planters’ Association’ (NBSTPA), first association established in 1990s, covers STGs from all the six northern districts of West Bengal, i.e. Jalpaiguri, Alipurduar, Darjeeling, Kalimpong, Cooch Behar and Uttar Dinajpur (Hannan, 2006; Hannan, 2019). As per the communications of NBSTPA representatives, it is not only the holding-size criteria which identify small-scale gardens; rather, it should have a more comprehensive definition. According to this association, the Small Tea Plantations (STPs) should include all the plantations that do not own the processing factories and which are dependent to sell green tea leaves to either the Bought-Leaf Factories (BLFs), Cooperative Factories (CPFs) or Estate Factories (Hannan, 2006). Therefore, they suggested that below 100 acres of plantations should be considered as STPs. This organization has classified the Small Tea Planters into four categories, viz. Group-A (51–100 acres), Group-B (24–50 acres), Group-C (11–23 acres) and Group-D (below 10 acres). In their opinion, it is the processing technology that divides the two sectors of tea industry, i.e. Organized and Unorganized sectors. The STGs do not own processing factories for the final production of green leaf to made tea, but on the contrary the Estate sector (Organized sector) does own the factories within their premises. The former enters into the market with intermediary products while later with final products (Hannan, 2006). The main argument behind this definition is that the price of green leaf is not related to the holding size; rather, it is the quality of leaf that decides the market price. Therefore, all the green leaf sellers are treated as one category in the market and it is unwise to delimit the STGs with the holding size. Another dimension of looking into the definitional aspect of STGs is that, though, the labour market varies according to the size of the tea farms, but at the production level there is no size variation and all the green leaf sellers are the victim of the price fluctuations equally. It is ultimately the market that decides the relative importance of the growers, whereas, at labour market particularly in relation to the payment of provident fund, paid holidays, yearly bonus and other measures are defined by the size of the STPs. According to Land Reforms Department, Government of West Bengal, a Small Tea Garden is defined by a land holding up to 24.20 acres (up to 7 ha) of tea plantation, and a land holding above 24.20 acres (above 7 ha) of tea plantation is considered as Big Tea Garden. The definition of Land Reforms Department is related to land ceiling of an individual family. The Government of West Bengal issued an order dated 21 August 1998 and introduced the provision of No-objection Certificate (NOC) and elaborated the guidelines for the development of new tea gardens in West Bengal. It is stated as follows: Para-7. After taking the aforesaid actions by drawing up appropriate proceedings in all cases the area of validity purchased land held by a tea-garden has to be determined. If the teagarden holds more than 7 hectares (24.20 acres) of land, it should be asked to apply to the State Government through the District Land & Land Reforms Officer concerned under Section 14Y of the Act for permission to hold land in excess of the ceiling limit. The State Government shall grant permission imposing terms and conditions similar to those in Form I under Schedule F of the West Bengal Estates Acquisition Rules, 1954 with such modifications as may be necessary.

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Para-9. After determination of the quantum of land as in Para 7 above if it is found that a tea-garden owner holds land within the ceiling i.e. within 24.20 acres, if the owner is a company, or within the ceiling as applicable to an individual according to the size of his family if such owner is not a company, the question of application under Section 14Y does not arise. Hence, the terms and conditions that shall be imposed on big tea-gardens cannot be imposed on the small ones owning and holding land within ceiling. In order to enable the small tea-garden owners to get recognition as cultivators of tea and for facilitating the district authorities to keep full account of the tea gardens within the district, certification is necessary. The small tea-garden owners may apply to the District Land & Land Reforms Officer concerned for certification. On receipt of such applications the D.L. & L.R.O. shall cause an enquiry as to the correctness of the land statement and determine rent as provided in Para 8 above and issue a certificate in the form appended. (Government of West Bengal, 1998).

As compared to this, the definition of small tea holdings is given in the Report of the Presidential Commission on the Tea Industry and Trade (1995) in Sri Lanka. It varies from the definition given in the recent Tea Land Survey, which was conducted by the Tea Commissioner of Sri Lanka (1994–95). The first definition states that owners of land between 4.1 and 20.2 ha are considered as a small tea holder in Sri Lanka (Chandrabose, 2004; Hannan, 2006). The second definition in fact repeats the Tea Control Act No. 51 of 1957. It is little comprehensive and small tea holdings are defined as follows: A Tea Smallholding constitutes a part of tea land, one or more adjoining tea lands, managed as one operational unit owned by one or more persons which is not less than 20 perches (a perch is 272.25 square feet, 160 perches is equivalent to one acre and 395.2 perches is equivalent to one hectare) in extent and with more than a density of 2400 tea bushes per hectare. (Tea Commissions Division, 1996 cf. Chandrabose, 2004).

It should be mentioned here that the Land Reforms Act of 1972 of Sri Lanka limited the area of land which could be owned by one person up to 20 ha or 50 acres, and by convention, all lands remaining under the individual ownership were identified as Small Holdings (Singh, 2001). Therefore, it seems to an apparent contradiction between ‘Plantations’ and ‘Small Tea Plantations’; it is so because plantation in general and tea plantation in particular have always been associated with large estates along with the following other characteristics: (a) Most of the tea plantations emerged during the financial phase of capitalism and in India, the first tea plantation started after 1840; (b) these ‘plantations’ were started by the foreign entrepreneurs particularly the British; (c) the workforce was brought by the planters through forced migration mostly tribal from Central India; (d) these plantations were capital intensive and highly mechanized; and (e) most of the plantations functioned like enclaves having minimum interaction with the immediate surrounding areas and communities (Hannan, 2006). As opposed to these, the STPs are of recent origin. In India, these emerged only after 1920s in South India and in the late 1980s and early 1990s in the North-East India. Moreover, most of the STPs are small in size, i.e. below 25 acres, and owned and managed by individual family owners. Consequently, these farms have no factory or processing units of their own hence; they dependent upon the BLFs for processing of green leaf and pricing of their intermediary product. In this situation and backdrop of these dissimilarities, it is imperative to study the emergence

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of Unorganized sector of tea because these factors have serious implications upon the growth and future of the STGs and their small-scale plantations. For many, the small-scale plantations may sound as a new type of economic activity in India, but it has roots date back to late eighteenth century in Indonesia (Wibowo & Dharmadi, 1999; Hannan, 2006). Perhaps this is the first country which initiated the STPs in the world, and from there, it spread to other parts of the world. Now, it is emerging as one of the alternative models of tea production in various countries.

1.5 Small-Scale Tea Plantations in Other Countries The emergence of Smallholders in tea economy in various countries have different stories in terms of management, regulatory measures relating to their farm product and marketing, etc., to mention only a few. The government policies and plans for the growth and smooth running of the smallholder farms vary from one country to other. In the following sections, the experiences of the leading small tea growing countries of the world such as Kenya, Sri Lanka, Indonesia, Malawi, China, Nepal and Bangladesh have been analysed to get a comparative picture.

1.5.1 Kenya In 1903, the tea planting was started in Kenya and it was limited to large-scale producers and multinational companies, whereas Smallholders’ tea in Kenya was started sometime in 1950s (KTDA, 1976; Hannan, 2006). Later, after the independence of Kenya in 1963, various land reform bills were passed which led to opening of tea plantation among the local farmers. The tea sector has emerged as an important asset for economic development, employment generation and tapping livelihood opportunities among the smallholders. A centralized authority named Kenya Tea Development Agency (KTDA) looks after the affairs of smallholders, and currently, there are around 560,000 small-scale tea farmers in Kenya (Banerjee, 2011). Other administering bodies are Ministry of Agriculture and Rural Development (Government), Tea Board of Kenya (Regulatory), Tea Research Foundation of Kenya (Research), etc. The tea industry of Kenya functions under the Tea Act (Cap 343) and Agricultural Act (Cap 318). The small-scale farmers produce around 62 per cent of all the tea produced in Kenya (Banerjee, 2011) (Table 1.2). It is only after the Mau Mau emergency (1959), the Government of Kenya decided to expand tea production by engaging smallholders, though it was questionable whether smallholders could handle the complexities of tea husbandry and production at that time. The experiment of smallholder tea production, which begun in 1953 with 40 acres of tea plantation, was interrupted by the Mau Mau emergency. By 1959, it reached to 6000 smallholders growing tea on 2281 acres and its demand rose to other smallholders for tea cultivation was high (KTDA, 1976; Hannan, 2006).

1.5 Small-Scale Tea Plantations in Other Countries

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Table 1.2 Area (ha) and production (kg) of tea in Kenya (1990–2006) Growth rate (%)

Year Smallholders

Estates

Area

Area

Production

Smallholders Production

Area

1990 67,041

109,996,712 29,977

1995 80,355

138,945,451 32,201 105,579,709 3.97

87,011,557 –

Estates

Production Area Production –

–

–

5.26

1.48

4.27 − 2.81

2000 85,083

145,546,258 35,313

90,739,801 1.18

0.95

1.93

2005 92,682

197,721,429 48,633 130,776,195 1.79

7.17

7.54

8.82

2006 95,779

191,177,061 51,297 119,400,981 3.34

− 3.31

5.48

− 8.70

Data Source Computed from report on small-scale tea sector in Kenya by CPDA (2008)

Moreover, the quality of tea produced by the smallholders was compared with the tea leaf grown on estates. Consequently, the Ministry of Agriculture, Government of Kenya, identified the need to develop small tea plantations under phased manner. To begin with, special provisions were made to establish a processing factory with full government support along with the development of small tea plantations. The Kenyan government responded to set up a working committee (1959) which suggested in establishing an authority with tight control over tea development. The authority was established in 1960 as the Special Crops Development Authority (SCDA), with tea as its initial responsibility. Later on, it was planned that the authority would also assist in the development of other smallholders in the production of a few other cash crops (KTDA, 1976; Hannan, 2006). In 1964, SCDA was replaced by the Kenya Tea Development Authority (KTDA) with an exclusive responsibility for the development of tea. The Government of Kenya made provisions for comprehensive infrastructure development related to the tea industry. Encouraged by their performance, foreign donors were tempted to invest in KTDA’s smallholder tea project. Over the years (1960–73), the Commonwealth Development Corporation, the International Development Association and the West Germany Government also made substantial loans available for field operations US$ 6.1 million and road construction US$ 3 million (KTDA, 1976; Hannan, 2006). Since its inception (1964), the smallholder tea sub-sector of KTDA experienced phenomenal growth largely due to the harmonious combination of improved production techniques, strict extension and supervision. Consequently, the number of farmers increased from 19,775 (1964) to over 560,000 currently as mentioned. Acreage under tea too increased from 4700 ha (1964) to 115,023 ha (2010) during the same period (Table 1.7). It is interesting to note that the average small-scale tea farm size is about 0.4 ha or equivalent to one (1) acre in India. Production of ‘green leaf’ has risen to 1233 million kg in 2016 and 225 million kg ‘made tea’ in 2010 (Fig. 1.2). Similarly, the number of BLFs has increased from one at the time of inception to 66 in 2010. Out of this, the KTDA contributes about 60% of the total tea produced in Kenya. Presently, KTDA is the successful and largest network of smallholder tea organization in the world and has played a ground-breaking role in putting Kenyan teas as high on the world market (Banerjee, 2011). In Kenya, smallholders are those

14

1 Plantation Economy and Regional Development

Fig. 1.2 Green leaf production in M. kgs (2012–16)

growing tea but do not possess their own factory for processing and are regulated and monitored by KTDA, a centralized agency promoted by Government of Kenya.

1.5.2 Sri Lanka It was reported that like any other developing countries tea is an important agricultural commodity in terms of export earnings and employment which is roughly around 10% in Sri Lanka (Perera, 2014). Tea was first introduced in 1824 and the commercial plantation of tea was introduced in 1867 in Sri Lanka (Ganewatta et al., 2000; Perera, 2014). Tea is mainly produced in three regions; they are: low grown elevations (mean sea level up to 610 m), medium grown elevations (610–1220 m) and high grown elevations (above 1220 m). Though the tea plantations were started as large plantations, the smallholders’ sector has been gradually developing in the country mainly after the Land reform of 1970s. Small family operated tea holdings began to be developed, and gradually, their number increased in the Low Country. As per the conditions of the reform, the land ceiling was limited to personal ownership to 20 ha (50 acres), which resulted into the breaking up of the many large privately owned tea estates (Chandrabose, 2004). Since then, the pace of smallholder development has accelerated significantly and it contributes nearly 73% of national tea production in Sri Lanka. The increase in the production of tea is mainly due to increase in cultivated land and increase in productivity growth of the tea smallholders. All tea lands up to 50 acres in extent under private ownership are considered as tea smallholdings (TSHDA Annual Report, 2009). The extent or the area of Smallholders was 75,769 ha in 1983 and 82,918 ha in 1994, and it was increased to 116,492 in 2005 (TSHDA). They are administered by Tea smallholder Development Authority (TSHDA) and Sri Lanka Federation of Tea Smallholders Development Societies commonly recognized as ‘Tea Shakthi’ (Table 1.4). The smallholder tea sector extends over 121,429 ha of total area

1.5 Small-Scale Tea Plantations in Other Countries

15

with 392,108 growers (Table 1.3). This sector is primarily located in the Low Country with an altitude of less than 600 m. The smallholder tea sector produces over 250 million kg (2014) and largely concentrated in low grown areas (Perera, 2014). Encouraged by the performance and acceptance of people in growing tea in smallholdings, the Government of Sri Lanka gave a formal recognition and established the Tea Small Holdings Development Authority (TSHDA) in 1978 to facilitate its smooth functioning (Chandrabose, 2004; Singh, 2001). Today, it is the nodal agency to implement and monitor the smallholder policies and programmes in the field. The main thrust of the TSHDA is to face the challenges in the twenty-first century, to enhance the quality of green leaf produced by smallholders and to emphasize the adoption of modern cultivation and harvesting techniques, constructing leaf sheds, improvements in infrastructure to facilitate the transportation of green leaf quickly to the factory, etc. In Sri Lanka, the Smallholders’ tea leaf is processed at factories owned by the plantation companies known as Estate Factory, Tea Smallholders Factories Ltd. Group, CPFs and privately owned BLFs. According to one estimate, around 50% of the green leaf was sold through the licensed dealers till 1995 followed by about 43% directly to the factories (Singh, 2001; Hannan, 2006). However, the share of sale through licensed dealer is declining over the years.

1.5.3 Indonesia As it has been reported that the smallholder tea planting began in 1875, Indonesia was the first country to initiate the small-scale tea plantations. Initially, the manager of Sinagar and Parakan Salak Estates in West Java distributed the seedling plants to his foreman and servants for tea planting in their homeyards (Wibowo & Dharmadi, 1999). In 1880, Mr. A.B.B. Crone, manager of Cicurug Estate, also distributed plant materials to the villagers in the surrounding areas of his garden to be planted in their land with a stipulation that the green tea leaves should be sold to his tea estate only (Wibowo & Dharmadi, 1999). The same is said to have been done in Garut by Mr. K.F. Holle, in the area surrounding his Waspada Tea Estate. Since then, tea smallholder estates have developed in West Java. The tea quality from smallholders was not good in the formative years, and the maintenance of their gardens was also poor. Therefore, they required some technical guidance by way of extension services and marketing. One of the first organizations to provide guidance was the farmers’ group of MITRA NU TANI and MADU TAWON at Cibadak in West Java (Wibowo & Dharmadi, 1999). In the first five-year National Development Plan (PELITA) from 1969–70 to 1974–75, the Indonesian government affirmed that the development of smallholders was essential to improve the welfare of the tea farmers. For the same purpose, a government project was set up and financed by foreign aid under Unit Pelaksana Project (UPP—the Project Executing Unit or PEU). The PEU was organized at many locations and for many commodities, and was given different names such as P3RSU for North Sumatera, PPCL in Lampung and P2TRSN for tea in West Java

121,429

392,108

2014

247.38

245.43

233.1

229

230.1

220.7

235.6

224.8

Production (M. kg)

73.1

72.2

71.4

69.8

69.4

76.2

74

73.8

Share to national production (%)

2123

2107

2001

1966

1976

1895

2138

2039

Productivity (made tea kg/ha)

67.54

64.99

57.27

52.63

54.11

52.71

45.45

40.88

0.23

0.23

0.20

0.13

0.26

0.24

0.28

0.26

− 12.52 15.04

0.20

0.23

–

Area (ha)

0.29

0.41

–

Price/ No. of kilo of smallholders green leaf (in Rs.)

Growth rate (%)

Data Source Computed from TSHDA Annual Reports 2009 and 2014 and Perera (2014)

121,267

391,226

2013

120,664

120,955

389,561

390,346

2011

2012

120,324

338,645

2010

119,768

120,009

386,000

387,110

2008

119,492

Area (ha)

2009

384,416

No. of smallholders

Tea smallholders

2007

Year

Table 1.3 Profile of tea smallholdings in Sri Lanka

0.58

0.79

5.29

1.25

1.12

2.29

− 0.48 1.79

− 8.92 4.26

0.27 2.97

4.80

–

Share to national production (%)

− 6.32

–

Production (Mn kg)

0.76

5.30

1.78

− 0.51

4.27

− 11.37

4.86

–

Productivity (made tea kg/ha)

3.92

13.48

8.82

− 2.74

2.66

15.97

11.18

–

Price/ kilo of green leaf in Rs.

16 1 Plantation Economy and Regional Development

1.5 Small-Scale Tea Plantations in Other Countries

17

Table 1.4 Tea smallholdings development societies (SHGs) Year

No. of societies

Growth rate (%)

2007

1309

–

No. of members 201,933

Growth rate (%) –

2008

1319

0.76

2,192,693

2009

1353

2.58

263,016

− 88.01

2012

1381

2.07

261,493

− 0.58

985.85

2013

1382

0.07

251,794

− 3.71

2014

1383

0.07

266,480

5.83

Data Source Based on TSHDA Annual Reports 2009 and 2014

(Wibowo & Dharmadi, 1999). Accordingly, tea growers enjoyed financial support and guidance to increase productivity. During 1974–75 to 1978–79, the purpose of tea development was clear and it aimed to improve the farmers’ income, welfare and improvement of quality of life. The upgrading of human resources of tea farmers was undertaken in terms of training and equal working condition opportunity. This was done by continuing the project P2TRSN and other projects, such as local Nucleus Tea Estate Project (PIR Lokal) and PRPTE (Rehabilitation and Extension of Export Plan Project). The objective of maintaining the price of green tea leaves according to the quality of tea leaves supplied by farmers was in accordance with the pricing formula suggested by the Research Institute for Tea and Cinchona. This became a law by a decree of the Government of Indonesia (Wibowo & Dharmadi, 1999). During the period of third and fourth five-year National Development Plans (1978–79 to 1988–89), the development of tea smallholders was even higher, due to the better tea price in the international market. The government also built four CTC and orthodox tea factories with a capacity of 40 tons of tea leaves per day to process green leaves from smallholders. The government support was given in order to maintain assurance prices for green leaves in the market. Tea farmers with an ownership of less than one hectare were advised to form Farmers’ Association to be more self-governing in order to obtain the visibility and advantages of the market. During the period of PELITA VI (1994–95), the area with tea smallholders was increased up to 59,711 ha with productivity reaching 874 kg per hectare and its spread over West Java, Central Java, East Java, West Sumatra, Jambi, South Sumatera and South Sulawesi. In 1996, the smallholder tea area was 62,123 hectares and produced 36,563 tonnes of tea (Wibowo & Dharmadi, 1999). The smallholders in Indonesia have an average holding size between 0.8 and 2 hectares and sell green tea leaves without processing. The smallholders possess 43% of the area under tea and produces 23% of the tea out of the total production (Banerjee, 2011). Smallholder in Indonesia often faces lack of modern tools or seed varieties. The total tea plantation area is 121,034 ha (2014). Most of the plantations are owned by smallholders, i.e. 50.96%, state owned 25.80% and private plantations are 23.24% (Sita et al., 2017). The average production is 147,000 tonnes with a decline of 1.7% annually as per Food and Agriculture Organisation. West Java Province is the largest producer of tea and it includes the smallholders though Tea is grown also

18

1 Plantation Economy and Regional Development

in Central Java, North Sumatra, etc. The organizations like Gapoktan (Tea Farmer Group Association) and village unit Koperasi (Cooperatives) are developed in the tea supply chain to establish factory and networks to maintain the market linkages and a cordial partnership with the government. The major problems faced by the tea farmers group are mainly capital shortage, tea prices, policy, technology, access to market information, etc. Most of the smallholders sell their green leaves to the local traders, some sell through tea farmers group and few smallholders sell directly to the tea factories depending on nearness of the factories. The average farm-gate price of fresh green leaf is IDR 1800 per kg and ideal farm-gate price is IDR 2000 per kg of fresh green leaf (Sita et al., 2017).

1.5.4 Malawi Malawi is the second largest tea producer in Africa after Kenya and produces 10% of production (FAOSTAT, 2012). Tea cultivation in Malawi started in 1880s and tea estates are found in Mulanje and Thyolo regions owned by foreign companies. The Smallholders tea in Malawi began in 1964 in three districts, namely Nkhata Bay, Mulanje and Thyolo; they received enormous support from the Government of Malawi through subsidized farm input like seedlings, fertilizers, chemicals, etc. (SOMO, 2008). Presently, there are 15,000 smallholder tea farmers cultivating about 4000 ha of land with an average holding size less than a hectare (Kantungwe et al., 2017). It is reported that initially ‘Smallholder Tea Authority (STA) under Ministry of Agriculture was given the responsibility to undertake this development with a joint financing from Malawi government and British Common wealth Development Cooperation (CDC)’, in the factory known as Malawi Tea company (MATECO). Over time, due to crisis and manifold problems like default in payment to the green leaf price, overdue of more than three months, etc., government dissolved STA and MATECO and Small Tea Growers Trust (STGT) and Smallholder Tea Company (STECO) were established (SOMO, 2008). In Malawi, smallholder farmers face various challenges like lack of supply chain responsibility, high cost of production, lack of collective bargaining, limited access to markets, low tea prices, etc.

1.5.5 China The tea cultivation in China started since five thousand years ago in 2737 BC (Majumdar et al., 2012). It has emerged as the largest tea-producing country in the world since it took over India in 2005. The main tea growing areas in China are North of Yangtze River, South of Yangtze, South China and Southwest China. The types of tea produced are Green tea, Black tea, White tea, Oolong tea, etc., out of which Green tea is largely produced. The major and the largest tea planting area is the Yunnan Province. Tea production in China has continued to be a small household

1.5 Small-Scale Tea Plantations in Other Countries

19

business having area less than 0.3 ha. They have no equal power in negotiating with firms in marketplace, high labour cost, low labour productivity, lack of skills, etc. They follow different types of tea cultivating practices like traditional mode by small farms, cooperative mode by cooperated farms and industrialization mode which is tea company centred. The government is supporting tea cultivation and expansion to develop the local economy. The organizations are Tea Traders Associations Tea Cooperatives, NGOs, Tea Growers Associations, etc. (Fang et al., 2014). During 2001–2010, Smallholders tea production has increased by 73% and area from 1.1 million hectares to 2 million hectares (Banerjee, 2011). The productivity has increased around 749 kg per hectare (2010). The increase in area and production has led to the increase in the export of the country in the global tea market, i.e. 303 million kg (2010).

1.5.6 Nepal Tea cultivation in Nepal was started since 1863 with the establishment of first factory in Ilam Bazar in 1878 and the private sector or the smallholder cultivation started since 1960s (Poudel, 2010). The Nepal Tea Development Corporation (NTDC) was dissolved and its properties were privatized. Both the CTC and Orthodox variety of teas are produced in Nepal. The CTC teas are grown in low altitudes or relatively plain areas while Orthodox variety is grown in high altitudes popularly known as Hill tea; it is mainly found in East Nepal, i.e. Ilam, Terathum, Panchthar and Dhankuta hill districts. Tea cultivation which was limited in four hill districts and plains of Jhapa district earlier is now spreading to other hill districts like Taplejung, Sankhuwasabha, Bhojpur, Khotang, Sindhupalachowk, Nuwakot, Dolkha and Udayapur of East Nepal and Gorkha, Lamjung and Kaski of mid-west Nepal (Gajmer, 2004; Hannan, 2006). Tea cultivation and production in Nepal is regulated by the Tea and Coffee Development Board Act. Table 1.5 shows that 80% of tea production under estate gardens produce CTC teas whereas it is 70% in small gardens. The overall Orthodox variety of teas in Nepal are produced more in small gardens. Table 1.6 shows that there are 15,013 Smallholders growing tea with 12,956 hectares and the estate sector is spread over 15,285 ha (2016–17). The share of national production between the two sectors is 45 per cent and 55%, respectively. Similarly, the share of CTC and Orthodox variety of teas are given in Table 1.5. It shows that almost 50% area of estate sector is devoted to Orthodox variety, but it produces roughly near to 20% of their production while other 50% area under CTC teas and produces around 80% of production. The share of area between Orthodox and CTC teas under smallholder sector is 70 and 30% while the production contribution is just in reverse order of both the variety of teas in Nepal.

20

1 Plantation Economy and Regional Development

Table 1.5 Plantation area (ha) and tea production (kg) in Nepal Fiscal year (Nepali and English)

Type

Orthodox

CTC

Total

Plantation Production Plantation Production Plantation Production area (%) (%) area (%) (%) area (%) (%)

2070/071 Garden 3383 (2013–14) (33.99)

986,696 (8.14)

6569 (66.01)

11,133,570 9952 (91.86) (100.00)

12,120,266 (100.00)

Small 5403 farmers (59.81)

2,050,998 (24.22)

3681 (40.75)

6,416,881 (75.78)

8,467,879 (100.00)

2071/072 Garden 6878 (2014–15) (47.12)

1,836,675 (13.85)

7718 (52.88)

11,428,477 14,596 (86.15) (100.00)

18,262,998 (100.00)

Small 7864 farmers (67.97)

3,087,053 (31.49)

3705 (32.03)

6,716,881 (68.51)

11,569 (100.00)

4,923,728 (100.00)

2072/073 Garden 7007 (2015–16) (47.56)

2,646,457 (69.28)

7725 (52.44)

1,173,551 (30.72)

14,732 (100.00)

14,382,008 (100.00)

Small 9238 farmers (70.96)

3,154,855 (31.93)

3781 (29.04)

6,726,881 (68.07)

13,019 (100.00)

9,881,736 (100.00)

2073/074 Garden 7560 (2016–17) (49.46)

2,674,594 (18.50)

7725 (50.54)

11,784,907 15,285 (81.50) (100.00)

14,459,501 (100.00)

Small 9238 farmers (71.30)

3,187,300 (32.03)

3718 (28.70)

6,762,525 (67.97)

9,949,825 (100.00)

9084 (100.00)

12,956 (100.00)

Source Computed from tea statistics of Nepal

Table 1.6 Comparison of tea estates and smallholders in Nepal Fiscal year (Nepali and English)

Estates

Smallholders

Total

Plantation Production Smallholders Plantation Production Plantation Production area (ha) (kg) (no) area (ha) (kg) area (ha) (kg)

2070/071 10,610 (2013–14) (52.73)

12,179,200 11,984 (57.79)

9510 (47.27)

8,897,166 (42.21)

20,120 (100.00)

21,076,366 (100.00)

2071/072 14,596 (2014–15) (55.78)

13,265,152 14,898 (57.21)

11,569 (44.22)

9,803,934 (42.28)

26,165 (100.00)

23,186,726 (100.00)

2072/073 14,732 (2015–16) (53.21)

14,382,008 15,040 (59.27)

12,956 (46.79)

9,881,736 (40.73)

27,688 (100.00)

24,263,744 (100.00)

2073/074 15,285 (2016–17) (54.12)

14,459,501 15,103 (59.24)

12,956 (45.88)

9,949,825 (40.76)

28,241 (100.00)

24,409,326 (100.00)

Source Computed from tea statistics of Nepal

1.5.7 Bangladesh Tea industry in Bangladesh plays an important role in generating the national economy though it is not as large as in other countries. The domestic demand of

1.5 Small-Scale Tea Plantations in Other Countries

21

Table 1.7 Growth of smallholders in India, Kenya and Sri Lanka Parameters

India

Years of estimation

2005

2019

2005

2010

2005

2014

Number of small tea growers

126,256

210,225

400,000

560,000

206,000

392,108

Area under tea in hectares

106,748

215,886

86,000

115,023

83,000

121,429

Production in million kg

180

654

181

225

187

247

(%) Share to national production

21

48

61

62

62

73

538

571

53

66

454

–

Number of bought-leaf factories

Kenya

Sri Lanka

Source Cited and computed from Hannan (2006), Tea Statistics-2019, CISTA (2019), Banerjee (2011) and various KTDA and TSHDA Annual Reports

tea is growing rapidly as compared to production due to its huge population and as a poor man’s drink. The production of tea in Bangladesh is dominated by 166 large tea estates covering an area of 116,219 ha of land of which 61,579 ha of land are cultivated in Sylhet and Chittagong (Saha et al., 2021). It employs around 1.5 lakh labourers and produces 82.13 million kg tea in a year with an average yield of 1529 kg/ ha. The STGs in the region are found to be more productive than estates. A recent study by Bangladesh Tea Board found an estimated 6000 ha of land in Panchagarh district and 7500 ha in Chittagong hill tracts are available for tea cultivation under the smallholder sector (Saha et al., 2021). The smallholder is a recent emerging sector which needs attention and support for its advancement. The Traidcraft Exchange UK partnering with Bikash, Bangladesh, has initiated tea as a livelihood possibility for the smallholders and now they work with 5000 small growers which is developed into village level groups and amalgamated under sub-districts and district associations. In Bangladesh, the smallholders are those having farm size up to 4.5 acres, but their actual average holdings are less than 1.7 acres (Traidcraft Exchange). In Bangladesh, Small Tea Growers’ Association has been formed and 280 small growers have been trained as Barefoot Service Provider to strengthen their livelihood by saving and diversifying alternatives. Since 2005–06, tea area under smallholders grown extensively in Panchagarh of Bangladesh which is highest district with 50 above sea level. In the year 2022–23, the Panchagarh reported of tea area of 12,079 acres and produced 90,274,632 kg of green leaf and made tea 17,781,938 kg (Shawon, 2023). There are 9 tea estates, 8335 smallholders and 26 tea factories situated in the districts. Around 15,000 tea workers with total employment of 30,000 people are engaged in tea sector valuing of Tk280 crores in a year in the district. Geographically, the region is closer to Banglabandha land port of Bangladesh and closer to northern districts of West Bengal, India.

22

1 Plantation Economy and Regional Development

1.6 Regional Analysis—Kenya, Sri Lanka and India The Small Tea Growing Sector, in Kenya and Sri Lanka, is characterized by strong supporting institutional framework, which is still in preliminary stages in India. The contribution of this sector is increased from 21% (2005) to 48% (2019) in India as compared to 61% (2005) and 62% (2010) in Kenya and 62% (2005) to 73% (2014) in Sri Lanka, respectively (Table 1.7). An important reason behind their low performance in India is the suppression of data related to the actual performance of this sector. Secondly, most of the produce of this sector is registered in the account of the large tea estates because the Small Tea Growers do not have a direct access to the market. Most of these growers sell their green leaves to the Estate Factories as well as to the BLFs. But it is only the part sale to the BLFs that goes in the account of the small growers and the sale to the Estate Factories is entered in the account of the later. Moreover, the role of middlemen or leaf agents is also less conducive to the growth of this sector. They act more like middlemen and corner most of benefits at the cost of the Small Tea Growers. Thus, underestimation of data has always been a hurdle in the growth of small-scale sector in India. Data in Table 1.7 show an absolute production of this Smallholders tea sector in all the three countries: in India increased from 180 to 654 million kg (2005–2019); while in Kenya it increased from 181 to 225 million kg (2005–2010) and 187 to 247 million kg in Sri Lanka (2005–2014). Relatively better performance in case of Kenya and Sri Lanka can be largely attributed to the better data management and transparency, which is lacking in India. In Kenya, the Smallholders and the factories are brought under an apex umbrella organization ‘Kenya Tea Development Agency’ (KTDA) which manages and accountable for the supply of inputs to green leaf collection and also running the KTDA factories (Hannan, 2018a). Likewise, in Sri Lanka, the Smallholders are organized into groups and societies and provide facilities for transportation of green leaf from the farm gate to the BLFs. The government intervention and monitoring have strengthened their bargaining power to obtain better prices for the green leaf (Hannan, 2018a). The ‘Tea Small Holdings Development Authority’ (TSHDA) is a centralized agency to implement and monitor the smallholder policies and programmes including efficient assistance for replanting, infilling, fertilizer application, supply of planting material and advisory services (Tea Board of India, 2002; Hannan, 2018a). In Sri Lanka, ‘Price-Sharing Formula’ between smallholders and BLFs is applicable based on ‘Reasonable Price Formula’ (RPF)—the RPF maintains a compulsory payment of 68% to the growers of the Net Sale Average (NSA) of the factory received at auction and the remaining 32% goes to the BLFs (Hannan, 2006; Hannan, 2018; Hannan, 2019a). In Kenya, the growers’ ratio is higher and they are paid at 75% while BLFs get 25% out of the net sale. With Sri Lankan experiences, the Tea Board of India has introduced the ‘Price-Sharing Formula’ and implemented in India w.e.f. 01.04.2004 (Hannan, 2017, Hannan 2019a). As per the formula, the sale averages are to be shared between the small growers and the BLFs at a ratio of 60:40 (Hannan, 2017, Hannan, 2019a). It is applied in all the tea growing regions except in Himachal Pradesh and Uttaranchal where the ratio is 58:42 (Tea Board of India, 2004; Hannan,

1.7 Concluding Remarks

23

2017, Hannan, 2019a). Though the Tea Board of India has evolved the price-sharing mechanism, its implementation and transparency are questioned and it is not adhered in letter and spirit. The main reason behind this is the lack of proper institutional support for the Smallholders and its vast geographical spread in India. Thus, there is an urgent need for a dedicated agency to implement and monitor Price-Sharing Formula in practice in every tea growing region and districts to safeguard from market margins and quality employment in the small-scale tea sector.

1.7 Concluding Remarks It is observed that Development-from-Below is successful particularly in Sri Lanka and Kenya largely. There are grass-roots level organizations and state-supported agencies like TSHDA and KTDA have played catalyst role and earned their credentials over the years. They monitor the entire supply chain and their marketing and also develop the capacities of smallholders in input management, scientific farm management, quality harvesting practices, digital transfers and transparencies, farmgate price dissemination, formation of SHGs as collectives and cooperatives, etc. Let us examine the situations that exist for Smallholders in India in the following chapters in detail and their regional dimensions. Notes [i] The terms ‘Smallholder’, ‘Small Tea Holder’, ‘Small Grower’, ‘Small Tea Grower’, ‘Small-Scale Tea Producer’, ‘Tea Cultivator’, etc. are used interchangeably throughout the chapters. [ii] The Bought-Leaf-Factories (BLFs) do not have their own plantations and source their raw material from small growers, i.e. green leaf, and process it and convert to made tea and participate in auction and non-auction for sale. [iii] The Cooperative Factories (CPFs) refers to those factories, which has share of small growers and the state government and jointly managed by the growermember and the respective state government in a state, e.g. INDCO Tea Factories in Tamil Nadu. [iv] The Estate Factories refer to traditional tea estates having the factories within their own premises and also have their own tea plantations. Some of Estate Factories buy green leaves from small gardens in their locality. [v] Mau Mau Emergency in Kenya: Very little was known of the Kenyan hinterland before the arrival of the British who came and colonized Kenya in nineteenth century. The colonization process was met with resistance and it was countered with excessive force. Hence, most of Kenya’s modern history is marked by rebellions against the British, with the first one being in 1890 and the last one known as Mau Mau rebellion (1952). Attacks by Mau Mau fighters on white settlers in Kenya threw colonial society into panic and British imposed a state of emergency in 1952. The outbreak of the Mau Mau paved the way for constitutional reforms and development in subsequent years. In 1955, a myriad

24

1 Plantation Economy and Regional Development

of political were formed all over the country after the colonial government yielded to their formation. Elections were held in March 1957, after which racial barriers in the government began to be lifted.

Chapter 2

Emerging Unorganized Sector of Tea Economy in India

Abstract It is an established fact that there is a paradigm shift in tea economy in India, i.e. from colonial corporate ownership to small-scale individual ownership production system. The geography of tea plantations have expanded from a few traditional tea growing states to fifteen states in India since 1990s. Almost all the hill states of North-East India grow small-scale tea today. The typical characteristics of plantation villages changed from homogeneous villages to heterogeneous villages which is found to be inclusive in character. As per Tea Board of India (2018–19), there are 210,225 smallholders with tea cultivation areas of 215,886 ha contributing roughly around 50–55% of tea production. In most of the cases, they are the firstgeneration unemployed youth into tea cultivation and enterprise development. On the other hand, the organized tea sector has 1569 tea estates with tea area of 420,670 ha. The labour relations are well defined in organized sector and covered under the Plantation Labour Act. But in the unorganized sector, the labour relations are evolving and new set of organizations like Bought-Leaf Factories (BLFs), Tea Producing Societies (SHGs), Small Tea Growers Associations and State-Level Associations, etc., are being emerged for the safeguard of livelihoods across the country and in India’s North-East. There are around 5.64 lakh smallholder families and 2.51 million people are associated with the unorganized sector of tea industry in India (Hannan, 2017). Around 1.25 million workers employed directly and an estimated 2.50 million people are indirectly dependant in organized sector of tea industry today. It needs to be mentioned that the quality of employment in organized tea industry differs from smallholder sector popularly known as Unorganized Sector. Livelihoods in this sector seem to be more vulnerable and their engagement with the market has series of middlemen and buffer zones. The group approach or collectivization in the form of Tea Cooperatives or Self-Help Groups is yet to gain popular recognition and acceptance model by smallholders. Therefore, there is a lack of confidence among growers to establish their credentials and visibility in the market particularly in government-led tea auctions. The question of under-recognition and low level of entrepreneurship skills always push them into a situation where buyer-driven market fixes the prices of their product (intermediary product, i.e. green leaf). It has an impact and reflection on their quality of employment, insecure livelihoods and a compromise

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 A. Hannan, The Smallholder Tea Economy and Regional Development, https://doi.org/10.1007/978-3-031-51812-6_2

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2 Emerging Unorganized Sector of Tea Economy in India

to overall quality of life and unexplored potentials and possible protection within the tea economy. Keywords Unorganized sector · Homogenous villages · Heterogeneous villages · Employment · Livelihoods · Market structure

2.1 Tea Economy in India and Upcoming Divide The history of Small Tea Plantation is very recent in India. However, despite a short span of time, it too has two distinct types of operations completely in tune with the international trends: these are the unorganized and organized sectors. The Organized sector is the result of a planned development extending over one and half century started during the colonial rule in India. Under colonialism, it was developed to meet the needs of the mother country. This developed into a situation where pressure on land was low and tea plantation was a part of extensive commercial agriculture. Since tea industry is a labour-intensive one, certainly there was an absolute shortage of manpower in the tea plantations. In order to meet the labour shortage, the colonial administration resorted to the methods of induced migration from the tribal belts of Chota Nagpur region of India to these plantations. Furthermore, to accomplish this end, the labourers were brought from the Chota Nagpur region in the tea estates and Homogeneous Villages were raised within the premises of the estates (Hannan, 2006, 2008). Unlike the traditional Indian villages, these new settlements were marked by their distinctive occupational structure, living style, income group, village morphology, cultural landscape and work schedule, to mention only a few. A new work culture which was imposed on the tribals, who were engaged in the tea plantations, accelerated the process of acculturation and detribalization. Consequently, the traditional hunting and gathering economy of the tribal gave way to the plantation economy. But the situation is diametrically opposite of what it was under the colonial rule and the unorganized sector of tea industry is an outcome of the survival and sustainability of the thousands of unemployed youths in the backward pockets of the country. This young battalion switches over to tea cultivation from other agricultural crops to have better gain and security from the market. Most of the farms are small and owned mostly by individual owners using labour-intensive production techniques. The size of workforce too is small in these individual farms as compared to traditional estate gardens. Since, most of the Small Tea Plantations (STPs) have been developed in the vicinity of the already existing villages and their interaction with the surrounding villages is more frequent than what it used to be between the surrounding villages and estate farms. The villages are Heterogeneous as these consist not only farm owners and their workers but also there are other agricultural labourers, food crop cultivators, petty businessman, schoolteachers, marginal-small-large farmers and different socioreligious groups (Hannan, 2006, 2008). In other words, these exist and flourish along with other diversified activities. The cultural landscape too is entirely different from

2.1 Tea Economy in India and Upcoming Divide

27

the normal traditional tea estate villages. These villages can be better termed as pluralistic in their culture, economy and other social attributes. Homogeneous villages Estate garden

Heterogeneous villages

[i] Two classes live in this type, [i] All types of economic classes Small e.g. labour lines and live in this type, e.g. holders managerial staffs agricultural labourers, farmers, [ii] Settled with migrant school teachers, etc. population during historical [ii] Settled with resident local past population [iii] Tea Plantations started before [iii] Tea Plantations begun after the the introduction of Panchayati introduction of Panchayati Raj Raj Institutions Institutions [iv] Labouring community live in a [iv] Labourers are free to engage controlled and watchful anywhere and have freedom of situations choice [v] Social Security measures are [v] People can access health, extended under the provisions education, housing, PDS, etc., of Plantation Labour Act, provided by the local state 1951, such as health, governments through education, housing and, ration, Panchayati Raj Institutions provided by the management under several schemes like or company and have no land PMGAY, old-age pension, etc., rights and have land rights

Source Based on Authors Field Survey

It is a matter of serious concern that though there are significant differences between large and the STPs yet, very little has come from scholars about the small farms and most often they are treated along with large tea estates. It is reported in the literature that farmer-based cultivation started in South India way back in 1960s, but the first attempt was made by Sharit Bhowmik regarding the emergence of STGs in India. However, from various official reports and studies conducted by different committees appointed by the government from time to time, some information on STGs is available. It was reported that small-scale tea gardens began in early 1960s in South Indian states, i.e. Tamil Nadu, Kerala and Karnataka (Hannan, 2013). However, during late 1980s or early 1990s, they spread over the two traditional tea-producing states of North and North-East India, i.e. Assam and West Bengal (Hannan, 2017, 2019). Today, as per the Tea Board of India (2017), there were 161,238 Small Tea Growers with a collective holding of 164,396 ha land (Table 2.3). The estimated annual production was somewhat near to twenty (presently fifty per cent) of total made tea production in India (Hannan, 2017). Moreover, the acceptance and popularity of this small-scale sector can be projected by the fact that within a span of 30 years there are as many as 571 BLFs established in India located in different smallholding tea growing areas and regions in the country (Confederation of Indian Small Tea Growers Associations, 2019). It should be mentioned here that the data do not represent the ground realities; in most of the cases, STGs are not registered with the Tea Board of India. Moreover, there are large variations between the available data with the Tea Board and the situation observed particularly in Assam and West

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2 Emerging Unorganized Sector of Tea Economy in India

Bengal (Hannan, 2017). The representatives of STGs Associations like the ‘United Forum of Small Tea Growers’ Associations’, North Bengal and ‘All Assam Small Tea Growers Association’, ‘Bodoland Small Tea Growers Association’, etc., opined that the actual numbers of STGs and tea planted area in India are widespread than what the Tea Board data reveals (Hannan, 2019). It was also noticed during the field survey that most of the marginal farmers cum worker growers are not associated with the existing STGs Associations (Hannan, 2017). This section generally refers to the owner of those farms which are fully operated by family members and there is no existence of hired labour—some of the members of such type of farms work as wage-workers in other tea farms in the nearby locality to supplement family income and enhance their sustainability (Hannan, 2006, 2008). The kind of development of smallholder producers of tea may better be defined as Unorganized Sector of tea industry and the actual contribution of the small-scale tea plantations is more than what is shown with the help of existing data computed from various sources. The tea industry’s performance during the seventh plan (1985–90) shows that this industry, which is exclusively controlled by tea companies owning large plantations, has been unable to meet any of its growth targets. The rapid increase in domestic consumption underlines the urgency for higher level of tea production. The Tea Board has assessed that while in 1957 only 36.3% of the total production was consumed in the internal market, this proportion increased to 67% by 1987 (Bhowmik, 1991; Hannan, 2006). Moreover, till the end of 1987, 44% of the area under tea had bushes that had crossed the economic age of 50 years. The industry has clearly shown no inclination to rectify the situation, i.e. only 6.3% of the total area had new bushes less than five years old. Considering the crisis in the industry, the Tea Board of India laid emphasized the expansion of growers in the 8th Plan (1990–95) for Tea Industry (Hannan, 2013). The Tea Board estimated that about 40,000 ha of additional land (25,000 ha in North Indian gardens and 15,000 ha in South Indian gardens) will be made available to new tea plantations (Bhowmik, 1991; Hannan, 2006). Accordingly, it was proposed to encourage small-scale tea gardens. Consequently, local people in different states ventured tea cultivation. It was also suggested that the new STGs will be situated in the periphery of the large estates. This will help them to have a tie-up arrangement with the large estates for technical know-how of tea husbandry and sale of green leaf. In turn, the nucleus tea estate will adopt these STGs and this arrangement will continue for at least 10 years (Bhowmik, 1991; Hannan, 2006). The draft plan ostensibly was an attempt to create a condition of STGs to boost tea production in the country to meet the domestic demand. This was primarily aimed at helping the crisis-ridden large estates by improving their output without improving their own production. Moreover, the idea would block the ways of the small-scale producers to emerge as independent producers and non-visibility in market. In fact, on close examination this scheme looks like another trick to favour the large estates which would pass their intermediary product, i.e. green leaf to the Estate Factories and estates wanted their productivity at optimum level. All these led to a development model which added new dimensions to the growth of the small-scale farms and had far-reaching consequences such as casualization of workers and emergence of unorganized sector (Mishra, 2016). However, with the passage of time this situation

2.2 Defining Unorganized Sector of Tea Industry

29

has changed and the BLFs and SHGs-led factories came in existence and defeated the objectives of this dependency model.

2.2 Defining Unorganized Sector of Tea Industry In the last three decades, the upcoming sector brought the new terms of labouring relations and conditions of work in the Heterogeneous Villages and employment opportunity in tea industry. There are differences of opinions and thoughts among policy planners and scholars about defining these new trends. According to Central Statistical Organisation (CSO), all the unregistered enterprises and household industries (other than the organized ones) which are not regulated by any law and are not maintaining annual accounts or balance sheets constitute the unorganized sector (Datt, 1997; Hannan, 2013). This definition is administrative nature, based on existing legal framework, and omits a larger section of unorganized self-employed regulated labour force. The Economists and Social Scientists broadly define the organized sectors consisting of enterprises whose labour markets, commodities and capital are organized. On the other, the employer-employee relations for the unorganized sector may be unrecorded and by and large informal. They may not be having an appointment letter or an agreement, and the employment relations are verbal and for short durational in nature. In some cases, contract of service may be camouflaged as unknown contract which is invisible within a legal framework. The organized labour is distinguished by relatively regular salaried employment and majority of these workers may have well-defined terms and conditions of employment, work schedule with clear-cut rights and obligations. On the contrary, labour in the unorganized sector or marginalized workers may be employed as casual workforce as outsourced contract with ill-defined employer-employee relationship. The Ministry of Labour (1994), Government of India, has outlined the following characteristics of unorganized labour (Datt, 1997): • Acute incidence of under-employment (often under-employed workers work for more than one employer according to availability of jobs), • Scattered nature of the work places (workers doing the same kind of jobs are in different habitations and do not necessarily live together in compact geographical areas), • Incidence of home-based work, • Lack of integration on account of all the above factors with consequent low collective bargaining power, • Low level of unionization (trade unions have serious difficulties in accessing workers who are under-employed, scattered and home-based), and • Lack of concrete employer-employee relationship.

It has been noticed that that the small-scale sector of tea industry failed to receive appropriate policy attention over the years because it is offering sizable employment. It is estimated at around 2.51 million people are directly or indirectly engaged in Unorganized sector of tea industry (Hannan, 2017). They do not maintain regular

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2 Emerging Unorganized Sector of Tea Economy in India

accounts or balance sheets and marked by conspicuous absence of proper planning for the betterment of the units, as these are cultivated like any other agricultural crops. Moreover, they also lack scientific approach for the management of the farms and these farms are remotely located and fields are tiny, small and scattered. Since there is a misconception among STGs that once they are identified with regulatory agencies like land department of state governments and register with the Tea Board of India, they will have additional burden of paying taxes and other expenses. So, they choose not to follow regulatory measures and prefer to operate in traditional ways. This apprehension also has led the STGs to remain absent from availing legal recognition. On the other, the state governments have failed to recognize them and to prepare an effective database of this sector. Here labour relations are oral and employment conditions are unwritten and casual in nature. There is an absence of contract under which a worker is engaged and absorbed. Inter-farm mobility of workers is a common phenomenon as it is for short duration. However, other than family farms, all other farms have some regular base workforce also known as the threshold workforce without which it is difficult to maintain and run the farms. Therefore, a small-scale tea farm requires labour for plucking green leaves, carrying and transportation, watering plants, manuring and fertilizer applications, pruning, spraying medicines, etc., on regular and routine manner. It is only indicative of the fact that both the STGs and their workers require some policy intervention for the quality growth and development of this small-scale sector as both the groups are at margins of the market forces. Meaning thereby, neither the STGs receive assured fair price for their product, i.e. green leaf, nor they are in a position to pay optimal wages to the hired workers. All these conditions of market forces allow the STGs and their workers to perform in a state of apprehensions, perpetual fear and livelihood insecurity. Under certain circumstances and context, the small-scale sector can be termed as Unorganized Sector of Tea Industry and it invites policy discussion and innovations for better planning and development. It is more relevant and necessary condition when one looks at the pace of growth of this sector has achieved despite all kinds of policy gaps and appropriate attentions.

2.3 Regional Dimension of Smallholder Tea Economy in India 2.3.1 Tamil Nadu—Nilgiris Tea plantation in Tamil Nadu is mainly concentrated in Nilgiri district due to favourable agro-climatic conditions. Formerly, the district was a part of the coffee growing region and tea was introduced around 1835 following the recommendations of a committee appointed by the then Madras Government (Hannan, 2020; Tea Board of India, 1980). The STGs came into picture in early 1950s. The establishment of Cooperative Factories (CPFs) for improving the economies of scale and

2.3 Regional Dimension of Smallholder Tea Economy in India

31

viability of STGs was first recommended by the Plantation Enquiry Commission in 1956 (Hannan, 2020; Tea Board of India, 1980). The Government of Tamil Nadu made the pioneering work in forming an apex body named as ‘Tamil Nadu Small Tea Growers’ Industrial Cooperative Factories Federation Limited’ (INDCOSERVE) (CEC, 2007; Hannan, 2007). They also formulated a scheme for STGs in 1958 on a cooperative basis (Hannan, 2020; Tea Board of India, 1980). The INDCOSERVE estimated that there were approximately 50,000 STGs having 30,000 ha of farmland (INDCOSERVE, 2004). It has 16 CPFs under its operation and governance. The first industrial cooperative tea factory in India was started at Kundah village in the year 1962 in Nilgiri district of Tamil Nadu (Bhowmik, 1997). As per Tea Board of India (2005–06), there were 61,985 STGs with tea planted area of 43,157 ha in Tamil Nadu and produced around 65 million kg made tea. There were 213 BLFs in operation other than cooperatives in the state.

2.3.2 Kerala and Karnataka Initially in Kerala, the STGs were concentrated in the districts of Idukki and Kottayam. A majority of Small Tea Plantations in Kottayam district came into existence in 1950s, when tea prices enjoyed buoyancy and the export quota system were in operation (Tea Board of India, 1979a). The buoyant tea prices and the export quota system had prompted the STGs to register themselves with the Tea Board. The registration was slackened soon after the quota system was withdrawn in 1961. Since the price of green leaf declined considerably during 1970–71, many planters in district Kottayam switched over to rubber plantations as the price of rubber was progressively increasing during those years. Another reason for switch over was the incentives and extension services and an assistance given to the growers by the Rubber Board of India through their development programmes to the small growing sector (Hannan, 2006). The situation in district Idukki was entirely different and STGs here are relatively of later origin and a majority of them came into existence in 1960s. Moreover, most of the STGs in Idukki are still unregistered with Tea Board. The STGs could not switch over to rubber as was done in Kottayam. Since rubber could not grow at those altitudes and variations in the local geographical factors too were against the development of tea in this district (Tea Board of India, 1979a, 1990). Now tea is mostly grown in Idukki and Wayanad districts. As per Tea Board of India (2005), there were 5999 STGs with 4810 ha of tea plantation in Kerala mostly concentrated in these two districts only. In 2007, there were 20 BLFs and CPFs in Kerala catering the need of this sector and the estimated made tea production of Kerala from smallholders tea is roughly three million kg tea (Table 2.6). Location and geographical contiguity of Bought-Leaf Factories (BLFs) and Cooperative Factories (CPFs) play an important role in determining the mode of sale of green leaves.

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2 Emerging Unorganized Sector of Tea Economy in India

2.3.3 Himachal Pradesh Tea is grown in two districts of Kangra and Mandi in Himachal Pradesh and the 90% of the total area under tea plantation is concentrated in Kangra only (Tea Board of India, 1979b). The Kangra valley is endowed with favourable agro-climatic conditions and available land for tea planting. The Chinese variety tea bushes have the least incidence of pests and plant diseases, even though the tea industry in this region is not enjoying fullest potential because of various reasons. The first CPFs started at Bir in the year 1964 (Tea Board of India, 1979b). The major problems faced by STGs were reported to be lack of suitable planting materials at reasonable prices, non-availability of fertilizers, the inability of STGs to engage regular skilled labour and the non-remunerative price of green leaf as compared to other crops. There are occasions of STGs switching over to other crops and cultivation. Owing to comparatively lower wage, the tea industry in Kangra does not attract adequate number of permanent and skilled labourers. Consequently, it has been noticed that majority of owners work as labourers in their own family farms (Tea Board of India, 1979b). It may also be highlighted that adequacy and availability of labour in time have become a hurdle of tea industry in this region. A large proportion of labourers are engaged in other activities like orchards, construction, services, etc. Majority of the STGs do not own any factory and they are required to carry their green leaf to the CPFs or Estate Factories. Therefore, carrying green leaf to distant places is time consuming and equally affecting the overall quality of made tea. In the year 2007, there were 3656 STGs with a tea planted area of 1653 ha in Himachal Pradesh and had 14 BLFs and 4 CPFs altogether (Tables 2.3 and 2.5).

2.3.4 Assam and North-East India In India’s North-East including Assam, the small-scale tea cultivation and production was unknown until 1980s. A humble beginning was made in Assam and small-scale farmers in these states started tea cultivation as alternative means of livelihoods on a large scale during mid-1990s. It coincides with due to good tea prices which prevailed during 1996–98 (Tea Board of India, 2003). Generally, the holding size of smallscale planters in majority of cases is less than one hectare. Gradually, they became dependent on tea cultivation and derive major portion of their cash income from selling green tea leaves. Nowadays, tea has become a farmers’ crop in North-East and leading in a new way of life with a livable opportunity not only for self-employment but also for the wage earners. The availability of high land, tea husbandry and agrotechnology, surplus local labour, benefits of a long durational tea plantation crop over the other seasonal agricultural crops, quality soil and climatic characteristics, etc., were the driving forces that motivated the small and marginal farmers and educated unemployed youth from urban centres to take up tea plantation in the uplands and hills in the region (Hannan, 2006). The asset of the small-scale sector

2.3 Regional Dimension of Smallholder Tea Economy in India

33

is the young bush age and high yield of tea plants due to clonal composition of tea plants, personal supervision of the farming community, low cost of production and the young enthusiastic entrepreneurs with a readiness to accept new challenges (Hannan, 2013, 2019). The states of Assam and Tripura were traditional tea growing areas of North-East before the appearance of STGs. But now all the hill states of North-East grow tea. In 2005, the area under small-scale plantations in North-East were spread over 95,632 ha with 71,476 STGs (Table 2.3). There were 222 BLFs and CPFs processing the green leaf to made tea in the region (Table 2.5). To facilitate the expansion of small-scale tea sector in North-East, the Tea Board of India offered special assistances to the smallholder tea farmers. Mostly, it is in the form of subsidies, financial support and technical training, etc., to the small growers. In Table 2.1, it is reported that during the 9th Five Year Plan (1997–2002), Tea Board granted plantation subsidy to 819 STGs with an amount of Rs.866.83 lakh (Hannan, 2006; Tea Board of India, 2003). It subsidized the growth of 3739.22 ha of land under small tea plantations during the same period. Except Sikkim, all the states of North-East and the STGs have been benefited from Plantation Subsidy Scheme of Tea Board of India. The highest area under tea cultivation was developed of the scheme found in Assam with 983.01 ha as traditional tea growing areas and 548.37 ha in non-traditional areas. In addition to that, an exclusive cell was set up in the name as Small Tea Growers Advisory Programme (STAP) at Assam Agricultural University, Jorhat, with the financial support of Tea Board in the year 1991 (Tea Board of India, 2003). It aimed at rendering extension and training services to STGs in the region and it has an experimental tea factory. Table 2.1 Financial assistance to the small tea growers in North-East India States

Coverage of plantation subsidy to North-East No of small tea growers (STGs)

Assam (T) Assam (NT)

378

Area developed (ha)

Rupees (lakhs)

983.01

148.21 144.04

95

548.37

192

350.72

69.73

Arunachal Pradesh

44

837.39

252.77

Nagaland

188.91

Tripura

93

741.60

Meghalaya

9

96.64

25.81

Manipur

7

131.49

27.88

Mizoram Total for NER*

1

50.00

9.48

819

3739.22

866.83

During the 9th plan period: 1997–2002 * Excluding the state of Sikkim; T—traditional, NT—non-traditional Source 48th Annual Report 2001–2002, Tea Board; Hannan (2006)

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2 Emerging Unorganized Sector of Tea Economy in India

2.3.5 North Bengal The beginning of smallholder tea plantations in North Bengal is slightly similar to North-East India especially Assam. The small-scale plantations begun during 1990s in both the states, Assam and North Bengal, and they share the common colonial history of plantation agriculture and geographic continuity. Traditionally, tea cultivation in India started during the colonial period when large tracts of waste lands and forest lands were available in sparsely populated areas of Assam and West Bengal (Bhowmik & Sarkar, 1998; Hannan, 2006). These plantations were managed and run by the corporate sector as a composite enterprise and carried the tag of enclave character where participation of local labour was negligible or absent. The state of West Bengal was not an exception to this process of development during colonial times. Here the traditional tea growing areas are confined in Jalpaiguri and Darjeeling districts and are divided into three sub-regions, namely Darjeeling Hills, Dooars and Terai as per Tea Board of India. The tea growing area in Jalpaiguri district is known as Dooars, and the plains of Darjeeling district are known as Terai. According to the Labour Gazette (1994), there were 275 tea estates in West Bengal with an area of 94,386.62 ha (Table 2.2). According to some other estimates (2002), there were 277 estate gardens registered under Plantation Labour Act 1951 extending an area of 103,950 ha, producing about 169.90 million kg tea (Government of West Bengal, 2004). Initially, these areas were not considered suitable for tea plantations and were sparsely populated with a low supply of availability of local labour. Therefore, plantations faced the problem of labour shortage during the formative years and remain dependent on migrant labour whose migration had to be induced by the planters themselves. As a result, the entire labour force in traditional estate plantations in West Bengal comprises of immigrants and their descendants. The workers in Dooars and Terai are tribal mainly brought from central India of Chota Nagpur and Santhal Pargana regions of Jharkhand and contiguous tribal areas extending from Orissa to Madhya Pradesh. Roughly half the population constitutes Oraons and the rest comprising Munda, Kharia, Santhal, Lohar, Baraik, etc. Around 20% of the labour force comprises of immigrants from Nepal who belong to different caste groups (Bhowmik & Sarkar, 1998). All the workers and their families are now permanently settled in their respective regions and have little or no contact with the places of their origin. The labour absorption rate in traditional tea estates is 2.36 persons per hectare in West Bengal, but it varies from hills to plains. In Darjeeling Hills, it is 2.82 persons per hectare, while Siliguri Plains represent lowest as 2.01 persons per hectare. The topography and slope gradient have a direct relationship of manpower requirement in the tea plantations and it is evident from Table 2.2. It is worth revealing that during the late 1980s and early 1990s small-scale tea areas in North Bengal were predominantly used for pineapple cultivation. The farmers switched over to tea cultivation in their fields due to inaccessible market for the pineapple (Hannan, 2006, 2013) since it is a perishable crop and a ripe pineapple cannot be kept for long and transported over a long distance. There was no readily available local market for pineapple besides household-level consumption in local

2.3 Regional Dimension of Smallholder Tea Economy in India

35

Table 2.2 District/region-wise distribution of traditional tea gardens in North Bengal [1994] Districts/regions

Number of tea estates

Area under tea plantations (ha)

Share of tea area to gross area of estates (%)

Total daily rated permanent workers (labour/ per ha)

Siliguri

56

14,162.05

62.75

28,966 (2.01)

Darjeeling Hills

65

14,365.44

46.74

40,513 (2.82)

121

28,527.49

53.52

69,479 (2.44)

Darjeeling Malbazar

45

17,973.15

59.40

46,366 (2.58)

Jalpaiguri

59

24,758.00

56.04

51,263 (2.07)

Alipurduar

50

23,127.98

61.99

55,414 (2.40)

Jalpaiguri

154

65,859.13

58.93

153,043 (2.32)

North Bengal

275

94,386.62

57.19

222,522 (2.36)

Source Computed from Plantation Workers in West Bengal, Labour Gazette (1994) Table 2.3 Area, production, no of STGs and yield in small tea plantations (STPs) States

No of STGs

Area (ha)

Assam

66,804

89,924

Tripura

1470

Manipur

427 3

Production (Th. kg)

Average size of holdings (ha)

Yield (kg/ha)

106,881

1.35

1189

1678

535

1.14

319

1200

47

2.81

39

17

NA

5.67

NA

38

210

282

5.52

1343

Nagaland

1451

1800

141

1.24

78

Meghalaya

1014

415

120

0.41

289

269

388

NA

1.44

NA

North-East India

71,476

95,632

108,006

1.34

1129

West Bengal

10,160

11,327

63,553

1.11

5656

980

1973

1065

2.01

540

70

746

103

10.65

138

3656

1653

105

0.45

64

North India

14,866

15,699

64,826

1.06

4129

Tamil Nadu

68,836

48,119

82,529

0.70

1715

6046

4882

1891

0.81

387

14

64

205

4.57

3203

Sikkim Arunachal Pradesh

Mizoram

Bihar Uttaranchal Himachal Pradesh

Kerala Karnataka South India All India

74,896

53,065

84,625

0.71

1595

161,238

164,396

257,457

1.02

1566

Source Based on unpublished data gathered from Tea Board of India and Hannan (2017)

36

2 Emerging Unorganized Sector of Tea Economy in India

hats and sell through a sole pineapple market situated at Bidhannagar in the district of Darjeeling (Hannan, 2019). Thus, the absence of access of proper market for the huge pineapple growing area and denial of processing technology led the pineapple growers to face difficulties to sell their products. Moreover, most of the products were sent outside to distant cities like Kolkata, Delhi, Mumbai, Kanpur, Agra, Nagpur, etc., with the help of middlemen or commission agents and it was inadvertently involving an ‘army of middlemen’ each taking a bulk share of their produce (Hannan, 2018). Consequently, the presence of middlemen placed unnecessary burden on pineapple growers which in turn carried its own share of uncertainties in the cultivation of pineapple. Thus, the resultant outcome was that the vast tracts of pineapple growing areas had to submerge and convert the landscape into a new commercially viable crop like tea. Subsequently, the small-scale plantations grew and spread in different parts of North Bengal in the last two decades of the twentieth century (Hannan, 2006). Hence, the emerging small-scale tea sector was spread beyond the traditional teaproducing areas of North Bengal. The small-scale sector found very little virgin high lands and most of the land occupied and used by the STGs may be considered as second grade land for tea cultivation (Hannan, 2006). The most suitable land already occupied by estate gardens during pre-independence period. Thus, the Unorganized sector includes following categories of land: (a) virgin land, (b) crop replaced land, (c) marginal land and (d) unsuitable land (Chakraborty, 2005). Now they are found in Darjeeling, Kalimpong, Jalpaiguri, Alipurduar, Cooch Behar and Uttar Dinajpur districts. The Chopra block of district Uttar Dinajpur is considered as birth place of small-scale tea plantations, and gradually over the years, it was spread in other localities later, i.e. Sadar, Rajganj, Mainaguri and Malbazar in district Jalpaiguri; Islampur and Goalpokhar in district Uttar Dinajpur; and Mekhliganj in district Cooch Behar, Mirik in Darjeeling and Gorubathan in Kalimpong (Hannan, 2006). Their land holdings are small and tea is cultivated in scattered small patches of land; at times, it is uneconomic too due to its size (Hannan, 2018). There are uncounted tiny growers and low economies of scale of their operations and production structure do not permit them to afford to transport green leaf to tea factory. It requires government initiatives to improve their scale economy and incentivize them to cluster and organize into cooperatives or collectives or Self-Help Groups (SHGs). The STGs are apprehensive about the attitude of the Estate Factories and BLFs towards the monopoly and control over the green leaf market. The kind of trade relations exist in the tea supply chain has been dealt in the third chapter separately.

2.4 Spatio-Temporal Pattern of Small Tea Growers (STGs) in India As reported earlier that the small-scale tea sectors in India have gained importance over the years, they contribute around 50% of tea production. As per Tea Board of India (2005), there were almost 1.26 lakh STGs in India contributed roughly 20% tea

2.4 Spatio-Temporal Pattern of Small Tea Growers (STGs) in India

37

production in the country (Hannan, 2013). This figure further reached to 1.61 lakh growers with planted area of 164,396 ha over the years (Table 2.3). Their geographical spread is found in fifteen states (Map 2.1). The states are Arunachal Pradesh, Assam, Manipur, Mizoram, Nagaland, Meghalaya, Sikkim and Tripura in ‘North-East India’; Bihar, West Bengal, Uttaranchal and Himachal Pradesh in ‘North India’; and Tamil Nadu, Kerala and Karnataka in ‘South India’ (Hannan, 2017). The Tea Board of India announced the expansion of new tea growing areas and promoted the STGs in the vicinity of tea estates conceptualizing the idea of ‘nucleus tea estates’ during the 8th Five Year Plan (Bhowmik, 1991). Gradually due to demonstration effect and growth, small-scale sector expanded in other areas too. Conversely, the failure to receive a better return from other crops, fruits and vegetables such as pineapple, potato, orange, areca nut and spices was the driving force to the farmers who grow tea and venture it as profitable business in these states (Hannan, 2017). It was found that small and fragmented land holdings compromise their position and visibility in green leaf price determining process with the BLFs and Estate Factories. Moreover, the perishable nature of crop and their dependency to the processing factory dictates the monopoly market principles in the lower end of tea supply chain and always receive the pass on price of their product. The gap between green leaf plucking time and tea processing is inversely related to quality tea production and it degrades within 3–4 hours of plucking which reduces the bargaining capacity and chances of better price realization (Hannan, 2017). Therefore, the linkages of factories and STGs having transparent trade relations are the necessity if the small-scale sector has to survive in long run; otherwise farming community might look for other alternatives as happened in past. It should be reported that the STGs situated in different states of India are not registered with the Tea Board of India and there are differences of the data published by the Tea Board and the information provided by the regional level Small Tea Grower Associations (Hannan, 2017). This scenario in the states of North-East and North India is self-revealing when one visits in tea growing areas during the peak crop harvesting period. They are found and visible only while trading their green leaf to the leaf agents (middlemen) and are highly unregulated and scattered. It was also noticed that most of the tiny growers are not connected with local level tea associations (Hannan, 2008, 2017). Simultaneously, it should be reported that the growth of small-scale sector brought new employment opportunities to the rural people in the backward areas and regions in India (Hannan, 2017). Unlike the estate sector, the small growers employ labourers from their vicinity and surrounding villages. The incidence of out-migration is reduced in the small tea growing villages as compared to other villages within the same localities. It is also found that dependents of labourers in estate garden also migrate in search of job to STGs gardens to find an alternative work and employment and this is common particularly from lower Assam to North Bengal. It is shown in Table 2.4 that there is a rapid rise of Unorganized Sector in Tea Industry during 1998–2019. The production of made tea increased from 91.36 million kg to 653.55 million kg. The tea planted area under the Unorganized sector also rose from 68,598 to 215,886 ha. During the corresponding period, the Organized sector

38

2 Emerging Unorganized Sector of Tea Economy in India

Map 2.1 Geographies of smallholder tea economy in India

2.4 Spatio-Temporal Pattern of Small Tea Growers (STGs) in India

39

declines in production from 782.74 million kg to 696.49 million kg though the planted area of tea is increased from 405,429 to 420,670 ha. This indicates the productivity decline per unit of land in the organized sector which points out to the old bush age, whereas the Unorganized sector consists of young plants of less than 30 years. It produced around 260.36 million kg out of a total made tea of 986.42 million kg in 2007 which was 26.39% in India (Tea Board of India, 2007). In 2014, it increased to 398.04 million kg out of a total tea of 1207.31 million kg and the share was 33% at the national level (Hannan, 2017). This picture further moved to 48.41% of tea production in 2019. In fact, some of states produced more than 50% of tea production of their state total and these were Arunachal Pradesh, West Bengal, Bihar, Himachal Pradesh, Tamil Nadu and Nagaland. If this trend continues, very soon the small-scale sector would contribute larger share in tea production compared to estate sector. It gives an indication that the future of tea industry relies on STGs in days to come if proper policy attention and institutional response are given to this sector (Hannan, 2017). The state-wise distribution of BLFs and CPFs in India is described in Table 2.5. In terms of location of factories, three states are highly concentrated and agglomerations are found in ‘Assam’ with 206 factories, followed by ‘Tamil Nadu’ with 165 factories and 85 factories in ‘West Bengal’ (Hannan, 2017). The other striking picture is evident in case of the distribution of CPFs in various states in India. In the year 2017, there were 511 factories in India, and out of this, 489 are BLFs and 22 are CPFs. The distribution of CPFs was found in ascending order such as: 15 in Nilgiris of Tamil Table 2.4 Sector-wise growth of area and production in Tea Industry in India Years

‘Unorganized sector’ No of STGs (up to 10.12 ha)

Area (ha)

1998

86,517

68,598

1999

97,267

2000

110,396

2001

‘Organized sector’ Production (M kg)

No of estates

Area (ha)

Production (M kg)

91.36

1598

405,429

782.74

83,152

111.25

1600

407,048

714.68

97,598

134.53

1614

406,768

712.39

113,650

NA

148.99

1614

NA

704.93

2002

126,167

NA

169.44

1634

NA

669.03

2003

127,366

109,198

199.37

1661

410,400

678.75

2004

127,366

110,787

229.58

1661

410,616

663.38

2005

139,041

142,985

236.70

1672

412,626

709.27

2006

141,544

154,099

254.93

1673

412,921

726.87

2007

157,504

162,431

260.36

1686

416,027

726.06

2014

NA

NA

398.04

NA

NA

809.27

2018–19

210,225

215,886

653.55

1569

420,670

696.49

Source Computed from Tea Statistics of 1999–2000, 2000–2001, 2003–2004, 2005–2006, 2019 and WEBSITE of Tea Board of India; Hannan (2017)

40

2 Emerging Unorganized Sector of Tea Economy in India

Table 2.5 Distribution of bought-leaf factories (BLFs) and cooperative factories (CPFs) States/regions

No of BLFs and CPFs 1998

1999

2000

2001

2002

2003

2004

2005

2006

2007 206

Assam

61

75

105

119

139

152

163

192

204

Tripura

9

10

NA

NA

2

2

2

3

3

3

Arunachal Pradesh

NA

NA

NA

NA

NA

4

5

10

10

10

Nagaland

NA

NA

NA

NA

NA

NA

NA

1

1

1

Meghalaya

NA

NA

NA

NA

NA

NA

1

2

2

2

North-East India

70

85

105

119

141

158

171

208

220

222 85

West Bengal

22

29

46

46

56

69

79

85

85

Bihar

NA

NA

NA

NA

1

1

1

2

2

2

Uttaranchal

NA

NA

NA

NA

1

1

1

2

2

2

Himachal Pradesh

4

4

4

4

4

4

14

14

14

14

North India

26

33

50

50

62

75

95

103

103

103

Tamil Nadu

168

168

173

172

175

197

200

165

165

165 20

Kerala

13

13

8

9

14

18

20

20

20

Karnataka

Nil

Nil

1

1

1

2

2

2

1

1

South India

181

181

182

182

190

217

222

187

186

186

All India

277

299

337

351

393

450

488

498

509

511

Note After the publication of ‘Tea Digest: 2008–09’, the latest ‘Tea Statistics-2019’ is published recently where the state-wise details of BLFs and CPFs are not given Source Based on Tea Statistics of 1999–2000, 2000–2001, 2003–2004, 2005–2006 and Tea Digest 2008–2009, Tea Board of India, Kolkata; Hannan (2017)

Nadu, four (4) in Himachal Pradesh, two (2) in Kerala and one (1) in Assam (Hannan, 2017). There were no CPFs found in West Bengal and Tripura that give an impression of the provincial government in these two states. Recently three SHGs-led factories have been established by STGs in Dooars region of West Bengal and the credit goes to Jalpaiguri STGs Association for such initiatives. However, in North-East the CPFs have not received much attention so far though in the hill states of the region people live in commune and it is easy to have such kind of collectives. Therefore, a proactive role and initiatives of Tea Board of India wants to promote and upgrade this sector. The absence of cooperatives and lack of collective effort and actions in establishing tea processing factories have an indirect impact in monopolizing green leaf market by the BLFs in North-East as well as North India (Hannan, 2017). Contrary to that, the number of factories has been increasing constantly and it was threefold from 70 to 222 in ‘North-East’ and fourfold in ‘North India’ from 26 to 103 during the period from 1998 to 2007 (Hannan, 2017). In South India, it grew from 181 to 186 during the corresponding period. However, currently the number of BLFs is increased from 511 to 571 in India (CISTA, 2019). But their regional distribution is not given in ‘Tea Statistics-2019’; therefore, it is difficult to illustrate the state-wise distribution as depicted in Table 2.5.

2.4 Spatio-Temporal Pattern of Small Tea Growers (STGs) in India

41

The data of BLFs and CPFs and the share of production of made teas are available in Tea Statistics since 1998, but there is absence of information of BLFs and CPFs due to non-publication of Tea Statistics by Tea Board of India from 2007 to 2018. Secondly, the percentage share of made tea production by the Unorganized sector is estimated taking into account of production of BLFs and CPFs only. But it does not show the actual production contribution of this sector as STGs sell green leaf to Estate Factories and it is recorded under the production of estate sector only (Hannan, 2017). In fact, many of the Estate Factories purchase huge volume of green leaf to use the optimum production level of their factories since their productivity is low due to old bush ages. Therefore, real contribution of made tea production of STGs would always be higher than what has been described. There is an absence of research studies and gathering of panel or time-series data relating to the Unorganized sector of tea economy, their spatial distribution, farm-gate price realization, training and capacity building, skill formation in tea husbandry and marketing and brand development. This situation augments the sectoral growth despite contributing 50% of made tea production in the country. Though the shortcomings are many, yet from known sources of data and production contribution is described in Table 2.6. If one looks back of last twenty years from 1998 to 2018–19, the overall production of made tea of Unorganized sector increased from 91.36 million kg to 653.55 million kg. During the same corresponding period, the North-East India reported an increase from 22.03 million kg to 323.71 million kg; North India reported from 8.38 million kg to 220.39 million kg; and South India from 60.95 million kg to 109.45 million kg (Hannan, 2017). The regional level trends indicate the high growth of this sector is found in North and North-East India over the years. The state of Assam and Arunachal of North-East have substantial increase in production whereas Bihar and West Bengal in North Indian states represent highest growth of the small-scale production of tea. The rapid rise, growth and expansion of small-scale tea cultivation, and various new types of organizations came in existence to fulfil the need and requirement of the Unorganized Sector of tea industry over the years. All of these innovated institutions have different levels of their interference and exchanges of deliveries in the tea supply chain. They can be summed into five categories: (a) ‘Cooperative Factories’ (CPFs); (b) ‘Bought-Leaf Factories’ (BLFs); (c) ‘Tea Producing Societies’ (SHGs); (d) ‘Small Tea Growers Associations or Federations’; and (e) ‘Agro-Medicines and Fertilizer shops’ (Hannan, 2017). The detail discussion of these institutions has been dealt in fifth chapter. Let us examine the employment pattern and livelihoods engaged in this upcoming sector since tea is a perennial crop and labour-intensive industry. And for the quality production at the farm level, it requires regular workforce for managing good health of plants for better crop harvesting and fine plucking which ultimately result into good quality made tea for human consumption.

NA

NA

NA

Bihar

30.02

14.20

8.38

North India

NA

67.03

111.25

NA

60.95

91.36

Karnataka

South India

All India

134.53

78.68

0.22

1.90

76.56

17.72

0.82

NA

NA

16.9

38.13

NA

NA

NA

0.45

37.68

2000

148.99

81.02

0.24

2.11

78.67

24.93

0.56

NA

NA

24.37

43.04

NA

NA

NA

0.44

42.60

2001

169.44

80.60

0.23

1.75

78.62

33.97

0.44

0.02

0.07

33.44

54.87

NA

NA

NA

1.58

53.29

2002

199.37

93.08

0.07

3.15

89.86

38.39

0.41

0.02

0.22

37.74

67.90

NA

NA

1.03

1.51

65.36

2003

229.58

98.76

0.12

3.80

94.84

50.31

0.45

0.02

0.25

49.59

80.51

0.09

NA

1.30

1.47

77.65

2004

236.70

85.52

0.06

3.18

82.28

56.09

0.47

0.12

0.28

55.22

95.09

0.10

NA

1.33

1.97

91.69

2005

254.93

90.01

0.21

3.04

86.76

59.85

0.55

0.12

0.18

59.00

105.07

0.14

NA

1.27

2.08

101.58

2006

260.36

87.17

0.18

2.88

84.11

64.53

0.53

0.12

0.33

63.55

108.66

0.15

NA

2.80

2.78

102.93

2007

653.55

109.45

0.27

11.12

98.06

220.39

0.48

–

4.35

215.56

323.71

0.46

1.68

7.78

2.24

311.55

2018–19

Source Based on Tea Statistics of 1999–2000, 2000–2001, 2003–2004, 2005–2006, 2019 and Tea Digest 2008–2009, Tea Board of India, Kolkata; Hannan (2017)

65.50

1.53

59.30

1.65

Tamil Nadu

Kerala

0.71

NA

0.95

Uttarakhand

Himachal Pradesh

13.49

22.03

7.43

NA

North-East India

NA

Meghalaya

NA

NA

West Bengal

NA

NA

Arunachal Pradesh

Nagaland

0.70

29.32

21.43

0.60

Assam

1999

1998

Production of tea (Million kg)

Tripura

States/regions

Table 2.6 Regional pattern and growth of smallholder made tea production in India

42 2 Emerging Unorganized Sector of Tea Economy in India

2.5 Employment and Livelihoods in Tea Industry

43

2.5 Employment and Livelihoods in Tea Industry As a known fact that, the tea industry is labour intensive and employs regular labour throughout the year from the villages adjacent to the tea estates, it has a standard provision of wage negotiating mechanisms and collective bargaining process which has evolved in post-independence period regulated by the Plantation Labour Act (Hannan, 2017). Table 2.7 shows that the organized sector of tea industry is confined to six states of India. These are: Tripura and Assam in North-East; West Bengal in North India and Kerala, Karnataka and Tamil Nadu in South India (Hannan, 2017). There are around 1.25 million of labourers employed in Organized sector out of which almost fifty per cent of them are in Assam and Tripura and approximately twenty per cent in West Bengal and ten per cent Tamil Nadu (Hannan, 2017). In addition to that, there are 1.24 million dependents of the regular labourers reside in tea estates. Hence, estimated populations of 2.50 million are directly and indirectly dependent and derive their livelihood from Organized sector of tea economy in India (Table 2.7). Apart from this, there is seasonal labour employed by the estate gardens during the peak plucking season for shorter period of 3–4 months and known as Thika workers or piece-rated workers. In census category, they are defined as marginal workers who work less than a period of 180 days in a year. So, if we add this component of seasonal workforce, and another a million may be joining the estimated employment in the Organized sector. As shown in Table 2.7 that the Unorganized sector has a recent past, even it crosses the estimated population and workforce in comparison with Organized sector adding to 2.51 million people (Hannan, 2017). Its geography is much wider and spread over as many as fifteen states. All the eight states of India’s North-East grow small-scale tea. It extends in Bihar, West Bengal, Uttarakhand and Himachal Pradesh in North India; and Kerala, Karnataka and Tamil Nadu in South India (CEC, 2007; Hannan, 2007). The working conditions and employment pattern are different in Unorganized sector and mostly verbal in nature except few large farms who employ more than twenty labourers. In most of the tiny and small farms, there is a predominance of family labour. Some of the farms also have hired labour within the villages or their nearby villages. The STGs engage hired labourers according to their need as per the demand of various activities in the production and management of tea fields. Unlike the estate tea gardens who normally employ regular workforce throughout the year and most of them leave in the plantations, the employment ecosystem in STGs gardens are different. Hence, the composition of hired labourers, self-engaged STGs and their dependency levels, and associated livelihoods is estimated and worked out to be 2.51 million people in India (Hannan, 2017). The estimation is calculated and arrived by devising a method: the (i) number of STGs plus, (ii) area under tea multiplied by per hectare labour absorption rate in different states and (iii) dependency is computed by adding STGs and labourers multiplied by the average household size of Census of India, 2011 (Hannan, 2017). There is also an existence of bi-partite agreement and negotiating mechanism of wages and work schedule in small-scale sector. The local level trade unions and

44

2 Emerging Unorganized Sector of Tea Economy in India

Table 2.7 Employment pattern and livelihoods in Tea Industry in India States/ regions

‘Organized sector’

‘Unorganized sector’

Labourers Bonafide Dependency STGs engaged dependents level

Assam

619,743

675,626

1,295,369

Tripura

11,631

9890

21,521

Manipur

NA

NA

NA

Labour Labourers Dependency absorption engaged level

66,804 179,848

246,652

1,208,595

1470

3356

4826

21,041

427

3660

4087

21,947

Sikkim

NA

NA

NA

3

52

55

260

Arunachal Pradesh

NA

NA

NA

38

641

679

3582

Nagaland

NA

NA

NA

1451

5490

6941

34,358

Meghalaya

NA

NA

NA

1014

1266

2280

12,561

269

Mizoram

NA

NA

NA

1183

1452

7160

North-East India

631,374

685,516

1,316,890

71,476 195,496

266,972

1,309,506

West Bengal

262,039

327,753

589,792

10,160

35,986

163,734

Bihar

25,826

NA

NA

NA

980

4498

5478

30,022

Uttaranchal NA

NA

NA

70

2275

2345

11,891

Himachal Pradesh

NA

NA

3656

5042

8698

40,357

NA

North India 262,039

327,753

589,792

14,866

37,641

52,507

246,004

Tamil Nadu 266,355

165,261

431,616

68,836 157,830

226,666

883,999

67,907

158,482

18,251

79,027

Kerala

90,575

Karnataka

4540

South India 361,470 All India

701

5241

233,869

595,339

1,254,883 1,247,138

2,502,021

6046

12,205

14

136

150

695

74,896 170,171

245,067

963,720

161,238 403,307

564,546

2,519,230

Note The formula applied for estimation of workforce is given in endnotes (i) at the end of this chapter Source Based on ‘Tea Statistics’ and unpublished data gathered from Tea Board; Hannan (2017)

STGs associations participate in annual basis and finalize their wages and bonus to the labourers. This practice is common particularly in West Bengal. The scenario of small-scale cultivation and increasing trends of employment opportunity in backwards pockets of our country is very encouraging. Though its traceability is found only in 1990s in North and North-East, tremendous possibility of growth of this sector is visible if appropriate policies are designed to restore livelihoods and improve their economies of scale. It is also to be highlighted that the North-East is considered as backward region of our country and special provisions are made to attend the region with special focus and creation of North-Eastern Council. It is also found that in the North-East alone around 1.30 million people are dependent in the Unorganized sector of tea industry despite its short history and many odds. It should be reported that in South India, there has been regular support to this small-scale cultivation since 1960s by the state of Tamil Nadu (Hannan, 2017, 2020c). Currently, 16 Industrial

2.6 Market Structure of Unorganized Sector in Tea Industry

45

Cooperative Factories (INDCO) are functional in Nilgiris which has given an organized platform to STGs in the state. The response of Government of Tamil Nadu is encouraging and an attempt to provide a market security to the STGs by organizing them into cooperatives and funding for their promotion. They are supported by collective production and processing of green leaf, better farm management and bulk input facility, credit provisioning, benefit and profit sharing, etc. (Hannan, 2017). Such kind of proactive role and responses are lacking by the states of North-East and North India particularly Assam, Arunachal Pradesh, Nagaland, West Bengal, Bihar, etc., where there bulk of tea is produced in Unorganized sector.

2.6 Market Structure of Unorganized Sector in Tea Industry There seems to phenomenal growth of Unorganized sector in North and India’s North-East particularly Assam and North Bengal. It has shown encouraging presence over the last three decades particularly when tea prices were boom during 1998–99 and tea prices were remunerative (Banerjee, 2011; Hannan, 2017). As the STGs produce their intermediary product, i.e. green leaf , it has to be processed in a factory to convert it into made tea before it is available for human consumption. Therefore, they are dependent on tea processing factories for the sale of their product. On the other, the perishable nature of the item makes the farmers reliant on tea factories. Under the circumstances, the physical distance between farm and factory, site and location of processing unit, road connectivity, transportation facility and presence of leaf agents (middlemen) is inversely related to quality tea and remunerative return and farm-gate price realization of STGs. It has been evident from the field survey that there is an absence of trade linkages between tea factories and STGs. Here the role of Tea Board and its SROs is important to facilitate such an arrangement for healthy development of this sector. There are four types of tea factories which are engaged in leaf trade from the smallscale tea growers: Estate Factories, BLFs, CPFs and SHGs run factories (Fig. 2.1). However, the first two types of factories are having monopoly in purchasing and trading green leaf in all the small-scale tea growing states in India at present. The INDCO CPFs are situated in Nilgiris yet BLFs dominate the green leaf market. A handful of SHGs run factories have been established in Dooars region of West Bengal yet their market share is negligible at the moment. Hence, the first two categories of factories buy major portion of green leaf indirectly through leaf agents or middlemen (Hannan, 2017). The direct trade linkage between factories and STGs exists in those areas where STGs are organized into collectives and do business together under the SHGs, an umbrella organization of growers. But the numbers of SHGs are very low in number, and therefore, visibility of them in influencing green leaf market found to be less significant. However, the formation of SHG is a bit of success in southern states particularly Kerala and Tamil Nadu as there is co-existence of INDCO cooperatives since 1960s. It is found that STGs are aware of the benefits of cluster approach and sensitive towards group approach in the bargaining process.

46

2 Emerging Unorganized Sector of Tea Economy in India

Fig. 2.1 A schematic model showing tea supply chain tea in India. Source cited from Hannan (2017)

The price-sharing formula was introduced by Tea Board of India (2004) based on the Sri Lankan experiences (Hannan, 2006). The cost of production of made tea is to be shared between the growers and factories. As per the formula, the final sale of CTC teas is to be shared between the STGs and the factories at the ratio of 60:40 which is presently 58:42 (Hannan, 2013, 2017). But the field evidences suggest that unorganized and scattered nature of STGs, remote locations, uneven and unscientific distribution of BLFs over large geographic space, absence of trade agreements and linkage between BLFs and STGs, and unfair trade practices lead to low farm-gate price realization (Hannan, 2017, 2020a, 2020b). The unaccounted growth of leaf

2.7 Concluding Remarks

47

agents (middlemen) also finds respectable share in green leaf trade. In fact, at times they become a hurdle for direct business between factory and farm and have their political cloud locally. The Tea Board has introduced the scheme of SHGs formation and incentives since 10th plan period, yet very few SHGs have been established in the states (Hannan, 2017). It is reported that more than 50% tea is produced by the Unorganized sector of tea industry, yet they are invisible in tea processing and marketing or developing their own brands till date.

2.7 Concluding Remarks There has not been a substantial progress towards developing the grass-roots level institutions for safeguarding the Unorganized sector so far. Despite their voluminous growth, there is no planned budgetary allocation for this sector. Most of STGs are invisible in the tea supply chain and unaware of the demands and requirements of the market. There is an urgent need to bring STGs into collectives either in the form of SHGs or Cooperatives and skilling their capacities to enterprise development to tap the opportunities of tea marketing and brandings. The grass-roots initiatives and local level institutions can bring them sustainable business and better fair price for green leaf. It would not be exaggerated to say that if SHGs and Cooperatives are instituted, the small-scale sector would diversify rural economy by utilizing local resources, provide new employments and prevent rural–urban migration. The SHGs can enhance their competitive strength through raising economies of scale, networking and breaking market barriers, sharing common infrastructure, application and use of appropriate technology, accessing credit facilities and provide them a future model for tea production and livelihood security. The untapped local labour market can be optimized by ensuring better business and farm-gate price realization in this sector. Notes [i] With reference to Table 2.7: (A) ‘Organized Sector’: the ‘Dependency Level’ is calculated by adding Actual Labourers Employed in tea estates plus their bonafide dependents in the tea growing in India; (B) ‘Unorganized Sector’: the ‘Dependency Level’ is computed by adding the number of STGs, Area of Tea multiplied by per Ha Labour Absorption rate in the States, multiplied by average Household-Size as per Census of India, 2011. So, the formula applied is: [(No of STGs + (Per Ha Labour Absorption rate × Area under Tea) × Average Size of Household] (Hannan, 2017). [ii] The data and statistical information of tea industry are published by Tea Board of India. However, the publication of Tea Statistics was stopped after 2005–06. The latest ‘Tea Statistics 2019’ is published after a gap 13 years. Similarly, the publication of Tea Digest has been irregular. The Techno-Economic Surveys in various states used to be published by Tea Board of India earlier, which has

48

2 Emerging Unorganized Sector of Tea Economy in India

been discontinued. Hence, the researchers find difficulty to access secondary data at disaggregated district-level data on farming community, BLFs and their productions.

Chapter 3

Smallholder Tea Economy in Assam and North Bengal

Abstract This chapter analyses the nature of farms, holding-size distribution, land rights of STGs and procedural issues relating to their emergence in Assam and North Bengal. Though the smallholders came in existence in early 1990s, yet within a short span of time, they have become an important contributor in tea economy over the years in relations to production and employment provider in rural areas in both the states. Secondly, it highlights the role of state and how its various agencies have neglected the smallholders over the years either by provincial or by national governments. It further focuses on how Tea Board of India has failed to regulate the green leaf market in the tea supply chain and allowed the entry of an army of leaf agents (middlemen) to exploit the STGs in both the states vis-à-vis other Indian states. The Small Grower Development Directorate (SGDD) and Sub-Regional Offices (SROs) of Tea Board of India have inadequately implemented the Tea Marketing Control Order (TMCO) as per the Gazette Notification of Ministry of Commerce and Industry (2015). In fact, the composition of District Green Leaf Price Monitoring Committee (DGLPMC) and its monthly meetings and reporting, resolutions and disseminations are unheard by smallholders on ground. The officials of SGDD of Tea Board found ineffective in delivery of their extension services to the smallholder community in the field at large. It also analyses the policy failure of Price Stabilisation Fund Scheme of Ministry of Commerce and Industry, Government of India. It is also reported and found that there is an absence of linking Price-Sharing Formula of Tea Board with Price Stabilisation Fund Scheme and did not receive attention of smallholders to register under the scheme in most of the small tea growing states in India. Lastly, the local initiatives and development-from-below have resulted in tea processing and marketing either individually in Upper Assam or collectively in Dooars of North Bengal by progressive STGs and their Associations. Keywords Farm size · Leaf agents · Price stabilisation fund scheme · Price-sharing formula · TMCO · DGLPMC

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 A. Hannan, The Smallholder Tea Economy and Regional Development, https://doi.org/10.1007/978-3-031-51812-6_3

49

50

3 Smallholder Tea Economy in Assam and North Bengal

3.1 Smallholder Tea Economy in Assam and North Bengal The state of Assam and West Bengal enjoys a central position in tea economy in India, and both the states together contribute around 80% of tea production in the country. Assam shares of 50% and the rest 30% is produced in West Bengal (Tea Board of India, 2019). The geography of tea economy in Assam is spread over 27 districts whereas in West Bengal tea is confined in six northern districts popularly known as North Bengal. As mentioned earlier, there has been a transformation and sea change in tea economy particularly in 1990s in North and North-East India (Hannan, 2019b). A shift from estate economy to small-scale household economy took place in these years. The estates sector remains static and has become a colonial model of tea plantations of yesteryears. It has not only confined to Assam alone, but extends to the hill states of India’s North-East where tea was not grown traditionally except Tripura. Hence, the geography of tea plantations is undergoing changes in the North-Eastern part of the country. This has boosted local economy by providing new economic opportunities to the local unemployed youth and brought an attention to the regulatory authorities like Tea Board of India and the provincial and national governments. The small-scale sector is also competing with estate gardens for their co-existence and brings new challenges and policy dialogue. Unlike colonial estate sector, where labour and capital were brought from outside, the small-scale sector found its investment of capital and labour from local economy and emerged as alternative livelihood respecting to local geographic setting. Thousands of unemployed youth have taken up to venture tea cultivation as their means of sustenance and development. In fact, the major institutions regulating tea plantations since post-independence period are situated in Assam and West Bengal such as Tea Board of India, Tea Research Association, Indian Tea Association, Darjeeling Tea Research and Development Centre, Tea Auction Centres at Guwahati, Siliguri, Kolkata, etc. As per Tea Board of India (2017–18), the small-scale sector contributed 621.61 million kg tea out of a total 1325.05 million kg and the percentage share of Assam and West Bengal is 493.36 million kg tea which is 79.37% (Hannan, 2019b). The contribution of Unorganized sector in Assam is 285 million kg and West Bengal with 208.12 million kg of 42.18% and 53.66%, respectively. The size of the Unorganized sector is small in South Indian states with 112.60 million kg which is less than 20% in India though the STGs exists since 1960s. It is important to mention here that within a short span of 30 years, the small-scale sector in Assam and North Bengal has grown exponentially and competing to estate gardens. Under this context, the present chapter deals with the internal variations of farm size, land ownership pattern and rights, registration with Tea Board and procedural gaps, trade relations and opportunities in tea supply chain, institutional response and policy provisioning, etc., which facilitate STGs a better farm-gate price realization. Having this background and growing nature of STGs in Assam and North Bengal and the size of their economy, the current chapter tries to answer the following research questions: (A) Are the STGs in both the states having uniform farm size as defined by Tea Board of India? (B) How are the land ownership, land rights and spatial patterns of

3.2 Farm Size, Land Relations and Livelihoods in Assam

51

their distribution? (C) Is the trade relations between STGs and Factories allow better bargains to farming community? (D) Are the policies of regulating authorities and state governments congenial in protecting farmers and farm-gate prices of STGs? (E) What is the structure of green leaf market? (F) Do all the STGs receive equal access of market irrespective of their size? Is there any role played by middlemen in the tea supply chain?

3.2 Farm Size, Land Relations and Livelihoods in Assam The growth of small-scale sector is very fast in comparison with estate gardens in Assam. In 2007, there were 64,597 growers with tea cultivated areas of 88,674 ha which increased to 84,577 growers to an area of 78,203 ha in 2016 (Government of Assam, 2016). During the same corresponding period, the estate sector reduced from 825 gardens with 232,645 ha to 767 gardens to an area of 226,197 ha. As per Tea Board data in the year 2017–18 (Table 3.1), the STGs contribute 42.18% out of tea production in Assam and confined to 22 districts (Hannan, 2019a). At the same, the data of Government of Assam reported of their presence in 27 districts (Table 3.2). Though the geography of small-scale tea growers are wider in the state, but their high agglomeration is found in Dibrugarh, Golaghat, Jorhat, Sivasagar and Tinsukia. In these areas, the STGs mostly switched over from horticulture crops to tea cultivation over the years (Hannan, 2019). There were a total of 206 BLFs out of which 172 are situated in five districts only. There are sixty-eight in Tinsukia, fifty-one in Dibrugarh, twenty-four in Golaghat, fifteen in Jorhat and fourteen in Sivasagar (Tea Board of India, 2007). According to Baruah and Taparia (2004– 05), 90% of STGs are concentrated in five districts of Assam: 30.26% in Dibrugarh, 21.97% in Tinsukia, 13.42% in Jorhat, 12.44% in Golaghat and 11.08% in Sivasagar. In fact, upper Assam is known for hub of tea cultivation in the state. The ‘All Assam Small Tea Growers Association’ (AASTGA) has branches in all the districts and the state office is located at Dibrugarh. The Tea Board of India established ‘Small Growers Development Directorate’ (SGDD) at Dibrugarh in 2013 (Hannan, 2020b). Apart from this, ‘All Bodoland Small Tea Growers Association’ is headquartered at Kokrajhar and has branches under BTC areas of the state. In Assam, different types of land are being used and cultivated by the STGs. Except forest and reserve lands, technically Tauzi land (locally known as Tauzu Bahi) is known as government land but under individual occupation in exchange of nominal payment of rent to the government (Hannan, 2019a). For Tauzi, the occupant can pay land tax and revenues for the use. On the other, in the Myadi land the cultivator has ownership and rights as per legal provisions. Hence, the Myadi Patta holders are considered to be real ownership on land. There is third type of land known as Eksona, where the state has the ownership and it is an intermediate phase in providing ownership to the cultivators. There exist sizable number of STGs who occupy Tauzi land till date, and for such growers, Tauzi Patta or rent receipt is necessary for registering their farms with Tea Board of India (Hannan, 2019a). Sharma and Barua’s

52

3 Smallholder Tea Economy in Assam and North Bengal

Table 3.1 Regional and sectoral pattern of production of tea in India (2017–18) States/ region

Assam

No of districts

22

Tea production (M. kg)

(%) Share of tea (region/state)

(%) Share of tea (India)

Estate sector

STGs sector

Estate sector

STGs sector

Estate sector

391.07

285.24

57.82

42.18

Total 676.31

55.59

STGs sector 45.89

5

179.74

208.12

387.86

46.34

53.66

25.55

33.48

Sub-Total

27

570.81

493.36

1064.17

53.64

46.36

81.15

79.37

North-East India*

44

401.45

296.57

698.02

57.51

42.49

57.07

47.71

8

180.94

212.44

393.38

46.00

54.00

25.72

34.18

South India

14

121.05

112.60

233.65

51.81

48.19

17.21

18.11

All India

66

703.44

621.61

1325.05

53.09

46.91

100.00

100.00

West Bengal

North India**

Note The state of Assam is included in North-East* and West Bengal in North India** Source Based on the data accessed from Tea Board (www.teaboard.gov.in)

(2017) study found that the land cultivated by small-scale growers in the district of Biswanath can be divided into three categories: agricultural land (low and high), forest land and grazing land (Sharma & Barua, 2017). The Small Tea Growers are cultivating high lands. Again agricultural land can be grouped into three types considering ownership rights, i.e. Myadi, Tauzi and Eksona as mentioned earlier. The STGs also use agricultural and homestead land for tea growing which mostly falls under Myadi land. They also occupy forest and grazing lands (Tauzi) and use it for tea plantations. Similar study of Pachoni (2016) in Lakhimpur of Assam reported that the land utilized in small-scale tea plantations is of three types: Myadi land (permanently settled), Eksona land (yearly settled) and Tauzi land (Hannan, 2019a; Pachoni, 2016). The STGs use all three types of land for tea planting in the district. His study further mention that the STGs who cultivate on Myadi land or have documentary evidence of land ownership entitle to register their farms to the Tea Board and can avail financial support including soft loans and subsidies of the Board and other formal financial institutions and banks. A Directory of Small Tea Growers, the first of its kind, was published in Assam with the initiative of Government of Assam (2001) to address their problems and a policy response of their existence. It was based on field survey by the state government. The directory divided the entire state into three geographic regions: Brahmaputra valley, Barak valley and Hill areas. It showed that there were 28,585 growers with tea cultivated areas of 27,878 ha and the average size of farms is 0.98 ha. At that time, the Barak valley and Hill areas had very negligible STGs with 84 and three (3) with tea area of 105 ha and 27 ha, respectively. The report further moves on to highlight that the small-scale sector in the state produced 257.6 million kg out of entire production of 453.5 million kg. The number of labourers engaged was 103,308 persons and the average labour absorption rate per hectare is 3.61 persons which was

Area (ha)

–

Barpeta

1325.47

5566.93

3320

6526

380

Jorhat

Golaghat

K. Anglong

–

113.33

–

45

Hailakandi

Bongaigaon

–

–

–

–

Cachar

Karimganj

–

Dima Hasao (N C Hills) –

574.67

5723.07

5389.2

10,876

7047

Dibrugarh

13,789.47

–

Sivasagar

11,714

Tinsukia

262.27

448

–

Lakhimpur

Dhemaji

837.33

1412

Sonitpur

44.27

219.07

20

321

Morigaon

Nagaon

–

90.4

96.13

86

96

Dhubri

89.6

24

No.

2002–03 (AASTGA)

Goalpara

Kokrajhar

Districts

2.52

–

–

–

–

1.51

0.85

0.40

0.76

0.53

1.18

–

0.59

0.59

0.68

2.21

–

1.00

1.05

3.73

23

4

7

31

1

286

868

183

121

190

218

54

133

493

119

7

1

1

1

9

Farm size No.

60.3

23.84

36.28

127.7

4.68

1961.68

1905

247.87

332.01

490.05

496.52

111.42

349.15

1047.06

300.17

7.35

1.51

6.25

1.04

46.65

2.62

5.96

5.18

4.12

4.68

6.86

2.19

1.35

2.74

2.58

2.28

2.06

2.63

2.12

2.52

1.05

1.51

6.25

1.04

5.18

345.13

12.7

1.51

31.54

13.07

417.33

511.89

365.51

676.21

528.98

605.29

168.06

52

4

9

172

1

489

121.76

23.84

44.17

604.97

4.68

2627.29

1387 2715.62

194

290

208

265

80

266

1073 1896.96

145

7

1

13

3

115

2.34

5.96

4.91

3.52

4.68

5.37

1.96

1.88

2.33

2.54

2.28

2.10

1.92

1.77

2.38

1.81

1.51

2.43

4.36

3.63

447.74

1649.22

8677.09

1659.19

12.7

–

154.22

28.7

998.81

696

4

10

172

2

1520

9503

6366

595.9

23.84

57.5

604.97

10.22

3345.43

9160.06

6158.83

10,868 11,149.42

19,160 15,433.77

18,595 16,674.24

536

1815

8750

1032

7

–

154

13

335

Area (ha)

(continued)

0.86

5.96

5.75

3.52

5.11

2.20

0.96

0.97

1.03

0.81

0.90

0.84

0.91

0.99

1.61

1.81

–

1.00

2.21

2.98

Farm size

2014–15 (Regd. with Tea Board)

Area (ha) Farm size No.

As on 18.06.2012 (Regd. with Tea Board)

Area (ha) Farm size No.

As on 31.03.2006 (Regd. with Tea Board)

Table 3.2 District-wise number, area and farm size of small-scale tea gardens in Assam

3.2 Farm Size, Land Relations and Livelihoods in Assam 53

–

34,225.88

–

42,390

Udalguri

Assam

–

0.81

–

1.46

–

0.60

–

1.82

–

2927

–

162

–

8

–

7

–

Farm size No.

8088.97

–

476.07

–

29.42

–

26.95

–

2.76

–

2.94

–

3.68

–

3.85

–

121.27

502.05

75.6

29.42

–

30.55

–

5053 12,475.4

77

165

21

8

–

8

–

2.49

1.57

3.04

3.60

3.68

–

3.82

–

5029.63

2.83

339.56

–

2.4

29.42

4.78

84,591 82,250.47

4773

4

257

–

3

8

8

Area (ha)

0.97

1.05

0.71

1.32

–

0.80

3.68

0.60

Farm size

2014–15 (Regd. with Tea Board)

Area (ha) Farm size No.

As on 18.06.2012 (Regd. with Tea Board)

Area (ha) Farm size No.

As on 31.03.2006 (Regd. with Tea Board)

Source Based on unpublished data of AASTGA, Dibrugarh (2002–03); TBI-North-East Zonal Office, Guwahati (2006); Statistical Handbook of Assam (2012, 2016)

49.47

–

34

Baksa

9.6

16

Nalbari

Darrang

45.6

–

25

–

–

Kamrup

Area (ha)

No.

–

2002–03 (AASTGA)

Kamrup Metro

Chirang

Districts

Table 3.2 (continued)

54 3 Smallholder Tea Economy in Assam and North Bengal

3.2 Farm Size, Land Relations and Livelihoods in Assam

55

higher than the tea estates. They employed staffs of 5139 persons to supervise their tea fields and advice the labourers for daily field operations. Borah (2013) projected that around 2.40 lakh people are employed directly in the small-scale tea sector in the state of Assam and it consists of ‘family labour’, ‘labour from neighbouring tea estates’ and ‘sub-staffs’ (Borah, 2013; Hannan, 2019a). She also mentioned of 220 Bought-Leaf Factories (BLFs) which purchase and process green leaf to made tea in the state. On an average, each factory employs roughly 20–25 workers with various shifts during peak season and the actual numbers of STGs were 68,465 with plantation area of 118,058.30 ha. Table 3.2 represents the district-level growth of STGs, area and farm size during four time periods: 2002–03, 2006, 2012 and 2014–15. The overall farm size declines over the years in the state from 0.81 ha, 2.76 ha, 2.49 ha and 0.97 ha except 2002– 03. However, the All Assam Small Tea Growers Association (AASTGA) and their membership may not reveal the much on ground during formative years. But in successive years the registration of growers in the state has improved. The continuous efforts of AASTGA, Government of Assam and Tea Board of India have made STGs visible in government records which itself can be considered a success. Though there existed 42,390 growers in 2002–03, registered STGs with Tea Board were only 2927 (2006) and 5053 (2012) but within four years it increased to 84,591 (2014–15). This indicates that Government of Assam was successful in clearing and regularizing land records in the state, and due to this, the STGs could register in Tea Board. The second observation is evident in Table 3.2 that they may be widely spread and situated in twenty-seven districts of Assam, yet the highest concentration of farming is found in Dibrugarh, Golaghat, Jorhat, Sivasagar and Tinsukia. This has resulted into agglomeration of industry by having highest number of BLFs in these districts only. This region is geographically contiguous and shares district boundary of each other. It has a similarity of the principles of effect of agglomeration on geographic space as propounded by Weber’s (1909) concept of industrial location (Knowles and Wareing, 2012). Thirdly, the farm size is relatively high in tribal areas particularly in Kokrajhar, Karbi Anglong, Dima Hasao and Cachar with 2.98, 2.20, 5.11 and 3.52 ha, respectively. Similar observations are also seen in the districts of Barak valley, i.e. 5.75 and 5.96 ha in Karimganj and Hailakandi. Fourthly, there is an absence of cooperatives in the state though there are STGs agglomerations in existence. However, there are differences of opinions and the number and area of small-scale gardens are more as claimed by AASTGA and Tea Board of India. It is known from the field interaction that the tiny and marginal farmers are registered with Tea Board and they are visible and more connected to leaf agents. Such types of holdings and growers find difficulty in maintaining paper work and uneconomic too. However, land department of Government of Assam can focus on them and regularize their land records. Visibility of them is low and unnoticed at times. To address it, initiative of state government is important to organize them into collectives either in the form of SHGs or Cooperatives in necessary for the overall growth of this small-scale sector in the state. Baruah and Taparia (2004–05) classified the STGs into nine categories considering their farm size (Table 3.3). If his classification is divided into groups as per size of 0–4

56

3 Smallholder Tea Economy in Assam and North Bengal

and 4–10 ha, a noticeable distribution is observed. It is found that 84.76% growers are less than four hectares in the state while rest 15.24% is having farm size of 4–10 ha. This distribution has lot to say in policy response of the Tea Board of India and Government of Assam. This is also related to the Price Stabilization Fund Scheme of Government of India designed by Ministry of Commerce (2003–2012). Theoretically, all the growers less than four hectares, i.e. 84.76%, should have been enrolled under the scheme in the state as it offered to register up to four hectares. Since there were 84,591 growers (2014–15) registered with Tea Board of India, an estimated of 71,699 growers would have been enrolled. However, 3194 growers were enrolled under the scheme (Hannan, 2019a; Tea Board of India, 2008). It is again evident that the macro-policies of the regulatory agencies and government would impact only when there is a presence of grass-roots initiatives. The success of the scheme over the years would have brought market transparency in tea supply chain and better realization of farm-gate prices of green leaf, which has not happened. Sharma and Barua (2017) found in their study while conducting in the districts Behali and Biswanath Chariali and reported that the land relations in small-scale tea sector are not uniform and can be grouped into six types: (i) ‘non-cultivating landowners’ (> 25 acres), (ii) ‘semi-middle peasants’ (10–25 acres), (iii) ‘middle peasants’ (5–10 acres), (iv) ‘small peasants’ (2–5 acres), (v) ‘marginal peasants’ (< 2 acres) and (vi) landless as wage labour (Hannan, 2019a). They further point out that the first three types are landowning class and have sound economic protection. The 4th and 5th types have small holding size which do not produce sufficient amount of rice to support them and look for alternatives for additional income and choosing smallscale tea cultivation to their available land. Unlike estate gardens, which have different types and hierarchical employment structure, the small gardens offer only one type employment, i.e. hired labourers. But the gardens above eight acres employ two types of workforce: Mahari (Supervisor) and the hired labourer. Mahari is basically multitasking staffs, who look after the farm in all operations starting from management, Table 3.3 Holding-size distribution of STGs gardens in Assam Holding size (ha)

Share of STGs (%)

< 0.67

10.28

0.67–1.21

25.63

1.35–2.56

34.68

2.70–3.91

14.17

4.05–5.26

6.37

5.40–6.61

4.32

6.74–7.96

2.32

8.10–9.31

1.49

9.45> All groups

Sub-groups (0–4 and 4–10 ha) 84.76

15.24

0.74 100.00

Source Cited from Baruah and Taparia (2004–05)

100.00

3.3 Farm Size, Land Relations and Livelihoods in North Bengal

57

field supervision, accounting, payments, etc. (Sharma & Barua, 2017). Five acre farms are managed by family members only. In 2016, the wages in small farms were Rs. 120–140 which was increased to Rs. 180–200 now. It varies from one area to other and changes from peak season to lean season depending on local labour market. There is an absence of trade unions in small-scale sector and labour market institutions and labour relations appear to function on market principles (Hannan, 2019a).

3.3 Farm Size, Land Relations and Livelihoods in North Bengal The small-scale sector in tea made its appearance during late 1980s and early 1990s. Initially pineapple growers in Chopra block of Uttar Dinajpur started switching to tea cultivation due to failure of remunerative prices. Gradually, other areas joined into tea sector. Mostly high lands along the Indo-Bangladesh border are converted to tea planted areas (Hannan, 2006, 2013). But now the geography of small-scale tea cultivation is found in Darjeeling, Kalimpong, Jalpaiguri, Cooch Behar and Alipurduar too. The estate gardens were mostly confined in Darjeeling and Jalpaiguri and known as traditional tea growing areas. Most of the case holdings are small and fragmented. Due to low economies of scale, their visibility in tea marketing is absent and remains as practitioner of farming like any other crops. Many a times they receive unacceptable prices which is below the cost of production and local level strikes and throwing green leaf over National Highway 31 is common as a form of protest. It is captured in vernacular media that is why unknown to many at national level. Once they switched over to tea due to non-availability of market for the pineapple and fruit processing industry, it again repeats their previous conditions. The perishable nature of pineapple restricted the market access and transportation of pineapple over long distances and cities of India. The absence of market and processing technology was the prime factor of such a shift. Tea cultivation was found an alternative to sustain their livelihoods and the STGs expected it as durable profession. Unlike pineapple which has to be replaced every 2–3 years, tea can be planted and harvested for a period of 40–50 years. All these led to mushrooming of growth of small-scale sector and many unemployed youth of urban and rural areas pick up it as a career and living life. Chakraborty (2017) reported that there were 176 BLFs which produced 154 million kg made in the year 2016 and shared 52% made tea production in the state. He further highlighted that in 1996, there were only 10 BLFs in North Bengal sharing only three per cent of tea production. It further rose to 77 BLFs producing 46 million kg tea and increased the share of 28% of the state. During the corresponding period, the number of STGs increased from 2000 to 40,000 (1996–2016). However, he raised a genuine concern of price of green leaf which they used to sale at Rs. 16 per kg (1996), Rs. 15 per kg (2004) and Rs. 15 per kg. (2016); on the other, the cost of inputs has increased manifold over the years.

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3 Smallholder Tea Economy in Assam and North Bengal

Therefore, the situation of STGs is a kind of return history which they experienced in pineapple growing. They always face dictates and challenges of market monopoly of private capital and BLFs and equally treated in labour, financial and commodity market. They receive the prices whatever pass on to them and have no role or participation in decision making or any bargaining capacity to influence tea auction or non-auction routes. Credit and finance are not readily available to them and find it from informal sources at an unreasonable rate of interest of private lenders. This has given birth of middlemen popularly known as leaf agents in every locality, and tiny and marginal growers are always in debt to them and may better be termed as army of exploiters. The labour market is same as the estate gardens except housing and education which is covered under the Plantation Labour Act, 1951. Periodic revision of wages and agreements between small gardens and trade unions in all the small tea growing districts exists in North Bengal. Having all such odds, the smallscale sector has been performing in providing employment and a new economic opportunity in backward and border regions of North Bengal and estimated to 1.63 lakh people directly engaged and derive their livelihoods (Hannan, 2006, 2017). Chakraborty (2021) has recently reported that there are 187 BLFs doing green leaf trade of around 55,000 STGs in different districts of North Bengal. In 2019, the total production of tea in West Bengal was 424.29 million kg and the share of small gardens was 236.86 million kg (55.83%). The estate garden shared 187.43 million kg (44.17%). He further highlights that though good number BLFs exist in North Bengal, in reality few handful of BLFs has market monopoly in the region. These few companies dominate the auction and non-auction routes and decide the farm-gate prices from the back door. This trend needs to be checked by Tea Board of India and there are invisible hand controlling the auctions and private sale which has an impact in the small-scale tea sector. However, there is mismatch exist between the data accessed from government sources and STGs Associations. According to Government of West Bengal (2009), there were 20,352 small growers spread over 25,708.06 ha of tea land in Uttar Dinajpur, Jalpaiguri, Darjeeling and Cooch Behar in North Bengal (Table 3.4). The highest number of growers is found in Uttar Dinajpur of 10,397 persons with an area of 10,993.32 ha of tea cultivated land and lowest in Cooch Behar of 541 with 1665.80 ha. Average farm size is 1.27 ha as per the data. Unlike Assam, in the state of West Bengal, there is a policy hazard in front of STGs. They require to obtain a ‘Noobjection Certificate’ (NOC) from Land and Land Reforms Department, Government of West Bengal, before planning tea and change the land use (Hannan, 2019a). Due to reluctance of state government and procedural problems of land department, only 1783 STGs could receive NOC (As on 31.12.2005). A total of 6041 persons (As on 30.06.2001) submitted their application to obtain NOC and only 1783 growers received it (As on 31.12.2005). Because of this policy hazard and lethargic approach land department of the state and the STGs is worst sufferer and excluded of financial benefits of Tea Board of India till date. They cannot register their farms to Tea Board of India thereby excluded of benefits of various schemes and measures meant for them. Only 8.35% of small-scale gardens could receive NOC (refer Table 3.4). The

3.3 Farm Size, Land Relations and Livelihoods in North Bengal

59

provision of NOC was introduced in 1994 and notified by the Land Reforms Department of Government of West Bengal. The said notification further instructed the land department to complete the ground survey and entire exercise within a period of three months (Hannan, 2013, 2019a). But the instructions are yet to fulfil by the concerned land department of the Government of West Bengal. Likewise, many small and marginal tea growers in the state who have not joined to any Tea Associations and cultivate tea just any other agricultural crop and continue to exist at the mercy of leaf agents. Therefore, the data on small-scale tea sector from government sources do not actually represent and reflect the ground situation which has been gathered and understood from field interactions and survey. The Chopra block in district Uttar Dinajpur is known as birthplace of STGs in North Bengal and also has a high concentration of small gardens (Chakraborty, 2003). The online available data (http://uttardinajpur.nic.in/dlro.html) accessed on 02.02.2019 of Land Reforms Department show the internal distribution of growers and they are situated in four blocks of the district, i.e. Chopra, Islampur, Goalpokhar I and Goalpokhar II, along the Indo-Bangladesh border. The road connectivity in these areas is very poor. Some of the tea plantations exist within the limit of border fencing of Indo-Bangladesh border and small growers reported of harassment of security forces due to entry to their plots. The said online data further reported that there were 9814 STGs with a planted area of 23,152.35 ha altogether. The average farm size is 2.36 ha. The block Chopra reports highest STGs with 7694 and tea area of 18,328.50 ha and farm size of 2.39 ha. But while conducting the field survey and interaction with the local level associations, it was found that thousands of small and marginal farmers who are less than an acre are not in the database of the government agencies. They simply make appearance at the hands of leaf agents (middlemen) and lead their daily life without much concern of regulatory agencies and predominantly manage their farms with family labour only. Table 3.4 Status of small-scale tea gardens in North Bengal Districts

Small tea growers [As on 31.12.2009] Status of NOC issued to STGs [30.11.2004] No. of STGs

Area (ha)

Average farm size (ha)

No. of applications received

10,397

10,993.32

1.06

1860

561

5.40

Jalpaiguri

5777

8986.36

1.56

1947

845

14.62

Darjeeling

3637

4062.59

1.12

2005

249

6.85

541

1665.80

3.08

129

44

8.13

20,352

25,708.06

1.27

5941

1699

8.35

Uttar Dinajpur

Cooch Behar North Bengal

No. of NOC issued

STGs received NOC (%)

Source Based on field data gathered from STGs Associations; and the Land Reforms Department, Government of West Bengal http://www.telegraphindia.com/1100115/jsp/siliguri/story_119 85634.jsp

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3 Smallholder Tea Economy in Assam and North Bengal

Another survey-based study conducted under the supervision of the University of North Bengal in the Department of Commerce and Department of Economics reported that 93.68% STGs are having farm size of 0–4 ha category. Only 6.33% of growers are 4–10 ha of size (Table 3.5). If one takes into account of 20,352 STGs in North Bengal as per available government sources mentioned above (Table 3.4), at least an estimated 19,065 STGs should have been enrolled under the Price Stabilization Fund Scheme as it covers all growers up to four hectares. But as per 54th Annual Report (2008) of Tea Board of India it was found that merely 132 STGs are enrolled in the state and could benefit of the scheme. Therefore, the growers in the state of West Bengal were excluded of the scheme of the Government of India. Therefore, both the states, i.e. Assam and West Bengal, failed to deliver market justice by not actualizing the spirit of the scheme and it remained as paper work and the target group could not realize the benefit of it. Das (2014) while citing the CAG (2012) report mentioned that even after three to five decades of existence of STGs, the Tea Board of India has miscarried to discharge its basic regulatory role efficiently and eighty per cent of growers continue to remain outside the ambit of regulations of Tea Board. The author’s own fieldwork reported that there are three categories of farms are found in North Bengal as per their size of land holding: (i) Family Farms (0–5 acres), it is defined the farms which are looked after and managed collectively by family members and have a combination of family as well as hired labour; (ii) OwnerSupervisory Farms (5–15 acres), this type is managed by the owner himself in all supervisory operations, technical advice, field activities, etc. (Hannan, 2006, 2019a). The agricultural activities are operated by hired labour, and (iii) Staff-Supervisory Farms (15–25 acres), it is supervised by staffs locally called Munsi (multi-tasking staff) and take care technical and operational parts, payments, field operations, etc. It has high prevalence and high dependency of hired labour (Hannan, 2006, 2008, 2013). Table 3.5 Holding-size distribution of STGs gardens in North Bengal Holding-size (ha)

Growers (%)

< 0.80

46.84

0.80–1.62

27.85

1.62–2.43

8.86

2.43–4.05

10.13

4.05–10.12

6.33

All groups

100.00

Sub-groups (0–4 and 4–10 ha) 93.68

6.33 100.00

Source Based on unpublished data of UFSTGA (Jalpaiguri); Hannan (2019)

3.4 Trade Relations and Small Tea Growers (STGs)

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3.4 Trade Relations and Small Tea Growers (STGs) This section deals with the existing policies of protecting STGs from market adversaries and role played by the various institutions. The gaps between policy provisioning and practices would be identified with their success rate in disseminating as well as implementing on ground. Let us examine how the situations of STGs have changed in tune with macro-policies of the Ministry of Commerce, Government of India; Tea Board of India and provincial governments in deliveries.

3.4.1 ‘Price Stabilisation Fund Scheme’ (PSF) and Ministry of Commerce (GOI) The 54th Annual Report (2008) of Tea Board of India mentioned that the PSF scheme was announced and introduced by Ministry of Commerce and Industry, Government of India, w.e.f. 01.04.2003 for the benefit of small-scale growers of tea, coffee, rubber and tobacco. The objective of it was to protect and provide compensation to the small producers when the prices of these commodities fall below a certain level. The small growers of a holding size up to four hectares could enrol in the scheme. The scheme was in operation w.e.f. 01.04.2003 to 01.03.2012. The Government of India set up a corpus fund of Rs. 500 crores for the scheme. To determine the compensation, seven years international moving price of a commodity taken into consideration and an annual Price Spectrum Bank for each commodity is fixed during the period. Every registered grower would have PSF account and three categories were identified as Boom, Normal and Distress year. In a Boom year, the grower contributes to PSF account of Rs. 1000/-; in Normal year, PSF Trust and grower contribute to PSF account of Rs. 500/- each; in Distress year, PSF Trust contributes Rs. 1000/- to PSF account. A maximum membership of 42,619 growers was allowed initially. Growers had to pay of Rs. 500/- and open a PSF account in any nationalized bank. Besides annual compensation, the growers were entitled of Personal Accident Insurance cover without paying any premium. In case of tea, for the period of 2003–04 to 2007–08, it has been categorized as Normal year (Tea Board of India, 2008). However, the PSF scheme could not achieve much success. Table 3.6 has shown the progress of membership of the scheme during 2003–04 to 2007–08 and only 15,382 growers joined the scheme out of initial proposal of 42,619. The state of Tamil Nadu made a sizable membership with an enrolment of 11,886 growers. The status of enrolment in Kerala, West Bengal and Himachal Pradesh was 12, 132 and 58 growers only during the period of five years. The scenario in North-East is not exception and it had low participation with 3194 growers. The overall success rate of the target was 35.85%. It is to be reported that during 2004–05, the Government of Tamil Nadu contributed an amount of Rs. 1.15 crores in PSF account towards the membership fee of 23,000 small growers in the state (Tea Board of India, 2008). It may be due to the presence of INDCO tea cooperatives in the state. It is further

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mentioned that at the end of 2003–04, the total membership fee by the growers in India was Rs. 930,500/- and matching governments contribution under PSF Trust of Rs. 930,500/-. The amount disbursed was Rs. 527,000/- and the balance to be disbursed was Rs. 403,500/-. Therefore, the PSF scheme was found unsatisfactory and its success rate is low as mentioned earlier. The design of the scheme was not lucrative to the growers and it failed to make inroads though it had many indirect benefits. Firstly, the premium amount and the government contribution hardly meet the farm costs and price fluctuations. Secondly, lot of paper work and lengthy formalities enrol under the PSF scheme. At the same time, small and marginal growers face problems of accessing valid land documents in Assam and state governments permission in case of West Bengal leads to low enrolment in these states and North-East. As known fact, many STGs are not registered with Tea Board of India even today. Thirdly, the Boom, Normal and Distress years are constructed at national level and it has not been extended to connect at regional, state and district level which could link the farmgate price realization under the ‘District Green Leaf Price Monitoring Committee’ (DGLPMC) and ‘Price-Sharing Formula’ introduced by Tea Board of India. The Price Spectrum Band did not consider regional dimension of tea prices of North and South India separately (Hannan, 2019a). Finally, the ambitious scheme failed before it was implemented in true spirit. But, if it is designed appropriately, it may deliver and protect the marginal and small growers in tea supply chain in one end and could make transparency in commodity market to have fair share of farming community who are at the margins. Table 3.6 Enrolment of STGs in ‘Price Stabilization Fund Scheme’ in India States/ India Kerala Tamil Nadu West Bengal Himachal Pradesh

Initially Enrolment of STGs Success rate (%) proposed 2003–04 2004–05 2005–06 2006–07 2007–08 Total Target target achieved 2250

11

1

–

–

–

23,245

184

11,691

–

–

11

467

56

76

–

–

–

1380

34

8

3

–

–

12

0.53

11,886 51.13 132 28.26 58

4.20

North-East 15,277

1576

1044

199

52

323

3194 20.90

India

1861

12,820

202

52

347

15,282 35.85

42,619

Source Based on 54th Annual Report, Tea Board of India, Kolkata

3.4 Trade Relations and Small Tea Growers (STGs)

63

3.4.2 ‘Price-Sharing Formula’ and Government of West Bengal During the formative years, the small-scale tea growers were dependent on estate garden factories to sale their green leaf. Later on BLFs were established in North Bengal to fill the demand of STGs and leaf purchase and process. Presently, there are 187 BLFs situated in different districts in North Bengal. The Estate Factories also purchase green leaf from STGs in the region, but the green leaf market is predominantly controlled by leaf agents locally known as Farias. It needs to be reported that during the year 2001–2003 in North Bengal, the STGs were facing crisis and realized very poor price though the plucking standard and quality of leaf was good, i.e. two leaves and a bud (Chakraborty, 2003; Hannan, 2013). In March 2003, the price of green leaf was lowest at Rs. 2–3 per kg. This coincides and connected with crisis in tea industry in general, and at the same time, as many as 118 tea gardens were closed in five major tea growing states in India (Hannan, 2020d; Tea Board of India, 2005). This impacted the STGs and there were agitations, road blockades and indefinite strikes organized by growers as form of protest in North Bengal. During the time, the Divisional Commissioner of Jalpaiguri Division, Government of West Bengal, after rounds of discussions and deliberations fixed a minimum green leaf price at Rs. 6 per kg. After the recommendation, the BLFs failed to adherence of the guidelines as instructed by office of the Commissioner (Hannan, 2013). Later on, the Government of West Bengal constituted a committed and submitted detail plan of action. The ‘Report of the Committee on the Tea Industry in West Bengal’ (2004) recommended to Tea Board of India to implement a ‘Price-Sharing Formula’ and in Para 5.1 (b) of the said report mentioned as below: (i) “The Tea Board should lay down a Price-Sharing-Formula in terms of which the sale proceeds of made tea produced by the BLFs is shared in fixed proportions between the STGs and BLFs. The TMCO 2003 has a provision to this effect, and this practice is already being implemented in Sri Lanka. This will ensure that STGs get a reasonable price for the green leaf, which they sell to the BLFs. At present, this market is a buyersmarket in which the BLFs are able to fix the price at which they will buy green leaf from the STGs and other new non-estate plantations”. (ii) “In order to ensure further transparency and fairness in the trade in green leaf, there should be a one-to-one linkage between each BLFs and STGs. The Tea Board can chalk out the tagging of selected STGs with each BLF, keeping in view the capacity of each BLF and the geographical location of the BLFs and the Small Tea Plantations. This one-to-one tagging means that a particular BLF can buy green leaf only from the Small Tea Plantations tagged to it, and it cannot buy green leaf from any other source. Similarly, the STGs can sell green leaf only to the BLFs to which they are tagged, and they cannot sell to any other agency. This will ensure further stability in the price of green leaf, and can be introduced along with 100 per cent auction. There is such a system prevailing in Tamil Nadu, though there it has developed on its own over time”.

Ultimately, the Tea Board of India considered the recommendation of the Government of West Bengal and with the permission and approval of Government of India implemented the ‘Price-Sharing Formula’ w.e.f. 01.04.2004 vide ‘Circular No.

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12(23)/2003/XII/3317 dated 19/20.01.2004 and 12 (23)/LC/2003/P-XII/4124 dated 26.03.2004’ (Hannan, 2013, 2019).

3.4.3 ‘Price-Sharing Formula’ and Tea Board of India As the ‘Price-Sharing Formula’ notified and implemented by the Tea Board w.e.f. 01.04.04, all the BLFs and estate gardens in India were instructed to follow its guidelines thereafter. This somehow can be equated as first formal recognition of STGs at national level and address their concern by the Tea Board of India. Under the said formula, the every BLFs or Estate Factories has to share the sale of made tea with the STGs at a ratio of 40:60 basis on the auction price received for the corresponding month (Hannan, 2013). The actual expected green leaf price was considered and calculated by taking into account the ‘outturn percentage’ of made tea out of green leaf. The ‘outturn percentage’ was fixed at 23% in Tamil Nadu, 26.40% in Himachal and Uttarakhand, and other states of India it was 21.50% (Table 3.7). It is to be highlighted here that the field study in North Bengal suggests higher ‘outturn percentage’ as compared to what has been fixed in ‘Price-Sharing Formula’ way back in 2004. Three SHGs-led factories in Dooars region recorded higher outturn percentage, i.e. 22.26% in Panbari STGs Society; 21.00% in Jai Jalpesh STGs Society; and 22.29% in Naba Jagaran STGs Society (Hannan, 2019b). Hence, the Price-Sharing Formula needs to be revisited and new studies should be initiated by Tea Board of India. As per the Notification of Tea Board of India, the ‘Price-Sharing Formula’ is stated below: The Price-Sharing-Sharing-Formula envisages sharing of sale proceeds between green leaf supplier and manufacturer in the ratio of 60:40 in all tea growing states except Himachal Pradesh and Uttaranchal, where the sharing is in the ratio of 52:48, so long as the prices realized by the manufacturers remain either at par with or lower than the state average. When the price realization exceeds the state average price, the differential is required to be shared in the ratio of 50:50. While calculating the actual price for the green leaf, the out turn percentage is also taken into consideration. The out turn percentage applicable to Tamil Nadu is 23 per cent, Himachal Pradesh and Uttaranchal it is 26.40 per cent and for rest of India it is 21.50 per cent.

The macro-policy changes and introduction of ‘Price-Sharing Formula’ somehow brought some impact in tea supply chain. The monopoly of BLFs and Estate Factories in green leaf market and business attitude towards small-scale sector repercussions had changed. The growers gain confidence and found that the regulatory agencies are important to manage their tea cultivation and protection of livelihoods. Over the years, an incremental improvement of the trade relations is visible between STGs and Factories. It has made important outcomes in small-scale tea sector in India, e.g. share of tea production, green leaf pricing, role of leaf agents, improvement in hired labour wages, etc. The execution and practices of implementation of ‘Price-Sharing Formula’ had differences in North and South India. The variations were also found at inter-state

3.5 District-Level Green Leaf Price Monitoring Committee (DGLPMC)

65

Table 3.7 State/region-wise share of Price-sharing formula States/regions

Share of STGs and factories (%) Outturn ratio from green leaf to made tea (%)

Assam

60:40

21.50

West Bengal

60:40

21.50

Nilgiris

60:40

23.00

Kerala

60:40

21.50

Himachal Pradesh and Uttaranchal*

52:48

26.40

Tripura

60:40

21.50

Bihar and rest of India

60:40

21.50

Source Based on Tea Board Circular No. 12(23)LC/2003/XII/3317, 2004

level. In North India, it is computed at the office of the Controller of Licensing at headquartered, Kolkata. The monthly average price for CTC teas used to be notified and calculated considering from auction and non-auction routes (Hannan, 2019a). The regional Tea Board offices of North India situated at Assam, West Bengal, Tripura and Arunachal Pradesh were communicated through a circular in the first week of every month for the previous month. In addition to this, the regional Tea Board at Siliguri carried the ‘Price-Sharing Formula’ further and published a list of BLFs for green leaf price paid to STGs and price received for CTC teas. This practice of implementation was discontinued later. But it was never disseminated in Assam and other states in North India. It had a tremendous impact in making transparency in trade relations in tea supply chain which should be re-introduced and practised in all the regional and sub-regional offices of Tea Board of India in different districts to safeguard the small-scale tea sector and protection of livelihoods of millions of STGs on ground. The practice and implementation of ‘Price-Sharing Formula’ in South India were executed by the Joint Controller of Licensing of Tea Board office at Cochin. The average monthly price of CTC teas sold at auction and non-auction and was computed and notified in every month through a circular to Tea Board’s regional offices situated in Tamil Nadu, Kerala and Karnataka.

3.5 District-Level Green Leaf Price Monitoring Committee (DGLPMC) The Government of India has amended the ‘Tea Marketing Control Order’ (TMCO) in 2015 and notified to constitute the DGLPMCs in all small tea growing districts of India to safeguard the interest of STGs. The changes have been executed by the Ministry of Commerce through a Gazette Notification No. SO 1012 (E) dated 15.04.2015 and added the following Para in ‘Section 30’ as ‘30A’ of the ‘Principal

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Order’. The Tea Board of India carried it further and notified to all stakeholders vide Letter No. Law/08/2013 dated 21.05.2015 for implementation. 30A. District Green Leaf Pricing Monitoring Committee – (1) There shall be a green leaf price monitoring committee in each tea growing district comprising of two representatives each from Bought leaf factories, small tea growers and estate factories and one officer of the Board not below the rank of Assistant Director and the Collector or Deputy Commissioner of such tea growing district shall be the ex-officio Chairman. The officer of the Board shall be the member secretary of the committee.

As discussed above that there are twenty-seven (27) districts in Assam and six (06) districts in West Bengal grow small-scale tea (Hannan, 2019a). During interactions with the offices of the Collector or Deputy Commissioners and STGs Associations, it is found many growers on ground are not aware of DGLPMC of Tea Board of India. In fact, there are cases and examples where only two–three meetings are held since its inception. The member-secretary of all the committees are the Officers of Tea Board posted at ‘Sub-Regional Offices’ (SROs) and they should be held accountable and responsible of casual approach of its implementation. It is to be reported that the Tea Board of India has set up a dedicated Small Tea Grower Development Directorate (SGDD) in 2013 and recruited ‘Development Officers’ and ‘Factory Advisors’ at SROs in almost all tea growing areas in India (Hannan, 2018b, 2019b). There are of 67 SROs in India at present which includes 39 in Assam and 15 in West Bengal and the 12th plan outlay of SGDD was rupees 200 crores and expenditure of 35 crores (Hannan, 2019b; Tea Board of India, 2016, 2017). There is an absence of actual assessment on ground by the Directorate and its SROs. The SROs of SGDD have failed to deliver their mandate and protect farm-gate price realization as mandatory under the TMCO, 2015. In Assam too, Pachoni (2016) found and reported that that the Price-Sharing Formula is not implemented as per the guidelines. The DGLPMC has grossly failed to stabilize the farm-gate price of green leaves. Even in peak plucking season, the BLFs and Estate Factories refuse to buy green leaves at times and the DGLPMC have ignored it. The situation in North Bengal is worse. The wage rate in small-scale gardens was increased from Rs. 132.50 (2016–17) to Rs. 176.00 plus ration of 1.80 (Hannan, 2018b, 2019a, 2019b). But the farm-gate price for green leaf was Rs. 4–5 per kg during peak season (July–September) in 2017 as reported in Uttar Banga Sambad (October 12, 2017) and Rs. 9–10 per kg in 2018 in Uttar Banga Sambad (May 09, 2018). However, a detailed analysis of DGLPMC and policy gaps is dealt in sixth chapter.

3.6 ‘Development-From-Below’ and Small Tea Growers (STGs) As discussed in the first chapter that the development-from-below approach does not dispute the path of development-from-above but essentially argues for regions to take control of their own institutions and resources to create the lifestyle desired by the

3.6 ‘Development-From-Below’ and Small Tea Growers (STGs)

67

people in the region. Hence, the development-from-below aims to create regional autonomy through integration of people’s life and their economic activities, resource utilization within a territory or geographic space (Nelson, 1993). In this light, let us examine few success stories by which STGs have made their presence in tea landscape and innovated something new for their survival in Assam and North Bengal. Assam The processing of green leaf to made tea is an innovative grass-roots initiative notice in the field. Though these are small-scale gestures it brought some changes in the attitude of organized tea industry. Lachit Neog and Hemanga Gohain ventured 9.5 ha small tea garden at Amlongchang in central part of Assam in the year 2002. He converted to organic methods of tea production and was certified by SKAL, Holland, in the year 2006 (Hannan, 2019a). They had a mini-tea processing factory in the garden. The estimated budget of ten lakhs was invested by them which they incurred of rupees six lakhs for machinery, around three lakhs for two generators, less than a lakh rupees for the construction of building and sheds and thirty thousand rupees for furnace fired by paddy husk. The factory now is processing green leaf roughly 120 kg/ per day and produces good quality orthodox tea. They have a plan to produce green tea in future. As revealed by them during interaction that there are as many as thirty mini-tea processing factories in Assam and they appealed to Tea Board of India to recognize it and promote it for better future of small-scale sector. Ranjit chetia (B.E. in Chemical Technology) and a STG resides in Golaghat district developed another small-scale CTC variety of tea processing factory in his house (Hannan, 2019a). At the time of survey, he was in the process of obtaining patent right in collaboration of two other scientists at ‘Council for Scientific and Industrial Research’ Institute situated at Jorhat. He informed two such factories have been approved by Tea Board of India and currently under production. As per his estimate, a small-scale factory establishment requires a capital of rupees 13–15 lakhs with a green leaf threshing capacity of 1000–1500 kg per day. Since he belongs from a STGs family, he reserves a strong feeling and affinity for STGs community. He is well-versed about the market monopoly of BLFs and over-exploitation. Pabitra Lingda belongs to Sighpho Tribe residing at Ketetong Gram Panchayat of Tinsukia district and had set up a small-scale tea factory producing orthodox tea (Hannan, 2019a). Around 10 acres of tea garden which they planted in the year 1992 and took initiative to convert it into organic in the year 2002. Almost 30 rounds of plucking are received during March to November in a year. Cow-dung, compost, urine, etc., are used to control pest attacks. He also reported that after conversion into organic, birds fly in tea field and eat the insects. The orthodox tea is sold locally and many army officers and government employees purchase from their house. North Bengal Like Assam, the leaf agents (middlemen) dominate the green leaf trading in North Bengal. Generally, they provide advance money to the growers during lean season and remain exploitative in trade relations. They take advantages of poor economic condition of the small and tiny growers who prefer to take advance capital from

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the agents only as formal sources are not available. The reasons to sell green leaf to Farias (leaf agents) are many and it is situational and congregation of many factors as informed by growers (Hannan, 2006). Many of them highlighted that ‘we follow the movement and direction of the wind’ (Hannan, 2013, 2018a). The common reasons are cash payment, no objection for long leaves, advance money, etc., are put Farias at advantageous. Small farm size is also viewed as constraint of regular production and difficulty in carrying green leaf to the factory or avail factory vehicle. This opportunity of scale economy and transport facility is provided by Farias for the collecting green leaves. In Jalpaiguri district of North Bengal, the STGs joined together to form SHGs and established their own factories. Three such successful SHGs are: (i) the ‘Panbari’ STGs Society, (ii) the ‘Jai Jalpesh’ STGs Society and (iii) the ‘Naba Jagaran’ STGs Society (Hannan, 2019b). The Panbari is the first STGs Society in India to innovate and facilitate entrepreneurship. The Jalpaiguri STGs Association played a very important role in establishing these factories. The Panbari society sells CTC teas in auction under a brand of MAHALAXMI TEA. The Jai Jalpesh also has brand called SHIB BARI JAI JALPESH BARI TEA since 2013 (ibid.). The factory has a retail outlet for direct marketing. The Jai Jalpesh has obtained export license from Tea Board of India (2016) and demonstrated their teas in Russia as well as Kazakhstan.

3.7 Concluding Remarks In both the states of Assam and West Bengal, the small-scale tea sector is facing problems of land regularization, record corrections of land rights and their formal recognition though they contribute more than 50% of tea production. The Government of Assam has made some efforts in updating land records and rights of STGs which somehow made a portion of growers to register with Tea Board of India. But in West Bengal, since 2001 no progress is made in providing NOC and thereby small-scale sector is largely neglected. Trade relations between STGs and tea factories are one-sided affair and it has unequal access with farm size in the tea supply chain. There are policies like ‘Price Stabilization Fund Scheme’, ‘Price-Sharing Formula’ and off late ‘DGLPMC’ to address the market monopoly and to safeguard the small-scale sector, but they have failed to deliver expected results on the ground. However, there have been few bottom-up initiatives in both the states either individually or collectively attempted to bring some changes on the ongoing struggle of the growers. Hence, Development-from-below is utmost important to change the fate of growers and to make accountable the regulatory agencies like Tea Board of India and its SROs to be active and watchdog of the situation. At the same, the land department of both the states has to be proactive in clearing ‘records of rights’ to facilitate growers to avail formal channels of finance, government schemes and options of crop insurance either affected due to natural hazards or market failures as notified under ‘Price Stabilization Fund Scheme’. The linkage of ‘Price Stabilization Fund Scheme’, ‘Price-Sharing Formula’ and ‘DGLPMC’ at district level is necessary to

3.7 Concluding Remarks

69

promote market transparency in the small-scale tea sector in India. There should be regulations on Farias (leaf agents) to register with Tea Board of India and impose fine if failed to promote good quality green leaf. A ‘Direct Benefit Transfer System’ (DBTS) should be introduced in all BLFs and Estate Factories for the payment of green leaf to the growers to encourage the transparency in farm-gate price realization. The state intervention is needed to regularize the land records and to extend support to organize then into clusters or cooperatives or SHGs in line of Industrial Cooperative (INDCO) tea factories as found in Nilgiris of Tamil Nadu. Let us assess the situation of INDCO tea cooperatives in next chapter. Notes [i] The Price Stabilisation Fund Scheme was introduced by Ministry of Commerce and Industry, Government of India, in the year 2003. The period of the scheme was 01.04.2003 to 31.03.2012. The small and marginal grower-farmers of tea, coffee, rubber and tobacco with a holding size of four hectares were eligible to enrol as member in the scheme (Hannan, 2019a). The objective of the scheme was to support financially to the STGs when prices of the commodities decrease below a specified range or level. [ii] The Sighpho Tribe are settled and distributed in 19 villages of upper Assam. Some of the households have developed organic tea factories in their houses and market it locally and abroad in Canada. The UNDP has funded a Guest House located at Ketetong Gram Panchayat in the district of Tinsukia in Assam.

Chapter 4

Development of INDCO Tea Factories in Tamil Nadu

Abstract The INDCO tea factories plays a very crucial role in sustaining rural economy in Nilgiris since inception. The first unit of INDCO was opened at Kundah in 1962 and the latest one at Bitherkad in 1998. This unique model was introduced by Government of Tamil Nadu to provide an opportunity to smallholders in sustaining their livelihoods and safeguarding them from the vulnerabilities of market. Though there are 15 states in India where tea is grown by smallholders today, such an initiative of regional development model at grassroots is lacking in other states. The INDCO tea factories are identified as growth-centres and equated as spatial model in boosting rural economy by engaging growers and improving their scale economies. This model allowed the participation of smallholders in tea processing and marketing of made tea through auction and non-auction routes and showed their visibility in tea supply chain. The present chapter is an attempt to have critical review and map the journey of 15 INDCO factories, their functioning and deliveries made during the post-reform period. It was seen that though all the 15 factories operated under the similar forms of governance structure, their performance and deliveries differ over geographical space within the region. There is a spatial variation of the outcomes of the growth-centres over a period of last twenty-five years (1990–91 to 2015–16). Therefore, an attempt is made to answer whether local geographic conditions and governance play a vital role in their functioning and efficiencies or external economies impacting the viability and sustainability of such units. It is also realized that there are 181 privately owned Bought-Leaf Factories (2004) producing roughly 70–80 million kg made tea in a year. This mushrooming growth has happened mainly during post-reform period. It is apparently seen that there is a huge private capital entering into smallholder sector to capture the tea market in Nilgiris though the region has witnessed a classic model of cooperatives in the country since 1960s. Therefore, the chapter focuses on their economy and functioning of INDCO tea factories during the post-reform period and seeks to answer whether unhealthy competition, between corporate ownership of Bought-Leaf Factories and State-owned INDCO factories with limited capital flow, can sustain the force of economic liberalization. Keywords Tea cooperatives · INDCO factories · Governance · Post-reform · Livelihoods

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 A. Hannan, The Smallholder Tea Economy and Regional Development, https://doi.org/10.1007/978-3-031-51812-6_4

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72

4 Development of INDCO Tea Factories in Tamil Nadu

4.1 Beginning the INDCO Model in Tamil Nadu The important characteristics and principles of a cooperative are self-reliance, selfhelp, self-responsibility, democratic function, equality and justice for all. Thus, a cooperative is understood as member-owned, member-controlled and memberbenefit organization seeking partnership in governance, economic rationale and political control within the framework of larger socio-economic and political environment. The ‘International Cooperative Alliance’ (ICA) defines as ‘A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically-controlled enterprise’ (Apostolakis & Dijk, 2018; Hannan, 2020c; ICA, 2016). Gandhi’s idea of village was described in Harijan in 1942 as ‘as far as possible every activity will be conducted on the cooperative basis…the government of the village will be conducted by a panchayat of five persons annually elected by the adult villagers, male and female, possessing minimum prescribed qualifications’ (Jodhka, 2012). So, the importance of cooperatives has also been propagated by our founding fathers of the nation. The Government of Tamil Nadu with an objective to improve the scale of operations of STGs established INDCO tea factories way back in 1960s and organized them into collectives in district Nilgiris. The primary intentions of this initiative were to support technical training and help growers, for the betterment of their entrepreneurship skills and provide a sustainable alternative and equitable business model in a context of estate economy in tea sector in India (Hannan, 2020). It would not be an exaggeration to equate that the setting up of INDCO tea factories was a kind of a bottom-up approach in the process of Development-from-below initiative of the Government of Tamil Nadu. While establishing INDCO factories, the spatial aspects of STGs concentration were considered with due significance to connect the local rural economies, therefore, it may also be regarded an approach towards regional development through its forward and backward linkages in the process of economic development as conceptualized by Albert Hischman. The favourable agro-climatic conditions commanded tea plantations to flourish in district Nilgiris of Tamil Nadu. Even more than 90% tea is produced in Nilgiris in the state. The regional headquarter of Tea Board of India for South Indian states is situated at Coonoor headed by an Executive Director. The ‘United Planters Association of South India’ (UPASI) is also located here. It has a tea auction centre as well. The ‘Krishi Vigyan Kendra’ (KVK), Coonoor had developed a demonstrated mini-tea factory for experimental and research purpose. Formerly the district Nilgiris was a coffee-growing region and tea was introduced in the district sometime in the year 1835 followed by the recommendations of the Committee appointed by the ‘Madras Government’ at that time (Tea Board of India, 1980). It was also reported that Small Tea Growers (STGs) in the district originated their presence in 1920s and the introduction of export quota by the Tea Board of India accelerated their development further. Though the STGs existed prior to 1950s, they became important in discussion and policy inclusion when it was first stressed by the ‘Plantation Enquiry

4.1 Beginning the INDCO Model in Tamil Nadu

73

Commission’ in 1956. It recommended the idea of setting up Cooperative Factories (CPFs) to improve their economic viability in the region (Bhowmik & Reddy, 1989). The Government of Tamil Nadu made the pioneering work and gave recognition to STGs first in India and designed cooperative scheme for smallholders in 1958. The INDCOSERVE was established in 1965 as an apex body of the ‘The Tamil Nadu Small Tea Growers’ Industrial Cooperative Factories Federation Limited’ that represents tea cooperatives in the state (Hannan, 2008, 2020c). It estimated the presence of 50,000 STGs with a possibility of tea cultivated land of 30,000 ha (INDCOSERVE, 2004). The first Industrial cooperative (INDCO) tea factory in India was established at Kunda village in the year 1962 in district Nilgiris of Tamil Nadu (Bhowmik, 1997). As per Tea Board of India sources in the year 2006, there were 68,137 STGs with tea area of 47,699 ha in Nilgiris which produced 85 million kg of made tea (Hannan, 2017, 2020c). The ‘Tea Statistics 2019’ reported that there are 45,765 STGs with an area of 33,284.57 ha of land in the state. The STGs contributed 98.06 million kg tea and estate sector with 62.09 million kg to a total production of 160.15 million kg in Tamil Nadu (Tea Board of India, 2018–19). Currently, there are 16 CPFs and 181 Bought-Leaf Factories in operation in the state. As a whole in India, there are 22 CPFs producing and they are found to be located four in Himachal Pradesh, two in Kerala and sixteen in Tamil Nadu (Hannan, 2020c). The Department of Horticulture, Government of Tamil Nadu defined the STGs into two categories: ‘small farmers’ (1–2 ha) and ‘marginal farmers’ (0.5–1 ha). As per their sources, there are around 23,052 small and marginal farmers within the STGs and their actual blockwise distribution is found in descending order as: 6611 in Kunda, 4924 in Coonoor, 5808 in Kotagiri and 5709 in Gudalur and Pandalur. This reveals the fact that all the growers are not registered in Tea Board, hence the ‘Tea Statistics 2019’ has reported less number of growers. It has reported by Pallavi and Johnson (2012) that since 1920 small growers are there in Nilgiris. The area under tea plantations in Nilgiris was grown from 20,840 ha (1961), 24,849 ha (1981), 35,537 ha (1995), 66,156 ha (2007) and 62,885 (2019). The number of STGs increased from 6375 (1981) to 6563 (1991) to 55,601 (1999), and then to 45,765 (2019). With the growing numbers of STGs and area under tea, one could easily understand that sizeable growth small-scale sector that has happened in post-1960s. They argued further that due to lack of access of capital hinders the STGs to expand their scale economy and operations, and weakly armed to make any form of value additions. The institutional environment under which STGs operate in the tea value chain is a necessary condition for the interventions of the state agencies and non-state actors. Three types of tea factories are available in Nilgiris: Bought-Leaf Factories (BLFs), Estate Factories and INDCO Tea Cooperative Factories. In the first two categories the STGs are not officially linked to the factories and they supply green leaf and their trade relations with the factory are solely open market relations and determined based on principles of demand–supply. There is no protection available for them under these two chains. Here one can find the presence of leaf agents in the tea supply chain. In the third category, the STGs are the members of INDCO Tea Cooperative Factories and have share in ownership as a member-grower of the respective factory situated in their locality.

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4 Development of INDCO Tea Factories in Tamil Nadu

Neilson and Pritchard articulated that the STGs highlight on the institutional arrangement and social embeddedness which stressed upon the patterns of relations in economic activities. They stated that ‘governance’ and ‘institutions’ are inevitably reproduced by a constant interactive nexus and linkages of the global value chain. This interactive-nexus demands for a struggle and new types and forms of value chain governance of a commodity. The way all these struggles are emerging and being resolved requires a deeper insight to understand and indicates how producers are implanted in the global value chain, the level of control and economic returns (Pallavi & Johnson, 2012). Therefore, it is pertinent to question as how STGs are situated in the tea supply chain and how far they have been able to build a counter pressure to the global capital or there is any evidence to surrender those institutions to the global capital (Pallavi & Johnson, 2012). Bhowmin (1997) observed that the presence of the INDCO Cooperatives has strengthened a kind check and balance the relationships of the exploitative nature and tendencies of the BLFs. The STGs are able to bargain in market and get better remunerative prices of green leaf and increase the income and share the profit. The major shortcoming of the cooperatives lies in its democratic functioning and bureaucratic control of INDCO factories. The ‘Special Officers’ and ‘Executives’ are nominated instead of their democratically elected representations. This happens not because the members of cooperatives are not interested but the legal constraints and provisions have been obligatory by the State Government. This is a classic example of unwarranted control of bureaucracy over the operational and functioning of cooperatives though there are availability of democratically elected ‘Boards of Directors’. Generally, two arguments are forwarded in support of government control over INDCO tea cooperatives. Firstly, lack of expertise of members may affect the efficient management of the organization and there are possibilities of showing a lack of responsibility and care in handling financial resources and have an opportunity of misuse. Secondly, as the government has shares and financial commitments and investments in INDCO Cooperatives, it should have an exercise and control over its operations and thereby exercise its powers. However, if expertise manages the cooperatives, then all the INDCO factories would have been running on profit which is not the situation currently. The state government should also promote and develop capacities and skill of the STGs to take control of their own institutions and manage their factory resources since they are in operations over decades. Let us see in this chapter how cooperatives have resulted over the years. The Government of Tamil Nadu introduced this unique spatial model of regional development of INDCO Tea Cooperatives way back in 1960s. There are noticeable differential outcomes and results are visible which are not uniform over local geographies (Hannan, 2020). This chapter firstly traces the growth pattern of INDCO factories particularly during post-reform period 1990–91 to 2015–16. The employment pattern in ‘farm’ (agriculture) and ‘factory’ (industry) in INDCO tea factories are estimated and the types of livelihoods are identified. An attempt is also made to understand the size and scale economy of cooperatives. The differential cost of production at farm and factory are analysed separately and are shown how optimal use of resources of a factory reduces the production cost of made tea citing one of

4.1 Beginning the INDCO Model in Tamil Nadu

75

the best performing factory of Salisbury and INDCOSERVE at disaggregate and aggregate level of operations. It also highlights and compares the INDCO factories under ten measurable indicators during the period of 1990–91 to 2015–16 (Hannan, 2020c). Lastly, it shows and compares the relative growth of cooperatives and BLFs in Nilgiris and tells the story of withdrawal of state and entry of private capital as an alternative allowing market monopoly towards exploitative nature in growth of unorganized sector in Nilgiris. The data on INDCO tea factories is gathered and computed from their website (http://www.indcoserve.com) for the period from 1991–91 to 2015–16. The yearwise continuous data was available for all the fifteen INDCO Tea factories on various aspects, e.g. procurement of green leaf, production of made tea, average green leaf price paid to the farmers/STGs, quantity sold off made tea, selling price realization of made tea, value of tea sold, etc. (Hannan, 2020). The unpublished data on ‘Cost of Production’ (Farm Level) is collected from United Forum of Small Tea Growers Associations (UFSTGA), Jalpaiguri, West Bengal. Similarly, the unpublished data on ‘Cost of Production’ (Farm) is collected from Krishi Vigyan Kendra, Coonoor (Hannan, 2008). The ‘Cost of Processing’ (Factory) of made tea is computed based on unpublished data gathered from Salisbury INDCO factory and INDCOSERVE Office at Coonoor, Tamil Nadu. The ‘Tea Statistics’, ‘Tea Digest’ and ‘Techno-Economic Surveys’ of Tea Board of India are consulted and referred to estimate the share of cooperatives in tea industry in Nilgiris. The pattern of employment and types of livelihoods in ‘farm’ and ‘factory’ are estimated separately based on the number of persons engaged multiplied by average size of household of the state which gives the picture of dependency on farm and factory in their catchment or hinterland. An attempt is also made to measure the factory-wise outcomes under various measurable indicators like farm size, production level, outturn percentage, price realization of green leaf and made tea, etc. The variations of INDCO factories are discussed and analysed with a gap of five years, i.e. 1990–91, 1995–96, 2000–01, 2005–06, 2010–11, 2015–16. An Index of Growth Performance for the period from 1990–91 to 2015–16 is constructed for all 15 INDCO tea factories (Hannan, 2020c). Lastly, an estimation of capital flow is attempted considering INDCO factories as base during the year 2010–11 to understand the nature of mushrooming growth of BLFs during post-reform period in Nilgiris. It should also be mentioned that the Tea Board of India has stopped publishing Tea Statistics on regular basis and hence it is difficult to compare as disaggregated data is not available in public domain. This is the shortcoming of the present research. However, an attempt is made to collate and compile data available from various sources.

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4 Development of INDCO Tea Factories in Tamil Nadu

4.2 Mapping the Journey of INDCO Factories It is to be reported that the Government of Tamil Nadu took pioneering initiative to introduce the Tea Cooperatives in India way back in 1960s. However other examples are also found in tea industry where the running gardens were closed and it became a cooperative by default. The Durgabari Tea Estate in Tripura was such case and a private tea garden had a grant area of 145 acres of tea plantations. The garden was under deep crisis and was abandoned by the company in 1970s. After that the Government of Tripura discontinued the land grant and constituted Durgabari Tea Estate Workers Cooperative Society Ltd. (1978). There are two units of the cooperative with a tea planted areas of 310 acres and employs 643 labourers. Its production contribution is around six lakh kg of made tea in a year (Durgabari Cooperative, 2014 cf. Hannan, 2020c). Similarly in Darjeeling hills of West Bengal, a tea cooperative named Sanjukta Vikash Co-operative (SVC) was also formed in 1996 in support of DLR Prerna (NGO) to help the abandoned labourers. The SVC cooperative has 448 members and spread over the villages of Harsing, Dabaiani and Yankhoo and they were part of closed tea estate of Harrison’s and Mineral Spring in Darjeeling. The garden had 1200 acres of land of which 600 acres were under tea plantation and the rest were reserve forests (DLR Prerna, 2005 cf. Hannan, 2020c). There are many closed gardens lying abandoned yet such initiatives are hardly taken by state governments. Having this background, let us assess the growth history of INDCO tea factories in the following sections. In order to improve the scale of operation and conditions of STGs, the idea of setting up of cooperatives in the public sector was first recommended by the ‘Plantation Enquiry Commission’ in 1956. Other than green leaf processing of STGs, the INDCO Cooperatives undertook bulk purchase and distribution of manures and fertilizers, providing tea sapling, technical training and organizing awareness camps, etc. The INDCOSERVE being a centralized service providing agency functions based at Coonoor and has been responsible for all round support to safeguard the interest of growers in Nilgiris over the years. In the beginning STGs were selling green leaf to BLFs as per their terms and conditions. The recommendations of Plantation Enquiry Commission opened a new opportunity for the enhancement of economic viability of STGs and minimized market monopoly of BLFs and Estate Factories. As a result, 15 INDCO tea factories were established. The decade-wise order is: seven during 1960–70; three during 1971–80; three during 1981–90; two after 1991 (Table 4.1). The latest factory is established in 2017 at Nanjanad. All these factories together have collective membership of 19,635 STGs cultivating 32,235 acres or 13,045 ha of land under tea plantation. The average farm size is 1.64 acres or 0.66 ha. Currently, there are 16 factories under operation since 2017 and there is little increase of membership of 25,950 STGs and tea cultivated area of 40,273 acres (Hannan, 2020c). The INDCOSERVE of representing INDCO Tea Factories are one of the largest producers and sellers of tea in Nilgiris commands around 20% of total production in the state (INDCOSERVE, 2006; Hannan, 2020c).

4.2 Mapping the Journey of INDCO Factories

77

Being a service facilitator, this organization ensures inputs to the STGs such as fertilizers, jute bags for made teas, spray machines, pruning and plucking machines to all growers-members of INDCO Tea Factories. It offers marketing of tea of INDCO factories and facilities for warehousing situated at Cochin, Coonoor and Coimbatore. It gives financial support to the member-growers at the time of need particularly during lean season. In order to uplift the STGs in Nilgiris, the role of Government of Tamil Nadu is path-breaking for Cooperative movement in tea economy in India and is also a challenge to the estate sector. No other states in India has taken this policy decision so far to promote STGs though we have as many as 15 states where tea is grown in small-scale sector. The STGs were able to realize a better farm-gate price for green leaf and sense of security for their profession and livelihoods. Hence, the recognition by the Government makes their life with difference as compared to other parts of the country. Table 4.1 reported that the 15 INDCO factories together have a collectively shared capital of Rs. 15.10 crores with Rs. 8.44 crores of ‘Government share’ and Rs. 6.66 crores of ‘Growers share’ invested in smallholder economy. In 2015–16, they produced 1.51 crore kg of made tea. The highest share of capital from STGs members Table 4.1 Profile of INDCO tea factories and their Hinterland in Nilgiris Tamil Nadu INDCO tea factories

Date of regn.

Kunda

26.09.58 29.02.62

0.28

1464

2293 0.49

0.54

1.03

Karumbalam 19.03.65 27.12.66

0.10

732

1441 0.28

0.18

0.46

Date of Installed No. of Area commence capacity STGs acres (crore/ member kg)

Govt. share (crores/ Rs.)

STGs share (crores/ Rs.)

Total share capital (crores/ Rs.)

Mercunad

26.02.65 20.05.67

0.16

1417

2268 0.41

0.34

0.75

Mahalinga

19.03.65 16.05.67

0.14

1404

2635 0.43

0.43

0.86

Manjoor

26.02.65 10.09.67

0.28

1411

2100 0.47

0.38

0.85

Ithalar

26.02.65 10.09.67

0.28

2015

2362 0.44

0.43

0.87

Pandalur

28.08.66 27.10.74

0.20

1533

2850 0.62

0.63

1.25

Kaikatty

27.02.73 24.12.76

0.13

1498

2342 0.38

0.35

0.73

Kattabettu

20.08.73 24.12.76

0.16

879

1705 0.39

0.22

0.61

Salisbury

04.02.80 05.09.83

0.28

1571

3569 0.65

1.26

1.92

Frontier

23.06.81 12.10.86

0.20

2073

2801 0.77

0.60

1.37

Kinnakorai

22.02.86 07.04.89

0.13

820

1303 0.53

0.29

0.82

Bikkatty

02.05.86 11.07.91

0.16

918

1101 0.73

0.37

1.10

Ebbanad

27.08.92 12.12.97

0.11

794

1685 0.89

0.18

1.08

Bitherkad

10.11.92 28.06.98

0.14

1106

1780 0.95

0.46

1.41

1958–92 1962–98

2.73

19,635

32,235 8.44

6.66

15.10

Source Based on data accessed from http://www.indcoserve.com (visited 2012, May 24); Hannan (2020c)

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4 Development of INDCO Tea Factories in Tamil Nadu

is found in Salisbury followed by Pandalur and Frontier factory. The government share of capital is highest in Bitherkad followed by Ebanad and Frontiers. It also revealed in Table 4.1 that there is no rational thought or standard method applied for the investment of government share in INDCO factories and it varies from one factory to other. Ideally, this should have been decided on the basis of number of STGs and their tea acreage in a factory catchment. It is also found that the INDCO factories which were established in 1970s have less government share while the factories of 1980s and 1990s have more capital flow from the government.

4.3 Employment Pattern in INDCO Factories and Their Farm Hinterland According to Tea Board of India sources (2017–18), the small-scale sector contributed around 46.91% of total made tea production in India. Their spatial distribution and vast geographical spread is found in sixty-six districts and fifteen states (Hannan, 2019b). It has been reported that approximately 2.51 people are dependent on this Unorganized sector of tea economy directly and indirectly to derive their livelihoods and in Tamil Nadu alone, it is around 8.84 lakhs people (Hannan, 2017). Two kinds of workforce are employed in INDCO tea factories in Nilgiris: (i) the workforce in farm production which may be regarded as agricultural operations; and (ii) the workforce who are working in tea factories and may be considered as industrial workers. In the farm operations, the STGs themselves and the hired labourers together are estimated at 64,921 persons directly (Table 4.2). The dependency level in farm sector alone is reported to 253,190 people in the state. The industrial labourers working in the factories are 1155 persons and their dependency level is worked out at 4505 people in Nilgiris (Hannan, 2020c). There exists inter-factory variation of employment in INDCO tea factories and farm labour in their hinterland. The Salisbury tea factory is the best performing among all units and it employs highest number of people. It has 142 labourers while the lowest is found in Karumbalam factory with 32 labourers only. It needs to be stated that as Salisbury tea factory is an efficient unit among all factories, it has been able to pay better price of green leaf to the STGs over the years. Three types of workers are employed in industrial units of INDCO tea factories: (a) Society staff, (b) Permanent workers and (c) Casual workers. Altogether in all INDCO tea factories, there are 132, 577, 446 persons in three categories respectively (Hannan, 2020). It is also noticed that only two permanent workers are engaged in Ebbanad factory which gives an impression of the functioning of the factory. In the farming operation again, the Salisbury hinterland has the highest number of workers with 6585 persons; and the Bikkatty hinterland has the lowest of 2465 persons (Hannan, 2020c). The break-up between the STGs and casual workers in the INDCO farming operations is estimated at 19,635 persons and 45,286 persons, respectively (Table 4.2).

23

59

48

22

7

11

9

6

12

10

5

20

13

9

Mercunad

Mahalinga

Manjoor

Ithalar

Pandalur

Kaikatty

Kattabettu

Salisbury

Frontier

577

132

Dependency level

446

18

34

33

24

5

63

20

34

47

52

16

23

38

7

32

1155

60

38

84

55

66

142

48

79

111

101

81

56

100

32

102

4505

234

148

328

215

257

554

187

308

433

394

316

218

390

125

398

19,635

1106

794

918

820

2073

1571

879

1498

1533

2015

1411

1404

1417

732

1464

45,286

2501

2367

1547

1831

3935

5014

2395

3290

4004

3318

2950

3702

3186

2024

3221

Casual worker

64,921

3607

3161

2465

2651

6008

6585

3274

4788

5537

5333

4361

5106

4603

2756

4685

Total worker

253,190

14,066

12,329

9613

10,337

23,431

25,681

12,770

18,674

21,594

20,800

17,009

19,913

17,953

10,750

18,273

Dependency level

Note Factory/Industry—to arrive at ‘dependency level’ is worked out based on total workers employed multiplied by avg. size of household; Farm/ Agriculture—dependency level is worked out based on number of STGs plus per Ha labour absorption in Tamil Nadu multiplied by average household size as per census 2011; e.g. dependency level = [(no of STGs + (per ha labour absorbtion × area under tea)) × average size of household] (Hannan, 2017; Hannan, 2020c). Source Computed and estimated from the data retrieved from http://www.indcoserve.com (visited 2012, May 24); Hannan (2020c)

INDCOSERVE

7

Bitherkad

2

35

2

Ebbanad

40

11

Bikkatty

35

52

43

56

22

55

22

3

Karumbalam

63

7

Kinnakorai

Total worker

Workforce (no.) in farm (agriculture)

Casual worker

Number of STGs

Permanent worker

Workforce (no.) in factory (industry)

Society staff

Kunda

INDCO factories

Table 4.2 Employment and livelihoods in INDCO factories and farm Hinterland in Nilgiris (2010–11)

4.3 Employment Pattern in INDCO Factories and Their Farm Hinterland 79

80

4 Development of INDCO Tea Factories in Tamil Nadu

The wide variations of workforce in INDCO tea factories indicate that there is an inadequate utilization of available resources and excessive bureaucratic control in running the tea factories. Ideally, the STGs are members and they have share capital in all the INDCO factories and every member-grower would wish to enhance their income by putting their best either in terms of their quality green leaf production and increase in productivity. The study Bhowmik (1997) stated that all the INDCO tea factories have their democratically elected ‘Boards of Directors’ and any point of time the member-growers would always want to improve the factory capacity and facilitate better extension services and outreach programme to the growers. Therefore, if it happens, there would be drastic changes of employment as well as payment for green leaf price would rise and made tea prices would also increase, but it has not happened in case of INDCO tea factories. Some are receiving better prices while others are somehow thriving to survive. Therefore, it is an unspoken truth that any capacity increases of the INDCO tea factories and efficient optimum utilization of their resources would demand higher labour force which has not resulted in this case. So, the nature of governance and functioning of INDCO tea factories needs to be revisited for better sustainable planning in future and also to safeguard the economy of tea cooperatives in Nilgiris.

4.4 Disparities in Performance of INDCO Factories Table 4.3 describes the comparative performance of the INDCO Tea Factories over the past one decade (2005–05 to 2016–17). It is a remarkable fact that the lossmaking factories was fourteen and highest in 2014–15, nine in 2007–08 and seven in 2005–06 (Table 4.3). However, it has been reduced to five in 2016–17. This trend itself shows a question mark in their functioning. It indicates that the functioning of INDCO factories is not the same though it is managed by democratically elected ‘Board of Directors’, similar governance structure under a single apex body called INDCOSERVE. The cumulative loss of INDCO tea factories is reported to be Rs. 33.89 crores as on March 2016 (Pitchai and Akilandeeswari, 2016). The highest cumulative loss is incurred by Ebbanad followed by Bitherkad and Kinnakorai of Rs. 9.25 crores, Rs. 5.11 crores, Rs. 3.83 crores, respectively. On the brighter side, the Manjoor, Pandalur, Kaikatty and Salisbury have performed better and reduced their cumulative loss over the years. This signals that there is a possibility of improvement if robust assessment techniques, digital governance in all transactions, effective monitoring in the entire chains and optimum resource utilization in factories are implemented. The factories must have quarterly general meetings and disseminate the outcomes and problems to the member-growers as it may bring better transparency and accountable participatory forms of governance.

4.5 Issues of Cost of Production: Farm and Factory

81

Table 4.3 Performance of INDCO factories (2005–06 to 2016–17) Years

No of tea factories

2005–06

15

38.01

42.89

8

7

2006–07

15

55.20

66.88

12

3

2007–08

15

47.93

58.07

6

9

2008–09

15

89.32

96.49

13

2

2009–10

15

116.48

114.67

9

6

2010–11

15

80.43

82.71

15

0

2011–12

15

120.11

95.10

15

0

2012–13

15

140.09

140.55

15

0

2013–14

15

142.12

133.46

9

6

2014–15

15

103.17

98.23

1

14

2015–16

15

102.37

101.83

9

6

2016–17

15

129.20

125.01

10

5

Total production Total sales of of made tea made tea (crore (crore Rs.) Rs.)

No of profit tea factories

No of loss tea factories

Source http://www.indcom.tn.gov.in/tea_sector.html (visited 2017, August 24 and 2018, October 13)

4.5 Issues of Cost of Production: Farm and Factory Since there are two types of production: ‘Green Leaf’ at farm and ‘Made Tea’ in factory in the small-scale sector unlike the estate gardens where farm and factory operate under the same integrated enterprise. Hence, the ‘Cost of Production’ is taken separately in this case. Secondly, there has been lack of studies on the issue of ‘Cost of Production’. Before 1990s, Tea Board of India used to bring Tech-Economic Surveys in different states where the Cost of Production was shared. But nowadays, the Tea Board has stopped publishing such studies. However, with the available studies of Tea Board of India and Krishi Vigyan Kendra, Coonoor, an attempt is made to understand the phenomenon of ‘Cost of Production’ and its importance in safeguarding the small-scale sector in the country. An estimation of the ‘Cost of Production’ has also been attempted by the researcher in collecting primary data in three SHGs run factories situated in Dooars region of West Bengal and described in detail in Chap. 5.

4.5.1 Cost of Farm Production (Green Leaf) The ‘operational cost’ in STGs garden varies from one region to other and one grower to other. Local climate, soil characteristics, management of the garden, efficiency and personal supervision of the grower, etc. play a major role in production, which finally

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4 Development of INDCO Tea Factories in Tamil Nadu

add to cost of cultivation. The Institute of Cost and Works Accountants of India, New Delhi has studied in major small tea growing states in India such as Assam, West Bengal, Bihar, Tripura and Himachal Pradesh in North India; and Tamil Nadu and Kerala in South India (CEC, 2007; Hannan, 2007, 2008). This is a first All India Study by Tea Board of India on ‘Cost of Production’ on STGs sector. Though the study has gaps, it is a first step of measuring the efficiency of STGs sector. It is shown in Table 4.4 that the per acre yield is highest in Assam of 5023 kg followed by Bihar and West Bengal of 4750 kg and 4651 kg, respectively (CEC, 2007; Hannan, 2007, 2008). The lowest yield is found in Himachal Pradesh of 2376 kg. The cost of green leaf production per kg is highest in Himachal Pradesh followed by Kerala and it is Rs. 7.62 and Rs. 6.31, respectively (Table 4.4). The cost of farm production has also been estimated by Krishi Vigyan Kendra Coonoor in Nilgiris (Tables 4.5 and 4.6). Based on the ideal agricultural practices and improved productivity, the study shows that in Seedling STGs gardens per kg green leaf production cost is Rs. 6.00 and in Clonal gardens, it is Rs. 5.75 considering volume of green leaf production per acre of 3200 kg and 5000 kg, respectively (CEC, 2007; Hannan, 2007, 2008). All the assumptions are made by them is an ideal situation, but actually the practices on ground vary over localities and from one garden to another and deviate from the guidelines prescribed by ‘Krishi Vigyan Kendra’ Coonoor. But one remarkable finding is noticed out of this estimation which has relevance in all time. The percentage share in ‘Cost of Production’ is 49.99% for plucking only. The other major shares are manuring and pest control of 19.52 and 10.55% (Table 4.5). All three together consist of 80% expenditure in managing farms. The other two major components are weed control and leaf transport which together composed of another 10–11% cost. The leaf transportation is important for small growers as their farm size is small and they can thrive collectively. Difficulty in leaf transportation and small size of farms have led the growth of leaf agents to facilitate the transportation services to the growers in case of BLFs. All these indicate areas of concern in managing efficiency as well as farm production. It is noticed that seedling tea plants are more resistant to pest attack as comparde to clonal tea plants and the quality of green leaf is better in seedlings. Plucking cycles Table 4.4 Cost of green leaf production in India (2006) (as per the study of Institute of Cost and Work Accountants of India, New Delhi) Small-scale tea growing states

Yield/acre (kg)

Cost of green leaf production (per kg/Rs.)

Assam

5023

6.29

West Bengal

4651

6.27

Bihar

4750

5.80

Tripura

3484

5.07

Tamil Nadu

3917

5.33

Kerala

4392

6.31

Himachal Pradesh

2376

7.62

Source Tea Board of India (2006), CEC (2007), Hannan (2007, 2008)

4.5 Issues of Cost of Production: Farm and Factory

83

Table 4.5 Cost of farm production in seedling tea in Nilgiris (2007) (yield 3200 kg per acre/per year) Sl. No.

Nature of work

Cost of cultivation (Rs./per ha)

Percentage share in cost of cultivation

Cost of green leaf production (Rs./per kg)

1

Manure

3748.38

19.52

1.17

2

Pest control

2026.00

10.55

0.63

3

Weed control

1125.40

5.86

0.36

4

Shade regulation

375.00

1.95

0.12

5

Growth promoter and nutrients

1065.30

5.55

0.33

6

Plucking

9600.00

49.99

3.00

7

Plucking incentives

160.00

0.83

0.05

8

Leaf transport, bags etc.

1100.00

5.73

0.34

19,200.08

100.00

6.00

Total

Source Based on unpublished data of ‘Krishi Vigyan Kendra’, Coonoor

Table 4.6 Cost of farm production in clonal tea in Nilgiris (2007) (yield 5000 kg/per acre) Sl. No.

Nature of work

Cost of cultivation (Rs./per ha)

Percentage share in cost of cultivation

Cost of green leaf production (Rs./per kg)

1

Manure

4441.17

15.44

0.89

2

Pest control

6260.00

21.76

1.25

3

Weed control

1350.40

4.69

0.28

4

Shade regulation

375.00

1.30

0.08

5

Growth promoter and nutrients

1737.45

6.04

0.34

12,480.00

43.39

2.50

520.00

1.81

0.10

1600.00

5.56

0.32

28,764.02

100.00

5.75

6

Plucking

7

Plucking incentives

8

Leaf transport, bags etc.

Total

Source Based on unpublished data of ‘Krishi Vigyan Kendra’, Coonoor

are longer in case of seedling plants and the productivity is low. As mentioned in Tables 4.5 and 4.6, it is 3200 kg/per acre in seedling plants and 5000 kg/acre in clonal plants. In Nilgiris, STGs gardens are mixed in both clonal and seedling plants. In case of clonal plants, the ‘Cost of Production’ is almost 80% in manure, pest control and plucking green leaves together. However, one major difference is found that the pest control cost is 21.76% in clonal plants whereas it is 10.55% in seedling plants. Other side, the green leaf production per unit of land is higher in clonal gardens as

84

4 Development of INDCO Tea Factories in Tamil Nadu

compared to the seedling gardens. It should also be reported that most of the states of STGs prefer to plant clonal varieties as they require less gestation period. It is particularly practised in small-scale tea sector with an expectation of higher harvest and crop production as their land units are small in size. However, all these studies hinges on better farm management and quality of inputs, pruning cycle and plucking standards, etc. Such attempts have not been continued on regular basis to monitor the situation on the ground on STGs sector. The regulatory agencies like INDCOSERVE and Tea Board of India should have made periodic attempts to study the ground situations and make policy recommendation which is not happening presently.

4.5.2 Cost of Factory Production (Made Tea) The first systematic study on ‘Cost of Production’ in tea processing to convert green leaf to made tea is attempted in 1976 by Tea Board of India in INDCO factories, Nilgiris. Based on balance sheet of nine cooperative factories, it was found that the overall cost of processing averaged of Rs. 8.17 per kg of made tea. It ranged from Rs. 6.86 to Rs. 8.99. The average price realization of the INDCO tea factories was in the range of Rs. 7.32 to Rs. 9.80 per kg and the overall average worked out to Rs. 8.47 (Tea Board of India, 1980). It was assumed that all the cooperative factories had shown a profit in 1976, but detailed analysis indicated that out of nine factories only four had shown profit while five others were run under loss (Tea Board of India, 1980). Therefore, an attempt has been made to analyse and understand the Salisbury INDCO which is a profit-making factory among all 15 INDCO tea factories. ‘Case Study 1’: The Salisbury INDCO Tea Factory, Nilgiris It is seen in Table 4.7 that the cost of green leaf processing of the Salisbury INDCO Tea Factory is Rs. 14.58 in the month of July 2006 and the average cost of processing in the first financial quarter, i.e. April to June 2006 is Rs. 13.10 (Table 4.7). The leaf transportation is assured by factory and expenses are borne by INDCO factory only, i.e. from garden to factory and it is included in the cost of processing. It is also evident that 75.47% share is paid for the green leaf which is contradictory to the existing ‘Price-Sharing Formula’ of Tea Board of India ever after providing the leaf transportation by the factory (Table 4.7). Under this formula a cap of 60% of sale is to be shared to the STGs either by Estate Factory or BLFs. This demands transparency and studies on ‘Cost of Production’ by the regulatory agencies like Tea Board of India and Ministry of Commerce, Government of India on regular basis. ‘Case Study 2’: INDCOSERVE—The Tamil Nadu Small Tea Growers’ Industrial Co-operative Factories’ Federation Limited In corresponding period as mentioned above, it is seen in Table 4.8 that the cost of green leaf processing in INDCO Tea Factories together is a little higher and it is Rs. 16.72 for the month of July 2006 and Rs. 18.64 for the first financial quarter from

4.5 Issues of Cost of Production: Farm and Factory

85

Table 4.7 Cost of processing of green leaf to made tea at Salisbury Tea Factory (Rs./per kg) Items

Cost of green leaf processing (Rs./per kg) July 2006 Amount (Rs./per kg)

Green leaf Leaf collection expenses

April to June 2006 Percentage share

Amount (Rs./per kg)

Percentage share

44.85

75.47

38.42

74.57

1.51

2.54

1.28

2.48

Fuel (firewood)

2.64

4.44

2.83

5.49

Power (electricity)

3.15

5.30

2.95

5.73

Wages

1.99

3.35

1.41

2.74

Factory overheads

2.53

4.26

2.16

4.19

General overheads

1.09

1.83

1.04

2.02

Packing

0.78

1.31

0.78

1.51

Tax

0.30

0.50

0.30

0.58

Transport of made tea

0.59

0.99

0.35

0.70

Total

59.43

100.00

51.52

100.00

Cost of processing

14.58

24.53

13.10

25.43

Source Based on unpublished data of Salisbury INDCO tea factory

April to June 2006 (Table 4.8). The difference between Salisbury Tea Factory and INDCO Tea Factories together in the month of July 2006 is Rs. 2.75 made tea/per kg and in the first financial quarter from April to June 2006 is Rs. 5.54 made tea/per kg (Tables 4.7 and 4.8). It is evident that the efficient management and optimal use of the resources have a relationship on the cost of processing. Moreover, general overheads charges increases while considering all the INDCO Tea Factories collectively. This happens due to the underperforming factories while taking all the units together. The payment share to the green leaf is 63.93% after giving the leaf transportation by the factory which again questions the cap of Price-Sharing Formula of Tea Board which gives share at a ratio of 60:40 between the STGs and factories. It is evident in Tables 4.7 and 4.8 that there are differential outcomes in terms of cost of processing within INDCO factories. The cost of made tea processing is only 25% in case of Salisbury INDCO factory separately but it increases up to 40% when all the INDCO factories are taken together into account. On the other, the increase in cost of processing reduces the share of STGs cap in green leaf pricing which is reduced to 60% from 75% in case of INDCOSERVE and Salisbury, respectively. This is a reflection of efficient management of INDCO tea factories and their governance and resource utilization. All these studies on ‘Cost of Production’ in farm

86

4 Development of INDCO Tea Factories in Tamil Nadu

Table 4.8 Cost of processing of green leaf to made tea of INDCOSERVE (Rs./per kg) Item

Cost of green leaf processing (Rs./per kg) July 2006 Amount (Rs./per kg)

Green leaf Leaf collection expenses

April to June 2006 Percentage share

Amount (Rs./per kg)

Percentage share

29.63

63.93

27.57

59.66

0.93

2.01

0.53

1.15

Fuel (firewood)

3.40

7.34

4.34

9.39

Diesel

0.08

0.17

0.44

0.95

Power (electricity)

3.51

7.52

3.29

7.12

Wages

1.73

3.73

2.55

5.52

Factory overheads

3.79

8.18

1.66

3.59

General overheads

2.02

4.36

4.13

8.94

Packing material

0.80

1.73

0.77

1.67

Tax (excise duty)

0.30

0.65

0.30

0.65

Transport of made tea

0.16

0.35

0.63

1.36

Total

46.35

100.00

46.21

100.00

Cost of processing

16.72

36.07

18.64

40.34

Source Based on unpublished data of INDCOSERVE, Coonoor, CEC (2007), Hannan (2007, 2008)

and factory recommend that the Tea Board of India cannot be silent in years and demands comprehensive studies on every five-year basis to have their policy update and justify welfare and livelihood security of the STGs in India as in case of Sri Lanka and Kenya.

4.6 Differential Outcomes of INDCO Factories in Post-reform Period The INDCOSERVE in Nilgiris as an apex body manage all the INDCO tea factories and they are regulated, controlled, supervised and monitored. The governance structure is same and functioned under the acts, statutes and rules framed by the Government of Tamil Nadu. But it is reported from the facts that the performance of the 15 INDCO tea factories during the period from 1991 to 2016 is not uniform (Hannan,

4.6 Differential Outcomes of INDCO Factories in Post-reform Period

87

2020c). The results are varied and exceedingly unusual. A spatio-temporal analysis is undertaken for the reference period. The data is captured for six different time periods, i.e. 1990–91, 1995–96, 2000–01, 2005–06, 2010–11 and 2015–16 with an interval of five years and analysed. The outcomes and results are shown in Table 4.9. Ten indicators are chosen to understand and assess the situation of all the INDCO tea factories: (i) farm size, (ii) green leaf procurement, (iii) yield rate of green leaf, (iv) processing of made tea, (v) yield rate of made tea, (vi) out turn percentage of made tea, (vii) sale of made tea, (viii) value of made tea, (ix) average price realized and (x) green leaf price paid to the farmers etc. Results and Discussions: Intra-Variation and Outcomes (1990–91 to 2015–2016) The membership status of INDCO tea factories have increased from 19,842 (1990– 91) to 25,103 (2015–16) and the average farm size has reduced to 1.45 acres from 1.61 acres. But the yield rate of green leaf is improved from 1357 to 1600 kg/acre during the corresponding period. It indicates that farm sector is showing better performance. The ‘outturn percentage’ has presented a little increase from 25.23 to 25.98%. This trend also highlights the fact that the green leaf in farm sector has improved and resulted in higher outturn in made tea. This is connected with macro policies of Tea Board of India particularly the ‘Price-Sharing Formula’. The ‘Outturn Percentage’ Table 4.9 Index of performance of INDCO tea factories (1990–91 to 2015–16) Indicators/years

1990–91 1995–96 2000–01 2005–06 2010–11 2015–16

No of STG members

19,842

19,842

19,842

20,049

19,635

25,103

Tea acreage

32,042

32,042

32,042

31,849

32,235

36,298

Average farm size (acres)

1.61

1.61

1.61

1.59

1.64

1.45

Green leaf purchased (crore kg)

4.35

5.02

5.37

4.76

6.28

5.81

Yield of green leaf (kg/per acre)

1357.50

1566.97

1677.17

1493.67

1946.89

1600.97

Made tea produced (crore kg) 1.10

1.29

1.38

1.23

1.66

1.51

Yield of made tea (kg/per acre)

342.55

403.35

431.84

387.52

514.50

415.86

Out turn percentage

25.23

25.74

25.75

25.94

26.43

25.98

Tea sale (crore kg)

1.08

1.35

1.42

1.24

1.69

1.60

Value of tea sales (Rs. in crore)

37.06

53.93

52.30

42.90

91.77

101.84

Average price (per kg)

34.18

Average green leaf price paid 6.75 (per kg)

39.81

36.84

34.66

54.26

63.49

7.66

5.89

4.80

8.48

8.94

Note No of STG members and tea acreage is taken as average of 2006–07 and 2010–11 for 1990–91, 1995–96 and 2000–01 Source Calculated by Author from the data retrieved from http://www.indcoserve.com (visited 2012, May 24) and http://www.ica-ap.coop/sites/ica-ap.coop/files/Dr._C._Pitchai__Sr._ No._11.PDF (visited 2017, August 24)

88

4 Development of INDCO Tea Factories in Tamil Nadu

in the formula is fixed at 23% while in actual data it is showing near to 26%. This may be considered as policy exclusion by the Tea Board introduced sometime in 2004 and it has not been revisited with a time bound detail study. It is also found that in 1990–91, farmers were paid for the green leaf paid at Rs. 6.75 per kg which further declined at Rs. 4.80 per kg in 2010–11 (Hannan, 2020c). In 2015–16, there is an increase of Rs. 8.94 per kg. All these trends from Table 4.9 identify and support the fact that the tea farmers are barely getting their optimum green leaf prices and put forward a question whether the ‘Cost of Production’ is met at the farm sector of INDCO factories. 1990–91 It is found that a sharp variation exists in optimal use of resources in different tea factories. The lowest green leaf procurement is evident in Pandalur with 0.19 crore kg and the highest in Kunda with 0.60 crore kg. This has reflected in pricing of green leaf to the growers of Rs. 5.92 and Rs. 7.99, respectively. The yield of green leaf also varies and the highest yield is found in Kunda with 2605 kg/per acre (Hannan, 2020c). The lowest yield is only 657 kg per acre in Pandalur and the range of gap is almost 2000 kg per acre. The realization of average price of made tea per kg vary from Rs. 32 to Rs. 35. The outturn percentage varies significantly among factories and it ranges from 23 to 27%. It indicates made tea quality produced by a particular factory and the quality of green leaf accepted from the member-growers. The higher ‘Outturn Percentage’ is positively related to quality green leaf and made tea simultaneously which is connected with better price realization in market. 1995–96 The green leaf procurement varies from 0.07 crore kg in case of Karumbalam to 0.73 crore kg in Salibury. The price of green leaf paid Rs. 6.17 in Frontier factory and Rs. 8.27 in Kunda. The yield of green leaf was the highest in Salisbury with 2233 kg per acre and lowest in 501 kg per acres in Karumbalam (Hannan, 2020c). The average price realized for made tea per kg ranges from Rs. 37.18 to Rs. 41.59. The ‘Outturn Percentage’ of made tea ranges from 22.82 to 28.80%. The average green leaf price per kg paid to the growers is Rs. 6.17 in Frontier (lowest) to Rs. 8.63 in Karumbalam (highest). 2000–01 The procurement of green leaf is highest in 0.65 crore kg in Pandalur and lowest in Ebbanad with 0.15 crore kg. The yield is high in Pandalur of 2252 kg/per acre and low in Ebbanad of 905 kg/per acre (Hannan, 2020c). The ‘Outturn Percentage’ differs from 24.15 to 28.27%. The range of per kg made tea price realization is Rs. 31.27 in Kattabettu to Rs. 41 in Salisbury. The highest green leaf per kg price paid by Kaikatty is Rs. 6.25 and Frontier paid the lowest of Rs. 5.48. 2005–06 There is a sharp contract of procurement of green leaf ranging from 0.08 crore kg in Ebbanad to 0.96 crore kg in Salisbury (Hannan, 2020c). It reflects in yield

4.7 Unhealthy Competition of Cooperatives and Bought-Leaf Factories

89

pattern of green leaf in both factories from 482 kg per acre to 3290 kg per acre. This indicates the effective guidance, extension services and optimal use of land resources by the respective factories though all of them are regulated and monitored by INDCOSERVE as central body of all factories. This has resulted in pricing of green leaf paid per kg which ranges from Rs. 4.10 to Rs. 6.69 in Ebbanad and Salisbury, respectively. There is a gradual progress of ‘Outturn Percentage’ ranging from 24.48 to 27.56%. 2010–11 The green leaf procurement is all time high during the period of 1990–91 to 2015–16 which is 6.28 crore kg collectively. The Salisbury factory achieved their credentials and reached the highest procurement of 1.18 crore kg. In fact, the Kunda factory used to outperform during 1990s. The yield of green leaf is the highest in Salisbury of 3306 kg per acre (Hannan, 2020c). The price of per kg green leaf paid to farmers is Rs. 10.51 in Salisbury while the lowest price paid by Ebbanad of Rs. 7.24. A contrasting picture of ‘Outturn Percentage’ varies from 20.67% in Ithalar to 36.59% in Kattabettu. 2015–16 The overall procurement of green leaf dropped with 5.81 crore kg. The ‘Outturn Percentage’ is 25.98%. An improvement of green leaf price is evident and it is paid of Rs. 8.94 per kg due to realization of better price of made tea. Another noticeable fact is that the price of per kg green leaf was Rs. 6.75 in 1990–91 when the average price of per kg made tea was Rs. 34.18, but it paid Rs. 8.94 per kg in 2015–16 when the average price of made tea is Rs. 63.49 per kg (Hannan, 2020c). It is near to double but the grower’s payment has not increased proportionately.

4.7 Unhealthy Competition of Cooperatives and Bought-Leaf Factories The BLFs are those factories which do not have plantations of their own and purchase green leaf from small growers to manufacture made tea and they came into existence in the state of Tamil Nadu and Kerala after 1963–64 (Tea Board of India, 1980). In 1980, there were 75 BLFs in three sub-divisions of district Nilgiris: Coonoor, Ooty (74) and Gudalur (01). In Table 4.10, a comparative picture of the number of tea factories during pre-reform (before 1991) and post-reform (after 1991) in Nilgiris is shown. The number of BLFs increased to 156 in the year 2000 and 181 in 2011 but the INDCO tea factories remain constant till date. The capital flow to INDCO tea factories is Rs. 15.10 crores and the BLFs have an estimated capital of Rs. 182.21 crores during 2010–11 (Table 4.10). This is also an indication that either cooperatives are not in a position to regain its strength or there is lack of initiatives and political

90

4 Development of INDCO Tea Factories in Tamil Nadu

will to support this existing model of state. The sudden growth of BLFs in postreform period has monopoly of green leaf market and INDCO tea cooperatives have not been able to channelize resources and capital to upgrade their production and market share in Nilgiris. In Table 4.11, a comparison is made to show the relative share of Organized sector (Estate) and Unorganized sector (STGs) including Cooperatives and BLFs during the period from 1998 to 2019. It is seen that production contribution of Cooperatives remains almost stagnant over the years while BLFs the production level increased from 48.14 million kg to 68.72 million kg (Table 4.11). There is also substantial increase of production in estate sector from 93.97 million kg to 124.78 million kg (1998–2007), but it is to be mentioned here that the STGs also sell their green leaf to the estate gardens besides BLFs and Cooperatives. It seems private sector has grown in size but the Cooperative sector is remaining stagnant and lagging behind to harness optimum potential despite the increase of STGs in tea acreage in Nilgiris. As per aggregate data available from Tea Board of India (2017–18), the state of Tamil Nadu produced 164.40 million kg of made tea of which estate garden shares 63.42 million kg (38.58%) and the STGs 100.98 million kg (61.42%). In 2018–19, the estate sector contributed 62.09 million kg and STGs with 98.06 million kg and their percentage share is 38.77% and 61.23%, respectively. This reveals that small-scale sector is growing very fast in Nilgiris as well as in Tamil Nadu, yet the Government of Tamil Nadu has not extended much attention in the expansion of cooperative sector in the state. It is knowingly realized that there is silent promotion of private sector which has already monopolized the green leaf market which is impacting the Unorganized sector, and the trade relations are more in favour of corporates than the local people and their livelihoods in the state. Table 4.10 Cumulative growth of INDCO factories and bought-leaf factories in Tamil Nadu Co-operative factories

Bought-leaf factories

No. of INDCO factories

Capital (Rs. in crore)

No. of bought-leaf factories

1975–1991

13

NA

75

NA

1990–2000

15

NA

156

NA

2001–2011

15

15.10

181

182.21

Period

Estimated capital (Rs. in crore)

Note Capital of INDCO factories is taken as base during (2010–11) for the estimation of capital in bought leaf factories Source Computed from INDCO data and various volumes of tea statistics

4.8 Concluding Remarks

91

Table 4.11 Comparative growth of sub-sectors of tea industry in Nilgiris (1998–2007 and 2018–19) (production in million kg) Years

STGs in Nilgiris INDCO factories

STGs combined BLFs

Tamil Nadu total

No

Production No

1998

17

11.16

151 48.14

168

59.30

93.97

153.27

1999

17

13.11

151 52.39

168

65.50

94.62

160.12

2000

17

13.60

156 62.95

173

76.55

95.19

171.74

2001

16

12.80

156 65.87

172

78.67

96.09

174.76

2002

16

11.19

157 65.31

173

76.50

112.84

189.34

2003

15

14.06

178 73.81

193

87.87

133.56

221.43

2004

15

14.12

181 78.52

196

92.64

129.75

222.39

2005

15

12.52

146 67.53

161

80.05

125.68

205.73

2006

15

14.32

146 70.56

161

84.88

124.97

209.85

2007

15

13.70

146 68.72

161

82.42

124.78

207.20

–

–

98.06

62.09

160.15

2018–19 16

–

Production No

Estate gardens

–

Production Production Production

Source Computed from tea statistics and tea digest

4.8 Concluding Remarks Firstly, the ‘Cost of Production’ for the Unorganized sector is studied and estimated by the Institute of Cost and Works Accountant, New Delhi supported by Tea Board of India (2006). Thereafter, no such attempt has been made to review the situation and assess the Cost of Production either in Nilgiris or whole of India. It is to be reported that in 2006–07, the Unorganized sector contributed only 20–25% of tea production in India but in 2018–19, nearly 50% of made tea production is contributed by this sector. It invites timely and periodic study and policy prescriptive for the safeguard of STGs and realization of minimum support price. Secondly, the share capital of INDCO factories is Rs. 15.10 crores: share of STGs is Rs. 6.67 crores and Government of Tamil Nadu is Rs. 8.44 crores. It is interesting to note that before 1991, there were 13 INDCO factories in operation and 75 BLFs but in 2010–11 the number of INDCO factories remained to 15 only whereas the number of BLFs increased exponentially up to 181. The estimated private capital stimulated in the unorganized sector in the post-reform period is around Rs. 182 crores considering the base as INDCO factories in Tamil Nadu (Hannan, 2020c). This unmatched investment during short span of time has monopolized the green leaf market of unorganized sector particularly purchase of green leaf from STGs whereas there is no new investment or expansion initiative is taking place in case of INDCO tea factories or Tea Board of India. Thirdly, the journey of INDCO factories is very fluctuating over the years. As per available data of Commissioner of Industries and Commerce, Government of Tamil Nadu, out of 15 INDCO tea factories 14 were running at loss. The cumulative loss of INDCO factories is around Rs. 34 crores as on 31.03.2016. Despite its ups

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4 Development of INDCO Tea Factories in Tamil Nadu

and downs and sluggish growth, no constructive effort is made by INDCOSERVE to seek for financial relief and modernization of factories either from ‘Government of Tamil Nadu’ or ‘Tea Board of India’. The financial position of INDCO factories is unstable. The Tea Board of India has constituted Small Tea Grower Development Directorate (SGDD) in 2013 (Hannan, 2020b). During 12th five-year plan, an outlay and expenditure of SGDD was Rs. 200 crores and Rs. 35 crores (Tea Board of India, 2016, 2017). The INDCOSERVE and the Government of Tamil Nadu should have attracted to the Board for the planned allocation despite their uprising presence Unorganized sector in the state. A look out for new investment in upgradation of machineries with a support of Tea Board of India and Ministry of Commerce and Industry, Government of India is necessary which is absent currently. Fourthly, as known the outcomes are not uniform among all INDCO tea cooperatives and intravariations are evident. All the factories are not performing as profit-making units which have impacted STGs to receive better price for green leaf. That’s why a critical enquiry and rectification of INDCOSERVE and INDCO factories are to be studied thoroughly. The internal structure of the institution and its governance seems to be fractured and economy of each of the factory, their infrastructure and optimal resource utilization are to be assessed separately time to time and necessary decisions and recommendations are to be implemented. Lastly, the external economies influence the tea industry in general and the Unorganized sector in Nilgiris in particular. The entry of private capital surrounds the small-scale farming sector but there is absence of new initiatives coming in INDCO Cooperative especially during the post-reform period. Therefore, this sector is facing crisis to overcome the monopoly of BLFs and private players. The ‘Government of Tamil Nadu’ and ‘Tea Board of India’ deliberately ignored it though it employs nearly three lakhs of people in the state directly and indirectly. Therefore, the INDCO tea factories require new investment of capital from the state agencies to compete and enhance their efficiency, their scale of operations and make value additions as per the demand of market. The withdrawal of state agencies may further push the Unorganized sector into deplorable situation in the tea supply chain to sustain their small-scale economies.

Chapter 5

Mapping the Tea Producing Societies (SHGs) in India

Abstract This chapter explores the visibility of tea smallholders in the supply chain of tea industry in India. As known fact, the smallholder farms are unorganized and disintegrated, fragmented holdings, low economies of scale and out of influence of the formal financial institutions and credit sources. Their formal recognition is yet to reach the fullest potential in the small tea growing states and absence of appropriate policy disregards their existence and formalizes economies. Very few STGs are registered with Tea Board of India. Considering all factors, the Tea Board of India introduced collectives or group approach in the form of Tea Producing Societies (SHGs) during Tenth Plan period. The Tea Producing Societies (SHGs) are identified as the lowest-order business models in the tea supply chain and allows visibility of smallholders in the tea industry. These Societies have improved somehow their bargaining strength of growers across the States and resulted into better deal and business linkages with BLFs. It further elaborates the available policy options for Tea Producing Societies (SHGs) in Indian context and analyses its changes over the different plan periods during 10th, 11th and 12th plan of Tea Board of India and identifies the types of extension services and skills development measures provided to SHGs. The agrarian relations of Tea Producing Societies (SHGs) in their hinterlands in four states, i.e. Assam, West Bengal, Tamil Nadu and Kerala are highlighted. The relevant issues like cost of production and processing, outturn percentage, farm-gate green leaf price realization, quality measurement techniques of green leaf assessment, etc. are mentioned. It is observed from the field that in Dooars region of West Bengal only tea district in the country where smallholder SHGs have managed to established tea factories with the financial support of Tea Board on India and process green leaf and participate in tea marketing. The governance and emergence of new institutions with regard to small-scale tea cultivation in India have been discussed during the period 1960–2017. To cater to the needs of smallholders, several news institutions have been innovated in their governance. The Cooperative Factories (CPFs), Bought-Leaf Factories (BLFs), Tea Producing Societies (SHGs), etc. are new to tea economy. Similarly, the Confederation of Indian Small Tea Growers Associations (CISTA) was formed in 2007 as an apex body of all STG Associations in different states in India. The Small Growers Development Directorate (SGDD) and Sub-Regional

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 A. Hannan, The Smallholder Tea Economy and Regional Development, https://doi.org/10.1007/978-3-031-51812-6_5

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Offices (SROs) of Tea Board of India during 12th plan are some of the important institutions came up to fulfill the needs of small-scale sector. Keywords Tea producing societies (SHGs) · Dooars · Agrarian relations · Governance · CISTA · SGDD

5.1 Tea Producing Societies (SHGs) and Collectivization of STGs The Tea Producing Societies (SHGs) are collective body of individuals joining hands together to achieve a common goal or purpose for their sustainable living and deriving livelihoods from the use of common pool of resources and attain a kind of formal recognition of the agencies of state. The SHGs are voluntary union of peer groups formed for mutual benefit and assistance in achieving socio-economic and healthcare purposes among the people with similar problems and experiences (Bagheri & Nabavi, 2007). These are village-level organizations which focus on developing savings and credits of rural people and their social empowerment and provide a platform for mutual economic benefit and assistance. The SHGs differ from traditional micro-finance groups or institutions which they rely on external finance (Ban et al., 2020). This SHGs model has been conceptualized by the World Bank. Later on, it has been implemented in many sectors as group approach and applied in different countries particularly in developing countries of Asia and Africa. The Tea Board of India also applied this model in Unorganized sector to make small-scale farmers more viable and to share the resources collectively. As mentioned in earlier chapters, the farm size of the tea growers are small and uneconomic to manage all the operations. This SHGs model was introduced by Tea Board of India during 10th five-year (2002–07) plan and reviewed in the 11th plan (2007–12) and continued in the 12th plan (2012–17). The Tea Producing Societies (SHGs) are lower-order institutions or enterprises in the tea supply chain and found to be successful to some extent (Hannan, 2018b). The pre-conditions to set up the SHGs might vary with geographies and regions and it is evident from the field experiences and interactions. During the 10th to 12th Plans of Tea Board, several measures and initiatives are taken and financial assistance are provided to enhance and improve their capacities. The efficient farm management, leaf collection and storage, transportation facility and digital payments in trading green leaf and scientific accounting system, etc. are few such initiatives. The Tea Board of India introduced various schemes and provisions which were implemented from time to time such as: revolving or corpus fund, capital cost of godown construction and office, green leaf shed, weighing scale, pruning machine, harvesting machine, plastic crates and nylon bags, tea nursery grant, desktop computer with printer, etc. (Tea Board of India, 2007; Hannan, 2019b). The 12th plan of Tea Board was again reviewed by the SHGs and some new measures were extended such as a micro-irrigation scheme for watering tea fields

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which included procurement of water pumps, sprinkler irrigation equipment, check dams, etc. (Tea Board of India, 2012; Hannan, 2019b). The civil society organizations and NGOs are thought to be collaborated as policy measure in setting up of Tea Producing Societies (SHGs). The labourers employed in small-scale sector under Tea Producing Societies (SHGs) are provided to cover under group insurance and stipend for the children of workers. The annual awards for best performing SHGs, STGs and BLFs from all the small tea growing regions in India were introduced by Tea Board. A cash award ranging from Rs. 25,000/- to Rs. 100,000/- and a recognition certificate is announced with an expectation of healthy competition among groups and tea growers (Hannan, 2019b; Tea Board of India, 2012). The scheme for ‘Micro and Mini tea factories’ is also announced for the Tea Producing Societies (SHGs) during the 12th plan. The study tours, technical training in collaboration with TRA, tea conventions and workshops are organized with the financial support of Tea Board to augment skill gaps of the STGs in Unorganized sector (Hannan, 2018b, 2019b). The aims and objectives of the Tea Producing Societies (SHGs) can be summed up and mentioned below: (i) Organize STGs into groups at the village level; (ii) Linking groups with Tea Board of India; (iii) Promote good agricultural practices, farm management and produce quality green leaf; (iv) Collection of good leaf, store under the leaf shed, transport efficiently and manage records; (v) Bulk procurement and distribution of inputs through SHGs to the members of the groups like fertilizers, bio-chemicals, sprayers, pruning machines, etc.; (vi) Trade negotiation and bargain for better business and healthy relations between BLFs and SHGs; (vii) Building capacities of SHGs to take up self-employment through new micro-enterprises; (viii) Provide training for Entrepreneurship and skill formation; (ix) Linking of SHGs with Banks and other financial institutions; (x) Providing access to new and improved technologies, extension and dissemination; (xi) Enhance Social Capital and Networking for market advantages and formation of Local, Regional and National level Associations. Nevertheless, the conditions of setting up of SHGs vary over different plan periods of Tea Board of India and improved and sharpened based on the outcomes gathered from field experiences. Let us examine the growth history of SHGs in different states of India and assess the initiatives of NGOs in this sector. The present chapter attempts to find out the impact of SHGs in collective bargaining and leaf trade with sustainable business, scientific farming practices and improving trade and agrarian relations in the tea supply chain and support of state agencies for better and secure livelihoods. The pertinent question arises and asked are as follows: (a) Whether the Tea Producing Societies (SHGs) can provide an alternative model of their visibility, existence and sustainable livelihoods?; (b) Has Tea Board of India made an attempt to include the STGs in the tea supply chain?; (c) Have the Tea Producing Societies (SHGs) developed their own processing units and factories and have brands for marketing of tea?; (d) What type of institutions have been innovated and evolved over the years in governing and rearing small-scale sector of tea in India? This chapter tries to answer considering two time periods: (i) Mapping Tea Producing Societies (SHGs) during 2007–08; and (ii) Analysing Tea Producing Societies (SHGs) during 2017–18.

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The results of field surveys of two time periods are analysed in this chapter. The Phase-I was conducted in the months of ‘September–November 2007’ in four states, i.e. Assam, West Bengal, Tamil Nadu and Kerala. A structured schedule was prepared and data was gathered at the level of Tea Producing Societies (SHGs). Ten SHGs were taken as unit of observation and analysis in each state. The sample SHGs were selected purposively with a consultation of local-level associations and geographical locations. The schedule consisted relevant issues like farm size, Tea Board’s affiliation, credit sources, role of leaf agents and dependencies, functional aspects of SHGs including fund status, savings, agricultural practices, plucking cycle, production level, green leaf trade, business linkage with BLFs, etc. The second phase of field survey was conducted during 2017–18 and restricted to the Tea Producing Societies (SHGs) which have been raised as tea factories and process green leaf to made tea and participate in auction and other channels of tea marketing. It was found that in Dooars region of North Bengal, three SHGs have set up their tea processing factories with a financial support of Tea Board of India. Hence, all the three SHGs, i.e. ‘Panbari’ STGs Society, ‘Jai Jalpesh’ STGs Society and ‘Naba Jagaran’ STGs Society were considered as case studies (Hannan, 2019b). Simple statistical techniques like percentage, ratios, frequencies, indices, etc. were used for regional analysis and cross-comparisons to interpret their impacts and success.

5.2 Growth of Tea Producing Societies (SHGs) in India Though the Tea Board of India introduced a scheme to set up SHGs during 10th plan, but very few SHGs were established in small tea growing states. The SHGs model became popular when the ‘Centre for Education and Communication’ (CEC), New Delhi partnering with Traidcraft, UK with a financial support of Department For International Development (DFID), UK implemented a research project titled ‘Sustainable Livelihood for Small Tea Growers in India’. It was for three years (2006– 09) and operative in four traditional tea growing states in India: ‘Assam’, ‘West Bengal’, ‘Tamil Nadu’ and ‘Kerala’. Table 5.1 reported that the impact of ambitious research project, a total of 294 ‘Tea Producing Societies’ (SHGs) were established with membership of 12,941 growers in four states together (Hannan, 2018b). It was estimated that approximately 10.25% of the STGs came under the roof of SHGs. The size of SHGs in membership and area of tea cultivation in Tamil Nadu was larger in comparison to other states. Since, the villages are compact type of settlements and are surrounded by tea fields in their neighbourhood. On the other side, linear and nuclear type of settlements are found in district of Wayanad of Kerala and growers practising mixed cropping which allows the size of SHGs to remain small. Hence, the local geographic conditions play an important role in forming SHGs. In the states of Assam and West Bengal, the size of SHGs is medium due to similar topography, cultural similarity and compact settlement type. It was evident from the survey results that the southern states, i.e. Kerala and Tamil Nadu the STGs were registered with Tea Board but Assam and West Bengal they were not registered though the collectivization

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Table 5.1 CEC mediated ‘tea producing societies’ (SHGs) in India (10th plan) (As on 31st March, 2008) States

No. of tea producing societies (SHGs)

Assam*

No. of registered SHGs with Tea Board

No. of member STGs

Avg. size of SHGs (membership)

123

Nil

4705

38.25

West Bengal

40

Nil

2212

55.3

Tamil Nadu

31

31

3491

112.6

Kerala

100

100

2533

Total

294

131

12,941

25.3 44.02

* The

figures of Assam are estimated based on 32 Tea Producing Societies (SHGs) Source Centre for Education and Communication (2007); Hannan (2018b)

of small growers into groups presented better results in all four tea growing states (Hannan, 2018a). The realization of farm-gate price of green leaf of STGs is higher in collectives in comparison to the individual STGs in their counterpart in a same locality. The quality of green leaf and the farm agricultural practices were scientific into groups. ‘Plucking cycle’ was shorter which gave them more rounds of plucking and plant bushes were healthy. The plucking standards were found better as awareness level increased. In other words, group approach provided them platform in improving knowledge in tea technology, shared information, bulk procurement of fertilizers and agro-medicines, and scientific approach in the application of farm inputs.

5.3 Financing and Skill Development of ‘Tea Producing Societies’ (SHGs) During, 10th to 12th plan, several innovative measures and financial assistance were started by Tea Board of India. The idea was to enhance the efficient management of the tea farms of SHGs, leaf storage and better transport, digital transfers and accounting systems, trading terms of green leaf, etc. Table 5.2 has given below the synopsis of various schemes and programmes announced time to time by Tea Board. The key facilities existing for the SHGs are revolving fund, capital cost of godown and office, leaf shed, weighing scale, pruning machine, harvesting machine, plastic crates and nylon bags, tea nursery grant, desktop computer with printer, etc. (Hannan, 2019b; Tea Board of India, 2012). The study tours, tea conventions and workshops are also organized by Tea Board to provide exposure and fill skill gaps to the STGs. During the 12th plan, the Tea Board organized 2379 study tours, workshops and trainings in which 126,525 STGs participated across India (Tea Board of India, 2017). Table 5.3 reports that there are 346 Tea Producing Societies (SHGs) that are established during 12th Plan alone and the Board incurred an expenditure of Rs. 899.89 lakhs. Simultaneously for capacity building

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Table 5.2 Financial assistance to SHGs during plan periods of Tea Board of India Items/materials

10th plan (2002–07)

11th plan (2007–12) 12th plan (2012–17)

1. Revolving fund for field inputs such as fertilizers, pesticides and sprayer etc.

NA

Rs. 10,000 (per hectare)

Rs. 15,000 (per hectare)

2. Capital cost for input storage and godown and office

NA

Rs. 50,000 (per SHG)

Rs. 100,000 (per SHG)

3. Leaf collection shed for every 5000 kg harvested/per day

Rs. 30,000

Rs. 30,000

Rs. 50,000

4. Weighing scales @ two/per SHG

Actual cost

Rs. 3000

Rs. 3500

5. Plastic crates and nylon bags for carrying green leaf

Rs. 210 and Rs. 30 each

Rs. 300 and Rs. 40 each

6. Pruning machine @ Rs. 7500 each one for every 10 ha of tea plantation

Rs. 35,000 each

Rs. 40,000 each

7. Transport vehicle for @ 50% of actual cost 2000 kg/per day green leaf during June to Sept

@ 50% of actual cost

@ 50% of actual cost

8. Harvesting machine NA @ one for every 10 ha

NA

@ 50% of actual cost

9. Desktop computer and printer for each SHG

NA

NA

Rs. 40,000

10. Tea nursery grant

NA

NA

@ Rs. 2 per plant

Source Computed from 10th, 11th and 12th plan of Tea Board of India

and skilling of STGs, an amount of Rs. 488.98 lakhs was spent (Table 5.3). This contributes in promoting STGs across states and an effective measure for sustainable business and entrepreneurship development. However, the impact of the measures and initiatives in the field is likely to be seen in future when SHGs show some credible deliveries as few SHGs set up their tea factories in Dooars with the intervention of CEC and Traidcraft.

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Table 5.3 Extension services of Tea Board for STGs development (during 12th plan) Financial years

SHGs No. of SHGs established

Study tours, workshops and trainings Actual expenditure (Rs. in lakh)

2012–13

75

99.88

2013–14

130

246.81

2014–15

87

282.42

No. of programmes 320

No. of STGs participated

Actual expenditure (Rs. in lakh)

27,590

131.24

462

27,841

188.94

298

17,268

83.14

2015–16

26

98.41

529

30,446

67.62

2016–17

28

172.37

770

23,380

18.04

346

899.89

2379

126,525

488.98

Total

Source Computed from 63rd Annual Report, Tea Board of India

5.4 Tea Producing Societies (SHGs) and Agrarian Relations (2007) As evident in the state of Assam, tea is cultivated as mono-crop and mixed crop farming in small-scale gardens. The growers have orange and beetle nut in their tea fields as an alternative and a mechanism practised for sustenance. The yield rate of green leaf production ranges between 6000 and 7000 kg per acre (CEC, 2007; Hannan, 2018b). The mono-cropping pattern is followed in different districts in North Bengal. However, the growers in some cases plant tea in pineapple fields. Since, pineapple only lasts for 2–3 years and thereafter they convert it tea field. In this way, growers economize their planting cost of tea since green leaves are harvested in tea plants only after three years of planting. The yield level is a little lesser in West Bengal that ranges 5000–6000 kg per acre. Since tea plants are young and bushes are at tender age, there is less incidences of pest and insect attacks in small-scale gardens as compared to estate gardens. A sharp contrasting situation and microregional differences are found between the ‘Upper Nilgiris’ (Ooty, Coonoor, Kundah and Kotagiri) and ‘Nilgiri Wayanad’ (Gudalur and Pandhalur). In ‘Upper Nilgiris’ it is again mono-crop farming that is being practised and the yield level is around 4000– 4500 kg/per acre (CEC, 2007; Hannan, 2018b). On the other, in ‘Nilgiri Wayanad’ it is a mixed crop farming and the tea fields are mixed with pepper, yam, ginger, tapioca, cardamom, banana, cloves, areca nut, jackfruit, etc. Here the field practices are somewhat similar to Wayanad district of Kerala. In Wayanad too, the growers plant tea with a combination of other crops like coffee, pepper, rubber, cashew, areca nut, coconut, etc. in their tea fields. This is how they maintain a balance of market failures and ecological balance to sustain their livelihoods. Table 5.6 provide an ‘Index of Performance and Effectiveness of SHGs’ in four states of India.

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Table 5.4 Membership, tea area, registration and farm size of SHGs in India States

No. of members in SHGs

No. of registered STGs

Plantation area (in acres)

Avg. size of SHGs (membership)

Avg. size of SHGs (area)

Assam

337

3

649.88

33.7

64.99

West Bengal

650

94

2465.65

65.0

246.57

Tamil Nadu

1393

264

2647.84

139.3

264.78

Kerala

444

142

509.87

44.4

50.99

Total

2824

500

6273.24

70.6

156.83

Source Centre for Education and Communication (2007); Hannan (2018b)

5.4.1 Farm Size, Farm Registration and Associated Aspects The average farm size found in the selected SHGs is 1.92 acres, 3.79 acres, 1.90 acres and 1.15 acres in ‘Assam’, ‘West Bengal’, ‘Tamil Nadu’ and ‘Kerala’, respectively and the farm size at all India is estimated at 2.22 acres (CEC, 2007; Hannan, 2018a). The registration of farms with Tea Board of India is lowest in Assam with 0.89% followed by West Bengal with 14.46%, Tamil Nadu with 18.95% and Kerala having highest with 31.98%. The inter-state variations in terms of the ‘Size of SHGs’ in terms of (a) membership status and (b) plantation area is contrasting. As evident in Table 5.4, the number of average membership status of the SHGs is 33.7, 65.0, 139.3 and 44.4 and the average size of SHGs in terms of tea area is 64.99 acres, 246.57 acres, 264.78 acres and 50.99 acres in Assam, West Bengal, Tamil Nadu and Kerala, respectively (CEC, 2007; Hannan, 2018b). The state of Tamil Nadu represents the highest size of SHGs in respect of area as well as membership status. This may be due to the existence of STGs since 1960s. The average membership size of SHGs is found at 70.6 and the average tea area of SHGs is 156.83 acres in India.

5.4.2 Fund Status and Society Management Varieties of experiences are reported with regard to the management of SHGs. The SHGs in Assam have kept a provision of ‘Annual Membership Fee’ and ‘Initial Membership Fee’ separately and it varies from Rs. 50 to Rs. 200. All the SHGs have savings accounts in the Banks. Two types of ‘Savings’ are practised in SHGs: (a) ‘Compulsory deduction’ from the sale of green leaf. It may differ from one group to other in a region as per the decisions and bylaws of the SHGs. Normally it ranges from 0.25 to 0.60 paise per kg. (b) ‘Monthly Premiums’; it ranges from Rs. 50 to 200 per month to the member-growers (CEC, 2007; Hannan, 2018b). Both types of savings are decided collectively in their general body meetings and implemented accordingly. The purpose of savings is to support the member-growers during lean season to manage their farms and other crisis and emergencies. The average savings of the

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SHGs under the study was Rs. 15,000 to Rs. 165,000. In West Bengal too, the SHGs have a provision of ‘Lifetime Membership Fee’ as well as ‘Annual Membership’. The ‘Lifetime Membership Fee’ is charged based on land holding criteria of a growermember. Normally, the collection rate is Rs. 100 per acre of tea planted area. The ‘Annual Membership Fee’ collected from members ranges from Rs. 100 to Rs. 200. The ‘Savings’ are upheld from the sale of green leaf and the standard practice ranges from Rs. 0.50 to Rs. 1.00 per kg of green leaf. The ‘Savings’ are returned to the grower-members in the month of December annually to run and manage the farms during lean season. It was reported that the ‘Savings’ in the SHGs of West Bengal ranges from Rs. 5000/- to Rs. 600,000/- (CEC, 2007; Hannan, 2018b). The SHGs in Nilgiris have endorsed the provision of ‘Initial Membership Fee’ as well as ‘Annual Membership Fee’. The charges of both ranges from Rs. 50 to Rs. 100. Except one, all the SHGs did not start their savings and deductions. The Dharmagiri Chalivayal STGs Society (SHGs) had reported of savings of Rs. 350,000 in their account during the survey (CEC, 2007; Hannan, 2018b). In Kerala, SHGs announced the ‘Initial Membership Fee’ and ‘Annual Membership Fee’. The ‘Initial Membership Fee’ is collected at the rate of Rs. 10–Rs. 25 and the ‘Annual Membership Fee’ at the rate of Rs. 20–Rs. 60 and the compulsory monthly savings were not in practice during the survey but the growers reported that it was under consideration and planning (CEC, 2007; Hannan, 2018b).

5.4.3 Aspects of Cultivation, Leaf Procurement and Trade The ‘Plucking Level’ of green leaf and the quality of leaf vary across states. It is told by experts that the quality of tea depend on plucking standards in farms, its fine plucking is practised and the quality of made tea is automatically maintained and fetches good price in the market. The plucking standard is better in Assam in comparison to other states in the small-scale sector tea. It has a plucking practice of 2–3 leaves and a bud. On the other hand, the plucking standards are very poor in the state of West Bengal especially in the district of Uttar Dinajpur (CEC, 2007; Hannan, 2018b). It was reported that a common practice of plucking of 4–5 leaves and a bud is prevalent in this area. A moderate level of plucking standard of 3–4 leaves and a bud is practised by the SHGs in Tamil Nadu and Kerala. The ‘Krishi Vigyan Kendra’, Coonoor and ‘Swaminathan Research Centre’ Ellapara, Wayanad have an impact on farming practices in small-scale sector in these two states. The plucking standard has a relationship with ‘Plucking Cycle’ and generally the fine plucking is accompanying with short ‘Plucking Cycle’ and coarse plucking is related with long gap of ‘Plucking Cycle’. It was reported that during the months of September–October, the ‘Plucking Cycle’ was 10–12 days in Tamil Nadu and 12–13 days in Kerala. But it was only 7–10 days in the Jalpaiguri district and 15 days in Uttar Dinajpur district of West Bengal and 7–9 days in Assam (CEC, 2007; Hannan, 2018b). Mostly the STGs in all the four states are dependent on monsoon rain. However, few exceptions are found in West Bengal where some growers could afford irrigation to water their tea fields.

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Table 5.5 Green leaf price (per kg) and indebtedness of STGs in SHGs States

(%) Share of member growers supply leaf to SHGs

(%) Share of STGs taken loan from leaf agents

Avg. daily procurement of leaf by the SHGs (kg)

Avg. leaf price Avg. leaf price received by outside SHGs members of (Rs./kg) SHGs (Rs./kg)

Assam

92.87

44.21

985

10.15

9.25

West Bengal

94.61

18.30

3980

6.76

6.21

Tamil Nadu

85.14

26.13

2080

6.89

5.97

Kerala

50.00

8.33

920

7.15

6.50

Total

82.72

23.69

1991

7.74

6.99

Source Centre for Education and Communication (2007); Hannan (2018b)

This period irrigation normally extends from February to June in a year. Most of the SHGs are newly established and do not have experience of business and leaf trade to BLFs. It was found that the majority of growers’ members supply green leaf through SHGs only and percentage share varies from 50% in Kerala which was the lowest and the highest in West Bengal reported 94.61%. The growers also supply leaf to the agents (middlemen) as they had received ‘Advance Money’ from them during the lean season. As per Table 5.5, the ‘Dependency level’ of growers to the leaf agents was reported to 44.21%, 18.30%, 26.13% and 8.33% in Assam, West Bengal, Tamil Nadu and Kerala, respectively (CEC, 2007; Hannan, 2018b). The SHG with more tea planted area and large farm size has an impact on leaf procurement. It is also related to some other factors like seasons, percentage of grower-members supplying leaf to SHGs, farm practices and input management in the tea fields. The average ‘daily procurement of green leaf’ by SHGs was estimated highest at 3980 kg in West Bengal, followed by 2080 kg in Tamil Nadu, 985 kg in Assam and 920 kg in Kerala (Table 5.5). Variations in Farm-Gate price realization of green leaf were found between members of SHGs and the other growers outside the ambit of groups. It was reported that the green leaf price variation per kilograms was 0.90 paise in Assam, 0.55 paise in West Bengal, 0.92 paise in Tamil Nadu and 0.65 paise in Kerala (Table 5.6). The average price variation was 0.75 paise in all four states together (CEC, 2007; Hannan, 2018b). It suggests that if growers are assembled under the SHGs, their business and terms of trade improve and strengthen bargaining capacity and market risks are minimized.

5.4.4 Trade Relations of STGs and BLFs in the Supply Chain It was reported from the field that the BLFs endorse the leaf agents. There are reasons for such a favour: (i) Very few SHGs are established in the small-scale tea growing areas and vast majority of growers are not associated with any groups; (ii) SHGs

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Table 5.6 Index of performance and effectiveness of SHGs Indicators/states

Assam

West Bengal

Tamil Nadu

Kerala

India

(a) Avg. membership size of the SHGs (no. of STGs)

33.70

65.00

139.30

44.40

70.60

(b) Avg. size of the SHGs as per tea plantation area (ha)

26.31

99.83

107.20

20.64

63.49

(c) Avg. farm size of the members of SHGs (ha)

0.78

1.53

0.77

0.47

0.90

(d) (%) of STGs registered with Tea Board of India

0.89

14.46

18.95

31.98

17.70

(e) (%) of members supply green leaf to SHGs

92.87

94.61

85.14

50.00

82.72

(f) (%) of members taken loan from leaf agents in SHGs

44.21

18.30

26.13

8.33

23.69

985.00

3980.00

2080.00

920.00

1991.00

(h) Avg. green leaf price/ per kg received by SHGs (Rs.)

10.15

6.76

6.89

7.15

7.74

(i) Avg. green leaf price/ per kg outside the SHGs (Rs.)

9.25

6.21

5.97

6.50

6.99

(g) Avg. green leaf procurement by the SHGs (kg)

Source Cited from Hannan (2018b)

supply very low volume of green leaf to the BLFs, e.g. SHGs can supply maximum of green leaf of 1500–2000 kg/per day. On the other, BLFs have crashing capacity of higher amount of green leaf. Therefore, the BLFs try to find alternative channel to buy green leaf to meet the daily requirement at optimum level. This leads to the growth of ‘leaf agents’ in small tea growing areas. In an ideal situation, if all the growers are brought under SHGs in the villages, the BLFs may find better transactions and healthy business and purchase the green leaf directly from groups by replacing leaf agents. One such example was found during the fieldwork in Tamil Nadu and the SHGs entered into ‘Trade Agreement’ with BLFs (Box No. 5.1). Box No. 5.1: Trade Agreement between BLFs and SHGs in Tamil Nadu The SHGs and BLFs are linked as per following terms and conditions: (a) The standard of the leaf should be a bud and three leaves or a soft two leaves and banji.

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(b) (c) (d) (e) (f) (g)

The agreement is valid for six months only. Transportation and collection of green leaves at the cost of company. The coarse percentage should be limited up to 30% for the period. The payment is made in the name of the SHGs. During rainy season deductions are limited to maximum 10% for wetness. Weight deductions are 1 kg for 4 bags during dry season and 1 kg for 3 bags during rainy season. (h) Advance payment of Rs. 6/- per kg is disbursed on each Saturday and the balance amount and the arrears should be disbursed within 10 days of the subsequent month. (i) Either party has the right to terminate the contract by giving 30 days’ notice in writing. Source Centre for Education and Communication (2007); Hannan (2018a)

5.5 Tea Producing Societies (SHGs) in Processing and Marketing (2017) The SHGs are running since 2007 in all the four states and increased the visibility in tea economy from leaf trading to set-up of tea factories. Their bargaining capacity in trading green leaf from SHGs to BLFs is also successful despite ups and downs. It was found that from the field that only in Dooars areas of West Bengal, the SHGs could establish the tea factories and sale the made in auction as well as non-auction routes. Three such SHGs are identified and fieldwork was undertaken to understand their success stories. These SHGs are: The ‘Panbari’ STGs Society, The ‘Jai Jalpesh STGs’ Society and The ‘Naba Jagaran’ STGs Society (Hannan, 2019b). It was found that the governance and guidelines of establishing the SHGs by Tea Board of India were same, but the states of Assam, Tamil Nadu and Kerala could not to establish factories under SHGs. The objective of the SHGs model was to transform and link the small-scale farms into tea processing and marketing. Simultaneously, it was also reported that there existed closed and abandoned tea gardens under the organized tea industry in the same areas or regions and also in other traditional tea producing states of Assam, West Bengal, Tamil Nadu, Kerala and Tripura (Hannan, 2020d; Tea Board of India, 2005). The 51st Annual Report of Tea Board of India highlighted that as many as 118 tea gardens were closed which affected 68,442 labourers altogether during 2000–2004. This gives a scope of further enquiry as to why estate sector is surviving in a low pace and at the same time small-scale sector without much of support performing better today. The regulatory bodies like Tea Board of India and Ministry of Commerce Government of India and the State Governments must pay attention and dig the ground truth further.

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Having this background, the case studies of three success stories of SHGs are captured and repeated interactions with their representatives and field visits during 2017–18. The Panbari SHG is the first STGs Society that laid the foundation for a tea factory in India (Hannan, 2019b). It started entrepreneurship model through the collective effort of members. It has shown a new path to the smallholders in the country to produce their own tea and brand them to market it when the state is withdrawing the responsibilities in the post-reform period. It was found from the field interaction that few more SHGs in Dooars region of West Bengal are in pipeline and likely to set up tea factories within one to two years and momentum is reached where the new establishments are coming up. The ‘Jalpaiguri STGs Association’ played an important vigorous role in establishing tea factories under SHGs (Hannan, 2019b). The leadership abilities and agro-extension services of the Association especially Shri Bijoy Gopal Chakraborty could motivate the growers in the region, to reason out of the box and shaped their ‘farms to factory’ movement from the ‘state of imagination to realities’. It is proven that that the small-scale Unorganized sector of tea industry has capabilities and potentials to sustain if appropriate guidance and capacities are built up through training and skilling them. It can withstand and become visible in tea processing and marketing if leadership is provided to them.

5.5.1 SHGs Case Study-I: The Panbari STGs Society It was reported while interacting to the President, of the Panbari STGs Society that the growers planted tea in their field in early 1990s. The idea of setting up of group came to their mind when a few members along with the president Shri Badal Debnath of ‘Jalpaiguri Khudra Cha Chashi Samity’ were sponsored by the Tea Board of India and sent on a study tour to South India (2002). The Tea Board arranged one-day visit to SHGs run by women in Tamil Nadu who were doing green leaf trade between BLFs and STGs. This exposure trip opened their eyes. After return from the trip, they formed a group with 72 members in the year 2004. Currently they have 290 member-growers and tea planted area of 279 ha (Hannan, 2019b). The size of tea farms range from one acre to 25 acres. The SHGs started leaf trade with ‘Teesta Tea Factory’ during 2004–05. Later on, they shifted their leaf trade to ‘Jadavpur Tea Estate’ and ‘Ramshai Tea Garden’ situated in Jalpaiguri during 2005–06. In the year 2008, the members of SHGs started exploring to set up a tea factory and Shi Amal Roy Chowdhury, Deputy Director, Regional Office of Tea Board posted at Siliguri motivated the growers. In the year 2008–10, the savings of the membergrowers of Panbari SHGs added to Rs. 6.5 lakhs by compulsory deduction from green leaf at the rate of one rupee per kg. As per the Tea Board of India guidelines, one crore rupees fund was required to set up a factory. The society again postponed their plan for two more years till 2012 and increased their savings to rupees two crores as ‘Corpus Fund’ (Hannan, 2019b). The individual shares of the growers in SHGs corpus ranges from rupees five thousand to one lakh. But the banks and other financial institutions were afraid and hesitant to grant loans to the society due to the

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nonexistence of co-lateral security. With a continuous persuasion, the ‘Union Bank of India’ situated at Jalpaiguri Town was convinced and granted loan of rupees one crore to the society in 2012 at the interest of 12% per annum. The society started repayment just after a period of one year from the release of loan. The Tea Board of India extended one-time grant to the society in the year 2012 and the financial support of rupees one crore and twenty lakhs was given to the society (Hannan, 2019b). In the meantime, the society had purchased a plot of land measuring area 1.16 acres with a payment of rupees eight lakhs in 2009 and the ‘Detail Project Report’ was ready for the tea factory. However, no financial support was received from the state government. The factory started operation since January 18, 2013 and employed approximately 45 labourers with male and female ratio of 50%. Two shifts of works are done by the labourers in the factory during day and night. The green leaf crashing capacity of the factory is around 20–25 thousand kg per day. The net profit of the society is shared at the ratio of 60:40 annually: (a) 60% for green leaf contribution and (b) 40% for cash capital investment in factory by the members. In the year 2016–17, the members were paid a profit margin of Rs. 15–16 thousand for a share contribution of rupees one lakh. As per the society bylaws and guidelines, the sale of a share capital can be transferred and sold within SHG members. The loan amount is reduced from one crore to eighteen lakhs after repayment over the years and it is paid at the rate of two lakhs per month. The SHGs has Recurring Deposit of Rs. 82 lakhs which was matured in the month of December, 2017. The society participates in auction and sells made tea directly under their registered brand as ‘MAHALAXMI TEA’. Two types of tea bags are prepared in the factory each of 26 and 30 kg. The empty bags are procured at the cost of Rs. 21. Nearly forty thousand people derive their livelihoods directly or indirectly to the SHGs society and its farms owned member-growers. The activities include tea plucking, leaf transportation, supply of fertilizers and manures, packaging and other ancillary services. Over the years, it has transformed the local economy in its catchment. The society has a plan to construct a ‘Tourist Resort’ at Ramshai Tourist spot which is situated at a distance of 2–3 km from the factory (Hannan, 2019b). In addition to tea, the resort may give extra financial income to the society and an alternative means of sustenance if tea market fails anytime in future. This is how they would plan to diversify their group and make it more sustainable business. Table 5.7 gives brief statistical information of Panbari STGs Society for the period of 2013–16. The green leaf price paid to the growers ranges from Rs. 13–14 per kg and the cost of tea processing from green leaf computed and it varies from Rs. 27–30 per kg made tea. The ‘Outturn Percentage’ varies from 21.85 to 22.26%.

5.5.2 SHGs Case Study-II: The Jai Jalpesh STGs Society The Jai Jalpesh STGs Society was established in the year 2005–06 with an objective to bail out the STGs from the exploitative trade relation of the corporates. The factory

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Table 5.7 Profile and growth of Panbari STGs society (2013–2016) Particulars/years

2013

2014

2015

2016

Green leaf (kg)

2,831,125

3,404,613

3,401,391

3,456,373

Made tea (kg)

743,964

747,399

759,551

750,512

Avg green leaf price (Rs./kg)

13.98

13.77

13.35

14.10

Avg made tea price (Rs./kg)

106.97

108.00

103.00

109.26

Outturn percentage

22.26

21.95

22.00

21.85

Gross profit (Rs.)

11,637,081

12,107,993

11,902,038

13,505,393

Cost of production (Rs./kg)

91

92

87

92

Cost of processing (Rs./kg)

29

30

27

28

Source Authors Field Survey, 2017–18

started its production in 2013 and the SHGs society has 522 members with 335 ha of tea areas (Hannan, 2019b). The tea factory is situated on the side of the ‘Asian Highway’ leading to ‘Changrabandha International Check Point’, Cooch Behar in ‘Indo-Bangladesh’ border. The factory was given financial support from the Tea Board of India under the Scheduled Caste sub-plan. The members of the SHGs reside nearby villages with a radius of ten kilometres and around 15 villages are dependent. Most of the growers switched over from other crops such as jute, paddy, chilly, tobacco, etc. Local economy in the catchment is improved over the years and the tea factory has shown a new path to the villagers in enterprise development and sustainable business. The financial health condition of the society is stable and the growers were never paid less than that of Rs. 12–13 per kg green leaf since its establishment of the factory in 2013. While establishing the factory, the growers’ collective contribution was rupees two crores. Each share was of rupees twenty thousand. Among the growers’ members, an individual can have a number of share units of one to twenty-five. The Tea Board of India has given Rs. 1.92 crores as one time grant to the society. The society has borrowed a loan of rupees one crore from ‘Union Bank of India’, Jalpaiguri Town. As on 2017, the remaining balance amount of bank loan was Rs. 30 lakhs. The annual net profit is shared at the ratio of 75:25. The 75% of profit is divided to the share capital invested and the rest 25% to green leaf supply. In the year 2016–17, a unit share of twenty thousand, the profit was given for ‘share capital’ to Rs. 9000 and for ‘green leaf’ to Rs. 6000 to the members of the SHGs. It was reported that every year profit share is increasing and the growers get better earning and this trend would continue revealed by the Shri Rajat Roy Karjee, President of the society. The SHG has its own brand as ‘SHIB BARI JAI JALPESH BARI TEA’ which was registered in 2013. The factory has retail outlet in its premises and facilitates direct marketing in the form of packets. All other teas of the factory is sent to auction for sale. The SHG has been granted ‘Export License’ in the year 2016 from Tea Board of India and the society has demonstrated their teas in Russia and Kajakhastan (Hannan,

108 Table 5.8 Statistical profile of the Jai Jalpesh STGs Society

5 Mapping the Tea Producing Societies (SHGs) in India

Particulars/years

2016–17

Green leaf (kg)

3,604,909

Made tea (kg)

793,079

Average green leaf price (Rs./kg)

13.64

Average made tea price (Rs./kg)

108.63

Outturn percentage

21.99

Gross profit (Rs.)

86,152,171

Cost of production (Rs./kg)

90

Cost of processing (Rs./kg)

28

Source Authors Field Survey, 2017–18

2019b). In next phase, they have a plan to demonstrate in Egypt. Therefore, the society might be able to sell their teas in international market and establish their credentials in exports other than domestic market. The society plans to establish ‘Homestays’ and promote ‘Tea Tourism’ since it is situated close to the ‘Changrabandha International Check Point’. This would bring them extra revenue and earnings to the society as a subsidiary project for sustainable business. There are some plots of vacant lands available near the factory and a ‘Tourist Resort’ at border point would provide them additional earning and further boost to local economic development. Table 5.8 gives an idea of the performance summary of the factory and SHGs during the year 2016–17.

5.5.3 SHGs Case Study-III: The Naba Jagaran STGs Society In the year 2008, the Naba Jagaran STGs Society was founded with 18–19 members only and thereafter its membership increased from 70–80 in 2009 to 323 in 2011. Presently it has 313 members with a tea plantation area of around 1000 acres (Hannan, 2019b). In formative years, the society started as leaf trade to safeguard the STGs. It was reported during interaction with the President and other members of the society that the aim of group formation was to transform growers against the exploitative relations and clutches of leaf agents and BLFs in the region. As a result, the society could participate in price fixing of green leaf and were not dependent to the BLFs which were one-sided affair earlier. The price of green leaf and its processing cost can be examined. The collective business model can offer better deal of their business and protect their livelihoods. In 2010, the Naba Jagaran STGs Society sold of 819,845 kg green leaf and the average price realized was Rs. 12.98 per kg (Hannan, 2019b). Table 5.9 showing the month-wise green leaf price paid to the STGs members of the SHGs society in 2010. It reported that the green leaf price was low during the peak season, i.e. ‘July to October’. In fact, it is common across all regions and areas of

5.5 Tea Producing Societies (SHGs) in Processing and Marketing (2017) Table 5.9 Monthly green leaf production and prices (2010)

Months

Green leaf (kg)

109

Price (Rs./kg)

March

75,185

15.75

April

55,379

13.60

May

86,718

13.30

June

110,280

12.80

July

118,569

13.50

August

97,765

12.70

September

95,945

11.65

October

90,640

9.50

November

65,000

13.00

December

24,364

11.00

819,845

12.98

Total

Source Authors Field Survey, 2017–18

small tea growing districts in India. But, during these months more than 50% green leaf is produced in the tea farms. The BLFs try to push a situation of artificial overproduction during these months and refuse to accept green leaf citing their limited processing capacity to bring down the green leaf prices. It was found that though the auction prices were stable during the period despite STGs paid less price for green leaf. In this manner, the lion’s share is siphoned from farm gate to corporate sector and the growers’ remains at margins. Unlike the other two other factories, the Naba Jagaran STGs Society was facing financial crisis over the years. However, in the year 2017 onwards, the society became stable and run on profit. The total green leaf production of the society in the year 2017 was 33,13,793 kg and made tea was 738,506 kg and the ‘Outturn Percentage’ was 22.29% (Hannan, 2019b). The society has introduced new measures to overcome the situation and the production of quality leaf. They also practise ‘compulsory deduction’ of one rupee per kg of green leaf supply from its members. This fund would be distributed among the growers during lean season to manage the farms. The factory has implemented the green leaf quality parameters and a formula is adopted as mentioned below: [For example, Measurement of Green Leaf = Fine Leaf (Two Leaf and a bud)/Green Leaf of 50 grams × 100 = Percentage of Fine Leaf. Then the green leaf is graded in three categories as ‘A’ = 26 to 30 per cent, ‘B’ = 20 to 25 per cent, and ‘C’ = 15 to 19 per cent (Field Survey, 2017-18; Hannan, 2019b).]

In addition, to measure the wetness and water content a reduction varies from 5 to 20% during ‘dry season’ and ‘rainy season’. The society has a ‘Corpus Fund’ of rupees of 33 lakhs given by Tea Board of India and it remained unutilized since 2012 (Hannan, 2019b). It was opined that the Tea Board of India should allow SHGs to use the corpus fund for procurement of fertilizers and agro-medicines for bulk purchase, so that the growers can be benefitted out of it. It was also revealed that

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there was no provision of ‘Corpus Fund’ for factory in Tea Board of India. However, the Tea Board can make special provision to help the growers and allow to use the fund. Since most of the growers are marginal and they require weekly payment on regular basis for the supply of green leaf. But, the payment of made tea from auctions takes time, sometime more than a month. In a situation the factory finds difficulty to pay the growers in every weekend. In this process, the society borrows money from private sources and broker at an exorbitant rate which ultimately decreases the profit margin of growers. Therefore, the Tea Board should introduce a scheme for ‘Corpus Fund’ for factories to smoothly run the payments to growers.

5.6 Governance and Emergence of New Institutions (1960–2017) With the arrival of small-scale tea sector, various ‘Types of Institutions’ were innovated over the years (1960–2017) in tea plantation economy having different aims and objectives. In the passage to time, ‘geographies of tea plantations’ have expanded and a constant search for alternatives has given birth to these new institutions. It is an outcome of the pressure of civil society groups and small-scale farmers and government agencies. They can be summarized into five categories (Table 5.10): (A) ‘Co-operative Factories’; (B) ‘Bought-Leaf Factories’ (BLFs); (C) ‘Tea Producing Societies’ (SHGs); (D) ‘Associations or Federations’; and (E) ‘Small Grower Development Directorate’ (SGDD), Tea Board of India (Hannan, 2017, 2019b). The State of Tamil Nadu played a pioneering role in the set-up of first Industrial Co-operative (INDCO) tea factory at Kundah (1962). This is a first innovation of its kind which paved the small-scale sector in limelight. The BLFs became visible in 1960s in Nilgiris just after INDCO tea factories but they were confined in southern states till 1990 (Tea Board of India, 1980). The spread of BLFs in new geographies of North India and North-East was ventured only after 1990s which coincides with the development of small-scale tea cultivation in this part of the country. Therefore, the demonstration of BLFs in South India led the establishment in North-East with a support of Tea Board. Since the Tea Board of India identified the nature of existence of small-scale sector and found the characteristics of uneconomic and scattered land holdings, they introduced group approach to enhance their scale of operation and economies. Subsequently, a scheme was announced to establish ‘Tea Producing Societies’ (SHGs) which was launched during 10th plan. This has impacted on the bargaining capacity of growers in trading green leaf. In the process of all negotiations and participations of small growers at various platforms from regional to national level with all such institutions motivated them to concretize to have a National Association. By this time most of the small tea growing states already had regional and sub-regional association. All of them came together with the active support of Centre for Education and Communication, New Delhi and join hands for collective action and to influence the policies of National and provincial Governments and regulatory

5.7 Concluding Remarks

111

agencies. Consequently, in the year 2007, the ‘Confederation of Indian Small Tea Growers Associations’ (CISTA) was formed to negotiate with the government. The CISTA submitted a charter of demands to the Ministry of Commerce, Government of India (2007) and after due considerations the Tea Board of India constituted Small Growers Development Directorate (SGDD) headquartered at Dibrugarh, Assam in April, 2013 (Hannan, 2017, 2019b; Tea Board of India, 2017). It was reported that 67 ‘Sub-Regional Offices’ (SROs) were established under the SGDD in the smallscale tea growing districts in India (Hannan, 2019b; Tea Board of India, 2016). The objective was to impart technical training and skill formation to the farmers, monitor farm-gate green leaf prices, practices of farm inputs and quality tea production. As reported, the state of Assam had 39 Sub-Regional Offices (SROs) followed by West Bengal with 15 and three in Tamil Nadu. The ‘Development Officers’ and ‘Factory Advisors’ were appointed in all the SROs. But the fate of STGs did not change and they are still at the mercy of BLFs and trade relations between BLFs and STGs have not brought any desired results on ground (Hannan, 2019a). The role of SGDD and SROs seemed to be superficial and extension services are poor as found during field interaction with the growers. It is found that the governance and monitoring of the small-scale tea sector is ineffective by the state agencies particularly SGDD and SROs. The condition of farmers and the farm-gate price is found to be below the cost of production during peak production seasons during ‘July to October’ in a cropping year despite the introduction and implementation of ‘Tea Marketing Control Order’ (TMCO), 2015 and constitution of DGLPMC (Hannan, 2019a; Tea Board of India, 2015). The effectiveness of DGLPMC and SROs under the guidelines of TMCO is dealt separately in Chapter 6.

5.7 Concluding Remarks The Tea Producing Societies (SHGs) have performed exceedingly well in all the states particularly in creating a space of discussion on small-scale tea sector. The ‘agrarian relation’ and ‘bargaining capacity’ of the small growers have improved over the years. But the SHGs model is successful in establishing tea factories found in one region only, i.e. Dooars in North Bengal and the growers in other states have not welcomed the SHGs-led tea factories so far. The Tea Board of India may design a lucrative scheme and a new policy provision for such promotions in future too. The broader alliances of the regional and sub-regional Associations under the apex body of ‘Confederation of Indian Small Tea Growers Associations’ (CISTA) should make transparent membership drive and open a dedicated national portal for registration for the small-scale sector. They should also publish online newsletter under different languages and regional organizations and their constitution of committees should be displayed over webpages to have visibility and peer pressure and international outlook of the sector. There are various models that exist in tea economy such as Estate model, Cooperative Model and SHGs Model and the Tea Board should have a comprehensive study and synchronize their policies as per the need and practical

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Table 5.10 Emerging Institutions of Governance of Smallholders in India Type of institutions and year of their establishment

Objectives

Initiatives taken

Stakeholders

‘Co-operative factories’ or CPFs (since 1962)

To enable input management in farm practices, production and procurement of green leaf, and produce into made tea, and participate in marketing

15 INDCO Tea Small tea growers Factories were (STGs), and State established under Governments the initiative of Government of Tamil Nadu

Agro-production, green leaf procurement, tea processing and marketing

‘Bought-Leaf Factories’ (BLFs) (since 1960s)

To purchase green leaf, process and participate in marketing

571 BLFs established situated in 15 states in India under private capital

Tea processing and marketing

‘Tea Producing Societies’ (SHGs) (10th plan, TBI)

To increase the scale of operation, organizing collectives, bulk purchase and input management, and provide better price to the STGs

Tea Board has Small tea growers introduced the (STGs) ‘cluster approach’ in farm production and skill STGs to bargain and receive fair price for leaf from BLFs

Private Limited Companies and Corporates

Level of interference and expected deliverables

Scientific agro-practices, farm production, input management, quality tea production and marketing of green leaf

(continued)

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Table 5.10 (continued) Type of institutions and year of their establishment

Objectives

Initiatives taken

Stakeholders

‘CISTA’ (2007) and State; Regional and Sub-Regional Associations

To address the policies relating to small tea growers in India and make them visible in the tea supply chain

Small tea growers Small tea growers across the states took initiatives and organized the Associations and Federations at National, State, Regional and Sub-regional level

Demanding new schemes relating to STGs like Tea Board Registration, input subsidies, micro and mini factories, implementing the ‘Price-sharing Formula’ between factories and STGs

‘Small Grower Development Directorate’ (SGDD), Tea Board of India (12th plan, TBI)

To safeguard the interest of STGs and implement ‘Price-sharing Formula’, providing agro-extension services, study tours and workshops etc.

To implement the ‘Price-sharing Formula’ and announce ‘Minimum Benchmark Price (MBP)’ on regular basis

Constitute the ‘District Level Price Monitoring Committee’ (DGLPMC), Conduct Monthly Meetings under the Chairmanship of District Magistrate, Monitor the fair representation of all STGs in the DGLPMC etc.

Small Tea Growers, District Magistrates, Development Officers and Factory Advisors, 67 Sub-Regional Offices (SROs) of Tea Board of India

Level of interference and expected deliverables

Source Authors field survey and lived-in-experiences

requirement. Tea Board of India should strengthen the SROs instead of central headquarter at Kolkata and make digital governance so that additional manpower can be relocated in their field offices and add value to the tea sector. The ‘Centre for Education and Communication’ (CEC), New Delhi was successful in the formation and establishment of SHGs. The Tea Board should utilize the expertise of this organization to integrate the small-scale tea sector more vibrant and transparently in governing their issues and proper growth. The experience of NGOs can be of great support to Tea Board of India as well as other financial institutions like ‘NABARD’ for the establishment of tea factories in small tea growing districts in India to safeguard livelihoods of millions of smallholders. The ‘World Summit for Social Development’ was held at Copenhagen (1995) which emphasized the importance of improving access to credit for small producers, landless farmers and other low-income individuals, particularly women and disadvantaged and vulnerable groups (Nair, 2001). Therefore, the idea of ‘Micro-Finance’ can play an effective role for the financial inclusion of smallscale sector across the states in India through SHGs. The linking of SHGs to Tea

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Board of India, Tea Research Association (TRA), Krishi Vigyan Kendras (KVK), Civil Society Organizations and NGOs, etc. would bring better outcomes and scientific agricultural practices in tea economy by improving trade relations and quality production system. Notes [i] The ‘Outturn Percentage’ is the ratio of made tea produced out of green leaf. This is computed to decide farm-gate price for green leaf as per the ‘PriceSharing Formula’ implemented by the Tea Board of India and a quality check of green leaf in the process of tea production in the factory. [ii] The ‘Confederation of Indian Small Tea Growers Association’ (CISTA) was established in 2007 with the intervention and initiative of ‘Centre for Education and Communication’, New Delhi (Hannan, 2017). It consists of ‘All Assam STGs Association’, Assam; ‘All Tripura STGs Association’, Tripura; ‘All Mizoram STGs Association’, Mizoram; ‘All Nagaland STGs Association’, Nagaland; ‘All Meghalaya STGs Association’, Meghalaya; ‘All Bodoland STGs Association’, Kokrajhar; ‘United Forum of STGs Associations’, North Bengal; ‘The Nilgiris STGs Association’, Tamil Nadu; ‘All Kerala STGs Association’, Kerala; ‘Kangra Valley STGs Association’, Himachal Pradesh.

Chapter 6

An Introspection of ‘District Green Leaf Price Monitoring Committee’ (DGLPMC)

Abstract This chapter attempts to explore the contemporary scenario in the tea industry and explains that how the industrial map and its geography have changed in recent decades. Firstly, tea economy is divided into organized and unorganized sectors and both the sub-sectors within tea economy contribute 696.49 million kg (51.59%) and 653.55 million kg (48.41%) respectively out of total of 1350.04 million kgs. The average farm size of Small Tea Growers (STGs) is 1.03 ha (Unorganized) and Estate Gardens is 268.11 ha (Organized). Their regional pattern of existence cover almost all corners in India and are spread over all eight states of North-East India, four states in North India and three states in South India. Secondly, it deals with the Tea Marketing Control Order (TMCO) and its provisions under S.O. 1012 (E) dated 15.04.2015 to constitute the District Green Leaf Price Monitoring Committees (DGLPMCs) in each small tea growing districts in the country. It is found that out of total 55 districts in 15 states, the DGLPMCs is constituted only in 28 districts of six states. In another 27 districts in ten states, the DGLPMCs are not constituted and policy exclusions are reported at regional level. As a matter of practice, the average monthly auction prices of CTC teas at district and state levels are displayed over Tea Board website. The Minimum Benchmark Prices (MBPs) of green leaf are notified by the Sub-Regional Offices (SROs) and Regional Offices (ROs) of Tea Board of India however, it does not ensure the payment of same price to the smallholder on ground. It is evident from the field experiences in district Uttar Dinajpur of West Bengal that the provisions of monitoring the farm-gate prices receivable to the smallholders are not adhered and implemented by the Sub-Regional Offices (SROs) and Regional Offices (ROs). Monthly meetings are not conducted and factory-wise actual green leaf price paid to STGs are not notified on monthly basis as per the mandatory E-Form submitted by Bought-Leaf Factories (BLFs). Keywords DGLPMC · TMCO · Auction prices · MBPs · Farm-gate price · SROs

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 A. Hannan, The Smallholder Tea Economy and Regional Development, https://doi.org/10.1007/978-3-031-51812-6_6

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116

6 An Introspection of ‘District Green Leaf Price Monitoring Committee’ …

6.1 Introduction of DGLPMC The Government of India under Department of Commerce, Ministry of Commerce and Industry has notified the ‘S.O. 1012 (E) on April 15, 2015’ (Hannan, 2020). It ordered the Tea Board of India to constitute and notify the District Green Leaf Price Monitoring Committee (DGLPMC) in all small tea growing districts of India to monitor the farm-gate price of green leaf paid to the Small Tea Growers (STGs). The DGLPMCs would consist of two representatives each from Bought-Leaf Factories (BLFs), STGs and Estate Factories, one officer of Tea Board of India not below the rank of Assistant Director as member-secretary and the Collector or Deputy Commissioner as Ex-Officio Chairman (Hannan, 2020a, 2020b). The tenure of the DGLPMC shall be three years and representing members of BLFs, STGs and Estate Factories cannot be part of two consecutive terms. The prime responsibility of DGLPMCs is to safeguard and monitor the farm-gate price of green leaf price payable to the STGs. It is computed based on the last month average auction price of BLFs of the concerned district of each succeeding month with an agreed principle of ‘Price-Sharing Formula’ as in presence and implemented by Tea Board of India. The DGLPMC would also supervise and monitor the compliance of payment of average price paid to the STGs and bring notice and identify the errant BLFs of Tea Board (Hannan, 2020a, 2020b). It has also been directed upon the member-secretary (Officer of Tea Board) of the DGLPMC who shall ensure and conduct at least one meeting of the committee in a month. It is evident that there are 66 districts (Tea Board of India, 2017–18) spread over 15 states grow tea today (Hannan, 2019b, 2020a, 2020b). It is assumed theoretically that all the small tea growing districts would have DGLPMC as per the guidelines mentioned as per the Gazette Notification. However, the field data does not support as it is to be implemented by the Tea Board and it’s Sub-Regional Offices (SROs) which would allow fair levelling terrain to the STGs at the lower end of the supply chain on ground. It has a far-reaching consequence to the labourers who are engaged in small-scale tea economies estimated at 2.51 million people directly or indirectly (Hannan, 2017). It has an impact on unorganized sector in tea economy which affects the local economy of the respective localities and small tea growing regions collectively. However, the unorganized sector within tea economy produced 653.55 million kg (48.41%) out of total tea of 1350.04 million kg (Tea Board, 2019b). But there exist regional inequalities in implementing policies in supply chain in all districts of India. The Tea Board of India and its linkages-effect with district administration and SROs to implement the policies and monitor the farm-gate price and guarantee better price realization to the STGs seem to be dismal (Hannan, 2020a). There are gaps in governance and effective decentralization in implementing the policies in each level starting from Auction Price of CTC teas to Minimum Bench Price (MBP) of Green Leaf and Farm-Gate prices green leaf at the factory level despite its mandatory proviso of sub-section (3) and (5) of section 30 of the ‘Tea Act, 1953’ (29 0f1953). In this context, fieldwork was conducted to understand the nature of monitoring the farm-gate price of green leaf and institutional data was gathered on the ground

6.2 Geographies of Tea Economy Today

117

information in the districts of ‘North Bengal’ and ‘Bihar’ (i.e. Kishanganj district). Therefore, the present chapter emphasizes to analyse the following objectives: (A) To analyse the trends of district-level Auction Prices of CTC teas during 2013– 2018 as Tea Board of India notified it under the provision of TMCO, 2013; (B) To analyse the Minimum Benchmark Price (MBP) of green leaf in the districts of North Bengal and Bihar during 2015–2018; (C) To assess and verify the outcomes from the field survey, opinions and narratives of STGs, local media and newspaper reports and analyse the farm-gate price realization of green leaf price at district level.

6.2 Geographies of Tea Economy Today It is a known fact that the tea economy currently is a blend of ‘Organized’ and ‘Unorganized’ sub-sectors and departed from its classic definition Enclave Economy which was once started by the colonial rulers in India (Dasgupta, 1983). As mentioned above, they contribute 696.49 million kg (51.59%) and 653.55 million kg (48.41%) respectively out of total of 1350.04 million kg (Hannan, 2020a, 2020b). This structural change was witnessed in ‘1990s’ in tea industry and many small-scale farmers commonly recognized as Small Tea Growers (STGs) started cultivating tea (Hannan, 2017). Earlier tea growing was confined to Assam, West Bengal, Tripura, Tamil Nadu, Karnataka and Kerala and they were identified as traditional tea growing states in India. Now Geography of Plantations is transformed and hilly and mountainous states in India’s North-East are cultivating small-scale tea (Hannan, 2020a, 2020b). The other states of Bihar, Uttarakhand, Himachal Pradesh also grow tea as cash crop in the farming sector. Table 6.1 reveals that 15 states of India are growing tea and their differential contribution under ‘Organized’ and ‘Unorganized’ sectors. It is reported that a total of 210,225 STGs having an area of 215,886.40 ha of tea is grown under the coverage of ‘Unorganized’ sector. In India, the average farm size is 1.03 ha and the highest size of farms are found in Nagaland with 6.79 ha (Hannan, 2020a). The highest numbers of STGs are situated in three states, i.e. Assam, Tamil Nadu and West Bengal in descending order (Hannan, 2020a, 2020b). More than fifty per cent STGs are found and reported in North-East India. There are 571 Bought-Leaf Factories (BLFs) established and distributed in 15 states in India which purchase green leaf from STGs (CISTA, 2019; Hannan, 2020b). The ‘Organized’ sector has 1569 tea estates with tea area of 420,670.60 ha and average size of estates in 268.11 ha in India (Tea Board, 2019). The size of tea estates in hilly states is relatively small and it is evident in case of Himachal Pradesh, Uttarakhand, Meghalaya, Mizoram and Sikkim as mentioned in Table 6.1.

118

6 An Introspection of ‘District Green Leaf Price Monitoring Committee’ …

Table 6.1 Geography and size of Tea Economy in India (2018–19) States

Unorganized sector

Organized sector

No. of STGs

Area (ha)

Avg. size

No. of Est.

Arunachal Pradesh

1690

4630.50

2.74

28

Assam

101,085

105,291

1.04

765

Area (ha)

Avg. size

2593.23

92.62

232,399.4

303.79

Meghalaya

644

910.35

1.41

2

96.99

48.50

Mizoram

364

182.80

0.50

1

15

15.00

Manipur

489

1382.61

2.83

1

312.44

312.44

Nagaland

3354

22,772.27

6.79

1

200

200.00

Sikkim

30

8.75

0.29

1

177.64

177.64

Tripura

2766

1407.28

0.51

52

6904.05

132.77

242,698.7

285.19

North-East

110,422

136,585.60

1.24

851

Bihar

3500

3900

1.11

6

107.37

17.90

Himachal Pradesh

1526

710.22

0.47

15

627.26

41.82

Uttarakhand

3150

2127.08

0.68

4

751.11

187.78

West Bengal

37,365

33,711.27

0.90

451

114,410.5

253.68

North India

45,541

40,448.57

0.89

476

115,896.2

243.48

Karnataka

–

–

–

2171.74

135.73

16

Kerala

8497

5567.74

0.66

93

30,303.42

325.84

Tamil Nadu

45,765

33,284.57

0.73

133

29,600.56

222.56

South India

54,262

38,852.31

0.72

242

62,075.72

256.51

India

210,225

215,886.40

1.03

1569

420,670.60

268.11

Source Based on Tea Statistics (2019)

6.3 Trends of District-Level Auction Prices of CTC Teas in India As per the ‘Tea Marketing Control Order’, 2003 (TMCO) under the clause 30, the fixation of Price Sharing Formula and its compliance, Tea Board of India is displaying over its website the Monthly Auction Prices of CTC teas at district level (Government of India, 2003). The data is apprehended below in Table 6.2 for the period of 2013– 2018. It is found that higher auction price of CTC teas are received in the states Assam and West Bengal while southern states get low price as compared to Northern states. It is also observed from data that southern states hardly cross of rupees hundred for a kilogram of CTC teas. At times, they realize fifty per cent prices as compared to highest taker state of Assam. It is to be mentioned here that CTC teas are mostly consumed within India in the domestic market. The data further reveals that the district-level Auction Prices of CTC teas are announced only for ‘four’ districts in Arunachal Pradesh, ‘sixteen’ districts in Assam, ‘four’ in West Bengal, ‘two’ in

6.4 Practices of Minimum Benchmark Price (MBP) of Green Leaf

119

Kerala and ‘two’ in Tamil Nadu (Table 6.2). In case of smaller states of North-East, i.e. Meghalaya, Nagaland, Tripura and Bihar (new entrant), Auction Prices of CTC teas are notified collectively at the state level only (Hannan, 2020a, 2020b). The disaggregated district-level Auction Prices are not disseminated in these states and therefore one does not know the inter-district price variations except Bihar where only one district tea is produced. It needs to be mentioned that there are around 70 districts in 15 states where small-scale tea is cultivated and produced. If FarmGate prices of green leaves are to be monitored, the Auction Prices of CTC teas for all the districts are to be announced as per policy guidelines of ‘Tea (Marketing) Control Order’. So there is gap in disseminating the Auction Prices of CTC teas at the district level. Even in existing monthly data displayed by the Tea Board of India, there are discrepancies observed in case of some districts. The web dissemination of Auction Price of CTC teas seems to be a ritualistic process of data management rather than monitoring the relationships of market impurities which has an impact on poor Farm-Gate price realization of green leaf by STGs and CTC teas by the BoughtLeaf Factories. Hence, the implementation of ‘Tea (Marketing) Control Order’ is not effective as per the provisions and conventions which attempts to bring transparency in tea marketing in the supply chain.

6.4 Practices of Minimum Benchmark Price (MBP) of Green Leaf The Tea Board of India has started to notify the Minimum Benchmark Price (MBP) of Green Leaf at district level since 2015–16 onwards (Hannan, 2020a, 2020b; Tea Board, 2015). This has been in practice by the Small Grower Development Directorate (SGDD) headquartered at Dibrugarh, Assam and through this Directorate, the Tea Board wanted to monitor the farm-gate prices of green leaf paid to STGs in different regions and districts of India. To understand and assess the ground situation and effectiveness of this policy in North Bengal and Bihar, the unpublished data from Confederations of Indian Small Tea Growers Associations (CISTA) was collected for the period of 2016–2018 and interacted with the President of the organization. Since the district-level MBP is not available in public domain neither disseminated over the Tea Board website, the notifications of SGDD are analysed which gathered through fieldwork and compiled (Table 6.3). As per the field data, it was found that MBP of green leaf was notified for the districts of Darjeeling (Plains), Jalpaiguri, North Dinajpur and Cooch Behar in North Bengal. In the state of Bihar, it is provided consolidated manner for the state and it is known that tea is grown only in Kishanganj. It is observed that the MBP is always higher in Jalpaiguri as compared to Darjeeling (Plains), Cooch Behar and North Dinajpur. The lowest MBP for green leaf is received in Kishanganj of Bihar over during 2016–2018 (Hannan, 2020a, 2020b). Some of the reasons emerged during field interactions among growers are as follows: proactive role of Jalpaiguri Small Tea Growers Association; presence of

89.21 –

Coochbehar

Darjeeling (hills)

West Bengal

– –

All districts of state

All districts of state

Nagaland

Tripura

–

All districts of state

Meghalaya

–

124.49 108.74

Sonitpur

–

103.75

Karbi Anglong

–

–

–

–

–

–

–

–

– 122.11

–

Hailakandi

–

Lakhimpur

–

–

–

–

–

–

–

Sibsagar

120.87 132.87

Golaghat

–

Goalpara

Jorhat

– 116.81

Bongaigaon

Dibrugarh

117.35

Cachar

Tinsukia

Assam

–

– –

West Siang

All Districts of AP

– –

– –

Lohit

Changlang

Arunachal Pradesh

Nov

Oct

Districts

States

2013

Table 6.2 District-level auction prices of made tea in India (2013–18)

–

90.68

–

–

–

104.23

111.03

105.6

110.73

–

170.18

117.44

110.8

–

114.75

–

117.56

–

–

–

–

Dec

(continued)

120 6 An Introspection of ‘District Green Leaf Price Monitoring Committee’ …

–

106.55

–

100.69

105.94

Dibrugarh

Goalpara

Golaghat

Jorhat

All districts of AP

Bongaigaon

–

West Siang

123.02

–

Changlang

Cachar

–

Lohit

Arunachal Pradesh

Assam

–

Districts

Jan

Mar

Apr

96.44

98.82

–

102.27

–

110.63

–

–

–

–

97.72

80.13

–

88.27

–

–

–

–

–

159.73

132.4

–

131.46

–

–

–

–

–

154.06

145.33

–

145.85

–

158.79

–

–

–

–

May

81.79

Nilgiris

States

2014

–

Coimbatore

Feb

88.08

Wayanad

Tamil Nadu

96.21

Idduki

Kerala

–

83.48

Uttar Dinajpur

All districts of state

85.23 89.91

Darjeeling (plains)

Jalpaiguri

Oct

Districts

Bihar

States

2013

Table 6.2 (continued)

165.68

159.17

–

158.94

–

157.67

–

–

–

–

Jun

158.21

152.27

–

152.33

–

141.43

–

–

–

–

Jul

–

–

–

–

–

–

–

–

141.08

138.17

–

133.32

–

128.41

–

–

–

–

Aug

Nov

132.08

129.89

–

127.56

–

127.21

–

–

–

–

Sep

131.92

128.12

–

122.94

–

123.65

92.64

128.23

87.83

90.15

Oct

75.28

–

76.64

71.96

–

84.93

92.2

88.16

Dec

126.55

116.2

–

116.37

–

111.26

102.87

0

72.26

77.45

Dec

(continued)

129.61

126.53

–

121

–

112.91

96.59

142.07

82.4

86.24

Nov

6.4 Practices of Minimum Benchmark Price (MBP) of Green Leaf 121

–

88.14

90.63

86.73

–

78.06

85.44

–

80.7

Darjeeling (hills)

Darjeeling (plains)

Jalpaiguri

Uttar Dinajpur

All districts of state

Idduki

Wayanad

Coimbatore

Nilgiris

Bihar

Kerala

Tamil Nadu

–

79.71

All districts of state

Coochbehar

Tripura

97.55

Tinsukia

West Bengal

105.72

Sonitpur

–

102.59

Karbi Anglong

All districts of state

96.69

Sibsagar

Nagaland

–

Hailakandi

–

144.08

Lakhimpur

All districts of state

Jan

Districts

Meghalaya

States

2014

Table 6.2 (continued)

83.97

–

87.84

84.42

–

78.22

87.47

82.84

–

73.04

–

–

–

92.59

76.67

94.14

104.85

–

143.32

Feb

77.81

–

84.04

81.24

–

73.91

85.78

82.28

–

63

–

–

–

93.12

113

97.59

101.98

–

135.62

Mar

74.47

–

80.38

80.33

–

126.95

129.22

115.39

–

125.19

–

–

–

144.23

137.75

75

142.64

–

195.19

Apr

81.18

–

75.48

72.54

–

110.3

120.85

110.86

–

102.66

–

–

–

140.56

149.57

–

141.36

–

192.36

May

77.78

–

–

62.67

–

121.31

129.87

119.6

–

118.3

–

–

–

153.39

161.78

–

155.41

–

223.07

Jun

71.61

–

–

58.45

–

109.28

117.83

109.49

–

99.64

–

–

–

138.88

145.33

–

146.01

–

213.46

Jul

64.85

–

72.37

61.18

–

95.21

103.33

96.32

–

96.6

–

–

–

125.8

137.88

124.61

134.15

–

197.2

Aug

74.53

–

70.09

64.13

–

89.33

98.83

92.34

–

89.96

–

–

–

117.39

131.44

112.84

124.24

–

179.73

Sep

73.42

–

64.66

61.64

84.4

84.57

95.51

87.75

–

86.67

–

–

–

109.37

127.32

105.07

118.97

–

195.65

Oct

65.08

–

60.15

61.46

84.6

85.58

94.82

88.3

–

77.72

–

–

–

70.45

–

65.96

66.64

80.83

82.44

92.87

86.17

–

82.75

–

–

–

106.26

109.56

96.92

108.16

–

188.47

Dec

(continued)

110.53

123.5

103.67

120.31

–

209.27

Nov

122 6 An Introspection of ‘District Green Leaf Price Monitoring Committee’ …

68.49

69.73

143.16

98.28

Lohit

Changlang

West Siang

All Districts of AP

Arunachal Pradesh

–

100.42

–

108.69

108.81

157.02

–

96.51

83.31

108.11

100.98

–

–

Bongaigaon

Dibrugarh

Goalpara

Golaghat

Jorhat

Lakhimpur

Hailakandi

Sibsagar

Karbi Anglong

Sonitpur

Tinsukia

All districts of state

All districts of state

All districts of state

Meghalaya

Nagaland

Tripura

–

98.88

Cachar

Assam

Jan

Districts

States

2015

Table 6.2 (continued)

–

–

–

82.76

97.81

86

88.17

–

138.03

95.95

87.95

–

86.96

–

89.86

87.58

–

54.35

59.39

Feb

–

–

–

71.77

88.09

71

85.91

–

135.93

70.01

70.35

–

70.9

–

77.73

78.21

–

0

0

Mar

–

–

–

123.08

125.43

–

112.54

–

210.5

137.49

115.95

–

122.03

–

148.62

93.28

–

110.1

117.02

Apr

–

–

–

117.43

127.96

–

124.49

–

199.7

138.73

128.3

–

126.81

–

131.24

89.79

–

95.13

104.46

May

–

–

–

125.8

126.48

–

130.58

–

223.84

127.12

125.91

–

136.12

–

122.66

92.71

–

94.69

93.4

Jun

–

–

–

124.13

134.14

–

127.27

–

219.71

134.59

131.51

–

130.86

–

136.74

93.59

–

91.36

92.45

Jul

–

–

–

118.48

125.28

–

124.12

–

219.79

138.15

132.14

–

130.93

–

137.13

98.55

127.26

86.85

81.02

Aug

–

–

–

110.86

113.85

–

119.69

–

210.26

131.79

128.46

–

122.27

–

147.46

97.33

123.67

73.23

73.88

Sep

–

–

–

105.03

113.64

99.11

115.79

–

204.64

130.32

123.97

–

116.72

–

135.29

91.2

122.69

69.4

66.32

Oct

–

–

–

–

–

–

105.67

109.58

91.68

111.46

–

163.79

123.46

122.97

–

116.84

–

136.74

102.56

125.94

76.27

74.14

Dec

(continued)

111.61

116.64

97.43

123.16

–

203.01

133.58

126.67

–

118.75

–

137.57

99.71

112.37

72.79

70.25

Nov

6.4 Practices of Minimum Benchmark Price (MBP) of Green Leaf 123

83.95

81.27

66.15

69.62

Uttar Dinajpur

All districts of state

Idduki

Wayanad

Bihar

Kerala

–

102.39

Dibrugarh

103.27

All districts of AP

Bongaigaon

–

Upper siang

127.14

118.68

West Siang

Cachar

80.89

Changlang

Assam

Jan

68.17

Districts

Lohit

States

Arunachal Pradesh

2016

75.8

93.63

Jalpaiguri

–

79.71

Darjeeling (plains)

Nilgiris

–

Darjeeling (hills)

Coimbatore

72.75

Coochbehar

West Bengal

Tamil Nadu

Jan

Districts

States

2015

Table 6.2 (continued)

100.82

–

109.92

100.97

–

96

84.73

77.56

Feb

79.44

–

71.72

70.74

72.97

73.12

85.83

75.82

–

59.31

Feb

97.11

–

115.96

100.53

–

–

–

–

Mar

79.02

–

69.73

66.62

–

64.95

80.63

79.73

–

54.21

Mar

132.31

–

160.85

108.52

–

–

–

139.06

Apr

76.73

–

70.69

67.87

–

103.15

109.39

97.19

–

Apr

118.45

–

131.27

113.57

–

120.27

–

–

May

67.94

–

63.66

64.75

–

92.19

103.52

93.5

–

64.31

May

130.62

–

142.25

113.57

–

120.27

85.82

140.09

Jun

66.58

–

66.85

64.78

–

84.69

98.23

81.71

–

85.64

Jun

130.43

–

139.72

103.24

–

128.66

–

116.54

Jul

68.41

–

65.23

67.88

–

86.1

90.68

84.01

–

77.37

Jul

127.43

–

134.98

128.86

109.83

116.96

111.57

114.62

Aug

67.84

–

62.25

67.56

–

83.9

87.65

83.36

–

69.56

Aug

125.68

119.92

135.98

97.02

109.83

–

104.28

116.9

Sep

70.7

–

62.83

69.34

–

73.06

81.45

72.88

–

64.42

Sep

123.42

119.27

132.58

98.33

–

111.8

–

109.86

Oct

74.23

–

74.69

77.06

65.53

73.36

79.69

71.4

–

61.76

Oct

122.06

109.66

131.52

111.06

–

118.03

–

110.71

Dec

85.04

–

79.18

78.39

82.5

89.34

96.9

87.93

–

74.6

Dec

(continued)

121.81

113.28

139.35

110.31

–

108.85

98

111.62

Nov

77.59

–

73.27

76.76

75.16

88.23

92

80.82

–

65.81

Nov

124 6 An Introspection of ‘District Green Leaf Price Monitoring Committee’ …

–

70.33

–

92.66

98.79

91.09

93.06

88.21

93.05

Darjeeling (hills)

Darjeeling (plains)

Jalpaiguri

Uttar Dinajpur

All districts of state

Idduki

Wayanad

Bihar

Kerala

102.95

Tinsukia

All districts of state

100.87

Sonitpur

Coochbehar

89.26

Karbi Anglong

Tripura

97.2

Sibsagar

West Bengal

–

Hailakandi

–

157.95

Lakhimpur

All districts of state

107.1

Jorhat

Nagaland

117.83

Golaghat

–

–

Goalpara

All districts of state

Jan

Districts

Meghalaya

States

2016

Table 6.2 (continued)

101.47

100.13

88.71

86.93

96.06

97.87

–

78.99

–

–

–

95.44

104.94

93.69

91.37

–

136.6

90.59

104.13

–

Feb

93.54

94.2

–

97.87

112.36

96.04

–

–

–

–

–

89.04

150.67

88.71

92.94

–

120.51

100

109.12

–

Mar

109.42

97

–

118.24

120.51

112.57

–

–

–

–

–

127.88

121.98

–

130.04

–

186.26

136.14

143.85

–

Apr

96.3

92.1

–

111.05

114.35

111.01

–

–

–

–

–

113.74

106.84

–

121.55

–

178.37

129.61

136.59

–

May

127.57

118.17

–

109.56

113.39

107.63

–

–

–

170.77

–

124.57

131.77

–

135.47

132.55

214.14

137.57

137.77

–

Jun

95

110.69

–

109.07

110.83

104.96

–

–

–

139.73

–

124.54

136.58

–

132.44

118.16

199.92

130.22

137.33

–

Jul

92.93

103.44

–

104.63

105.69

100.48

–

–

135.86

–

–

123.29

133.33

108.74

126.04

120.37

180.47

124.06

132.49

–

Aug

92.83

84.3

96.38

103.62

106.22

99.26

–

–

131.38

–

112.69

124.57

131.89

117.28

123.31

119.95

176.82

122.01

124.9

–

Sep

93.55

89.05

93.87

102.76

106.15

99

–

–

126.77

133.37

112.68

120

125.7

119.6

127.86

120.43

176.73

113.71

124.82

–

Oct

96.44

89.53

99.04

98

101.52

107.02

109.87

104.54

–

–

120.45

122.96

122.74

114.45

116.39

119.62

118.22

122.82

167.84

114.38

115.62

113.4

Dec

(continued)

102.59

106.62

109.55

105.12

–

–

125.25

128.16

107.05

117.96

124.97

127.14

123.64

126.33

172.49

111.13

122.92

117.71

Nov

6.4 Practices of Minimum Benchmark Price (MBP) of Green Leaf 125

85.04

Nilgiris

99.55

111.44

103.74

109.22

99.09

154.04

111.00

106.66

108.27

106.24

–

Dibrugarh

Goalpara

Golaghat

Jorhat

Lakhimpur

Hailakandi

Sibsagar

Karbi Anglong

Sonitpur

Udalguri

All districts of AP

Bongaigaon

90

West Siang

119.25

105.41

Changlang

Cachar

–

Lohit

Arunachal Pradesh

Assam

101.89

Districts

States

Jan

–

Coimbatore

Tamil Nadu

2017

Jan

Districts

States

2016

Table 6.2 (continued)

–

100.47

97.83

101.37

116.79

137.1

98.97

104.00

100.92

97.32

91.4

105.69

82

97

–

99.47

Feb

108.3

–

Feb

–

99.73

100

99.42

118.00

129.29

112.04

103.36

100

100.47

–

109.55

–

–

–

–

Mar

93.99

–

Mar

–

125.2

0

128.41

–

123.47

140.63

123.28

–

130.48

122.23

117.71

–

–

–

139.55

Apr

94.81

–

Apr

–

121.74

111.21

119.34

–

125.15

125.63

122.56

113.94

126.65

104.3

129.48

162.09

138.34

–

118.59

May

97.34

–

May

–

139.45

109.47

132.87

166.84

114.49

135.74

130.2

120.16

134.26

112.6

134.2

188.03

120.92

–

126.16

Jun

98.7

98.27

Jun

–

138.04

85.56

130.94

132.51

127.74

129.1

131.7

119.92

130.98

114.72

128.16

191.04

130.46

–

107.5

Jul

91.84

89.32

Jul

–

138.24

126.82

132.18

128.32

136.02

132.14

131.34

122.47

131.48

119.49

144.52

192.61

122.51

–

100.27

Aug

90.02

82.8

Aug

–

136.74

129.93

132.91

130.33

115.92

129.37

127.05

121.44

132.69

128.31

147.46

199.59

131.73

105.74

109.17

Sep

97.32

90.8

Sep

132.47

139.29

132.54

133.73

134.83

128.21

130.35

129.09

120.11

135.44

133.22

146.78

200.44

127.46

105.05

105.5

Oct

96.19

90.86

Oct

127.3

122.55

126.45

131.18

126.45

116.65

–

135.14

123.46

115.7

122.27

128.58

153.44

205.58

116.38

96.68

112.52

Dec

104.08

99.27

Dec

(continued)

134.57

135.76

129.16

123.05

86.68

130.3

124.94

120.29

128.19

129.21

143

201.23

127.51

93.96

105.81

Nov

98.24

93.89

Nov

126 6 An Introspection of ‘District Green Leaf Price Monitoring Committee’ …

–

–

99.51

105.26

98.50

Coochbehar

Darjeeling (hills)

Darjeeling (plains)

Jalpaiguri

Uttar Dinajpur

West Bengal

107.71

Jan

101.95

75.94

115.37

193.52

Districts

Lohit

Changlang

West Siang

All districts of AP

Arunachal Pradesh

106.83

Nilgiris

States

2018

103.61

105.37

Coimbatore

Wayanad

Tamil Nadu

104.63

Idduki

Kerala

93.47

All districts of state

Bihar

109.67

All districts of state

All districts of state

Nagaland

119.29

All districts of state

Tripura

104.34

Tinsukia

Jan

Districts

Meghalaya

States

2017

Table 6.2 (continued)

155.76

68.76

61.01

91.19

Feb

106.77

101.54

112.51

109.71

87.71

90.27

99.82

93.27

–

–

104.53

103.51

120.34

93.26

Feb

–

–

66

61

Mar

107.7

105.35

106.42

103.69

88.17

90.67

95.80

92.12

90.00

–

130.13

71

98.59

92.59

Mar

203.04

–

78.81

158.29

Apr

98.99

90.45

104.33

–

102.36

107.71

113.6

104.89

111.71

–

–

–

–

133.27

Apr

198.88

152.4

78.29

117.37

May

85.2

81.36

86.98

95.04

97.31

101.63

110.01

104.89

102.73

–

131

143.54

125.49

116.75

May

227.32

155.76

81.3

107.53

Jun

75.74

69.98

78.03

77.20

88.32

99.99

107.06

95.79

–

93.32

131.33

163.83

126.48

122.92

Jun

221.97

145.83

77.65

110.04

Jul

71.25

69.95

77.07

79.95

84.46

92.31

99.09

91.52

–

87.97

119.84

141.99

143.87

122.99

Jul

213.35

119.22

103.35

115.33

Aug

66.32

61.62

77.50

78.16

81.18

89.1

99.62

87.43

–

82.48

120.7

137.57

128.36

124.31

Aug

206.76

113.97

125.09

116.26

Sep

72.34

67.29

73.60

64.58

77.30

87.85

97.74

86.84

–

86.83

123.44

136.75

139.1

122.28

Sep

204.92

117.16

110

117.16

Oct

81.39

72.26

81.11

80.52

80.61

89.90

102.34

92.25

–

91.79

123.44

140.32

144.61

124.66

Oct

190.79

131.86

125.50

119.21

Dec

81.88

73.55

82.87

80.64

82.12

97.5

103.37

97.03

–

101.11

117.48

133.33

153.28

115.17

Dec

(continued)

206.07

125.56

119.52

119.37

Nov

77.51

69.54

80.59

81.54

84.20

92.17

103.65

96.38

–

99.08

117.79

139.19

145.91

116.11

Nov

6.4 Practices of Minimum Benchmark Price (MBP) of Green Leaf 127

–

100.00

110.23

117.36

–

0

114.37

115.24

105.70

–

127.22

109.01

Lakhimpur

Hailakandi

Sibsagar

Karbi Anglong

Kokrajhar

Nogaon

Sonitpur

Udalguri

Tinsukia

Udalguri

All districts of state

Meghalaya

Coochbehar

121.23

Jorhat

West Bengal

113.26

Golaghat

82.96

115.36

95.56

Goalpara

All districts of state

146.96

Dibrugarh

All districts of state

101.74

Bongaigaon

Nagaland

146.96

Cachar

Assam

Tripura

Jan

Districts

States

2018

Table 6.2 (continued)

95.44

105.97

94.21

121.00

–

80.28

96.34

101.83

99.56

–

99.11

96.93

–

–

102.89

96.36

78.43

86.62

84.74

134.36

Feb

92.75

86.73

70.46

100.00

–

76.62

–

94.16

98.11

–

65.00

110.01

–

–

84.59

83.20

–

81.75

–

142.97

Mar

74.00

–

153.94

–

–

134.14

–

131.2

152.62

–

–

137.7

–

–

153.85

108.72

145.8

134.3

131.17

184.51

Apr

123.50

98.81

134.94

137.01

–

121.32

–

132.6

136.89

–

–

130.28

120.75

–

138.11

130.62

122.95

131.23

123.14

156.53

May

101.92

–

164.49

148.02

–

130.26

–

147.23

147.77

138.91

146.71

146.48

135

–

153.08

133.19

113.72

146.19

139.45

170.03

Jun

110.88

–

153.76

140.06

134.11

131.06

–

145.46

152.79

139.24

149.47

149.36

145.17

–

154.32

139.96

130.84

148.87

142.85

172.37

Jul

112.67

127.35

152.04

139.5

142.4

131.42

–

141.83

150.48

135.91

145.78

144.2

144.81

–

144.22

137.79

126.66

146.77

141.25

167.14

Aug

111.93

119.45

143.16

133.16

148.11

125.61

–

132.12

137.75

129.7

138.25

138.16

135.83

–

135.53

130.93

114.92

137.37

134.14

157.53

Sep

114.6

120.13

136.23

141.13

–

125.61

148.11

132.12

141.12

115

131.13

138.16

132.91

–

139.5

129.36

121.91

138.95

135.62

162.65

Oct

123.13

126.00

123.63

144.38

142.54

122.14

–

122.40

125.91

119.48

126.41

129.23

132.49

–

148.7

125.34

119.03

133.46

124.93

155.51

Dec

(continued)

125.63

125.66

136.15

–

–

124.82

151.3

131.24

139.46

133.03

132.82

137.14

131.44

–

139.76

128.71

126.72

139.2

133.24

164.21

Nov

128 6 An Introspection of ‘District Green Leaf Price Monitoring Committee’ …

89.51

Nilgiris

96.45

90.72

94.40

91.86

71.39

85.51

93.90

90.25

–

Feb

94.71

88.01

96.84

99.66

65.13

78.36

80.45

81.3

–

Mar

93.09

88.23

97.38

102.76

108.24

111.8

120.55

113.04

–

Apr

79.24

75.04

81.97

91.33

98.44

105.9

117.47

106.64

–

May

76.72

69.6

78.23

87.57

99.78

106.92

115.76

105.2

–

Jun

79.70

75.06

77.95

84.64

102.5

110.1

118.78

112.82

–

Jul

89.36 95.09

79.70

99.6

108.41

103.26

111.25

115.2

114.68

–

Sep

83.28

88.33

91.38

105.95

111.41

116.96

113.58

–

Aug

Source Computed from Website of Tea Board of India (http://www.teaboard.gov.in/TEABOARDPAGE/MjE5Ng==)

81.21

Coimbatore

88.96

Tamil Nadu

85.91

Wayanad

95.91

Uttar Dinajpur

Idduki

104.23

Jalpaiguri

Kerala

92.95

Darjeeling (plains)

76.77

–

Darjeeling (hills)

All districts of state

Jan

Districts

Bihar

States

2018

Table 6.2 (continued)

93.54

86.41

96.34

105.09

105.76

114.14

115.35

116.33

–

Oct

100.70

94.17

98.72

106.57

109.1

122.87

124.53

122.3

–

Nov

98.74

90.93

101.33

106.12

114.27

123.59

125.52

123.94

–

Dec

6.4 Practices of Minimum Benchmark Price (MBP) of Green Leaf 129

130

6 An Introspection of ‘District Green Leaf Price Monitoring Committee’ …

SHGs-led tea factories and tea processing; participate in auction market and brand development (Hannan, 2019b). It brings STGs more visibility and transparency in green leaf market. There exist ‘STGs Associations’ in Darjeeling (Plains), Cooch Behar, North Dinajpur and in Bihar Kishanganj too, but they are less vigilant in mobilizing STGs and failed to bring sufficient levels of awareness among growers. It is also reported that there are defunct ‘STGs Associations’ that exist in these areas. Therefore, visibility in tea processing and marketing in the form of Cooperatives and SHGs would make difference of outcomes in the effectiveness and implementation of macro-policies of the Tea Board of India and the Ministry of Commerce, Government of India. It is noteworthy to mention that a Sub-Regional Office (SRO) of Tea Board is situated at Islampur town of Uttar Dinajpur to look after the district and adjacent Kishanganj district of Bihar (Hannan, 2020a, 2020b). But the monitoring of Farm-Gate price of green leaf is always lower in the region. In fact, some of the STGs expressed during the field survey that they have unheard of the Tea Board’s Sub-Regional Office situated in Islampur. Hence, the extension services of the SROs are miserable in enhancing capacities of STGs and monitoring the green leaf market at different blocks under their jurisdiction. They are headed by Assistant Director and Factory Advisors including support staff with full office set-up, yet deliveries are poor. It is unfortunate that all the SROs spread over different small tea growing regions of India need periodic review and performance of their field operations and extension services. The Tea Board of India should introduce some mechanism and introduce innovative programmes. Awareness, sensitization, regular training and capacity building of STGs are necessary. The SROs should publish Monthly Brochures of factory-wise Farm-Gate price of green leaf in all tea growing districts as part of their activities and campaign to make STGs aware at very local level. Similarly, display of monthly MBP of all districts over the website of Tea Board is necessary to monitor the green leaf market and Farm-Gate prices paid by the BLFs in the districts of different states of India.

6.5 Tea Marketing Control Order (TMCO), 2003 and 2015 (Amended) The New Geography of Tea Plantations in India and changing structure of Enclave Economy have prompted new policies and programmes of the Tea Board of India for making it relevant to tea industry with current times (Dasgupta, 1983; Hannan, 2017). Simultaneously, the non-traditional tea growing states are also establishing new type of institutions to cater to the needs of the STGs in their respective states. In exercise of the power conferred by sub-sections (3) and (5) of ‘Section 30’ of the Tea Act, 1953 (29 of 1953), the ‘Government of India’ through the ‘Department of Commerce’, Ministry of Commerce and Industry notified the Tea (Marketing) Control Order (TMCO), 2003. It was again amended in 2015 vide S.O. 1012 (E) dated 15.04.2015 (Hannan, 2020a, 2020b). It ordered the Tea Board of India to implement and asked

6.5 Tea Marketing Control Order (TMCO), 2003 and 2015 (Amended)

131

Table 6.3 Monthly minimum benchmark prices (MBPs) of green leaf in North Bengal and Bihar 2015

2016

Dec

Mar

May

Jun

Jul

Aug

Oct

Nov

Dec

Darjeeling plains

10.27

12.43

14.3

14.1

13.67

13.33

12.61

12.57

13.35

Jalpaiguri

11.69

12.2

15.31

14.52

14.4

14.08

13.49

13.48

13.92

North Dinajpur

11.21

11.04

15.02

14.11

13.92

13.85

13.16

13.05

13.54

8.36

10.03

Districts

Cooch Behar Bihar (all districts) 7.27 Districts

–

–

–

–

–

–

–

–

–

–

–

9.32

9.07

9.92

Jul

Aug

2017 Feb

Mar

Apr

Darjeeling 12.64 11.85 11.7 plains

May

Jun

Sep

Oct

Nov

Dec

13.25 13.32 12.17 11.62 11.11 11.03 11.72 12.24

Jalpaiguri

13.37 12.68 12.17 14.43 13.97 13.6

12.59 12.65 12.41 13

North Dinajpur

12.51 11.47 11.52 13.68 12.91 12.7

11.73 11.32 11.16 11.42 11.71

Cooch Behar

–

–

–

–

–

11.85 11.17 10.48 11.03 11.66 12.59

Bihar (all districts)

9.04

8.48

8.52

9.89

9.41

8.54

8.16

7.85

7.47

7.79

8.14

Districts

2018 Feb

Mar

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

Jan

13.17

Darjeeling 12.32 11.81 11.46 14.36 13.55 13.36 14.33 14.43 14.57 14.78 15.53 plains Jalpaiguri

13.13 13.24 11.93 15.31 14.92 14.7

North Dinajpur

12.38 12.18 10.86 14.2

13.45 13.58 13.98 14.15 14.13 14.5

Cooch Behar

12.84 10.54 12.12

15.69 12.95 14.08 14.31 14.22 14.56 15.96

Bihar (all districts)

7.97

7.42

6.9

9.4 10.46

9.52

9.65

15.09 14.86 14.63 14.65 15.82

9.91 10.24

15.61

9.98 10.22 10.55

Source Based on unpublished monthly MBP notifications of SGDD, Tea Board of India Zonal Office, Siliguri

to constitute the District Green Leaf Price Monitoring Committee (DGLPMC) in all tea growing districts of India (Hannan, 2020a). The aim was to monitor the Farm-Gate prices of green leaf to be paid to STGs on real-time basis. Consequently, the Tea Board of India has notified and implemented vide Ref. Law/08/2013 dated 21.05.2015 (Tea Board of India, 2015). In the amended TMCO vide notification of

132

6 An Introspection of ‘District Green Leaf Price Monitoring Committee’ …

S.O. 1012 (E) dated 15.04.2015 under section (9)30A is added in the principal order (TMCO, 2003) after paragraph 30 states as follows: 30A. ‘District Green Leaf Price Monitoring Committee’. – (1) There shall be a green leaf price monitoring committee in each tea growing district comprising of two representatives each from Bought-Leaf Factories, small tea growers and estate factories and one officer of the Board not below the rank of Assistant Director and the Collector or Deputy Commissioner of such tea growing district shall be the ex-officio Chairman. The officer of the Board shall be the member secretary of the committee. (2) The Registering Authority shall notify the constitution of the committee and the tenure of the committee shall be for three years from the date of such notification and the committee shall be reconstituted after the expiry of every three years. (3) Upon the death or resignation of any member of the committee, other than the Chairman and officer of the Board, the Registering Authority can re-nominate new member from such category that the deceased or, as the case may be, resigned member represented and the tenure of such re-nominated member shall be for the remaining period, as if such death or resignation of the committee members has not happened. (4) No member of the committee representing Bought leaf factories, small growers or estate factories shall be a member of two consecutive terms. (5) The committee shall undertake the following functions, namely:(a) to monitor the average green leaf price payable to the small tea growers for each succeeding month based on the last month average auction price of Bought leaf factories of such district by applying price sharing formula as notified by the Registering Authority under the provision of paragraph 30; (b) to oversee the compliance of payment of such average price to the small tea growers and bring to the notice of the Registering Authority about the errant Bought leaf manufacturer. (6) The member secretary of the committee shall ensure to conduct at least one meeting of the committee in a month.

As per the clause 30A, the responsibility of DGLPMC is to safeguard and monitor the Farm-Gate price of green leaf paid to the STGs for each succeeding month based on the last month average Auction Price of CTC teas of BLFs of particular district by applying the price-sharing formula. The DGLPMC would also administer the compliance of payment of such average price to the STGs and also to bring notice of Tea Board about errant BLFs (Hannan, 2020a, 2020b). Further instructions are directed to the ‘Member-Secretary’ of the DGLPMC who shall have to conduct at least one meeting in a month. Therefore, an ideal position is that all the small tea growing districts should have constituted DGLPMC as per policy prescriptions. However, the field reports do not support the adherence to the guidelines. The SROs of the Board have failed to carry forward and transect the objectives of the policy on ground at district and sub-district levels (Hannan, 2020a, 2020b). Let us examine the situation based on institutional data gathered through RTIs and field survey.

6.6 Execution of TMCO and DGLPMC

133

6.6 Execution of TMCO and DGLPMC To comprehend the operational part of the amended ‘TMCO, 2015’ an application under the Right to Information Act, 2005 was filed to the Tea Board of India headquartered at Kolkata and a reply was obtained on 30.12.2019 (Hannan, 2020a, 2020b). It has been transcribed in RTI reply to the author that the DGLPMC are notified and constituted in twenty-eight districts of six states of India i.e. Assam, West Bengal, Tripura, Bihar, Kerala and Tamil Nadu (Map 6.1). Out of 28 districts, 16 districts in Assam, three districts in Tripura, two districts in West Bengal and one in Bihar, the DGLPMC was constituted and notified in March 2016 (Hannan, 2020b). Their tenure of three years was expired and for their reconstitution of DGLPMC the Tea Board is silent. The identified districts in Assam are Baksa, Bongaigaon, Cachar, Charaideo, Dibrugarh, Goalpara, Golaghat, Jorhat, Karbi Anglong, Kokrajhar, Lakhimpur, Nagaon, Sivasagar, Sonitpur, Tinsukia and Udalguri; Dhalai, Unakoti and West Tripura in Tripura; Darjeeling and Uttar Dinajpur in West Bengal; and Kishanganj in Bihar (Hannan, 2020a, 2020b). As per the ‘Tea Statistics-2019’, there are around 55 districts in 15 states where STGs are present and produce tea. Out of 27 districts, the Tea Board has not constituted DGLPMC and there is a spatial exclusion DGLPMC (Tables 6.4 and 6.5; Map 6.1). The state-wise distribution DGLPMC excluded districts are ‘eight’ in Arunachal Pradesh, ‘six’ in Assam, ‘three’ in Meghalaya, ‘two’ in Nagaland, ‘three’ in Tripura, ‘one’ in West Bengal, ‘one’ in Himachal Pradesh, ‘one’ in Kerala, ‘one’ in Karnataka and ‘one’ in Tamil Nadu. As per Government of Assam reports, the STGs were found in 27 districts in Assam (Hannan, 2019a). But the DGLPMC were constituted only in sixteen districts. All these have bearings and consequences on Farm-Gate price realization of STGs in one hand and the labourers and labouring conditions on the other. As reported the Unorganized sector employs an estimated 2.51 million people in India (Hannan, 2017). It has trickling-down impact to the local economic development of particular districts and regions situated in states of India collectively. So, there exists of Spatial Exclusion while implementing the policies of Ministry of Commerce, Government of India. The districts and regions are excluded as shown in Table 6.5. So if one looks further down at district and sub-district level and corroborate with field inputs, the situation is further worsening (Hannan, 2020a, 2020b). The Tea Board of India announces ‘Minimum Benchmark Price’ (MBP) for all states of India but it has become more of a ritualistic process and paper work only. During interaction with the President, ‘Confederation of Indian Small Tea Growers Associations’ (CISTA, 2019) at Jalpaiguri, it has been transcribed that MBP of green leaf is announced based on Auction Price of CTC teas in a particular region. It is circulated over email to all the stakeholders in tea industry and bulk messages are forwarded to the STGs over mobile who have ‘Tea Board Smart Card’. However, this communication does not confirm that the STGs are actually paid the prescribed price of green leaf as declared by the Tea Board, but it convinces only the implementation of TMCO, 2015 and their guidelines ‘Section (9): 30A of clause 5 (a)’ which states that ‘to monitor the average

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6 An Introspection of ‘District Green Leaf Price Monitoring Committee’ …

Map 6.1 Geographies of DGLPMC and spatial exclusion in India

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Table 6.4 Production of tea and DGLPMCs status in India (2018–19) States

Tea production (M. kg) Organized sector

Arunachal Pradesh

3.89

7.78 311.55

Small tea growing districts (No.) Total tea

STGs districts

DGLPMC notified

DGLPMC Not notified

11.67

8

0

8

701.34

22

16

6

Meghalaya

0.10

0.46

0.56

3

0

3

Nagaland

0.00

1.68

1.68

2

0

2

Sikkim

0.09

0

0.09

–

–

–

Tripura

6.38

2.24

8.62

6

3

3

Assam

389.79

Unorganized sector

North-East India

400.25

323.71

723.96

41

19

22

West Bengal

178.67

215.56

394.23

6

5

1

Bihar

0.69

4.35

5.04

1

1

0

Himachal Pradesh

0.30

0.48

0.78

1

0

1

Uttarakhand

0.02

0

0.02

–

–

–

North India

179.68

220.39

400.07

8

6

2

49.64

11.12

60.76

3

2

1

4.83

0.27

5.1

1

0

1

Tamil Nadu

62.09

98.06

160.15

2

1

1

South India

116.56

109.45

226.01

6

3

3

India

696.49

653.55

1350.04

55

28

27

Kerala Karnataka

Source Based on Tea Statistics-2019 and RTI Dated 30.12.2019

green leaf price payable to the small tea growers for each succeeding month based on the last month average auction price of Bought leaf factories of such district by applying price sharing formula as notified by the Registering Authority under the provision of paragraph 30’. Here one conspicuous gap is known that factory-wise Farm-Gate price of green leaf paid to the STGs is not published at district level (Hannan, 2019a, 2020a, 2020b). The SROs of Tea Board in the concerned district should focus on this. As per mandatory provision of TMCO, 2003 under Clause (7), E-Form return is compulsory to be submitted by each BLF to the Tea Board where actual price paid to the STGs is disclosed. This gives an opportunity to the BLFs or Estate Factory an upper edge to hide the actual prices paid to the STGs in a particular month in a district and STGs are not aware of such provisions. The TMCO, 2015 under ‘Section (9)30A of clause 5 (b)’ empowers the SROs to oversee and monitor as it states that ‘to oversee the compliance of payment of such average price to the small tea growers and bring to the notice of the Registering Authority about the errant Bought Leaf Manufacturer’. This clause is purposefully overlooked by the

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6 An Introspection of ‘District Green Leaf Price Monitoring Committee’ …

Table 6.5 The DGLPMC’s and spatial exclusion in India (Map 6.1) States

DGLPMC constituted districts

Arunachal Pradesh

Assam

DGLPMC and spatially excluded districts Changlang, Dibang Valley, East Siang, Lohit, Longding, Lower Dibang Valley, Papum Pare, Tirap

Baksa, Bongaigaon, Cachar, Charaideo, Dibrugarh, Goalpara, Golaghat, Jorhat, Karbi Anglong, Kokrajhar, Lakhimpur, Nagaon, Sivsagar, Sonitpur, Tinsukia, Udalguri (Hannan, 2020)

Meghalaya

Biswanath, Darrang, Hailakandi, Kamrup, Karimganj, Marigaon

East Khasi Hills, Ri-Bhoi, West Garo Hills

Nagaland

Mon, Mokokchung

Tripura

Dhalai, Unakoti, West Tripura

North Tripura, Sepahijala, South Tripura

West Bengal

Alipurduar, Coochbehar, Darjeeling, Jalpaiguri, Uttar Dinajpur

Kalimpong

Bihar

Kishanganj

Himachal Pradesh

Kangra

Uttarakhand Kerala

Idukki and Wayanad

Karnataka Tamil Nadu

Thrissur Chikmagalur

Nilgiris

Coimbatore

Source Based on Author’s Field Survey, 2018–19 and RTI responses

SROs of Tea Board of India which is a pre-condition of monitoring the Farm-Gate price and this may be termed as gap between policy and practice. It has also been reported in local print media time and again that the STGs are paid less than MBP of green leaf in North Bengal, particularly the district Uttar Dinajpur. Therefore, it was chosen to have an in-depth understanding of the ground situation. As per the Secretary, ‘Uttar Dinajpur Small Tea Growers Association’, the DGLPMC is failed to deliver and discharge its basic responsibilities and STGs are paid Rs. 3–4 per kg of green leaf which is lower than the production cost. In May 2018, the MBP of green leaf was Rs. 14.36 (Darjeeling), Rs. 15.31 (Jalpaiguri), Rs. 14.20 (Uttar Dinajpur) and Rs. 9.40 (Cooch Behar) in West Bengal. During the said month, STGs were receiving Rs. 12–13 per kg green leaf in Jalpaiguri and Rs. 6–9 per kg green leaf in Uttar Dinajpur. Again in August 2018, the MBP of green leaf was Rs. 13.58 per kg in Uttar Dinajpur but the STGs were receiving Rs. 8–10 per kg green leaf. To have deeper understanding and assess the impact of DGLPMC, the author interacted the officials at ‘Collector’s Office’ or ‘District Magistrate’ at Raiganj, Uttar Dinajpur and the concerned officials were met and interacted in the year 2018.

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It was reported that rarely DGLPMC meetings are conducted since the constitution of DGLPMC and proper records of are not available including MBP notifications at the Chairman’s Office. Minutes of monthly meeting dated 22.07.2016 of DGLPMC were found on records that it was reported that STGs were paid less than price-sharing formula and leaf trade occurs through ‘leaf agents’. It was further specified in the minutes that Factory-wise Green Leaf price paid to the STGs were not published at the district level and were not preserved on record, but the TMCO, 2015 under ‘Section (9)30A of clause (6)’ stated that ‘the member secretary of the committee shall ensure to conduct at least one meeting of the committee in a month’. This is a violation of the mandatory guidelines of TMCO. It was found from the interaction that the STGs in different localities in the district of Uttar Dinajpur are not aware of DGLPMC though there exist of SRO at Islampur, Uttar Dinajpur by the Tea Board of India. However, it was reported that SRO does not monitor the Farm-Gate prices on ground. Therefore, it is doubtful of the application of the guidelines as per TMCO. The SROs of Tea Board of India must be held responsible and accountable to convene monthly meetings compulsorily, maintain records of minutes of meetings under the Chairmanship of the Collector or Deputy Commissioner. The district-level database should be created and the same should be reported to the various authorities of Tea Board of India including local-level Tea Associations and SHGs. The SROs and Officers of Tea Board as Member-Secretary should ensure to notify and publish the Factory-wise monthly green leaf paid as per E-Form under the provisions of TMCO at the district levels. The SRO should notify all the decisions and actions under the permission of the ‘Collector’ or ‘District Magistrate’ and circulate to stakeholders in every month. It was found that out of all the six districts in North Bengal, the farmgate price realization of green leaf is lower in Uttar Dinajpur. The nearby district of Kishanganj in Bihar is the only tea growing district in the state receives the lowest price of green leaf (Hannan, 2020b). There was an anomaly and mismatch of topdown approach to monitor the farm-gate price and the ground information flows from below which was reported in North Bengal and Bihar. The field experiences suggested that wherever there is an existence of an active and functional Small Tea Growers Association, the price of green leaf is better in comparison to its counterpart in the same district. In April 2013, the Tea Board of India founded ‘Small Growers Development Directorate’ (SGDD) situated at Dibrugarh, Assam and an outlay of 200 crores was approved in 12th Plan for Small Growers Development under ‘Tea Development and Promotion Scheme’ (Tea Board of India, 2017). A total 67 Sub-Regional Offices (SRO) were set up to monitor the performance of small-scale tea sector in India under the SGDD with an aim to improve the technical knowledge and skills of tea farmers, farm-gate price monitoring, input management and quality tea production. The SROs were situated Assam-39, Tripura-3, Mizoram-1, Arunachal Pradesh-1, Meghalaya-1, West Bengal-15, Bihar-2, Uttarakhand-1, Tamil Nadu-3 and Kerala-1 (Hannan, 2020a). All the SROs were given sufficient manpower such as ‘Development Officers’, ‘Factory Advisors’ and ‘Assistant Directors’, etc. for tea development. It was reported that around 400 SHGs were planned and 346 SHGs were

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achieved during 12th Plan period. It has been transcribed that 174 STGs were benefitted and 6.12 crores of rupees were spent to expand tea plantations (Hannan, 2020a, 2020b). It was also reported to the ‘Ministry of Commerce and Industry’ that the Tea Board of India spent of Rs. 8.05 crores (2016–17), 14.00 crores (2017–18) and 20.45 crores (2018–19) for the development of STGs under Tea Development and Promotion scheme. However, the resulted outcomes are yet to be visible in the field and its desirable impact on defending Farm-Gate prices of green leaf in tea areas and regions on ground. The situation of STGs did not change much as trade relations between BLFs and Estate Factories have market monopoly and collective bargains are weak. It was also observed and found that the SROs of Tea Board have very negligible presence in providing their extension services and monitor the BLFs prices on regular basis. The SROs barely could circulate and publicize the factory-wise list of actual green leaf prices paid to the farmers and have not achieved attention of their presence to the tea farming community. This seems to be a violation of TMCO and an act of policy paralysis. The regional inequalities and policy practices exist in tea supply chain across districts (Hannan, 2020a). The role of Tea Board, SROs and its linkage effect to the district administration is missing while taking forward the DGLPMC from office to the field. Therefore, the better Farm-Gate price is far from reality. Multi-layered gaps are strongly evident in governance at district and sub-district levels. The monthly ‘Auction Price of CTC teas’ to ‘MBP of Green Leaf’ and their effective decentralization at the factory level are necessary. On contrary, the lowest unit of delivery of green leaf price in this case is the BLFs and Estate Factories situated in a particular district which is ultimately regulated by Tea Board of India. Hence, the SROs of Tea Board of India should be given responsibility to ensure and notify factory-wise actual green leaf price paid to the STGs on monthly basis. The records must be maintained by SROs and the office of ‘District Collector’ or ‘Deputy Commissioner’. This would make general administration in a district to be watchdog and observing the Farm-Gate prices. In this way, the differential payments of MBP and actual price as per E-Form under TMCO would be known to the agencies. It was reported under RTI that as many as 27 small tea growing districts in 10 states, the DGLPMC has not been constituted so far and Tea Board of India must take proactive role to constitute the same as per the Gazette Notification of ‘TMCO-2015’.

6.7 Concluding Remarks The field interaction suggests that wherever active ‘Small Tea Growers Associations’ exist, the farm-gate green leaf price is better in comparison to the other area in the same district. It was also found among the six districts that the price realization of green leaf is low in Uttar Dinajpur in comparison to other districts in North Bengal. The district of Kishanganj in Bihar is the only tea growing district and always receives the lowest price taker for leaf. It could be argued that the linkage effect and trickledown (Hirschman) and spread-effect (Myrdal) is weak in this context unless the local-level grassroots institutions like SHGs actively participate and improve their

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capacities by coupling with the existing policies of governing various stakeholders under DGLPMC. Similarly, the digital transactions may bring better results if the BLFs and Estate Factories are instructed by regulatory agencies like Tea Board of India. Therefore, the Tea Board of India must shoulder responsibility in protecting the livelihoods of millions of STGs in India and govern them appropriately and address their grievances through the Sub-Regional Offices (SROs) by developing a robust and full proof system through a ‘National Portal’ failing which the rift between institutions and stakeholders is likely to rise in the lower order of the tea supply chain.

Chapter 7

Conclusions and Policy Suggestions

Abstract The ownership and production structures in tea plantations have innovated new narratives in recent decades in India. The emergence of Small Tea Growers (STGs) or Smallholders also exists in countries like India, Sri Lanka, Kenya, Indonesia, Nepal, Bangladesh, Malawi, etc. Now Plantations cannot be considered as a ‘lopsided development’ of regional economy which grows in isolation from its surrounding regions popularly termed as ‘enclave economy’. There seems to be an apparent contradiction between Plantations and Small-Scale tea gardens, it is so because plantations in general and tea plantations in particular have always been associated with large estates along with many fundamental characteristics. Most of the plantations emerged during the financial phase of capitalism and in India the first tea plantations began after 1840s. These plantations were started by the foreign entrepreneurs particularly British. The workforce was brought by the planters through forced migration mostly tribal from central India. These were capital-intensive and highly mechanized. Most of the plantations functioned like enclaves having minimum interaction with the immediate surrounding areas and communities. But smallholders in tea economy has shifted from its traditional characteristics and demands new interpretations of economic protection and policy inclusion from market failures.

The ownership and production structures in tea plantations have innovated new narratives in recent decades in India. The emergence of Small Tea Growers (STGs) or Smallholders also exists in countries like India, Sri Lanka, Kenya, Indonesia, Nepal, Bangladesh, Malawi, etc. Now Plantations cannot be considered as a ‘lopsided development’ of regional economy which grows in isolation from its surrounding regions popularly termed as ‘enclave economy’. There seems to be an apparent contradiction between Plantations and Small-Scale tea gardens, it is so because plantations in general and tea plantations in particular have always been associated with large estates along with many fundamental characteristics. Most of the plantations emerged during the financial phase of capitalism and in India the first tea plantations began after 1840s. These plantations were started by the foreign entrepreneurs particularly British. The workforce was brought by the planters through forced migration mostly tribal from central India. These were capital-intensive and highly mechanized. Most

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 A. Hannan, The Smallholder Tea Economy and Regional Development, https://doi.org/10.1007/978-3-031-51812-6_7

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of the plantations functioned like enclaves having minimum interaction with the immediate surrounding areas and communities. The Small Tea Growing Sector, in Kenya and Sri Lanka, is characterized by strong supporting institutional framework, which is still in preliminary stages in India. An important reason behind their low performance in India is the suppression of data related to the actual performance of this sector. Secondly, most of the production of this sector is registered in the account of the large tea estates or Bought-Leaf Factories (BLFs) because the small tea growers do not have a direct access to the market. Most of these growers sell their green leaves to the estate factories as well as to the BLFs. But it is only the part sale to the BLFs that go in the account of the small growers and the sale to the Estate Factories is entered in the account of the later. Moreover, the role of middlemen or leaf agents is also less conducive to the growth of this sector. They act more like the middlemen and corner most of the benefits at the cost of the small tea growers. Thus, underestimation of data has always been the hurdle in the growth of small-scale sector in India. Relatively better performance in case of Kenya and Sri Lanka can be largely attributed to the better data management and transparency, which is lacking in India. In Kenya, the STGs and the factories are brought under an apex umbrella organization, ‘Kenya Tea Development Agency’ (KTDA), which manages and is accountable for the supply of inputs to green leaf collection and runs KTDA factories (Hannan, 2018a). Likewise, the in Sri Lanka too, the STGs are organized into groups and societies and provide facilities for the transportation of green leaf from the farm gate to the BLFs and have strengthened their bargaining power to obtain better prices for the green leaf (Hannan, 2018a). The ‘Tea Small Holdings Development Authority’ (TSHDA) is a centralized agency to implement and monitor the smallholder policies and programmes including efficient assistance for replanting, infilling, fertilizer application, supply of planting material and advisory services (Hannan, 2018a; Tea Board of India, 2002). Therefore, it can be concluded that the Development-from-Below is successful particularly in Sri Lanka and Kenya largely. There are grassroots-level organizations and state-supported agencies like TSHDA and KTDA have played catalyst role and earned their credentials over the years. They monitor the entire supply chain and their marketing and also develop the capacities of smallholders in input management and scientific farm management and quality harvesting practices, digital transfers and transparencies, farm-gate price dissemination, formation of SHGs and collectives and cooperatives, etc. Unlike the traditional plantations, the emergence of STGs has experienced new geographies in tea growing and differential agro-economic relations within Plantation Economy. To mention a few, owner-worker relations in STGs gardens have replaced the traditional labour relations that were based on social hierarchy in the estate gardens; sharp division of final production of tea between farms and BoughtLeaf Factories; large-scale units of production (estate gardens) have been replaced by small-scale production (smallholders); individual ownership (small family farms) of land in lieu of corporate or company ownership; employment of local labour instead of migrated labour and preference of direct recruitment of workers over other methods particularly recruitment through the middlemen, etc. This may better be termed as ‘subaltern economy’ which is a process of Development from Below that finds favour

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particularly with the marginal and small farm owners. The journey of Small-Scale Tea Economies (SSTEs) is recent in India. However, despite the short span of time, it too has two distinct types of operations completely in tune with the international trends: these are the ‘Unorganized’ and ‘Organized’ sectors. The Organized sector is the result of a planned development extending over one and half century started during the third phase of colonial rule in India. Under colonialism it was developed to meet the needs of the mother country. This developed into a situation where pressure on land was low and tea plantation was a part of extensive agriculture. Since tea industry is a labour-intensive one, certainly there was an absolute shortage of manpower in the tea plantations. In order to meet the labour shortage, the colonial administration resorted to the methods of induced-migration from the tribal belts of Chotonagpur region of India to these plantations. Furthermore, to accomplish this end the labourers were brought from the Chotonagpur region in the tea estates and Homogeneous Villages were raised within the premises of the estates (Hannan, 2006, 2008). Unlike the traditional Indian villages, these new settlements were marked by their distinctive occupational structure, living style, income group, village morphology, cultural landscape and work-schedule, etc. to mention only a few. A new work culture that was imposed on the tribal engaged in the tea plantations accelerated the process of acculturation and detribalization. Consequently, the traditional hunting and gathering economy of the tribal gave way to the plantation economy. Today, the situation is diametrically opposite of what it was under the colonial rule and the Unorganized sector of tea industry is an outcome of the survival and sustainability of the thousands of unemployed youths in the backward pockets of the country. This young battalion switches over to tea cultivation from other agricultural crops to have better gain and security from the market and continue to sustain their livelihoods. Most of the farms are small and owned mostly by individual owners using labour-intensive production techniques. The size of workforce too is small in these individual farms as compared to traditional estate gardens. Since, most of the small plantations have been developed in the vicinity of the already existing villages, so their interaction with the surrounding villages is more frequent than what it used to be between the surrounding villages and estate gardens. The villages are Heterogeneous as these composed of not only farm owners and their workers but also there are other agricultural labourers, food crop cultivators, petty businessman, schoolteachers, marginal-small-large farmers and different socio-religious groups (Hannan, 2006). In other words these exist and flourish along with other diversity and multiple economic activities. The cultural landscape too is entirely different from the normal traditional tea estate villages. These villages can be better termed as Pluralistic in their Culture, economy and other social attributes. There is a shifting paradigm within the Tea Industry in India from colonial corporate ownership to small-scale individual ownership production system. It has expanded from few traditional tea growing states to fifteen states in the country in the last few decades including all the hill states of North-East India. In most of the cases, they are the first-generation unemployed youth into tea cultivation and enterprise development. The labour relations are well defined in organized sector

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and are also covered under the Plantation Labour Act, 1951. But the unorganized sector, the labour relations are evolving and new set of organizations like BoughtLeaf Factories (BLFs), Tea Producing Societies (SHGs), Confederation of Indian Small Tea Growers Associations (CISTA) and State-Level Associations, etc. are being emerging for the safeguard of livelihoods across the country and in North-East India. There are around 5.64 lakh families and 2.51 million people are associated in the Unorganized sector of tea industry in India. Around 1.25 million of workers employed directly in organized sector of tea industry and 2.50 million people are indirectly dependent. It is also a noticeable fact that the quality of employment in organized tea industry differs from small-scale cultivation. Livelihoods in this sector seem to be more vulnerable and their engagement in the labour market has series of middlemen and buffer zones. The question of under-recognition of Unorganized sector, low level of entrepreneurship skills, institutional protection, etc. always push them into a situation where buyer-driven market fixes the prices of their intermediary product, i.e. green leaf. It has huge impact on the quality of their engagements, insecure livelihoods and compromising with overall quality of life and unexplored potentials within the tea industry. There are four types of tea factories which are engaged in leaf trade from the small-scale tea growers: Estate Factories, BLFs, Cooperative Factories (CPFs) and SHGs run factories. However, the first two types of factories are having monopoly in purchasing and trading green leaf in all the small-scale tea growing states in India at present. The INDCO CPFs are situated in Nilgiris yet BLFs dominate the green leaf market. A handful of SHGs run factories have been established in Dooars region of West Bengal yet their market share is negligible at the moment. Hence, the first two categories of factories buy major portion of green leaf directly and indirectly through leaf agents or middlemen (Hannan, 2017). The trade linkage between factories and STGs exist in those areas where STGs are organized into collectives and do business together under the SHGs, an umbrella organization of growers. But the SHGs are very low in number and therefore visibility of them in influencing green leaf market found to be less significant. However, the formation of SHG is a bit of success in southern states particularly Kerala and Tamil Nadu as there is co-existence of INDCO cooperatives since 1960s. It was found that STGs were aware in southern states of the benefits of cluster approach and sensitive towards group approach in bargaining process. There has not been a substantial progress towards developing the grassroots-level institutions for safeguarding the Unorganized sector so far. Despite their voluminous growth, there is no planned budgetary allocation for this sector. Most of the STGs are invisible in the tea supply chain and unaware of the demands and requirements of the market. There is an urgent need to bring STGs into collectives either in the form of SHGs or Cooperatives and skilling their capacities to enterprise development to tap the opportunities of tea marketing and branding. The grassroots initiatives and local-level institutions can bring them sustainable business and better fair price for green leaf. It would not be exaggerated to say that if SHGs and Cooperatives are instituted properly, the small-scale sector would diversify rural economy by utilizing local resources, provide new employments and prevent rural–urban migration. The

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SHGs can enhance their competitive strength through raising economies of scale, networking and breaking market barriers, sharing common infrastructure, application and use of appropriate technology, accessing credit facilities and provide them a future model of tea production and livelihood security. The untapped local labour market can be optimized by ensuring better business and farm-gate price realization in this sector. In the large states of Assam and West Bengal, the small-scale tea sector is facing problems of land regularization, record corrections of land rights and their formal recognition though they contribute more than 50% of tea production in their respective states. The Government of Assam has made some efforts in updating land records and rights of STGs which somehow made a portion of growers to register with Tea Board of India. But in West Bengal, since 2001 no progress is made in providing No-objection Certificate (NOC) and thereby small-scale sector is largely neglected. Trade relations between STGs and tea factories are one-sided affair and it has unequal access with declining farm size in the tea supply chain. There are policies like ‘Price Stabilization Fund Scheme’, ‘Price-Sharing Formula’ and off late ‘DGLPMC’ to address the market monopoly and safeguard the small-scale sector but they have failed to deliver expected results on ground. However, there have been few bottomup initiatives in both the states either individually or collectively attempted to bring some changes in the ongoing struggle of the growers. Hence, Development-frombelow is utmost important to change the fate of growers and to make accountable the regulatory agencies like Tea Board of India and its SROs to be active and watchdog of the situation. At the same, the land department of both the states have to be proactive in clearing ‘records of rights’ to facilitate growers to avail formal channels of finance, government schemes and options of crop insurance either affected due to natural hazards or market failures as notified under ‘Price Stabilization Fund Scheme’. The linkage of ‘Price Stabilization Fund Scheme’, ‘Price-Sharing Formula’ and ‘DGLPMC’ at district level are necessary to promote market transparency in the small-scale tea sector in India. There should be regulations on Farias (leaf agents) to register with Tea Board and impose fine if failed to promote good quality green leaf. A ‘Direct Benefit Transfer System’ (DBTS) should be introduced in all BLFs and Estate Factories for the payment of green leaf to the growers to encourage the transparency in farm-gate price realization. The state intervention is needed to regularize the land records and to extend the support to organize then into clusters or cooperatives or SHGs in line of Industrial Cooperative (INDCO) tea factories as existing in Nilgiris of Tamil Nadu. The emergence and nature of farms, holding-size distribution, and procedural issues relating to land rights of STGs have hindered the optimum level of market and policy inclusion in Assam and West Bengal. In West Bengal they are concentrated in six northern districts whereas in Assam they are spread over twenty-seven districts. Almost 80% of made tea of Unorganized sector in India are contributed by Assam and North Bengal. Nearly 85–90% of Small Tea Growers (STGs) are less than four hectares in both the states. Farms face procedural problems relating to their land rights and permission to cultivate tea and most of the cases they remain out of the ambit of Tea Board of India registrations process. This has impacted them to policy

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exclusion and inadequate address of their capacity building, training and access to market. Ultimately, an army of leaf agents (middlemen) has captured the entire green leaf market and the STGs exploited it substantially. The various policies like Price Stabilization Fund Scheme of Ministry of Commerce, Government of India and Price-Sharing Formula of Tea Board of India have become ineffective on ground. The realization of farm-gate price is abnormally low at times. It was found that there was an absence of linking of Price Stabilization Fund Scheme and Price-Sharing Formula. The SGDD and SROs of Tea Board have inadequately responded to implement the TMCO, 2015 as per the Gazette Notification of Ministry of Commerce and Industry (2015). In fact, the composition of ‘District Level Price Monitoring Committee’ (DGLPMC) and its monthly meetings, resolutions and disseminations are unheard of STGs in the ground. The officials of SGDD of Tea Board found ineffective in delivery of their extension services to the community in the field at large. The INDCO tea factories play a very crucial role in sustaining rural economy in Nilgiris since inception. The first unit of INDCO was opened at Kundah in 1962. This is a unique model initiated by Government of Tamil Nadu to provide an opportunity to Small Tea Growers (STGs) to sustain their livelihoods. Though there are 15 states in India where small-scale tea is grown but such an initiative of regional development model is lacking. The INDCO tea factories can be identified as growth-centres and spatial model of boosting rural economy by engaging STGs and improving their scale economies. It has enabled STGs in tea processing and upgraded them into tea marketing through auction and non-auction routes. It is found that there are 181 privately owned Bought-Leaf Factories (2004) in Nilgiris producing roughly 70– 80 million kg made tea in a year. This mushrooming growth has happened mainly during post-reform period. It is apparently seen that there is a huge private capital entering into STGs sector to capture the tea market in Nilgiris though the region has witnessed a classic model of cooperatives in the country since 1960s. There exists of unhealthy competition between private corporate ownership of BoughtLeaf Factories and State-owned INDCO factories with limited capital flow which pose a question whether cooperatives can sustain the force of economic liberalization without the support of state agencies. It is to be reported that the ‘Cost of Production’ for the Unorganized sector is studied and estimated for the first time by the Institute of Cost and Works Accountant, New Delhi supported by Tea Board of India in 2006. Thereafter, no such attempt has been made to review the situation and assess the Cost of Production either in Nilgiris or whole of India. It is to be reported that in 2006–07, the Unorganized sector contributed only 20–25% of tea production in India but in 2018–19, nearly 50% of made tea production was contributed by this sector. It invites timely and periodic study and policy prescriptive for the safeguard of STGs and realization of minimum support price. Secondly, the share capital of INDCO factories is Rs. 15.10 crores: share of STGs is 6.67 crores and Government of Tamil Nadu is Rs. 8.44 crores. It is interesting to note that before 1991, there were 13 INDCO factories in operation and 75 BLFs but in 2010–11 the number of INDCO factories remained to 15 only whereas the number of BLFs increased exponentially up to 181. The estimated private capital stimulated in the unorganized sector in the post-reform period is around Rs.

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182 crores considering the base as INDCO factories in Tamil Nadu (Hannan, 2020c). This unmatched investment during short span of time has monopolized the green leaf market of unorganized sector particularly purchase of green leaf from STGs whereas there is no new investment or expansion initiative taking place in case of INDCO tea factories. Therefore, the journey of INDCO factories is very fluctuating over the years. As per available data of Commissioner of Industries and Commerce, Government of Tamil Nadu, out of 15 INDCO tea factories 14 were running at loss. The cumulative loss of INDCO factories is around Rs. 34 crores as on 31.03.2016. Despite its ups and downs and sluggish growth, no constructive effort is made by INDCOSERVE to seek for financial relief and modernization of factories either from ‘Government of Tamil Nadu’ or ‘Tea Board of India’. The financial position of INDCO factories is unstable. The Tea Board of India has constituted Small Tea Grower Development Directorate (SGDD) in 2013 (Hannan, 2020). During 12th five-year plan, an outlay and expenditure of SGDD was 200 crores and 35 crores, respectively (62nd and 63rd Annual Report: Tea Board of India). The INDCOSERVE and the Government of Tamil Nadu should have attracted attention to the Tea Board for the planned allocation despite the uprising presence of Unorganized sector in the state. A look out for new investment in upgradation of machineries with a support of Tea Board of India and Ministry of Commerce and Industry, Government of India is necessary which is absent currently. It is also found that the outcomes INDCO factories in Nilgiris are not uniform and intra-variations are evident. All the factories are not performing as profit-making units which have impacted STGs to receive better price for green leaf. That’s why a critical enquiry and rectification of INDCOSERVE and INDCO factories are to be studied thoroughly. The internal structure of the institutions and its governance seems to be fractured and economy of each of the factory, their infrastructure and optimal resource utilization are to be assessed separately time to time and necessary decisions and recommendations are to be implemented (Hannan, 2020c). The external economies influence the tea industry in general and the Unorganized sector in Nilgiris in particular. The entry of private capital surrounds the small-scale farming sector but there is absence of new initiatives coming in INDCO Cooperative especially during the post-reform period. Therefore, this sector is facing crisis to overcome the monopoly of BLFs and private players. The ‘Government of Tamil Nadu’ and ‘Tea Board of India’ deliberately ignored it though it employs nearly three lakhs of people in the state directly and indirectly (Hannan, 2020c). Therefore, the INDCO tea factories requires new investment of capital from the state agencies to compete and enhance their efficiency, their scale of operations, and make value additions as per the demands of tea market. The withdrawal of state agencies may further push the Unorganized sector into deplorable situation in the tea supply chain to sustain their small-scale economies. The Tea Board of India introduced SHGs model in tea sector during 10th Plan period to improve the economies of scale of Small Tea Growers (STGs) in India. The policy and extension services for Tea Producing Societies (SHGs) have seen a change over the plan periods during 10th, 11th and 12th plan period of the Tea Board. During 12th Plan, 346 Tea Producing Societies (SHGs) are established in small tea growing districts throughout the country. A total of 126,525 STGs participated the

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extension services provided by Tea Board of India during 2012–17. They are the lowest-order business models in the supply chain of tea industry. It is seen that the SHGs have improved the bargaining strength of STGs across the States. In ‘Dooars’ region of West Bengal, three SHGs have been successful to convert into tea factory and started processing green leaf to made tea and participate in marketing through auction and non-auction routes. These are ‘Panbari SHG’, ‘Jai Jalpesh SHGs’ and ‘Naba Jagaran SHGs’ and have their own brands too. With the onset of the small-scale tea sector, various ‘Types of Institutions’ were innovated over the years (1960–2017) in the tea plantation economy having different aims and objectives. In the passage to time, ‘geographies of tea plantations’ have expanded and a constant search for alternatives has given birth to these new institutions. It is an outcome of the pressure of civil society groups and small-scale farmers and government agencies. They can be summarized into five categories: (A) ‘Co-operative Factories’; (B) ‘Bought-Leaf Factories’ (BLFs); (C) ‘Tea Producing Societies’ (SHGs), (D) ‘Associations or Federations’ and ‘Confederation of Indian Small Tea Growers Associations’ (CISTA); and (E) ‘Small Grower Development Directorate’ (SGDD), Tea Board of India (Hannan, 2017, 2019b). The SHGs have performed exceeding well in all the states particularly in creating a space for discussion on small-scale tea sector. The ‘agrarian relation’ and ‘bargaining capacity’ of the small growers have improved over the years. But the SHGs model is successful in establishing tea factories confined to one region only, i.e. Dooars in North Bengal and the growers in other states have not welcomed and ventured the tea factories so far. The Tea Board of India may/should design a lucrative SHG scheme and a new policy provisions for such promotions in future too. The broader alliances of the regional and sub-regional Associations and Federations under the apex body of ‘Confederation of Indian Small Tea Growers Associations’ (CISTA) should make transparent membership drive and open a dedicated national portal for registration for the small-scale sector. They should also publish online newsletter in different languages and regional organizations and their constitution of committees should be displayed over webpages to have visibility and peer pressure and international outlook of the sector. There are various models that exist in tea economy such as Estate model, Cooperative Model and SHGs Model and the Tea Board should have a comprehensive study and synchronize their policies as per the need and practical requirement. The Tea Board of India should strengthen the SROs instead of centralized headquarter at Kolkata and make digital governance so that additional manpower of Kolkata headquarter can be relocated in their field offices and add value to the tea sector. The ‘Centre for Education and Communication’, New Delhi was successful in the formation and establishment of SHGs. The Tea Board should utilize the expertise of this organization to integrate the small-scale tea sector more vibrant and transparently in governing their issues and proper growth. The experience of NGOs can be of great support to Tea Board of India as well as other financial institutions like ‘NABARD’ for the establishment of tea factories in small tea growing districts in the country to safeguard livelihoods of millions of smallholders. The ‘World Summit for Social Development’ held at Copenhagen (1995) emphasized the importance

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of improving access to credit for small producers, landless farmers and other lowincome individuals, particularly women and disadvantaged and vulnerable groups (Nair, 2001). Therefore, the idea of ‘Micro-Finance’ can play an effective role for the financial inclusion of small-scale sector across the states in India and can be implemented through SHGs. The linking of SHGs to Tea Board of India, Tea Research Association (TRA), Krishi Vigyan Kendras (KVKs), Civil Society Organizations and NGOs, etc. would bring better outcomes and scientific agricultural practices in tea economy by improving trade relations and quality production system. The tea economy is divided into Organized and Unorganized sector and the subsectors within tea economy contribute 696.49 million kg (51.59%) and 653.55 million kg (48.41%) respectively out of total of 1350.04 million kg. The average farm size of Small Tea Growers (STGs) is 1.03 ha (Unorganized) and Estate Gardens is 268.11 ha (Organized). Their regional pattern of existence cover almost all corners in India and are spread over all eight states of North-East India, four states in North India and three states in South India. Secondly, it deals with the Tea Marketing Control Order (TMCO) and its provisions under S.O. 1012 (E) dated 15.04.2015 to constitute the District Green Leaf Price Monitoring Committee (DGLPMC) in each small tea growing districts in the country. It was found that out of total 55 districts in 15 states, the DGLPMC is constituted only in 28 districts spread over six states. Another 27 districts in ten states, the DGLPMC is yet to be constituted. Thirdly, it was found and evident from the field experiences in North Bengal that the provisions of monitoring the farm-gate prices receivable to the STGs are not adhered and implemented by the Sub-Regional Offices (SROs) and Regional Offices (ROs) of Tea Board of India. Monthly meetings are not conducted and factory-wise actual green leaf price paid to STGs are not notified on monthly basis as per the E-Form submitted by Bought-Leaf Factories (BLFs). In April 2013, the Tea Board of India founded ‘Small Growers Development Directorate’ (SGDD) situated at Dibrugarh, Assam and an outlay of 200 crores was approved in 12th Plan for Small Growers Development under ‘Tea Development and Promotion Scheme’ (Hannan, 2019b, 2020b). A total of 67 Sub-Regional Offices (SRO) were set up to monitor the performance of small-scale tea sector in India under the SGDD with an aim to improve the technical knowledge and skills of tea farmers, farm-gate price monitoring, input management and quality tea production. The SROs were situated in Assam-39, Tripura-3, Mizoram-1, Arunachal Pradesh-1, Meghalaya-1, West Bengal-15, Bihar-2, Uttarakhand-1, Tamil Nadu-3 and Kerala-1 (Hannan, 2020b). All the SROs were given sufficient manpower such as ‘Development Officers’, ‘Factory Advisors’ and ‘Assistant Directors’, etc. for tea development (Hannan, 2020b). It was reported that around 400 SHGs were planned and 346 SHGs were achieved during 12th Plan period. It has been transcribed that 174 STGs were benefitted and 6.12 crores of rupees were spent to expand tea plantations (Hannan, 2020b). It was also reported to the ‘Ministry of Commerce and Industry’ that the Tea Board of India spent of Rs. 8.05 crores (2016–17), 14.00 crores (2017–18) and 20.45 crores (2018–19) for the development of STGs under Tea Development and Promotion scheme (Hannan, 2020b). However, the anticipated outcomes are yet to be visible in the field and its desirable impact on defending better Farm-Gate prices

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of green leaf in tea areas and regions on ground. The situation of STGs did not change much as trade relations between BLFs and Estate Factories have market monopoly and collective bargains of STGs are weak (Hannan, 2019b, 2020b). It was also observed and found that the SROs of Tea Board have very negligible presence in providing their extension services and monitor the BLFs prices on regular basis. The SROs barely could circulate and publicize the factory-wise list of actual green leaf prices paid to the farmers and have not achieved much attention to the tea farming community. This seems to be a violation of TMCO and an act of policy paralysis. The regional inequalities and policy practices exist in tea supply chain across districts (Hannan, 2020b). The role of Tea Board, SROs and its linkage effect to the district administration is missing while taking forward the DGLPMC from office to the field (Hannan, 2020b). Therefore, the better Farm-Gate price is far from reality. Multilayered gaps are strongly evident in governance at district and sub-district levels. The monthly monitoring of ‘Auction and Non-Auction Price of CTC teas’, ‘MBP of Green Leaf’ and ‘Actual Green Leaf Prices’ and their effective decentralization at the factory level is necessary. On contrary, the lowest unit of delivery of green leaf price in this case is the BLFs and Estate Factories situated in a particular district which is ultimately regulated by Tea Board of India. Hence, the SROs of Tea Board of India should be given responsibility and held accountable to ensure and notify factory-wise actual green leaf price paid to the STGs on monthly basis. The records must be maintained by SROs and the office of ‘District Collector’ or ‘Deputy Commissioner’ as Chairman of DGLPMC (Hannan, 2020b). This would make general administration in a district to be watchdog and observing the Farm-Gate prices. In this way, the differential payments of MBP and actual price paid for green leaf as per E-Form under TMCO would be known to the agencies and secure smallholder livelihoods. It was reported under RTI reply that as many as 27 small tea growing districts in 10 states, the DGLPMC has not been constituted so far and Tea Board of India must take proactive role to constitute the same as per the Gazette Notification of ‘TMCO-2015’ (Hannan, 2020b). The field interactions suggest that wherever an active ‘Small Tea Growers Association’ exists, the farm-gate green leaf price is better in comparison to the other area in the same district. It was also found among the six districts the price realization of green leaf is low in Uttar Dinajpur in comparison to other districts in North Bengal. The district of Kishanganj in Bihar is the only tea growing district and always receives of lowest price taker for leaf (Hannan, 2020b). It could be argued that the linkage effect and trickle-down (Hirschman) and spread-effect (Myrdal) is weak in this context unless the local-level grassroots institutions actively participate and improve their capacities by coupling with the existing policies of government under DGLPMC. Similarly, the digital transactions may bring better results if the BLFs and Estate Factories are instructed by regulatory agencies like Tea Board of India. Therefore, the Tea Board of India shoulder greater responsibility in protecting livelihoods of millions of STGs in India and govern them appropriately and address their grievances through the Sub-Regional Offices (SROs). It should develop a robust and full proof system through a ‘National Portal’ with the provision of district-level information STGs, BLFs, Associations, SHGs, Estate Factories and dissemination of auction

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and non-auction prices, actual green leaf prices, etc. failing which the rift between institutions and stakeholders is likely to rise in the lower order of the supply chain. The formation and constitution of DGLPMC in every small tea growing district is an imperative. However, it was found that some districts it has not been constituted as per the provision of Tea Board and instructions of Ministry of Commerce GOI guidelines are not followed. This need to be strictly adhered which may result into better farm-gate price realization over time. The smallholders’ model in tea plantations could be regarded as disintegrated model of development—the estate model is gradually being reduced to be ineffective in terms of production share and limited to new employment opportunities. This production space in tea economy is not a natural outcome rather it may be considered as strategic interest of estate sector to promote and inject smallholders thereby labour is being casualized and not being regulated under PLA. The estate sector (organized) tries to negotiate that social cost (healthcare, education, housing, etc.) is burdening their cost of production. On the other hand, the emerging smallholders sector (unorganized) is at receiving end in the tea supply chain and impurities of market where labour and smallholders are constantly trying to sustain themselves with ifs and buts. In addition to Tea Cooperatives (INDCO Model, Tamil Nadu), the SHGs are being implemented by Tea Board to improve the situation of smallholder tea economies. It has shown some results e.g. Dooars region in West Bengal where SHGs could succeed. The success stories of Dooars SHGs could be replicated in other tea growing areas through capacity building of growers. Even in SHGs-led factories, it has an easy access to evaluate and estimate cost of production as there is transparency of data. As it is regulated by the Tea Board thereby has some control in quality production and receives financial support. But, the BLFs are unwilling to share cost of production and trade data and it remains as a trade secret which impacts the smallholder’s product price in tea supply chain. Therefore, the Tea Board of India should simultaneously promote SHGs and Tea Cooperatives to have better future and livelihood security of smallholders in India.

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