1. Drastic drop in N Bengal tea prices hits small growers hard

Drastic drop in N Bengal tea prices hits small growers hard

A large number of tea growers in the Dooars and Terai regions of West Bengal have been hit hard by a drastic drop in the prices of green leaves coming down to R6-7 a kg against a normal market average of Rs 15-16 a kg.

By: | Kolkata | Published: December 9, 2015 12:06 AM

A large number of tea growers in the Dooars and Terai regions of West Bengal have been hit hard by a drastic drop in the prices of green leaves coming down to R6-7 a kg against a normal market average of Rs 15-16 a kg.

According to the Confederation of Small Tea Growers Association (CSTA), the 100-odd bought-leaf factories (BLFs) of the region have formed a sort of cartel forcing small tea growers to a distress sale. While such unprofitable operations are leading the gardens to a closure, tea garden workers are suffering from malnutrition. This has resulted in the deaths of 62 workers in the region during the last one month.

The bought leaf factories (BLFs) or the stand-alone tea processing units are the major buyers of green leaves from small tea growers. But they are now paying at the rate of Rs 6-7 a kg for purchases of green leaves, whereas the sale price with virtually no margin works out to  Rs 15- 16 a kg. “We have informed the Siliguri office of the Tea Board about the latest on the price front,” J C Dey of CSTA said. He said the BLFs in the region bought about 80% of the 590-600 million kg of green leaves produced by the small tea growers. The rest 20% went in meeting the requirement of some big gardens having their own processing facilities. With BLFs reducing the price of green leaves, the big tea estates too offered lower rates, Dey said.

Nearly 70% of the tea produced is sold via the auction route but in the current year, auction offtakes have been much lower than what was offered. Even peak prices were much lower than last year’s prices. Average peak price this year was Rs 160 a kg against last year’s Rs 140 a kg. “An over supply as well as a low price syndrome effected to a fall in prices of green leaves. Besides, most gardens are in a bad condition, unable to produce quality leaves. Decline in quality of production is also one of the reasons for falling prices,” a Tea Board official  said on the condition of anonymity.

But even as BLFs were buying green leaves at lower rates, prices of tea have not come down at the retail level.
“The gardens are in a dire state and there has to be some measures from the government to protect this industry,” Sumanta Guha Thakurta of the Indian Tea Association said. Of the 1,500 tea gardens across the country, most of tea gardens are making losses. Even as there has been a steep increase in the cost of production, which varies from garden to garden, prices of tea leaves have come down.

Even banks don’t have an appetite to fund the tea industry, since most tea gardens have become commercially unviable during the past few years. “There are a very few tea gardens that have exposure to bank loans”, Guhathakurta said.

While average production cost of CTC or black tea, which makes 70% of the production, is Rs 130 a kg, average production cost of Darjeeling tea is Rs 300 a kg. “Most tea gardens are in a bad position and require re-plantation. Although the Tea Board has been giving subsidies for re plantation but there is a high gestation period — between three and five years, in which pumping in money without actually earning any margin becomes very difficult for the garden owners,” the Tea Board official said, adding that 85% of production cost are fixed cost.

In fact, with most tea gardens of North Bengal earning no margins for almost a decade now, most gardens have stopped production, leading tea garden workers to a penniless situation. The tea garden owners have closed down health centres and hospitals inside the garden, and have stopped supplying all required amenities to its workers.

This has given rise to malnutrition and various physical ailments among workers, leading to incidents of recurring deaths in the closed tea gardens. Of the 62 deaths in the last one month, 22 have been in the GP Goenka-owned Duncan Group’s tea gardens.

The garden has not been earning profits since 2003. It has now planned to sell off its tea gardens, though getting buyers would be difficult, a Duncan Group official said.

Samiran Mondal, SDO of Alipore Dooars, said the workers of the loss-making tea gardens were not getting wages to avail private medical facilities . Most loss-making garden owners have stopped giving medical facilities to their workers but “we, from the general administration, are trying to do as much as we can,” Mondal said.

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