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Sustainable Livelihood for Small Tea Growers through CSR
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Contents
Introduction Itroductory Chapter Objectives and Methodology Chapters Summary Indian Tea Industry - Pattern and Growth Over View of Tea Industry Trend of Production Export of Tea - Variations and Growth Domestic Consumption Indias Small Tea Sector Small Tea Growers in India Productivity of Small Tea Gardens Economics of Small Tea Growers in India Small Tea Growers in Coonoor, Tamil Nadu Small Growers in Kerala Small Growers in West Bengal Small Growers in Assam Value Chain and Small Tea Growers Value Chain and Tea Sector Value Chain of Small Tea Growers Competitiveness of New Model in Tea Sector Cost of Production of Green Leaf for Small Growers Bought Leaf Factories 63 64
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3 6 7 11 12 13 14 18 18 20 22 22 30 40 47 54 57
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Price-Determined Mechanism Quality Changes and Adulteration Process Supply/Demand of Tea at Different Localities CSR and Small Tea Sector CSR and Tea Sector CSR and Small Tea Growers Workers Rights - Focuses of CSR CSR and Business Case of the Tea Industry Ethical Trade Initiative and Fair trade of Small Growers Fair Trade Consumer Preference and Behaviour in CSR CSR and Trade Initiatives Initiatives from Small Tea Growers in India Policy Recommendations and Feasible Intervention Points References List of Key Resources Persons List of tables World-wide production of tea International tea markets Registered tea gardens in India Share of small and estate gardens Share of small tea growers in Indian states Yields from tea cultivation Tea cultivation in Tamil Nadu Tea cultivation in Kerala Tea cultivation in West Bengal NOC petition of Tea Growers in West Bengal Price realization for Green Leaf in West Bengal Tea Cultivation in Assam Production cost for green leaves in India
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66 72 74 80 81 82 87 88 73 90 93 94 103 111
16 17 22 23 24 25 37 45 46 47 52 67
Growth of BLFs in India Price realization of various factories Impact of quality upgradation programme for BLFs Impact of quality upgradation programme for small tea growers Beneficiaries of Tea Board subsidies CSR standards, codes and practices The TBOD for CSR in small holdings CSR and welfare matrix Process of CSR in small tea segments Perspectives of stakeholders on CSR and tea industry Codes of conduct for ETI Fair Trade conditions and Terms of Trading Price realization of green leaves of TEAMAFCO List of figures Tea Industry in India Trends of Tea Production in India Tea Exports from India Domestic Consumption of Tea Domestic Market for Tea Per capita tea consumption in various countries Growth of tea gardens in Tamil Nadu Growth of tea gardens in Kerala Growth of tea gardens in West Bengal Growth of tea gardens in Assam Value chain of small tea growers in India Price differences at auctions
68 69 79 80 82 85 86 89 89 91 92 93 103 15 17 18 19 20 21 27 36 44 51 60 69
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Abbreviations
BLF CoC CSO CSR CTC ETI HLL KVK ITA ITC MNCs NAS NOC PDS SHG TPI
Bought leaf factory Code of conduct Central Statistical Organisation Corporate Social Responsibility Cut, torn and curl Ethical Trade Initiative Hindustan Lever Limited Krshi Vigyan Kendra Indian Tea Association International Tea Committee Multinational companies National Accounts Statistics No objection certificate Peerumadu Development Society Self-help Group Tea Promoters of India
CAGR Compound annual growth rate
CTTA Calcutta Tea Traders Association
OECD Organization for Economic Co-operation and Development
TMCO Tea Marketing Control Order UPASI United Tea Planters Associations of South India USTPA United Small Tea Producers Association VCA Value Chain Analysis
Foreword
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Chapter 1
Introduction
India is the second largest producer of tea in the world, and produces around 927.98 million kilograms of tea, accounting for 27.14 per cent of tea produced worldwide. The tea industry accounts for employment of more than 2 million people. India. It occupies an important role in the Indian economy not only due to its capacity to earn foreign exchange but also because it impacts the livelihoods of scores of people employed directly and indirectly by the industry. Tea production takes place in both large plantations and smaller gardens. The size of big plantations varies from 500 acres to 1,200 acres. These plantations focus solely on production of tea to benefit from the economies of scale. They are often part of a chain of plantations owned by large corporations. Technically, growers holding up to 10.12 hectares under tea are considered small growers. This segment provides employment to around 230,000 families.1 However, they only account for 14.5 per cent of the total area under tea and 11.1 per cent of total tea production. The plantation model of the tea industry works with its own structure and development mechanisms. Various Acts and Rules regulate and control the structure and function of plantation sector in India. The plantation sector works in a strong network of capital assets and has its own methods of addressing issues such as the quality of green leaves, production of made tea, and social, economic and social responsibilities at the field and market levels.
The problems of small tea growers
Small tea growers in India are economically and socially vulnerable as they are mostly marginal farmers, Dalits or from tribal communities. Many of them do not possess rights over the land they cultivate. Though the quantity of tea produced by small tea growers has increased over time, the profit accruing to them is very marginal. The reasons for this are several,
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chief among them being: Low price-realization owing to poor quality and inefficient and incompetent production structures in garden. Domination of the corporate sector over the market. Inability of small tea growers to access international markets directly Smallholders merely grow the tea as against the corporate sector, which converts the green leaf into a ready-to-consume beverage and thereafter dominates the market. The fairly large quantities of ordinary tea leafs produced by small growers are sent to bought-leaf factories for processing and result in low returns to the grower, as well as impact prices in the market. The constant fall in tea auction prices, since 2001 onwards has however challenged the plantation system of production. During 2002-2006 more than 36 plantations were closed down or abandoned and directly affected thousands of workers and the economy of regions where the plantations are located.. During this period, most of the discussions started highlighting the small holder model of tea production which was increasing when the prices were high is a sustainable system for future as the cost of production is low. However, the small holders unlike the popular perception were equally or some time worst effected by the constant fall in tea prices. This study tries to understand the drastic expansion, livelihood potential and competitiveness of small tea-growers as a new model of tea production in India. It also attempts to understand how elements of improved social, economic and environmental aspects in the small holding could lead to additional competitiveness for the tea small holdings. At the same time the study also analyses different barriers to integrate these components of responsible tea production and trade across the value chain. The small tea growers sector works in a vicious circle of low price realization and deprivation. It begins with the workers (who are given less wages and other facilities than the estate workers), growers (who could not match the quality of leaves produced by the estates), Bought Leaf Factories (BLFs) (who often produce inferior made tea), and finally results in low price realization at auctions. BLFs pay low prices for green leaves as they receive low prices for their made tea, a situation that results in workers being underpaid. Underpaid workers who work in such conditions are less productive. It is therefore important to examine how the small tea sector can develop mechanisms through which it can break this vicious cycle, strengthen its capacity and
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become empowered. Empowerment in this context means a process through which people, especially the poor, are enabled to take greater control over their own lives, and secure better livelihoods combined with ownership of productive assets as a key element.2 The study also looks into the opportunities for developing linkages between small tea growers and other stakeholders, especially corporate companies in the tea industry.
Objectives of the study
Trace the history and the present status of small growers and workers attached to them in the small tea gardens of India. Critically examine the legislative and policy framework (including implementation and execution of laws) in the tea small holdings. Undertake a mapping of the tea value-chain and assess the supply chain models to identify various intervention points for mainstreaming responsible practices with a focus on marginalised and vulnerable small growers and workers Evaluate the role of the key players and institutions involved in small holder system of tea production and trade. Examine the land-use pattern and socio-economic background of tea small growers. Identify ways to initiate and maintain at least minimum economic, social and environmental standards in the small growers sector which would enable them to compete with national and international players.
Methodology
The research focuses on small growers of four regions in India. The study mainly relies on primary survey including informal discussions, focused group discussions and questionnaire survey methods. A mix of qualitative and quantitative methods have been utilised during analysis of the research in an attempt to understand the situation of small growers in the tea industry and to suggest policy initiatives. The primary survey for the study covered all the stakeholders in the process of the tea value chain. It covered workers and small growers at one end and the consumers from the other. Attempts were made through the questionnaires to capture different perspectives from the various stakeholders. The study in all four regions specifically covered: Small growers
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Workers in small tea plantations Leaf agents Bought Leaf Factory owners Brokers Buyers, including those who bought directly from gardens Auction Secretary Up-country buyers Wholesalers, retailers and consumers Trade Union members Apart from the direct stakeholders, the survey also covered other key agents like resource persons from the Tea Board from its Kolkata and Regional Offices and other centres, UPASI, Coonoor; association members in different regions and trade union leaders. Consumers were queried to assess their awareness of the quality of tea, the prices they paid for good quality tea or CSR issues attached to the tea industry. The key questions of the discussions are included in the Appendix of this report. The formal questionnaire method, also applied during the survey, focused mainly on small tea growers and workers in small tea gardens. Questions were also framed to capture details of production, workers and social and environmental benefits of the workers. Though the terms marginal farmers and small growers vary, the present study recognizes small tea growers as per the formal definition of the Tea Board. The difference between the small smallholder and the larger smallholder is also significant. For instance, one of the smallholders interviewed had 45 acres of tea and was able to employ a farm manager. In the production scenario, the survey tried to capture the details of production of green leaf, cost and benefit of production, leaf prices, and marketing problems and so on. Workers and their wages were also addressed in the survey.
Overview of Chapters
The introductory chapter maps out the manner in which discussions develop into arguments that address the competitiveness of the small tea sector and livelihoods of the small tea growers and workers in the Indian tea industry. The second chapter describes the structural foundation of the Indian
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tea industry. It begins with the profile of production, growth patterns in international markets and the nature of domestic consumption in India. The situation of closed/abandoned tea estates across India, mainly in West Bengal and Kerala, created a crisis in the tea industry and left workers jobless causing intensive deprivation and even hunger deaths among them. The crisis in the Indian tea industry and low production in estates, has however led to expansion among small tea growers, as well as created a new and competitive model in the industry. In 2005, tea production in India touched 927.98 million kilograms. Of this, North India accounted for 74.5 per cent with 700.9 million kilograms, while South India had a share of 24.5 per cent with 227.88 million kilograms. India holds fifth position in the world tea market and accounts for 12 percent of the world market. Kenya still dominates the international market, while China and Sri Lanka have increased their shares in 2005 as compared to the previous year. From being a predominant consumer of loose tea, the Indian tea market has slowly transformed into a brand-dominated packet tea market. In India, packet tea is processed by multinational and other big Indian companies. The third chapter discusses the small tea sector in India in the context of the changing scenario of production, international and domestic consumption. Chapter three addresses issues of development of small tea sectors and how it copes with financial stability and productivity in order to compete with plantation economy. Small growers in India were initially confined to Nilgiris district of Tamil Nadu and to a small extent, Kerala and Himachal Pradesh. Small tea gardens came up in Assam, West Bengal and Bihar during the 90s. Currently the number of small holdings (as per the membership of various small growers associations in different states), stands at 1, 26,256 though only 56.8 per cent (71676) of these small growers have so far registered with the Tea Board. Around 53.9 per cent of small growers are concentrated in South India and 46.1 per cent is in North India. In the face of drastic expansion, small tea growers face constraints such as possession of title deeds, particularly in the north east region where small growers do not possess rights over the land and are therefore yet to register with the Tea Board. In the small tea sector, West Bengal with 3390 kilograms records high productivity. The performance of the small tea sector in Kenya with 1651 kilograms is lower than that of Indian small tea sector with 1680 kilograms. .
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Chapter four discusses the expansion of small tea cultivation in four regions, namely Tamil Nadu, Kerala, West Bengal and Assam. The chapter also examines the way workers engage with small tea gardens and outlines their vulnerability in terms of their deprived working conditions and inadequate welfare schemes. Though the spread of small tea cultivation began in the post 80s, rapid expansion began only in the late 90s. Among these small growers (below 10.2 Ha) there are large numbers of marginal growers in all tea growing regions. They face major constraints such as low price realization for green leaves, low quality of green leaves, and large numbers of unregistered growers, problems obtaining N.O.C and rights over the land, insufficient funding for proper maintenance, lack of associations/net works with multi stakeholders etc. The increase in the numbers of unregistered small growers is also a major problem since they fail to avail of subsidies and financial assistance under various schemes from the Tea Board and other financial institutions. All regions face similar problems, though the intensity varies from region to region. Migrant workers constitute a majority in the small tea sector work force. They include migrants from neighbouring countries as well as from within India. It is however learnt that a large number of labourers are returning to their villages to find alternate jobs such as stone crushing, construction labour and other unorganized sectors. Workers in small tea gardens enjoy no benefits or welfare schemes other than their daily wages. Since small tea growers are scattered in different regions, workers engaged with them do not form unions or associations. Workers of small tea gardens do not have any common platform to negotiate their basic rights such as minimum wages, working conditions and health care facilities. Chapter five locates the position of small tea growers in the value chain of the Indian tea industry. The concept of the value chain is used as an organised system of exchange from production to consumption with the purpose of increasing value, and transforming inputs and competitiveness. The concept of global value chain is one among the several approaches to study inter-firm relations. It draws on the simple idea that the design, production and marketing of products involve a chain of activities divided between different enterprises, often located in different places. The value chain of the tea industry involves various stakeholders and their conflicts of interests and convergence in the process of operationalising at various levels. The structured and pre-determined role of stakeholders in the tea industry and the interaction among them maintain the price mechanisms and value-additions in the tea industry. Big companies play a
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major role in the value chain of the Indian tea industry and they dominate pricing as well as domestic and international markets. This chapter goes on to state that small growers often fail to negotiate with other dominant stakeholders in the value chain in this process. It is also about identifying strategic interventions that the small tea sector can make to strengthen local business competitiveness in infrastructure and re-position regulations. This could help them look at competition as an advantage, rather than as a hindrance. The production and market segments of small tea growers emerge as a new alternative to plantation model economy. Emergence of this new model with its own dynamism influences production, domestic market and labour market as well. Chapter six outlines the development of the present mechanism of the sector that defines the competitive edge that the new model of small tea growers has. This chapter discusses various factors involved in the model such as the expansion of BLFs, price and quality determining mechanisms and determinants of supply and demand of tea in different localities. There has been a steady growth in the numbers of private tea manufacturing factories in India in the post 90s. In Assam, BLFs have increased to 162 in 2004 from 119 in 2001. Similarly, in West Bengal the number of BLFs is 79 in 2004 from 44 in 2001. The increase in the production of made tea at BLF due to various adulteration practices will create changes in supply within a short period in the market. In the context of marginal growth of domestic consumption and stagnant local demand, an increase in supply in the local markets will lead to a fall in prices and low quality tea. This chapter also discusses how important it is to maintain supply of quality green leaves and quality of made tea to domestic and international markets. The chapter also outlines initiatives of the Tea Board such as awareness programmes for improving quality, usage of chemical and fertilizers in the gardens etc. The programmes also focused on improved quality at the field-level and in factories to achieve high productivity and income. Chapter seven addresses CSR in the tea sector and the constraints in its implementation at various stages. The chapter also outlines social, economic and environmental responsibilities in the small tea sector as well as rights of workers and consumer awareness in India. CSR means the commitment to contribute to sustainable economic development working with employees, their families, the local community and society at large to improve quality of life in ways that are good both for business and for development. Though studies point out that a majority of
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consumers say that they are influenced in their purchasing by knowledge of a companys responsibility, their attitudes are not reflected in their actions. The actual purchasing behaviour of consumers does not match what they say. Lack of promotional schems of these products, purchasing power, choice etc are some of the reasons for the gap between purchasing preferences and behaviour. The chapter concludes with the major initiatives and constraints of small tea growers in India. The final chapter concludes with discussion and arguments on the study. It brings in the nature of problems at various levels and with different stakeholders and demonstrates how it influences the value chain of Indian tea industry by summarizing each chapter. The chapter also makes an attempt to find out feasible intervention points and make recommendations for the upward mobility of small growers in the value chain of the tea industry. More specifically, the arguments attempts to demonstrate that the development mechanisms of small tea segments are more competitive and play a major role in domestic and international markets and in the long run can lead to sustainable growth of the Indian tea industry.
All India- Production 927.88 S. India Production 227.88 (24.5%) Export 187.6 Export 94.9 (50.6%) N. India-Production 700.9 (74.5%) Domestic Consumption 757 Export 92.6 (49.4 %)
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Chapter 2
Indian Tea Industry Pattern and Growth

Overview of the Tea Industry in India
Tea is grown in 16 Indian States, of which Assam, West Bengal, Tamil Nadu and Kerala account for about 96 per cent of the total tea production. While tea exports account for a significant amount of foreign exchange, tea also contributes revenue to the national exchequer by way of cess, sales tax, agricultural and corporate income tax, etc. More than two million people derive their livelihood from ancillary activities associated with the industry. The tea industry provides direct employment to more than a million workers, of which a sizeable number are women.3 Figure 2.1 Tea Industry in India (figures are in Million kilograms)
All-India Production 927.88 S. India Production 227.8 (24.5%) Export 187.6 Domestic Consumption 757 Export 92.6 (49.4%) N. India Production 700.9 (74.5%)
Export 94.9 (50.6%)
Source: Tea Statistics (2005) J Thomas & Company Pvt. Ltd and www.indiateaportal.com
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Despite the crisis in the tea industry having caused serious challenges of livelihood and food security, hunger and poverty among the tea garden workers, mainly in West Bengal and Kerala, the scenario is gradually changing and there is an improvement in the prices. In 2004, 94 tea gardens were reopened and only 24 remain closed at present. The table below provides an overview of the tea industry in India.
Trend of Production
India was the market leader at the international level with regard to production and consumption till recently. However, the latest data (2005) demonstrates that China, with 27.34 per cent share of the total world tea production has become the biggest producer India comes second with 27.14 per cent of the total production. Chinas tea production has increased from 835.23 Million kilograms in 2004 to 934.86 Million kilograms in 2006 whereas Indias production has decreased from 934.86 in 2004 to 927.98 in 2005.4 Table 2.1 Production of Tea in World Country India China Sri Lanka Kenya Bangladesh Vietnam Indonesia Malawi Tanzania Others Total 2004 (in mn. kgs) 892.96 835.23 308.09 324.6 55.63 97 164.82 50.09 30.69 551.23 3310.35 Share 2005 (in %) (in mn. kgs) 27.0 25.2 9.3 9.8 1.7 2.9 5.0 1.5 0.9 16.7 100.0 927.98 934.86 317.2 328 58.62 109 165.85 37.98 30.36 509.15 3419.58 Share (in %) 27.14 27.34 9.28 9.59 1.71 3.19 4.85 1.11 0.89 14.89 100.00
Source: Tea Statistics (2005), J Thomas & Company Pvt. Ltd and www.indiateaportal.com
Northern India holds a major share in tea production with 74.5 per cent of total production in India, whereas Southern India leads in tea exports with 50.6 per cent of the total production being exported. The emerging demand from the Middle Eastern countries is one of the factors
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Figure 2.2 Trend of Production of Tea in India
Source: Tea Statistics (2003), Tea Board of India and Tea Statistics (2005), J Thomas & Company Pvt. Ltd.
for high exports growth from Southern India. Besides production, India is also ranked high in the domestic consumption of tea. Domestic consumption constitutes around 80 per cent of total tea production in India. However, the per capita consumption of India is very low compared to other countries.Figure 2.2 Trend of Production of Tea in India
Export of Tea: Variations and growth
Indias has 12 percent of the market share and enjoys fifth place among tea-exporting countries in the international market. While Kenya still dominates the international market, China and Sri Lanka have increased their market share in 2005 as compared to the previous year. Indias exports on the other hand, have declined from 12.8 per cent in 2004 to 12.3 per cent in 2005.5 The overall crisis in the tea industry has impacted the production and export sector of the Indian tea industry. Conversely, one of the important reasons for the ongoing crisis in the tea industry is Indias unpredictable performance in the export market. Export trends fluctuate each year, and between 2003 and 2004 there was a marked increase in export from 173 Million kilograms to 197 Million kilograms. The exports in 2005 fell to
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191 Million Kilograms. The following figure shows the trend of export of Tea from India. Table 2.2 International market of Tea Country India China Sri Lanka Kenya Vietnam Tanzania Indonesia Malawi Zimbabwe Others 2004 (in mn. kgs) 197.67 280.19 290.6 333.8 70 24.17 98.57 46.6 14.91 183.39 Share 2005 (in %) (in mn. kgs) 12.8 18.2 18.9 21.7 4.5 1.6 6.4 3.0 1.0 11.9 191.85 286.56 298.77 339.13 88 22.5 102.29 42.98 8.45 179.8 Share (in %) 12.3 18.4 19.1 21.7 5.6 1.4 6.6 2.8 0.5 11.5
Figure 2.3 Export of tea from India
Total
1539.9
100.0
1560.33
100.0
Domestic Consumption of Tea
India is still the largest consumer of black tea in the world with domestic
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Figure 2.4 Domestic Consumption of Tea in India
consumption accounting for almost 80 percent of the total tea production in the country. The pattern of domestic consumption has shown a steady and positive growth since 2000. From a mere 73 million kilograms in 1951 domestic consumption has increased to 653 million kilograms in 2000. In addition, compared to the previous years there is a marginal increase in 2004, 2005 and 2006 at 735, 757 and 779 million kilograms respectively 6. The following table shows the pattern of domestic consumption in India. The major tea consuming states in India include Maharashtra (87 million kilograms) Uttar Pradesh (82 million kilograms), Gujarat (64 million kilograms), Rajasthan (58 million kilograms) and Madhya Pradesh (42 million kilograms).7 The average annual per capita consumption of tea in India varies considerably from region to region. It fluctuates from a maximum of 1.2 kilograms in Punjab to a minimum of 0.36 kilograms in Orissa.8 The Indian domestic tea market is predominantly a loose tea market, constituting around 60 percent of the total tea consumption, while the balance is served by packet tea. Over the past couple of years however, there has been a shift in the domestic market from loose tea to branded packet tea. The growth of packet tea has increased as in the over-all domestic consumption in India. The share of the packet tea has increased from a meagre 15 per cent in the early 1980s to over 40 per cent currently. The big companies sell tea in branded loose and packet tea. Since 1985 the branded tea segment has registered good growth and its share in the total
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tea market is currently around 40 per cent. Small local players in the unorganised sector were major stakeholders in loose tea markets at various levels. Later on large players such as Hindustan Lever Limited and Tata Tea took over the tea market as branded packed tea producers. They created the nurtured the perception that nonbranded/ packet tea was inferior. Consumers were offered branded teas in a variety of aromas and flavours, packed in compact, attractive packets.9 Most of the big players such as Tata Tea and Hindustan Lever Limited claim through their tea promotional schemes that they provide good quality tea at economical prices in order to make this tea available to all strata of Domestic market of tea in India
Figure 2.5 Domestic market of tea in India
900 800 700 600 500 400 300 200 2000 2001 2002 Packet Tea 2003 Loose Tea Total 2004 Linear (Total) 2005 2006
society. Hindustan Lever Limited with a market share of 33 percent is the leading player in the packet tea business, Tata Tea has a share of 19.4 percent, Duncan has 3.7 percent and large and small regional brand companies such as Wagh Bakri and Runglee Rungliot etc dominate the rest of the market.10 The following figure shows the trend of loose and packet tea consumption in domestic market in India. Despite a steady growth rate, the per capita consumption in India is still one of the lowest in the world, with 0.65 grams per head. The average annual per capita consumption of tea in India is relatively low vis--vis other countries like UK (2.24 kilograms), Ireland (2.96 kilograms), Turkey (2.6 kilograms) and Sri Lanka (over 1.38 kilograms)11. It has been noted during the course of field work that there is a need for massive promotion for increasing domestic tea consumption in India.12
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The figure 2.6 shows that per capita consumption13 of tea in India is very low and it is stagnant during the period of 1999-01 to 2001-03, compared to other major countries. It shows that there is high potential to expand in domestic market. The per capita consumption of tea is very low among the young population in India. Therefore the regulatory body of the tea industry along with the other stakeholders has to join together to sustain the domestic market and explore fresh market potential in the future.
Figure 2.6 Per Capita Consumption of Tea in Various Countries
Source: Tea statistics (2003), Tea Board of India
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Chapter 3
Small Tea Sector in India

Small growers have been a part of the Indian Tea Industry only for the past few decades. They were initially confined to Nilgiris district in Tamil Nadu, and to a small extent in Kerala and Himachal Pradesh. The trend of growing tea over small areas spread to Assam, West Bengal and Bihar only during the 90s. As per the membership of various small growers associations in different states the number of small holdings currently stands at 1,26,256. Only 56.8 per cent (71,676) of these have so far registered with the Tea Board,14 owing to the reason that small tea growers, particularly in the north-eastern regions do not possess documents for the land they possess.15 Table 3.1 Registered Tea Gardens in India
Region Registered with with Tea Board Reported Percentage by Associations Registered growers
South India North East North India Total India
61773 5595 9903 71676
68000 45132 58256 126256
90.8 12.4 17.0 56.8
Source: Compiled Report on Small Tea Growers (2006), Tea Board of India
Despite the number of small growers having increased over the period, especially in the post 90s, large estates still account for major production of tea (78.8 per cent) in India. In Sri Lanka however, small growers produce 61 per cent of the countrys tea and in Kenya small holdings accounted for 61.6 percentage of production in 2000.16 In India the majority of small tea growers are from Southern India, mainly the Nilgiris region. The number of small tea gardens has registered a high increase in Southern
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India, particularly in Tamil Nadu. Around 53.9 per cent of small growers are concentrated in Southern India whereas the share of small tea growers in Northern India is 46.1 per cent. Out of the tea produced by small tea growers in India, Northern Indias share is 54.5 per cent. Of this, small tea growers in Assam constiute the major share, both in the number of estates as well as in the production. In Southern India, the major share of production as well as the number and area of production of small tea gardens belongs to Tamil Nadu. Table 3.2 Share of small and estate tea gardens in India Small Growers No. of Area ProdEstates in Ha uction 98.2 96.5 98.0 97.9 99.6 97.5 50.0 99.4 98.7 15.2 8.4 42.5 14.5 57.1 13.0 3.9 41.9 20.6 14.5 17.1 20.3 15.4 55.0 3.4 4.0 39.2 21.2 Big Growers No. of Area ProdEstates in Ha uction 1.8 3.5 2.0 2.1 0.4 2.5 50.0 0.6 1.3 84.8 91.6 57.5 85.5 42.9 87.0 96.1 58.1 79.4 85.5 82.9 79.7 84.6 45.0 96.6 96.0 60.8 78.8
Region Assam W. Bengal Others Northern India Tamil Nadu Kerala Karnataka Southern India All India
Source: Tea Statistics ( 2003), Tea Board of India
Productivity of Small Tea Gardens
Productivity of small tea gardens is based on several factors and there is consensus on the view that the productivity of small tea gardens in India is very low as compared to other tea producing regions in the world, namely Sri Lanka. Traditionally, Indias competitors for the export market have been divergently different. Kenya has employed an aggressive tea extension programme and has increased tea hectarage by over 63 thousand Ha mainly in the small grower sector, since 1992 onwards.17 Sri Lanka has in fact reduced the overall area under tea by nearly 57 thousand Ha, compared to the planted area in 1980.18 Productivity patterns in the small tea gardens and large-estate sectors
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Table 3.3 Share of Small Growers among different States in India (Figures in brackets show the percentage share against All India levels) Region Small Growers Big Growers Total Nos Area Pdn. Nos Area Pdn. Nos. Area Pdn. Assam 42492(33.7) 41249(38.9) 62770(35.2) 780(47.7) 229434(56.0) 370557(56.1) 43272(33.9) 270683(52.5) 433327(51.7) W.Bengal 8398(6.7) 9500(8.9) 32245(18.1) 308(18.8) 103613(25.3) 155776(23.6) 8706(6.8) 113113(21.9) 188021(22.4) Others 7277(5.8) 7355(6.9) 2108(1.2) 148(9.1) 9967(2.4) 8292(1.3) 7425(5.8) 17322(3.4) 10400(1.2) North India 58167(46.1) 58104(54.7) 9712(54.5) 1236(75.6) 343014(83.7) 534625(81.0) 59403(46.5) 401118(77.8) 631748(75.3) TN 61985(49.1) 43157(40.7) 78764(44.2) 228(14.0) 32462(7.9) 64357(9.7) 62213(48.7) 75619(14.7) 143121(17.1) Kerala 5999(4.8) 4810(4.5) 1969(1.1) 154(9.4) 32157(7.8) 55803(8.5) 6153(4.8) 36967(7.2) 57772(6.9) Karnataka 16(0.0) 83(0.1) 232(0.1) 16(1.0) 2045(0.5) 5601(0.8) 32(0.0) 2128(0.4) 5833(0.7) South India 68000(53.9) 48050(45.3) 80965(45.5) 398(24.4) 66664(16.3) 125761(19.0) 68398(53.5) 114714(22.2) 206726(24.7) Total India 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: Tea Statistics( 2003), Tea Board of India
vary and productivity is high in the small tea sector. In the tea sector as a whole, the share of production from estates is predominant. Indias performance (1690 kilograms) is lower than Kenya (2235 kg.) but better than Sri Lanka (1611 kilograms)19in terms of average yield per hectare of total production of tea. Kenya has a much higher growth in yield per Ha than India.20 As far as regional variations in India goes, the yield per Ha in Southern India (2004 kilograms) is higher than that of the Northern India (1601 kilograms). The productivity of Darjeeling is very low (545 kilograms), and it has pushed down the total productivity of West Bengal (1770 kilograms).21 The situation in the small tea sector is different and high productivity is recorded in West Bengal (3390 kg). This is in contrast to the performance of small tea sector of Kenya, which is lower than the Indian small tea sector.22 The productivity of small tea gardens in India is far below that of Sri Lanka (2300) though West Bengal (3394) and Karnataka (2800) show high productivity.23 The figures below summarize the productivity of tea sector in India and other major tea-producing countries that are in competition with India. Table 3.4 Yield of Tea cultivation Region Assam Darjeeling W. Bengal Northern India TN Kerala Karnataka Southern India All India Sri Lanka Kenya 3394 1670 1825 409 2800 1690 1680 2300 1651 STGs Yield (Kg/Ha) 1340 Tea Estates Yield (Kg/Ha) 1601 545 1770 1601 2203 1569 2476 2004 1690 1875 1933
Source: Calculated from Tea Statistics (2003), Tea Board of India
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Chapter 4
Economics of Small Tea Growers in India

SMALL TEA GROWERS IN COONOOR, TAMIL NADU Migrants and settlers occupied the Nilgiris at various times down the ages. Dominant among these were tribal communities such as the Kurumbas, Irulas, Todas, Kotas and Badagas.24 The Badagas25 probably migrated during the 16th century and are undoubtedly migrants from the plains of Karnataka, earlier the State of Mysore.26 They are now a major community in the Nilgiris and occupy the higher to middle (ranging between heights of 5,000 to 6,500 feet) uplands of the Nilgiris. Majority of the Badaga community are small tea growers and earns their livelihood through selling tea. The Badaga community initially consisted of only a few hundred people. They brought with them, traditional technologies that gave them an edge over other migrant groups. When their exploration for livelihood bore fruit, the Badagas migrated to the Nilgiris in larger numbers. The British tracked the tribal population from 1812 when there were only 2207 Badagas. At the turn of the century (1901) this number had grown to 34176 and by the 1971 census their strength was 1,04,392. Subsequently the Census data clubbed them with Kannadigas leaving the actual population of Badagas open to speculation. 27. Considering the fact that there has been a tendency towards small family norms among the present generation of Badagas, currently they are spread over 480 villages with a population of more than 7 lakhs. 28
Nature and Spread of Small Tea Growers
In Tamil Nadu, small tea cultivation is spread over five districts and the Nilgiris has the largest number of small gardens (619,74). Small tea growers
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are scattered over 4-5 regions mainly in Coonoor, Kotagiri and Gudaloor regions in Tamil Nadu. Though the number of the small growers is large, their production is less when compared to that of big estates. Most of the small growers are marginal land-holders and own between half to four acres. Though there were small tea growers operational in Nilgiris from the late 1970s, the tea cultivation by small holders has witnessed a distinct growth in the post 1990s and currently the number of small holders has grown to more than 50,000 in Tamil Nadu. Small tea cultivation in Tamil Nadu accounts for 55 per cent of the States total tea production. The Nilgiris region constitutes the major share of small tea gardens in Figure 4.1 Growth of Tea Gardens in Tamil Nadu
Source: Tea Statistics (2003), Tea Board of India
Tamil Nadu. These gardens hold the predominant share of tea production in Nilgiris, and they contribute 68.8 per cent of total tea production. 99.7 per cent of the total number of tea estates belongs to small tea growers. Majority of the small holders in the Nilgiris were earlier growing vegetables but when the prices of tea boomed during 1990s most of the small holders converted their land into tea holdings.29 Despite the largescale shift from vegetable cultivation to tea, the present crisis in the tea sector has compelled growers to think of other alternatives. 30 As one of the small tea growers observed, earlier we used to cultivate vegetables like cabbage, potatoes etc. Risks were high in this due to wild animals and the work load was also high. In tea cultivation everyday attention is not required and we enjoy subsidies for tea cultivation at various levels. I was not trained for tea cultivation but my neighbours were cultivating tea and
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this influenced me to do the same...31 Table 4.1 Tea cultivation in Tamil Nadu
Small Tea Gardens (up to 10.12 Ha) Actual Estate Tea Gardens (above 10.12 Ha)
Nos.
Area
Prod. 000kgs.
Nos.
Area
Prod. 000kgs.
Kanyakumari Tirunelveli Madurai Coimbatore Nilgiris Tamil Nadu
1 1 2 7 61974 61985 No.
2 4 13 56 43082 43157 Area 0.5 0.5 1.3 0.5 69.8 57.1 141 78623 78764 Prod. 0.0 0.0 0.0 0.5 69.7 55.0
6 3 3 45 171 228 No. 85.7 75.0 60.0 86.5 0.3 0.4
431 796 960 11678 18597 32462 Area 99.5 99.5 98.7 99.5 30.2 42.9
141 1692 1318 26983 34223 64357 Prod. 100.0 100.0 100.0 99.5 30.3 45.0
(Percentage of total tea cultivation ) Kanyakumari Tirunelveli Madurai Coimbatore Nilgiris Tamil Nadu 14.3 25.0 40.0 13.5 99.7 99.6
Source: Tea Statistics, (2003), Tea Board of India.
The pattern of shifting to tea cultivation from the earlier dominant practice of cultivating vegetables and agriculture crops began long ago.
Factors for Shifting to Tea Cultivation Positive Economics of Scale Low-risk owing to longevity of the product Low man-days compared to vegetable cultivation Availability of subsidies at various level of cultivation Demonstration Effect of the tea cultivation Financial support and development schemes for new tea cultivation from Tea Board
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The period post 90s witnessed intensive tea cultivation in Coonoor. There is large-scale conversion of forest land for tea cultivation. Earlier the region was well-known for vegetable cultivation and multi-cropping. Initiatives have now again begun for vegetable and flower cultivation from the community, as well as the authorities. Fluctuating green leaf prices and the negative impact of monoculture are the major factors for the new initiatives.
Large areas of forest land were also converted to tea gardens by small land holders. The high realisation from tea, and support from the Tea Board were influencing factors for farmers to shift to cultivating tea, and the trend grew from the late 90s. Tea cultivation was also more attractive in terms of work and was less risky as compared to vegetable cultivation.
Nature of Production
The average leaf production in small tea holdings of Nilgiris is 50006000 kilograms per acre annually.32 The figures vary depending on climate, and maintenance of the gardens. Small growers give their tea leaves to the nearest BLF through leaf agents. A few small growers deal with the cooperative factory. In spite of the relatively low prices they get from the factory, timely payments and reliability are motivating factors for their dealings with the co-operative. As one of the growers says, Though we get lower prices from the co-operative than we would on the market, we get it steadily and stocks are not sent back during peak season due to over supply. Major problems in tea It is common that local leaf agents often cultivation deny taking green leaves when there is high Low prices supply 33 Insufficient funding for proper The factory also provides time-bound maintenance loans and other financial assistance to Low quality of the tea leaf growers who are members of the coLack of associations/networks operative factory. They also get made tea at lower rates than the local retail market.34 Most of the small growers share concerns about low price, insufficient funding and maintenance being some of the major problems they are facing at present in tea cultivation. As price and quality are correlated, low-quality green leaf is cited as the reason for the low prices that growers get for their produce. On the other hand, small growers share that owing to low realisation, which is often below the expenditure they have incurred on cultivation, it is unaffordable for them to focus on the quality of leaf.
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Maintaining consistency in quality requires greater investments such as timely spraying of medicine, pruning, and timely application of fertilizers. Plucking of tea leaves begins usually at 8 am in the morning and sometimes goes up to 4 pm. While the leaves are usually plucked by hand, in some cases, knives are used to cut the leaf. This becomes necessary, particularly if the duration of the plucking period is more than the usual.35 While using knives helps increase the quantity of leaves that can be plucked in the time available, it affects the quality of the leaf. Well-maintained gardens however pluck the leaves at regular intervals and are able to sell them at relatively higher prices.36 When gardens are not properly maintained leaf yield is not proper and the grower lets the leaf grow for longer periods. Such leaves do not fetch the standard prices that prevail in the market. As a result the prices fetched do not leave small growers with any surplus that can be invested in the garden. Since a majority of them have less than 2 acres of land for tea cultivation they are not able to approach any mainstream banks for loans. The banks on their part do not encourage the individual farmer due to concerns of receiving repayments on time.
Workers in Small Growers Tea Gardens in Tamil Nadu
An overview of the employment in the tea gardens in Nilgiris shows a declining trend. Large numbers of labourers are moving to nearby villages in search of alternative jobs. At one time, labourers migrated to work in tea plantations both from within the country and outside. While workers from
A majority of the workers are migrants. They include migrants from Sri Lanka and other neighbouring districts of Tamil Nadu. Currently a large portion of the labourers are moving to nearby villages to find alternative jobs in garment factories and other small-scale industries.
outside the country were mainly from Sri Lanka37, internal migration was mostly from the neighbouring districts of Tamil Nadu. The first generation of international migrants was absorbed in tea private and government plantations. Currently however, Sri Lankan migrants who worked as seasonal, casual labourers in small tea gardens are without work.
The patterns of work allotment
Female workers are mainly appointed as leaf pluckers in small gardens. As most of the gardens are away from the main road, or from the owners
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house, male workers are employed to carry the leaves as head-loads from the gardens. All workers hold temporary jobs in small tea gardens. Often family members work in their gardens and appoint one or two female workers in peak season for plucking the green leaf. Almost all workers are temporary and get wages depending on their work. There is no other provision for welfare schemes other than the usual daily wages paid to workers in small tea gardens in Coonoor. Occasionally workers are given cash/clothes during festival days by small growers. There are no formal provisions or standards for payments during regional festivities38 and it depends entirely on the goodwill of the employer. Currently the demand from tea gardens for workers is dwindling owing to the crisis in the tea industry. Tea growers are finding it unaffordable to spend money on their tea gardens, and reports indicate that a mere 15-20 per cent of small growers have followed good maintenance practices in their tea gardens in the recent years.. Work in tea gardens is usually gender specific. Plucking of leaves is mainly performed by female workers. Male workers find it very difficult to earn a livelihood as they find jobs for hardly 10-15 days in a month, as only pruning, medicine spraying, etc are offered to them. The crisis in the tea industry had adversely affected workers who depend solely on tea gardens for their livelihood. Since tea-growing areas are geographically isolated, workers find it very difficult to look for alternative jobs. On an average, women earn Rs.60/- per day, while men get paid Rs.70/ -. The minimum wage has been fixed for tea plantation labour by the Government for Nilgiris, Tamil Nadu39 at Rs 72. The wage for carrying leaves is Rs.2/- per sack. While workers get paid regularly, availability of employment is sporadic. As mentioned earlier, alternate jobs are hard to come by, and many workers are migrating to nearby villages and to other small scale industries in search of employment. Women workers migrate to other districts to work in garment industries. Migrant labourers from Sri Lanka however do not have other options for livelihood as they have no knowledge of any profession other than working in tea gardens. As small tea gardens are basically small plots scattered over different regions workers engaged with small growers do not have representation in any unions or associations. Workers from tea manufacturing factories belong to unions but this entitlement is not available to casual and seasonal workers in small tea gardens. Workers in small tea gardens are challenged by poverty and deprivation.
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Their socio-economic situation has deteriorated down the years. Many of them are in the clutches of local money-lenders are have huge debts to repay. They live in colonies built by the local panchayats and workers do not own the houses they live in. The houses themselves are mud huts, and devoid of electricity, water connections and sanitation facilities. Since many of them are migrants they hardly own any land nearby gardens. They rely on money lenders as only source of credit in any kind of expenditure.
SMALL TEA GROWERS IN IDUKKI, KERALA

A Short history of Tea Cultivation in Kerala
In 1877 Kerala Varma, the Raja of Poonjar (a minor principality in the erstwhile Travancore state which includes the present day Indian state of Kerala), sold 227 sq. miles of thickly forested and largely unexplored area named Kannan Devan Hills to John Daniel Munroe, a British planter. This led to the birth of Kannan Devan Hill Produce Company. Kannan Thevan was name of an adivasi who showed the hills to the planters. The hills named after him and today Kannan Devan Hills is internationally known for its tea production. In 1878 the Maharaja of Travancore recognized J.D. Munroe and the North Travancore Land Planting and Agricultural Society. Members of the society developed their own estates in different areas of the high ranges. The first cultivation was undertaken by A.W. Turnor at Devikulam area in 1877. 40 During the initial years, the total area under tea cultivation was 200500 acres. When planters from Sri Lanka began to come in, the area of cultivation increased tremendously. The area of cultivation increased from 3352 acres (during 1885-90) to 34,555 acres in 1914. In 1900, Kannan Devan Tea Company alone had 19 estates. There were several reasons for accelerated development of tea and other plantation crops in Kerala. Important among them were: Suitable climatic conditions Availability of workers at low wages The Company Act of 1862 Strict rules for labour Introduction of banking Coming of roads connecting plantations and ports Nine percent (36,821 Ha) of the total cultivation area of tea in India
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currently is in Kerala. The Idukki District is characterized by large scale migration of people from Keralas main land and also labourers from neighbouring state of Tamil Nadu. Between 1890-1920 people came here to work in plantations, while during 1920-30 the migration from plan land mostly from Travancore was on account of the poverty, due to the post World War effect. The period of 1933-47 recorded a huge migration for the reason of a development project, the Pallivasal Project of Kerala. The Pallivassal Hydroelectric Project, the first such project in the State was initially constructed by the tea companies for their industrial use. During 1946 Government allotted forest land to 2000 persons while in 1950, colonies were established for ex-servicemen. In 1951 under the Grow More Food scheme, 1500 acres of land was allotted among 1000 persons. This again was the cause for large-scale migration into the Idukki district. Between 1960-1970 large numbers of people from neighbouring districts migrated on account of the construction of the historic Arch Dam at Idukki. Between 1901 and 1971 the population of the district has grown 16 times and is on a higher scale compared to the rate of growth of population in the rest of the State.41 During the period of 1971-81 the population of the district showed an increase of about 27 percent as against an increase of 19 percent of the State as a whole (Census Reports 1981 and 1991). There has been largescale conversion of forest areas into arable lands over the past two decades. The deforestation process started in the High Ranges with the advent of the plantation industry by the end of the 19th century. The evergreen forests in the area were totally destroyed and substituted with tea plantations. 42 This resulted in an increase in population in the hilly taluks of the district, especially in Udumbanchola and eastern parts of
STATISTICS FOR IDUKKI DISTRICT
Total number of tribal settlements Number of tribal settlements in Thodupuzha Number of tribal settlements in Peermade Number of tribal settlements in Devikulam Number of tribal settlements in Udumbanchola SC/ST population Total area of tea cultivation 245 74 34 126 34 2.07 lakhs43 23557 Ha44
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Thodupuzha taluk. The inability of the industrial sector in the district and neighbouring areas to absorb the labour force also acted as a catalyst for large scale encroachment of forest areas.
Production and Growth pattern of Small Tea cultivation
The study mainly focuses on Peermade and Pambanar regions of Idukki District of Kerala. Rubber, coconut, cardamom and tea are mainly cultivated in the region. When profit from the cultivation of other crops became marginal, profits from tea began to grow due to its longevity and relatively low initial investment.45 A majority of small tea growers are not trained. Some of them were supervisors and workers in tea estates. A large number of them were peasants and owned marginal lands. As in the other tea producing regions, the late 90s noted the mushrooming of small growers in this region. Figure 4.2 Growth of Tea Gardens in Kerala (No. of tea orchards) After peaking in 1993-1998 the sector shows steady growth. Though the crisis period witnessed the closing down of many tea estates, the same time also saw the emergence of a number of small growers in Kerala.
Source: Tea Statistics (2003) Tea Board of India
Profile of Small Tea Gardens
In Kerala small tea gardens exist mainly in seven districts. Idukki(4857), Kottayam(953) and Waynadu(69) have the highest number of small tea gardens. Small tea cultivation has a 3.4 per cent share of the total tea production in the State. The table below shows actual number of the tea gardens in both small and big estates and its share in total cultivation of Kerala, based on 2002 data.
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Table 4.2 Tea cultivation in Kerala Small Tea Gardens (up to 10.12 Ha) Actual No. Area Prod Palghat Malapuram Trichur Trivandrum Quilon Eranakulam Kottayam Idukki Waynadu Kerala 1 89 2 953 4857 69 5999 No. Palghat Malapuram Trichur Trivandrum Quilon Eranakulam Kottayam Idukki Waynadu Kerala 84.8 0.0 0.0 16.7 86.4 100.0 99.9 98.0 71.1 97.5 3 138 2 776 3773 97 4810 Area 2.5 0.0 0.0 0.3 10.2 100.0 92.4 14.1 1.8 13.0 226 1498 175 1969 Prod 2.4 28 21 70 1 Estate Tea Gardens (above 10.12 Ha) No. 5 174 1 5 14 0 1 99 28 154 No. 15.2 Area 831 0 529 962 1210 0 64 22980 5407 32157 Area 97.5 100.0 100.0 99.7 89.8 0.0 7.6 85.9 98.2 87.0 1467 320 349 0 31 38709 12082 55803 Prod. 97.6 0.0 100.0 100.0 100.0 0.0 12.1 96.3 98.6 96.6 Prod. 2845
(Percentage of Total Tea Cultivation )
0.0 100.0 0.0 100.0 0.0 0.0 0.0 87.9 3.7 1.4 3.4 83.3 13.6 0.0 0.1 2.0 28.9 2.5
Source: Tea Statistics, (2003), Tea Board of India.
Price and production Constant low realisation is a major problem for tea cultivation at present. The quality of tea leaf is also an issue and closely related to the
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prices. As expressed by a small grower getting good prices for leaf will in turn help us to grow good leaf. Proper maintenance will then be affordable. It is widely accepted that two leaves and a bud is considered of good quality but we get lower price even for best quality green leaves. Due to this lower price we sell dark colour leaves by assuring more quantity. Now, there is not much difference in our profit whether it is fine leaves or dark leaves46 Lack of associations and proper networking among tea growers are also major issues. Though there are some associations, they are mainly affiliated to the mainstream political parties, are politically oriented and very often fail to address the issues of the small growers.47 Growers can negotiate higher prices for their leaves only through associations. Now they are not in a position to bargain for higher price from leaf agent and avail financial assistance from any bank. A majority of small growers have not registered and due to this they are unable to avail of subsidies under various schemes from the Tea Board.48 The Tea Board also reports that Kerala has very few registered buyers.49 There are however some recent initiatives among small growers to come together and form new associations and begin dialogue with the Tea Board.50 As reported by one of the small growers and the member of an association here nobody speaks for us, some of the BLF owners take benefits from the Tea Board on our behalf with fake registration documents, and we hardly get anything from them. Our prime objective now is to register with the Tea Board to get guidelines and time to time about available subsidies The role of small growers in the value chain of the tea industry is very minimal. During a discussion with small growers in Peerumade, Kerala it was found that they were not aware of their end consumers. There were also unaware of the destination for their tea and the process through which the tea reached the market, either as made tea or in packets. They knew the tea chain up to the BLF and some of them were aware that the BLF sold tea to the auction centres. However, they had no knowledge what price their product fetched at the auction centre and did not relate it to the prices they received at BLFs. we know that we are getting low prices and BLFs and the leaf agent take away the major share of the profits. However, none of us know the price realization of our tea from the auction centre. We
40
are also not aware who the major players in the value chain of tea are51 Most small growers do not have direct contact with BLF owners. The price and the quality of their tea leaves are determined by the local leaf agent from time to time. The role of small growers in the whole value chain process is marginal and in most cases, limited to the level of local leaf agent. They have no idea where the tea goes and how much the tea fetches at the auction centre and believe that globalization is the cause for low prices. Many small growers observed that though wages had increased over time the price of tea had declined drastically. A small grower noted, Earlier we could not sell our tea leaves properly. The leaf agent would sometimes not collect it. For lack of any other option, we were forced to sell our tea leaves at low prices, sometimes lower than Rs.2/- per kg. There were times we had to send the green leaf to Tamil Nadu. That situation has changed now. At least we have a market, now that new BLFs are coming up. 52 While the tea crisis has affected the industry all over India in general, it has affected the green leaf market and workers in tea producing regions specifically. The tea crisis in Kerala has had more impact in Idukki, Ponmudi and Wayanadu. There are three kinds of plantations in the Peerumade region: The first category is that of plantations where plucking is still going on and managements have not been paying regular wages for years. Workers get only weekly cash advances, which are much lower than their minimum wages. The second is where managements have abandoned the plantations but plucking takes place with the help of trade unions. The third kind is the one where no plucking is taking place and workers are slowly leaving the estates. Workers are in severe crisis in the last two kinds of plantations. They are without work, wages and almost in a stage of chronic destitution.53 Since there is no option for their livelihood, workers in some estates pluck the green leaf and sell it in the market. This situation may impact the small tea growers market now since workers of closed tea estates have also begun selling tea leaves to BLFs. Due to the increase in supply the price of green leaf has come down. As one of the small growers says, Though we were getting low prices
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for our tea leaves some of the BLF owners became very rich over the period. Earlier one of the BLF owners used to come and take the leaf as head load. The status and economic condition of the BLF owner has improved so much that he is one of the biggest BLF owners in the region.54 The quality of green leaf has also deteriorated over time. Some of the BLF owners says, Many of the small tea growers do not maintain their gardens. Some of them provide good quality tea but when it comes to total leaf the average quality is low grade. They have also added that leaf agents often mix different quality of green leaves to get better price from BLFs. The duration of time which leaf agent takes to carry green leaves from the garden to the factory also determines the quality of the tea that would be manufactured out of those leaves. In many cases our prices are based on the quality of leaf and we do give good prices. We give steady price for green leaves even if there is a high fluctuation of price of the made tea . The Peerumade Development Society (PDS) is one of the manufacturing units that have a widespread association with small growers in the region. Small growers under the network of PDS follow organic practices and also get training and other necessary technical advice. There is a large number of small tea growers associated with the PDS. The price mechanism is based on their price structure and on standard quality measurements. The detailed function of PDS is analysed in later sections..
Workers at Small Growers Tea Gardens
Workers in Kerala are offered casual and seasonal work in most small tea gardens. More than 90 per cent of the workers are working as dailywage and temporary labourers. Family members of small tea growers also work in their gardens along with the workers or in some cases, by themselves. As elsewhere, in small tea gardens also, the worker population is dominated by women. Workers are mainly appointed for leaf plucking and due to its nature it is mostly offered to female workers. Men usually find less or no employment. Most of the men, including Tamil migrant tea workers, are construction workers from nearby cities like Kochi. Some of the workers from the closed and abandoned estates also have moved into the small tea gardens as casual workers in search of livelihoods. Around 22 estate factories have closed in Idukki district itself.55 The closed estates have resulted in the supply of cheap labour. Since there are limited alternative jobs in the region many of the workers are forced to work in small tea gardens for low wages. Housing, water and sanitation facilities are also poor in the areas where the workers stay.
42
Most of the workers belong to the backward, middle and lower caste groups such as Ezhava, Muslim and Dalit social groups in and outside the region. The area also has a large tribal population. A small number from tribal communities works as labourers in small tea gardens in some regions of Idukki district. The workers also include early migrant labourers from neighboring districts of Tamil Nadu.
Wage Rate and Daily Wages
Wages are relatively high in Kerala as compared to other tea producing regions in India. The rates are however low when compared to other jobs in Kerala. The district is also known for other agriculture and plantation crops such as rubber, coffee, cardamom etc. Tea cultivation constitutes only 11 per cent when compared to other crops.56 In the recent past, tea labourers have been migrating to other plantations due to inadequate wages in tea gardens. As a worker remarks, Though we have worked as tea workers since childhood we are now forced to leave and find jobs in other plantations. We migrate with family and find temporary shelters near the plantations. There are limitations to this also. Even though there are jobs available on rubber plantations, since we are not trained to be rubber tappers, we are unable to work in them.57 Most of the small tea gardens except those associated with Peermade Development Society (PDS) do not have fixed daily wages. The wages depend on the quantity of tea leaf the workers collect and they are paid at the rate of Rs.2/- per kilogram. This results in the workers having to work more. The perspective of the garden owners is different. As one owner remarks, Since we get low prices from the market for green leaf, it is not economical for us employ labour on daily wage basis. Therefore we pay them wages based on the weight of the leaves they pluck per day. We are not strict about the what form of plucking should be done though we do stress on two leaves and a bud.58 Majority of the workers plucking leaves are women and it was reported that their children often help them during the plucking. Since their wages depend on the weight of the leaves they pluck, children help their mothers get the minimum wages. When the labourers are unwell, they find it difficult as they have to pluck a certain quantity in order to earn their minimum wages. Though child labour is not encouraged in tea gardens, children of workers help their parents when they are unwell. One of the workers says, Our wages depend on the market prices for the leaf. If the prices are high we get better wages. If not, our wages also drop and we dont get the wages on time either.59
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The workers have very little role to play in maintaining the quality of leaf. As one of them remarks, We were plucking the leaf for the past several years; we do pluck according to the direction from the owners of tea gardens. We were told that two leaves and a bud is best quality and get highest price but we were directed to collect upto 6-8 leaves so that volumes are higher.6061 The workers often strip tea leaves instead of plucking them with their fingers, the reason for this being their urgency to pluck as many leaves as they can, as their wages depend on the quantity they pluck.62 Despite the presence of several active trade unions in the tea sector, workers in the small tea gardens are not associated with them. As a trade union leader in Kerala says, Presently the issues of workers in small tea gardens are unaddressed. Unions have a significant role to play in helping workers avail benefits, get their minimum working days and minimum wages etc. on time. Owing to the unstructured nature of their work, and that they are scattered over a large area it is difficult to unionise these workers. Additionally, most of the workers in small tea gardens have only casual or temporary status and this makes it difficult to address their issues collectively.63
SMALL TEA GROWERS IN WEST BENGAL

Brief history of Small Tea Growers
The history of small tea growers in West Bengal can be traced to the 80s. But widespread development of small tea gardens began in the post 90s. The tea gardens are situated in the northern region of West Bengal, mainly Darjeeling, Dooars and Terai. As in other tea producing regions, these tea gardens were earlier known for other agricultural crops mainly pineapple. The areas were also utilized for paddy and jute cultivation. The area recorded extensive tea cultivation from the late 1990s onwards. This period also saw the deepening of the tea crisis in plantation sector. The contradictions in the nature in the two models i.e. plantation vs small tea gardens in India also became evident at about this time.64 The table below shows the trend of tea cultivation in West Bengal since 1961 onwards. What would be interesting to note here is that the big plantations have actually come down in number and increase in terms of absolute number is primarily due to emergence of large number of small tea growers. Although the northern districts of West Bengal are among the oldest tea-growing regions in the country, the presence of small tea growers there is relatively new. Several reasons would appear to lie behind this, not the least of which was the state policy of land redistribution pursued aggressively
44
since the late 1970s. Under this, the ceiling-surplus lands that had vested with the state were progressively assigned to landless farmers both for cultivation and for homestead purposes, leaving little land that could be granted towards new tea leases. Also, tea in West Bengal has remained largely confined to the traditional growing areas of the Darjeeling hills, the Terai and the Jalpaiguri Dooars, where the conversion of forest lands into revenue lands reached a virtual standstill after Independence. In any case, most of the larger tea estates situated in the area were established well before the 1930s.65 From the mid-1980s onwards after a tea boom recurred, the West Bengal tea industry constantly sought release of additional land by the Government to the plantations. Since most of the vested land acquired through the implementation of land ceilings had already been exhausted through redistribution to landless beneficiaries, there was a look out for models through which tea production could be augmented. Hence, the Indian tea industry suggested that small holder model could be explored. This would mean tea production by ex-tea workers and others living in the vicinity of the tea estates, who would sell green leaf to the nucleus factories at prices determined on the basis of green tea quality, and the prices of made teas. The Indian tea industry contemplated that the small grower principle would allow the spread of tea cultivation into virgin areas where no tea factory existed at the time. 66 For the marginal landholder who is faced with the alternative of growing a single rainfed crop without the accompanying wherewithal to invest in modern agricultural inputs, this arrangement has made economic sense, since it offers 174 assured mandays of work per ha from the fifth year onwards, against the bare minimum generated by subsistence cultivation. The estate also gains because the wage offer made to the former landholder is lower than the prevailing statutory plantation wage, primarily because the status of the new plantation does not attract the attention of Plantation Labour Act of 1951.67 The small grower model also offered greater economies of scale to the estates since they no longer had to internalise the social costs of labour reproduction. The growth in small grower operations was rapid and showed up in increasing levels of labour casualisation, rather than in the expansion of registered tea factories and estates. Nevertheless, since the higher margins created by reduced labour costs in combination with a price upswing at the tea auctions made the BLF sector an increasingly viable investment option, it was inevitable that the number of BLFs would also increase rapidly and control over small tea growing operations would pass from
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the nodal estate sector to the BLFs. This second phase of development also allowed smallholder tea growing to be taken up well outside the periphery of the traditional tea region. During the subsequent auction price crash, the BLFs were able to steal a march over the integrated tea estates because of their costing advantages and also their favourable labour economics. 68 Figure 4.3 Growth of Tea Gardens in West Bengal
Tea Cultivation of Small Tea Growers
In West Bengal small tea cultivation is seen predominantly in two districts i.e. Dooars and Terai. Darjeeling has no small tea cultivation. The table below shows the actual number of tea gardens in both small and big estates and its share in total cultivation of West Bengal based on 2002 data. The number of tea gardens under small tea cultivation comes to 96 per cent whereas total production from small tea gardens has a mere 17 per cent share of out of the total tea production in West Bengal . This is primarily because most of the small holdings are below 10.12 hectares. So in absolute terms the small holdings comprises bulk of the tea gardens but when it comes to size hectres after hectre of tea are produced in few large tea plantations. In Terai district including West Dinajpur, small tea growers produce 39 percent of the total production. The emergence of small tea holders registered an increase from 2001 onwards, while the plantation sector in tea industry showed a decline. As small grower operations expanded, the average size of tea estates declined between 1990 and 2000 from 416 hectares to 128 hectares in the Dooars,
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and even more dramatically from 163 hectares to 23 hectares in the Terai.69 Table 4.3 Tea cultivation in West Bengal Small Tea Gardens (up to 10.12 Hct.) No. Area Prod. (in ha.) 000kgs 0 0 0 Estate Tea Gardens (above to 10.12 Hct.) No. Area Prod. (in ha.) 000kgs 85 17463 9180
Darjeeling Dooars(incl. Cooch Behar) 2825 3000 11302 158 69792 113933 Terai (incl. West Dinajpur) 5573 6500 20943 65 16358 32663 West Bengal 8398 9500 32245 308 103613 155776 (Percentage of total tea cultivation ) No. Area Prod. No. Area Prod. Darjeeling 0.0 0.0 0.0 100.0 100.0 100.0 Dooars(incl. Cooch Behar) 94.7 4.1 9.0 5.3 95.9 91.0 Terai (incl. West Dinajpur) 98.8 28.4 39.1 1.2 71.6 60.9 West Bengal 96.5 8.4 17.1 3.5 91.6 82.9
Source: Tea Statistics (2003), Tea Board of India.
It is important to analyse why and how the new model in tea industry emerged in the crisis period. The labour in the small tea sector consists mainly of temporary workers and the risk factors in terms of cost-profit ratio are also less. Many of the issues are linked to the problems they have with registering with the Tea Board. Most of the growers grow tea in their own land or occasionally on Government, patta, R.R or tribal lands. In West Bengal it is mandatory to take N.O.C or long-term lease for tea cultivation from the Land and Land Reforms (Land LR) Department. Unfortunately, the attitude from the L and L.R Department towards granting N.O.Cs for tea cultivation to the growers is far from co-operative. This aspect according to the small growers and the Association of Small Growers in West Bengal is vital and needs to be settled soon. The following figure gives the total N.O.C petitions received and issued during 2000-2005. This includes applications up to 30-06-2001.
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Table 4.4: Details of N.O.C petition by Tea Growers to the District Land and Land Reforms Department, Government of West Bengal District Jalpaiguri Darjeeling Uttar Dinajpur Coochbehar
Source: V Chakraborty (2006)
Total petition received for N.O.C. 1960 1947 2005 129
Total N.O.C issued up to 30-12-2005 620 865 249 49
Financial assistance and subsidies can be availed only by those small growers who have registered with the Tea Board. As per figures of the Tea Board only 166 (2 per cent) small holders are registered, and can avail subsidies, whereas in Tamil Nadu, 70 per cent of the small growers are registered with the Tea Board and can avail financial assistance for cultivation. Lack of technical knowledge among growers is also a problem in the small tea sector. Several cultivators were cultivating other crops mainly pineapple before shifting to tea cultivation.70 BLF owners indicate that growers need training on different aspects of cultivation with a view to improve the quality of leaf.71 Cultivators depend on the local market and buy pesticides of low price and quality as they do not have proper information. They do not have information on proper ways to apply the pesticides. For instance, it is widely accepted that medicine spray should be applied just after plucking. But some cultivators apply it before plucking. As it is visible on leaves it fetches low prices in the leaf market as well...72 Low prices of green leaf are one of the major problems persisting in small tea cultivation in the State. The growers get little or no financial assistance from the Tea Board or any other financial institutions such as banks. They take cash advances or credit from the leaf agents to meet running cultivation costs. Therefore they have to give the green leaf to the same agent though they it might be more advantageous to sell their produce to estate factories. This reduces their bargaining options and results in dominance by the leaf agents.. Similar to the other regions, in West Bengal as well, most of the cultivators, particularly especially marginal farmers (those who have below 5 acres), are not aware where the tea goes from the production sector. Their role is limited to the leaf agents. They agree that the criteria for quality are laid down by the BLFs and that the high quality tea from BLFs
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goes to the private market rather than to auctions. Low grade tea goes to auctions and also fetches low prices. Small growers are of the opinion that the price they get is very low even when they supply good leaf. They believe that the Tea Board and Government must intervene in the production sector and a price-sharing formula must be implemented. The present price of leaf varies between Rs 5.45-Rs. 7/- per kg. though they usually get Rs. 6/- per kg. This has declined from the previous years rate of Rs 7/- per kg. The price realization of green leaf in small tea sector from 2000 onwards is listed in the table below. Table 4.5: Price Realisation of Green Tea Leaves in West Bengal Year 2000 2001 2002 2003 2004 2005 Average Price.Rs/Kg 6.02 7.11 5.89 5.30 7.71 5.48
Source: Bijoy Gopal Chakraborty, United Forum (2006)
Though the Tea Board has set out a price-sharing formula, it is yet to be implemented in this region. According to the formula, out of the total sale proceeds of a BLF, 60 per cent must go the growers. However BLFs sell only marginally in auctions and the good quality tea is sold directly in the market. As they fetch low prices through auctions, it is difficult to implement the price-sharing formula. It has been noted that in many areas in Assam (discussed below separately), small growers get higher prices than through the formal price-sharing formula. Small growers also note that, Though there is a price-sharing formula which is applicable for small growers it is not being practised here. We feel that Tea Board should intervene and there should be a mechanism to monitor the leaf market and the entire market mechanism.73 Wages for workers take up a major portion of the total cost of production. Since wage itself are unaffordable, small growers fail to provide welfare schemes to the workers. Since they hardly get any subsidies they have to bear the costs entirely by themselves. Though many factors have changed over time, the small growers feel that if they get better prices they could improve the facilities on the one hand and improve on the quality of leaf on the other. There are options for selling the green leaf to estate factories if they can
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provide quality leaf as per factory standards. Some of them agree that if they could provide good socio-economic situation to the workers they can improve the productivity of labour and production as well. Initial investment and running expenditure however are increasing and create a huge gap between the expenditure and returns. The introduction of Self-Help Groups (SHGS) in the small tea holdings has brought about a positive change in the sector. For instance, the first SHG named Panabari Small Tea Growerss Society formed in Panbari village of Maynaguri Block, in Jalpaiguri District, is working successfully. It was formed two years ago and fetched better prices for green leaf. SHGs could improve the quality of leaves and negotiate for better prices for green leaf with BLFs and leaf agents in the locality. The SHGs could do so as they were entitled for different government schemes which were earlier not available to the unregistered small tea growers. The SHG initiated programmes like collection of leaves in such a way which minimises damage, provided transport facilities to interior places to carry leaves and storage facilites in different regions and also provided short term financial assistance to the growers to meet immediate expenditures. At present there are eight such SHGs working in the small tea sector in North Bengal.74
Workers in the Small Tea Gardens
The workers in small tea gardens live in poverty and most of them are casual/temporary workers. Their wages are often less than the official wage rate of the State. In many cases families of small tea gardens work in their own gardens and temporary workers are employed only in the peak season or for plucking leaf. The estate workers from the closed tea gardens also work as temporary workers in small tea gardens. No formal labour legislations or welfare schemes exist in small tea gardens and workers get only their wages. However, there are cases of support provided to workers in an individual basis by some small holders. Male workers do not find jobs in small tea gardens and most of the jobs such as pruning, drainage, applying manure etc, which are usually done by the small holders themselves and majority of the employment is given to women workers primarily for plucking activities.. Middle growers who have 20 acres or more however do provide some benefits and have some welfare provisions for the workers other than the usual wages. Owing to scarcity of jobs in tea garden the workers look for alternatives and several of them have found work in stone crushing fields. When the plucking season is over (December-February), some of them find jobs as stone crushers. A drastic increase has been noted in the number of tea
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workers, including women and children in stone-crushing fields. There are hardly any jobs available for the workers who depend on the tea gardens in the area of North Bengal. Some go to Sikkim and Jharkhand in search of jobs while the others survive on wild roots and tea flowers.75 While the workers do not appear to have any specific hazards associated with the tea industry, they suffer from nutritional problems, minor injuries and other seasonal illnesses. They are also prone to epidemics due to high malnutrition and water-borne diseases. Unlike in the estate sector, workers in small tea gardens have poor access to health facilities. Trade unions are active in the estate sector but the small tea sector does not have active unions. Though there are initiatives to unionise workers in small tea gardens they have not had much impact. Trade unions for small tea garden workers have inherent constraints due to the nature of their jobs, which is casual/temporary. They have issues like problems of low wages and other social security measures, which need to be addressed. It is also noted that benefits (especially for pregnant and breast-feeding mothers) and government relief programmes like Integrated Child Development Scheme (ICDS) and the Mid-Day Meal Scheme (MDMS) are irregular, inconsistent, and in some cases, inadequate or entirely absent. Workers are often not aware how to make use of the schemes and provided by the Tea Board and other Government institutions. Many workers have no idea as to the existence of relief or Public Distribution Systems of Government and where they do they have no knowledge about the procedures. They are also uninformed about their rights under existing labour laws.76
SMALL TEA GROWERS IN ASSAM

The spread of small tea gardens began in early 90s and peaked in late 90s. The number of tea gardens increased specifically from 1993 onwards and the numbers continue to grow. In Assam small tea cultivation is spread over ten districts and is concentrated in four districts that have more than 95 per cent of the tea gardens. They are Dibrugarh (98.9 per cent of total number of tea gardens in the district), Sibsagar (98.5 per cent), Lakhimpur (97.2 per cent) and Karbi Anglong (96.7 per cent). Total number of Small tea gardens shares 98.2 per cent of the total number of tea gardens in Assam whereas the their share in production is only 12.8. The table below shows the actual number of the tea gardens in both small and big estates and its share in total cultivation in Assam, based on 2002 data.
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Figure 4.4 Growth of Tea Gardens in Assam
Small growers in Assam get relatively better prices. At present Rs.11 is the average price for tea leaves/kg. It is noted that many of the BLFs are fetching higher prices through auctions as compared to selling to estate factories. As one of the officials of the Tea Board, Assam says, There are several new BLFs in the region. They are technically better equipped for manufacture as compared to many of the estate factories. If they get good green leaves they can produce quality made tea which helps them obtain high price realisation from the market77 . Continuous instruction on use It is important to note that one of the BLFs, of chemicals and knowledge TEAMFCO, achive high price realisation and about leaves is important. BLF they have also focus to improve the should control the quality of development of the small growers78 Leaf with small growers TEAMFCO. Small growers face several problems while collecting and transporting green leaf. There was a long wait before they could supply the leaf to the agent, and the leaf would then reach the BLFs late. Infrastructure such as roads and vehicles to transport the leaf are poor. At present there is no provision to transport the green leaves directly from the tea gardens to the BLF other than through the leaf agents. Distances from the garden to BLFs are long in Assam. For instance, most of the BLFs either in Lahoal or in Tinsukia are situated near the main road. As the agent collects leaf from different small growers, it sometimes takes till evening to reach the BLF. Small growers in Assam especially in the Tinsukia region belong to associations of small growers. The association members interact with the
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Table 4.6: Tea cultivation in Assam Districts Up to 10.12 Hectares Actual Nos. Darrang 1446 Goalpara 251 Kamrup 41 Lakhimpur 448 Dibrugarh 22590 Nowgong 341 Sibsagar 16893 Cachar 102 N.Cachar 0 Karbi Anglong 380 Assam 42492 Darrang Goalpara Kamrup Lakhimpur Dibrugarh Nowgong Sibsagar Cachar N. Cachar Karbi Anglong Assam 93.9 95.4 75.9 97.2 98.9 93.7 98.5 49.5 0.0 96.7 98.2 Area Above 10.12 Hectares
Prod. Nos. Area 000kgs 853 1229 94 40840 374 566 12 3149 53 108 13 3401 252 356 13 4541 25762 36012 244 67936 253 334 23 7788 12809 15367 256 63953 340 350 104 32435 0 0 8 4071 553 963 13 1320 41249 55285 780 229434 Percentage of total 2.0 1.6 6.1 98.0 10.6 9.4 4.6 89.4 1.5 2.4 24.1 98.5 5.3 3.9 2.8 94.7 27.5 22.6 1.1 72.5 3.1 2.9 6.3 96.9 16.7 13.3 1.5 83.3 1.0 0.8 50.5 99.0 0.0 0.0 100.0 100.0 29.5 44.1 3.3 70.5 15.2 12.8 1.8 84.8
Prod. 000kgs 74514 5465 4326 8723 122994 11362 99876 45219 4340 1223 378042 98.4 90.6 97.6 96.1 77.4 97.1 86.7 99.2 100.0 55.9 87.2
Source: Tea Statistics, (2003), Tea Board of India
Government of Assam regarding necessary steps to improve the situation of small growers in Assam. One of the members however points out, Many of the small growers do not come to us when they get good prices, they approach us only when there is a crisis, or they have a problem with
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prices and this affects our functioning as well. Small growers face a shortage of insufficient skilled and trained labour, as unskilled and inexperienced local surplus labourers are engaged in the small tea gardens. Former tea garden workers also from a major portion of the labourers since opportunities for alternative jobs are limited. This leads to a very high supply of workers in the region.
Nature and profile of workers in Small Tea Gardens
In Assam, a majority of the labourers are ex-tea garden workers or their kin/relatives. In the peak plucking season, most of these labourers are engaged in estate gardens. During this period, small growers face severe shortage of labour. Additionally small growers face a problem of shortage of skilled labour. Small growers in Assam also are challenged by limited knowledge about cultivation. Most of the small growers are not trained cultivators. They shifted to tea cultivation when tea started fetching high prices. Some of them brought roots from Darjeeling and began cultivation here. The quality of tea is related to and dependant on geography as in the case of Darjeeling.79 At present green leaves fetch relatively high prices in Assam. Though the hike in price is purely seasonal, the small growers admit that the quality and price of green leaves are positively correlated. As in the case of West Bengal, title deeds of cultivable land is one Lack of knowledge of tea of the major problems faced by small growers cultivation in small tea in Assam. Only 25 per cent of the growers segments has negatively have registered with the Tea Board. When affected the productivity and asked growers say, Land issues are not settled quality of the tea leaves in yet, so we are unable to register with the Tea the region- Tea Board Board. This makes it impossible for us to avail of the benefits provided by the Tea Board.80 Despite the issues of land settlement being common knowledge, the Tea Board as a statutory body does not have the authority to resolve them. A resource person from Tea Board says, We have several welfare and other schemes for small growers but they can be availed only by registered small growers. We cannot however take the responsibility of settling their problems. 81 The Tea Board is also ready to cooperate with the initiatives taken by civil society and other initiative groups for the development of small growers. The introduction of SHGs in Assam is cited as an example of initiatives by the Tea Board.82 Tea cultivation has entered forest land including reserved forest and government land and most of them are have
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100 per cent tea cultivation, though they are combined with bamboo and pineapple as well. The ecological imbalance and deterioration of the fertile land due to these plantation crops are rarely discussed and noticed. Many of the small growers and their associations have pointed out that resurgence in the small tea cultivation has improved the situation of the labour market by providing employment to a large number of people. Many of the workers also agree that they find jobs in small tea gardens. However employment in small tea gardens is not sustainable in terms of wage rates and working days. Workers are offered only minimum wages and no other benefits such as Gratuity, PF etc. Additionally, steady employment is available only during peak season, while families of tea garden owners work in their own gardens on other days. When there is a fall in tea leaf prices, jobs for workers also become scarce. It has been proven that this form of employment is neither sustainable nor dependable. Therefore the argument that there has been an increase in employment is valid only for a short period. On an average, labour employed by the small growers of Assam was Employment has increased due an estimated to be 4.36 per Ha, increase in the number of small tea comparatively higher than that of estate gardens. Association of Small Tea 83 Growers. gardens, at 2.39 per Ha. No The generation of employment is not permanent labour was employed and sustainable in terms of minimum wage the causal labourers received daily and working days. Wage and working wages ranging from Rs. 60 to Rs. 65 days are regulated only in peak per day. season. Workers are forced to find Often many workers known as tea jobs in other agricultural fields during the off-seasons. This pattern of tribes are forced to leave their places employment by small tea gardens is of work and look for jobs in other not attractive to skilled labourers. sectors. Tea labour communities constitute the oldest among Assams immigrant groups. They were recruited by British Tea Planters from the present day Jharkhand, Chhattisgarh, Bihar, Andhra Pradesh, Orissa, Uttar Pradesh and West Bengal between 1861 and the early 20th century to work as captive labour in tea plantations in Assam. They were spread over the districts of Western Assam i.e. Morigaon, Nagaon, Sonitpur and Darrang in Middle Assam, Golaghat, Jorhat, Sibsagar, Dibrugarh and Tinsukhia in Eastern or Upper Assam, North Cachar and Karbi Anglong districts in Southern Assam and the Barak Valley.84 Among the workers, a majority of them are from tribal groups, also known as the tea-tribe community. They are manly Santhals, Mundas,
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Oraons, Kharias, Gonds, Khonds, Kisang and Nagesias, they settled down in Assam at the end of the contract period, though some of them left the tea plantations to settle in the surrounding agricultural lands before the expiry of the contract. The group later on came to be known as the Ex tealabourer community which lives in villages neighbouring the tea estates and provides casual labour to them depending on seasonal demand.85 Men and women receive equal wages. Workers in small tea gardens are excluded from any kind of association and are not members of any union. As some workers observe, some producers fear that if we get associated with unions it will go against their interest. We all stay in nearby estate gardens mainly because we are kin and kith of tea garden and some of us are ex-tea garden workers.86 Since all the workers stay in the estate garden along with some of the family member who is a permanent worker, they are not paid any monetary benefits other than the daily wages. At present there is no provision for the welfare schemes or even the proper safety methods while using fertilizers and pesticides. Some of the workers are of the opinion that if they have a union of their own opportunities for negotiation would increase. During peak leaf plucking season they get jobs but they have no job guarantees for offseason. The role of the Government is also minimal, and though there are standards for minimum wages, many areas do not following the minimum wage rate standards. There are no provisions or measures ensure that workers in small tea gardens get the benefits of social security measures. This is in contrast to estate gardens, where there is some sort of social security system in place in the form of welfare schemes etc.
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Chapter 5
Value Chain and Small Tea Growers

Value Chain and Tea Sector
The concept of value chain is understood as an organised system of exchange from production to consumption, with the purpose of increasing value and transforming inputs and competitiveness. The global value chain (GVC) concept is one of a number of approaches to inter-firm relations. This approach draws on the simple idea that the design, production and marketing of products involve a chain of activities divided between different enterprises, often located in different places.87 The value chain concept can also be defined as the combination of design, product development, marketing, production and retailing by which products progress from conception to the final consumer.88 As single companies rarely turn raw materials into finished products for sale to end consumers, the value chain concept recognizes the role of various stakeholders who control and who add value along the chain. The tea industry in India is a buyer-driven commodity chain89 and is primarily controlled by big tea companies, There is a lack of transparency in the tea industry about different stages of price creation across the chain e.g. the destination of tea going out of a particular garden. The blending process occasionally begins from the BLFs itself. This process is likely to result in a loss of identity for gardens/small growers. It is obvious that the pre and post-auction value chain for tea is long and complicated and involves a number of intermediaries. This generally includes producers, BLF owners, brokers and buyers. The buyers include buying agents (at the auction centres), sub-agents (in the upcountry markets), wholesalers and semi-wholesalers (in the smaller upcountry markets).
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The value chain of the tea industry involves various stakeholders, and their roles are sometimes conflicting and affect convergence at operational levels. The structured and pre-determined role of stakeholders and the interactions among them however help maintain the value-additions and the price mechanism in the industry.90 The workers who are important stakeholders in the value chain often do not have any knowledge of the trade initiatives and the CoC. They have no role to play in its development and implementation. The section below defines the role of various stakeholders in the value chain of the tea industry.91 The key stakeholders include a. Auction organizers, who are designated as Tea Auction Committees or Tea Trading Associations. b. Tea producers cum sellers, who are either estate factories or BLFs or cooperative factories who manufacture tea from tea leaves. These producers are considered as sellers in tea auctions. Presently, dealers who purchase/procure tea from such estate factories/BLFs/ cooperatives are not allowed to sell their tea in the public tea auctions. c. Tea brokers, who are auctioneers of tea, and sell tea on behalf of sellers at the auction centres. d. Tea buyers, who are purchasers of tea in the auction centres. These buyers are not necessarily the bidders for tea in the auction centres all the time. They could be packeters/blenders who buy for their own brands or packets. Buyers are also agents who buy tea at auctions on behalf of other tea dealers. e. Warehouse keepers are those who store tea to be sold in the auction in warehouses. Producers-cum-sellers can also store their teas meant for auctioning in their own warehouses. There are no restrictions on the location of such warehouses for storing teas at present. 92. Other major stakeholders include retailers and consumers. The role of retailers in the value chain is also significant, as with the trend of increasing imports, these retailers are importing greater quantities of tea. They determine when and what products are to be made available as well as their characteristics (quality, appearance, packaging and so on). This involves interpreting market trends and specifying what products should be produced to meet these trends. It may also involve specifying the processes to make the product. Supermarkets however may merely dictate the what and leave the how to the supplier. Consumers are the ultimate decision makers. Tea marked as high quality in auction centres may not be in demand
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5.1 Value chain of the Small Tea Growers in the Tea industry of India
Source: Formulated on the basis of fieldwork
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by the consumer. Consumers even from the locality of tea gardens may not prefer tea which directly comes from the gardens i.e. without blending, because of its taste. Historical factors and agents have influence over the preference of consumers and these preferences have evolved over a period of time. Consumer preferences are not homogenous, but heterogeneous, and they determine the value chain of tea in the domestic market. The agents and actors in the buyers chain make tea dependent upon the nature of the consumers at various levels and strata of society. The schematic representation 5.1 shows multi-stakeholders in the value chain in Indian industry The schematic representation shows the interconnectedness of various stakeholders in the value chain of tea industry. The auctioneers (called brokers in tea trade) play a significant role in the whole transformation of the value chain. They taste and value tea, based on prevailing market conditions and these valuations, released to all members of the trade, act as guidelines for the sale. The brokers divide tea into different grades based on quality, make samples and fix prices. The quality of tea is measured by a tea taster from each auctioneer based on different criteria such as flavour, colour and thickness. They taste the made tea and determine the price based on value. In addition, they make samples of different grades and quality. The tea which arrives at the warehouses is catalogued and samples are distributed to all the registered buyers, so that they can come prepared for the auction. The prices also depend on the demand from the internal and external market.93 The tea available at the consumer level is in blended form, either as branded packets or loose tea. The auctioneers collect the sale proceeds from the buyers normally within 14 days from the date of sale at the auctions, known as the prompt date.94 The amount is remitted to the producers after deducting 1 per cent brokerage and government levies such as sales tax. The buyers payment is assured more or less automatically within 14 days. The strength of the auction system lies in the sanctity of the prompt date and timely remittance of sale proceeds to the producers. These factors demonstrate the integrity and financial standing of auctioning companies. On receipt of payment, the buyers are issued a Delivery Order for the tea to be collected from the warehouses. The auctioneers also undertake promotion to ensure maximum demand for the tea on offer in their catalogues. The brokers are also allowed to produce printed catalogues with the name of the garden and essential particulars of tea available for sale every week. They also circulate market information, coupled with their own
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views on the market conditions in India and other countries. The tea traders associations of each region maintain and administer the auctioning system and facilitate the good governance of tea auctions.95 The value of and demand for tea is fixed through negotiations and convergence with producers. Tea auctioneers have regular dialogues with producers and buyers and are able to monitor changes in demand and production patterns. His/her standing in the trade depends on how prompt and accurate s/he is in giving information to both the sections. The auctioning companies offer manufacturing advisory services to producers in response to changing market requirements.96 They have direct links with buyers as well as producers. They also keep in direct contact with semi-whole-sellers. 97 This requires strong international connections as well as a network of correspondents all over the world. Additionally, auctioning companies occasionally give shortterm finance98 to tea producers for the purchase of machinery, capital investment, etc., recovery of which, is made from the sale proceeds of tea. The profile and nature of buyers are dynamic and have different connotations in the market. Buyer means any person, firm, company, corporate body or cooperative society including a consignee or commission agent, with a place of business in tea in India who receives tea by way of stock transfer from the manufacturer. They can be engaged in purchasing or procuring tea either from public tea auctions or directly from manufacturers of tea, but the term buyer excludes those who buy only instant tea and other value added products of tea i.e. tea bags, packet teas, flavoured tea, quick brewing black tea etc. and also excludes the secondary buyers who do not source their tea either from auctions or from manufacturers. Marketers play a major role in the value chain of the tea industry. They include packeters/blenders and a majority of them come are national brand companies. Large retailers or marketers only supply the specifications for the branded products they order. These companies design and/or market, but do not make the products. They form a new breed of manufacturers that do not have factories. This separates the physical production of goods from the design and marketing. For instance, Wagh Bakri a large regional player focused in Gujarat will not integrate its operations backward by acquiring tea estates.99 They meet their requirements from auction centre. The Tea Board plays a key role in the industry as a regulatory and promoting body. It is a statutory body set up under the Tea Act, 1953 to promote all round development of the tea industry and comes under the
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administrative control of the Ministry of Commerce and Industry, Department of Commerce. The functions of the Tea Board are directed towards: Development and production of tea Extension of areas under tea cultivation Improvement in the quality of tea Undertaking promotional campaigns for increasing exports of tea and domestic promotion Promotion of co-operative efforts of growers Research and development efforts in tea It has also certain regulatory functions such as issue of Exporters License, Tea Waste License, and Tea Warehousing License etc.100 The role of small growers is marginal in the whole value chain process of the tea industry. At present their role is only in production sector and as we have seen, only up the level of leaf agents. They share just 21.2 per cent of the total production. Many of them are not aware of the different processes and the key stakeholders in the value chain of tea industry. The production sector in the tea industry is one of high risk and low profit. Small tea growers as reported above share only a marginal benefit and the larger profits go into value added processes and into the final products. Therefore there should be an upward shift of small growers in the value chain. Current trends show that big companies are withdrawing from production and concentrating only on marketing. Globalization has been marked by the efforts by companies to slice up the value chain, and break the production process into many steps. MNCs are no longer as keen on production processes as they are to organize and manage commodities i.e garments, footwear, consumer electronics or big brands of tea.101 MNCs capture the value of the product at various stages of the value chain. Among Indian tea companies, the two biggest multinationals are Hindustan Lever with over 45 percent of the retail market share followed by Tata Tea with an estimated market share of 28 percent in the packet tea segment. Goodricke Group Ltd. is the third most important multinational tea company in India. Most of these multinational and big national tea companies have their own estates along with trading, processing, blending and packaging facilities. Their ownership of both plantations and processing factories is called horizontal integration. However, there is a vertical integration also as they control transport companies, fertilizer companies,
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shipping agencies etc. Due to this control on entire production process from tea shrubs to tea bags, these companies have considerable influence on supply and demand and thereby on the tea trade policies of the tea producing countries. These MNCs also control the small tea growers by controlling the packet tea segments in various producing countries.102 However, big companies are becoming increasingly reluctant to operate in the old estate system of production because it is highly labour intensive and the bulk of costs for producing tea goes towards labour wages (in some cases as much as 60 per cent). However, the real profits are in the retail packed tea market. For example in India, the average tea auction prices are less than Rs. 50/- per kg but in retail the tea is sold for Rs.140/ - per kg. While the prices for tea at auctions are falling around the world, balance sheets of big tea companies show that they are still making profits. This is possible because most of the MNCs pack and sell their own tea without bringing it to the tea auctions and they are also the biggest buyers of the tea from the auctions.103 Value Chain Analysis (VCA), or more accurately global VCA, is about better positioning of a firm or sector within the context of global markets. It involves finding a competitive or investment niche within the full range of production and informational activities. This involves handling a product or service from conception, through intermediary phases of production, export and distribution, reaching it to retailers, end-users and consumers, and its disposal after use. It is also about identifying strategic interventions that the public sector can make to strengthen local business infrastructure and re-position regulations so that they can act as advantageous competition advantage rather than a hindrance. CSR standards, codes and practices offer one set of opportunities for finding this type of competitive investment niche within global value chains.104
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Chapter 6
Competitiveness of New Model of Production in Tea Sector

Cost of Production of green leaf
Low rates of return and high costs of production are major issues in tea cultivation in India. Over time, while the cost of production has increased drastically productivity has not improved. The plantation segments is high costs of production sector relative to profitability and this is considered one of the chief factors for the closing down of several tea estates in India. On the other hand however, the crisis in the plantation sector has also led to the emergence of a new model in the tea sector. The small-tea sector with its relatively low costs of production and low cost manufacturing has emerged as a new model of production. Though wages consume the major share in the cost of production in the small-tea sector as well, it is well below what the plantation sector consumes. A majority of the labourers work as temporary workers in both production and manufacture. The costs at different levels of the production process in small-tea segments are discussed in following section. The table below shows the cost of production in small tea gardens in India.
Bought Leaf Factories (BLFs)
BLFs do not have their own tea plantations and depend on small farmers for green leaves to produce made tea. There has been a steady growth in the numbers of private tea manufacturing factories in India in the post 90s. In 2004, there were more than: 162 tea factories in Assam producing 77 million kgs of tea 79 factories in West Bengal producing 50 million kgs of tea
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Table 6.1 Cost of production for green leaf among small growers (per kg of green leaf)
Assam WB Tripura Niligiris Kerala
Inputs- Fertilizers/ pesticides etc. Wages Direct Expenses Overheads Total cost per kg. of green leaf Average price realisation
1.74 3.58 0.15 0.81 6.27 7.41
2.12 2.87 0.69 0.64 6.32 5.5
1.6 2.73 0.32 0.42 5.07 4.54
1.78 2.92 0.11 0.52 5.33 4.87
1.26 4.54 0.19 0.6 6.59 5.35
Source: Compiled report on small tea growers, (2005), Tea Board of India
185 factories in Tamil Nadu producing 81 million kgs of tea 18 factories in Kerala producing 3 million kgs of tea105 The following table shows the growth of BLFs in India. Region Table 6.2 Growth of BLFs in India 2001 2002 2003 2004
No. Prod. No. Prod. No. Prod. (mn. kg) (mn. kg) (mn. kg) No. Prod. (mn. kg)
Assam West Bengal Others North India TN Kerala South India India
119 44 4 163 155 13 168 331
43.0 139 53.29 24.6 56 33.44 0.5 4 1.67 67.5 199 88.4 65.6 159 67.43 2.1 13 1.49 67.6 172 68.6 135.2 371 157
151 65.32 69 37.74 8 2.78 228 105.8 182 75.9 17 3.03 200 78.19 428 183.99
162 77.6 79 49.59 9 3.04 250 130.23 185 80.72 18 2.95 205 83.79 455 214.02
Source: Tea Statistics (2003), Tea Board of India and Tea Statistics (2005), J Thomas Pvt. Ltd.
The average price at the state level shows that tea from estate factories fetches higher prices compared to co-operative and BLFs except in Tripura.106 In Tripura BLFs fetch better prices than estate factories. The
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productivity of small tea gardens and BLFs is high since they have been launched recently. The adoption of advanced technology in BLFs also facilitates the production of high quality tea and they get higher prices from auctions. The newly opened BLFs are technically better equipped than many of the estate factories.107 Hence, the made tea is also better in terms of quality at the level of manufacturing. In many of the BLFs production quality is mainly influenced by the basic raw materials, i.e green leaf from the small growers. Since the competition among BLFs has been high in recent times the BLFs hardly keep any quality measures to green leaves and are purely competing with other factories in terms of volume. Some of the BLFs maintain close contact with small growers and monitor standards and as a result their tea fetches higher prices in auctions e.g. TEAMAFCO. In spite of BLFs being technically better equipped, their tea occasionally fetches lesser prices in tea auctions as compared to the estate factories. This is primarily because of the buyers perception that the tea produced in the estates are of better quality as they are well maintained. Table 6.3 Price realization of various factories in Guwahati Region Arunachal Assam Valley Cachar Nagaland Tripura Co-operatives BLFs Estates Price in Rs/Kg. 44.45 60.65 54.70 64.43 41.37 47.54 63.54 44.54 43.66
57.32
46.85
Source: Compiled data in season 2005-06, from Auction Centre, Guwahati.
Figure 6.1 Price difference at Auction in Coonoor
Source: Market Report (2006), Coonoor Auction; Compiled by UPASI
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The price variations between tea from big estates and BLFs are also very high in Coonoor auctions. The figure below shows the price variation between BLFs and big estates during the recent auctions in Coonoor. However, in individual cases, some of the BLFs get high prices for their tea in auctions. In Nilgiris itself there are 55 BLFs and some of them obtain average prices that are higher than what estate factories fetch. On the other hand, some of the BLFs auction at lower prices which are far below the average auction price. On the whole however, the average auction price of BLFs is far below the average price of estate factories.108
Price Determination Mechanism
Small tea growers are presently facing problems of low prices and low quality of tea leaf. They are dependent on BLFs to buy their tea and BLFs play a major role in determining prices and quality of tea. As evident from the schematic representation of the value chain, BLFs have direct linkages to wholesalers, up-country buyers and foreign markets. The price of tea in auctions has been declining in all regions of India. Even though some BLFs get higher prices than estate factories, the average price has reduced drastically. Market trends show sales through auctions are declining in India, a major factors that pushes auction prices downward. In order to get quicker realisation and other benefits BLFs look forward to direct sales within their localities as also to up-country and international buyers. However even in the direct selling process price realisation is based mainly on auction prices. The auction price is the standard/base price for direct sales. Direct buyers negotiate with BLFs on the basis of auction prices and fix prices which are more or less the same as auction prices or a little above them. The variation is never more than 10 per cent of the previous auction rate. BLFs get quick settlements through direct selling, while in auctions there is a wait of 14 days before settlement. BLFs also get advance from buyers. Owing to the large number of buyers who buy tea directly from BLFs there is reduced participation in auctions. Most BLFs sell their first-grade tea to the direct market. Low demand at auctions automatically reduces bargaining power and adversely affects auction prices. In several instances only big companies or large buyers are present to bid for the tea at auctions. They are able to finalise prices marginally above the price fixed by the brokers, while the same quality tea might have sold at better prices with better participation from buyers a the auction.
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The leaf agent acts as a mediator who collects the tea leaf from small growers and transports it to BLFs in nearby localities. Fixing the prices and checking the quality of leaf are done by the leaf agents. Most of the growers do not have transport facilities and the factories do not have the leaf collected. Agents get a commission of 50 paisa (cents) per kg, and as there is no communication between the grower and the factories, the agents occasionally report lower prices and thereafter give the growers lesser that what is due to them. Leaf agents are known to collect leaf from different growers and mix different varieties collect from the same or different localities. The growers are then told that their leaf fetched low prices owing to low quality. The difference in quality between leaves taken from different gardens influences the prices and is also a factor that limits the fixing of floor prices for tea leaves. It is also difficult to maintain minimum standards for quality of leaf.
Floor prices at gardens
There is no uniform quality checking system either in the gardens or at BLFs. Discussions with various small tea growers reveal that they are not ready or capable of adhering to any quality standards. As their leaf is inferior when measured against the set standards, it pushes the price of entire green leaf of the same agent downwards. This problem is mainly seen in some regions in Kerala and Assam. The institutional set up at PDS in Kerala and TEAMAFCO in Assam have their own consortiums and measure the quality of leaf based on their own standards. The price systems that they follow do not affect the price of green leaf at individual levels. Occasionally the consortium fails to check the quality of leaf and gives low prices to the growers. Though associations in certain regions insist that the Tea Board/ government should adopt strict measures to sell tea only through auction centres, none of them have strongly negotiated with any of the BLF owners near them. A majority of small growers and associations are unaware of the proportion of tea sold through auctions and direct sale from the BLFs. They are however told that their tea fetched lower prices at auction, and therefore get paid at the lower prices. Some brokers have noted that BLFs benefit even when prices at auctions are low, as their production costs are low. BLFs always sell their best teas directly in the market, and are able to command a premium.
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Sustainable Livelihood for Small Tea Growers through CSR Price Mechanism at Auctions
Auctions have traditionally been the main platforms or primary marketing of tea in India and serve as the principal price determining mechanism for tea in the country. The auction system is governed or strongly regulated by provisions of the Tea Marketing Control Order (TMCO), 1984.109 The sale and determining of prices takes place as a result of the interaction and inherent negotiations by various stakeholders. It is also a system of participation by various stakeholders i.e. producers, brokers, warehouse keepers and buyers.110 Several associations demand that there should be a minimum floor price at auction centres. But its implementation is questionable as buyers bid for tea based on quality. If there is price fixed as floor price, it might affect the auction system itself. Tea is also available directly. Auction sales in India are lowest at 53.3 per cent after Indonesia (34 per cent); Bangladesh (96.9 per cent) and Sri Lanka (91.3 per cent) who sell a majority of the tea produced through auction centres. There is a demand for strict monitoring of the quality of tea as very often, low quality products pull down the auction price of the entire stock.111 In addition, there is also a demand by some producers and brokers for action to be taken against BLFs/factory owners with regard to this. Closing down the erring BLFs/factories or cancelling their licenses is recommended if quality of the product is low. 112 Several buyers and producers are of the opinion that sales through the auction system are ideally suited for tea, because of the infinite varieties and grades and the scattered and often remote locations of estates.113 On the other hand many others prefer private sales it leads to the low share in auction. . Auction centres give producers the option of having their products inspected, tasted, graded, valued, catalogued and exhibited by specialists. Brokers, who know the needs of buyers and countries, choose and bid depending on the marketing conditions and the tea on offer. 114 Auctioning companies and large buyers occasionally give short-term financial support to tea producers for the purchase of machinery, capital investment, etc., and recoveries are affected from the sale proceeds of tea.115 The key stakeholders in the auction system are auction organisers, tea producers cum sellers, tea brokers, tea buyers and warehouse keepers in each region. Auction organisers, designate as Tea Auction Committees or Tea Trading Associations from each region maintain and administer the auctioning system and facilitate good governance at tea auctions. Tea brokers are auctioneers of tea who sell tea on behalf of sellers at the auction
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centres. Tea brokers, the brokers are auctioneers of tea, who sell tea on behalf of sellers at the auction centres. The quality of tea is measured by different criteria such as flavour, colour, and thickness by a tea taster from each auctioneer. They taste the made tea and determine the price based on value. The price also depends on the current market demands, both internal and external. Tea producers cum sellers are either estate factories or bought leaf factories or cooperative factories who manufacture tea from the tea leaf. Such factories are considered as sellers in different tea auctions. At present dealers, who purchase/procure teas from such estate factories/bought leaf factories/ cooperatives, are not allowed to sell their teas in the public tea auctions. Even when the auction prices continued to fall and the tea industry was in a crisis, this fall was not reflected in the retail prices of tea, which ruled high.116 While producers and consumers were affected, buyers were not. There is a wide gap between auction prices and retail prices.117 While there is a general consensus that the huge difference between the auction and retail prices go to brokers, traders and other middlemen at the cost of the producers, it is also true that middlemen have major roles to play in the value chain of the tea industry. Tea buyers and other major stakeholders in the auction system stabilise price mechanisms and sale practices. Buyers are purchasers of tea in the auction centres. Such tea buyers are not necessarily the bidder of tea in the auction centres all the time. Tea buyers are also buying agents who buy tea at auctions on behalf of other tea dealers or companies. The details about whom each buyer is bidding in auction are not transparent. Buyers also keep as secret about they buy tea from auction to sell in same state or to up-country buyers. Major portion of dust tea from the Guwahati auction centre are sent to southern India market and leaf tea for Gujarat, Rajasthan and Madhya Pradesh. Buyers claim that information about to where exactly the tea goes and whom they represent is a business secret. Indian buyers at auction centres are more fragmented compared to some of the international auction centres.118 Several buyers are registered in more than one auction centre in India. For example, Tata Tea alone has a number of registered buyers and they are registered at various auction centres. It is also the same in companies such as Hindustan Lever Limited and Wagh Bakri. In India, two companies - Tata Tea and Hindustan Lever Limited share most of the business. In other words several buyers represent one big brand company, for instance HLL or Tata Tea, and they sell tea to their regional packeters as proxy buyers.119
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Loose tea traders represented by small buyers at the regional level procure their requirements mainly from auction centres and none of them have their own plantations. Most of the buyers at auctions and national packeters are dominated by big players i.e. one or two companies. To produce their own products they fulfil their requirements from auction centres and through private sales. Scattered and fragmented small buyers have less power to hold prices in the dominance of big buyers. There is an assumption that buyers often push down the price in the auction.120 It helps them to buy their lot size at low prices. The compulsory sale of minimum lot size in auction may lead to the pulling out of small buyers. The low participation in t he auction and low competition are the major reasons for lower price. Large buyers, who buy more quantity, and buyers represent for big companies dominate in the auction and plays a major role in price fixation and sale practice. Due to low participation they can easily bid with lower than the earlier price of the tea of same grade121 In this way big companies play a major role in price realisation and dominate the large segments of the market of tea. There is a conscious effort from big companies to lower tea prices at auctions.122 This benefits them mainly in two ways. They dominate auctions and buy large amounts of tea at lower prices. Additionally they buy tea for their other requirements through private sales or directly from producers. The base price for this is the auction price. If they can offer a price which is marginally better than the auction prices it can benefit both parties. Producers are also benefited by exemption of tax and other charges which they had to remit in auction sale. This is a reason why despite the various benefits of selling tea through the auction system, private sales have been on the increase in all the regions of India.
Adulteration and formation of quality in various stages of value chain
The adulteration process affects tea in three ways - quality, supply and demand, and the price of tea. This section examines the usual methods of adulteration in various stages of the tea value chain. 1. Garden: Different grades of tea leaf are collected together. For example, grade A which is two leaves and a bud, and Grade B are not separately collected. When the two grades are mixed, it affects the quality of leaf. Plucking of leaf after the prescribed duration makes the leaf stronger and increases quantity, but also affects the quality. 2. Leaf Agent: The leaf agent often mixes different grades of leaf before
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selling it to the BLF factory. The process of mixing different grades of leaves also reduces the quality of leaves and reduces the price of the leaf. As a result BLFs get low quality leaf to produce made tea. 3. BLFs: a. BLFs produce various kinds of tea of different grades. They sell tea at various levels - at auctions, through direct sales and local wholesalers/semi - wholesalers and retailers, based on quality. b. Tough it cant be generalised but in many cases it is reported that BLFs resort to adulteration while producing made tea. Local communities point out that some BLFs use a wild root, or a variety of potato to adulterate made tea. The waste left in the tea production at the big estate factories are mostly taken to the BLFs. The use of such inferior products to increase the volume of tea directly affects the quality and increases the supply within a short period in a particular locality. It also affects the longevity of made tea. 4. Wholesalers, semi-wholesalers and retailers: It has been reported that many of the stakeholders involve the wholesalers, semi wholesalers and retailers in selling processes. They focus mainly on the loose tea market. In India, the loose tea market dominates the tea market it constitutes around 56 per cent (439 million kgs) of the total domestic consumption. The regional players supply low quality adulterated tea 5. Retail shops and tea shops at different localities: Even though some of the retailers and tea shops opt for low priced tea of low quality, they further adulterate it to increase their profit. This is mainly applicable to loose tea at the retailer level. Adulteration is happening in other ways as well.123 It has been reported by some of the brokers124 that there is always demand for low quality tea because of its lower prices. Most consumers in low income groups choose loose tea due to their low purchasing power. Since there is a demand for low quality tea, there is no major motivation for the BLFs to produce better quality tea and they draw margins through volumes. And, interestingly, all these teas are above the standard PFA act. It is seen that adulteration also happens at regional packeters and at the retail level. Regional packeters adulterate tea in order to add strength and colour to tea. These are sold mainly to labourers. For instance, adulterated tea sold in the tea producing regions of Idukki district is more in demand with local tea shops rather than small retail shops. 125.
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Consuming such tea also involves health hazards. Consumers have reported irritation and itching of their tongues on consumption of such adulterated tea. These incidents have been brought to the notice of health experts who pointed out that consumption of such adulterated tea can lead to severe health hazards.126
Supply/Demand of tea at different localities
The increase in the supply of tea leaf at garden levels has lead to a decline in the demand and price in leaf market. To increase the overall volume of leaf the agents take leaves without checking the quality. This affects the overall quality and finally leads to low prices. The practice of leaf agents of mixing different qualities from different small growers is an easy method to cover up minor defects in the leaf. The changes in the overall quality of leaf leads to low prices from the BLFs, and it ultimately leads to lower prices for small growers even if some of them always maintain minimum standards for their leaves. Increase in the production of made tea at BLFs due to various adulteration practices creates a change in supply over short periods in the market. Since the domestic consumption demand is steady, changes in the supply pattern results in low prices and low quality of the tea. The increase in supply at lower prices to wholesalers and semi- wholesalers leads to a decline in the demand. Automatically, the supply of made tea leads to low prices at the auction as well as in direct sales and at the local tea market. The availability of low-priced tea from local suppliers adversely affects the quality of tea as well as the tea markets of national packeters. By selling at lower prices, smaller regional players have raised their market share to 38 per cent from less than the earlier 20 per cent. They command a major share in the regions and rural pockets. They have to often compete with national picketers or big companies like Hindustan Lever Limited, Tata Tea and so on.127 Several BLFs have mushroomed in West Bengal and in South India in recent years. Several BLFs do not have efficient technicians. This has led to a flooding of inferior quality tea in the domestic market. Smaller players offer this tea at cheaper rates. Market analysts say that the poor quality tea produced by these players not only affects domestic price levels, but also damages the quality perception of the Indian tea in export markets. There has been a decline of quality in the tea sent by India to international markets in recent years mainly due to the cheap quality tea produced by
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smaller units. The intervention of Tea Board and other agencies to create awareness and quality and technical up-gradation has however increased productivity of BLFs. Table 6.4 shows the impact of quality upgradation programmes for BLFs in Coonoor. Table 6.4 Impact of quality upgradation programmes for BLFs
Parameters Existing Practice QUP Technologies Recommended Achievement in QUP Exp. conducted factories (in per cent) 38.5 92.8 38.5 85.7 42.8
Raw material
Withering Rolling (Temp.) 38.5% Fermentation Drying Theaflavin [(TF)% for brightening and briskness] Total liquor colour (TLC) No. of cups per kg of tea Tea grade Price Realization
3 to 4 leaf and bud Five hours > 350 C 30 minutes 290 F

o o
2 to 3 leaf and bud 12 hours > 350 C 90 minutes 250 F

o o
< 0.5 <2 < 300 Moderate Rs. 35/-
> 1.0 >3 > 450 Premium Rs. 45/-
10 32.8 38.5 25
Source: Tea Board & UPASI KVK (2004)
Table 6.4 shows that the grade of tea has increased by 38.5 per cent and price realization has increased by 25 per cent and price realization has increased from Rs.35 to Rs.45 after quality upgradation programmes for BLFs. In case of withering the impact is 92.8 per cent. This indicates that quality and productivity improve when BLFs receive proper training. Small growers agree that they benefit from the trainings and study classes initiated by the Tea Board. One of the small growers observes, Earlier many of us used knives while plucking leaves. But after training by UPASI we have stopped the practice. Wholesalers/Semi-wholesalers: the supply of low quality, low priced tea in local markets pushes down the market prices of high quality tea. Since local markets are price-sensitive, price variations of particular products have a major role to play in local markets. Low-priced tea, despite it being
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of inferior quality is seen to be in greater demand from regional and local retailers. The choice of local consumers is also seen to be determined by what the retailer decides to stock. Consumers accept whatever tea the retailers offer.128 Most small growers mention low prices and insufficient funding for maintenance as the major problems they currently face. On the one hand, as price and quality are correlated, deteriorating quality leads to low prices. On the other hand, small growers feel that since their produce fetches Table 6.5 Impact of Quality Upgradation programme on Small Tea Growers
Parameters Harvesting and Pruning Harvesting interval in days Existing Practices QUP Technologies Recommended Achievement in Quality centres areas run by SHGs 10-12 Rush period 13-12 lien period 28 rounds 5 years 18 to 20 inches
18-21(extended Rush period: 8 to 10 interval) Lean period: 10-12 No Plucking 18 to 20 rounds 30.32 rounds rounds in a year ( less) Pruning Ranging from 4-5 year pruning interval 8 to 10 years cycle Pruning Generally low 18-24 inches height height below (medium/light pruning) 10 inches (low pruning) Tipping height At 16-18 inches At 28 inches fromground level Yield increase per ha of green 6250 10,000 leaf(Kgs)/ year Price realisation Rs.6 Rs. 7.51 Income per ha Rs 37,500 Rs. 70,000 Cost of production at Rs.5/Kg Rs.31250 Rs.50,000 Net Profit per ha per year Rs. 6250 Rs. 20,000 Benefits by adopting technologies Rs.18,750
Source: Tea Board & UPASI KVK (2004)
At 28 inches from ground level 9,000 Rs.7.50 Rs. 67,500
Rs.45,000 Rs.22,500
Rs. 13,750 75
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prices below the cost of cultivation they cannot afford to increase/focus on the quality of leaf. Maintaining quality of tea is cost-intensive and large investments are required for various activities associated with quality management, such as timely spraying of medicine, pruning, and application of fertilizers on time. Shortage of funds among small growers renders them unable to follow the prescribed norms. Since a majority of them possess less than two acres of cultivable land no mainstream financial institution is willing to lend them the resources required. The Tea Board has initiated a number of programmes for small growers such as quality awareness programmes and training on usage of chemical and fertilizers etc. to improve the overall performance in the tea sector in different regions of India.129 Table 6.5 shows the effectiveness of the quality upgradation programmes for small growers in Coonoor. A resource person from the Tea Board observes that despite the presence of several initiatives being taken by regional institutions such as UPASIKVK at Coonoor and the Agricultural University, Jorhat, Assam to improve the quality of tea the impact is limited.130 There are very limited schemes of the Tea Board available for registered small tea growers. More importantly growers themselves must start initiatives that will help enhance quality.131 The following table shows the subsidy beneficiaries of the Tea Board, and indicates the low number of beneficiaries, owing to the small number of registered small growers in India. Table 6.4 Beneficiaries of Subsidy from Tea Board Region Assam W.Bengal S. India Number of beneficiaries 311 166 48018 Total STGs 42492 8398 68000 % of STGs 0.73 1.98 70.61
Source: Small Tea Growers, Compiled Report (2005), Tea Board of India
Despite possessing title deeds for their land, most of the small tea growers in Kerala are not registered with Tea Board. Similarly, gardens are not members of any producers associations or tea research institutes and as a result do not enjoy necessary scientific and technical assistance from the competent bodies.132 As a resource person from the Tea Board observes, The interventions of the Tea Board with associations from the local
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Small growers should form joint forums or associations to negotiate and avail collective benefits, such as technical assistance from appropriate bodies. The SHG concept does not work anywhere in the Kerala tea sector, even though the concept began there. The Tea Board is prepared to provide assistance in many ways but the initiatives should begin from below in the form of association, SHGs etc ..Tea Board, Kolkata.
research and other institutes have positive impact on small growers and can increase awareness regarding quality and price of the product. However, the impact is limited to certain regions. For instance, Kerala does not benefit from the Tea Board and other institutions, as a large number of farmers are not registered with the Tea Board, and therefore unable to avail the subsidies and other programmes from the Tea Board.
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Chapter 7
Corporate Social Responsibility and Small Tea Growers

CSR and Tea Sector
The concept of Corporate Social Responsibility (CSR) is defined in different theoretical and empirical perspectives. The attempt here is to give a brief overview of ongoing discussions on CSR and tea industry in India. There is also an effort to discuss the social, economical and environmental issues in tea gardens and examine how they impact workers and overall productivity in the sector. The initiatives of major companies and tea industry in India are also discussed. The social, economic and environmental issues are the emerging focal points in industry. This gives the opportunity and the space for wideranging discussions at various levels. There is a demand from consumers for products which are environmentally or ethically superior, and for CSR commitments that will contribute to sustainable economic development. Various types of moral consumer behaviours have been observed such as the selection of products based on a criterion of environmental133 and social responsibility134 as well as consumer boycotting.135 This pattern therefore calls for involving employees, their families, the local community and society at large to improve the quality of life, in ways that are both good for business and for development.136 The table on the following page summarises major standards and practices of CSR. At the core of the CSR concept is the fact that it reflects both the social imperatives and the social consequences of business success, and
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Table 7.1 CSR Standards, Codes and Practices

Economic Monetary flows to the public sector Employment and human resource Development Procurement and supply chain management Technology transfer andintellectual property rights Social Health and safety of employees Labour standards and working conditions Corruption and bribery Human rights Violence and conflict Social impact assessment and Management Community and stakeholder engagement (non-commercial) Charitable giving Social/community investment Social reporting and management systems Environment Environmentally safe production,products and services Resource and energy efficiency Environmental impact assessment and management Environmental reporting and Management systems
Source: Minton, A. and Rose, R (1997)
Corporate Governance Rights and treatment of Shareholder Governance policies and business Principles Information disclosure and reporting Responsibilities of the Board Customer/end-user care
that responsibility accordingly falls upon the corporation. But the precise manifestation and direction of the responsibility lies at the discretion of the corporation. .137 Subsequently, concerns with corporate social performance, stakeholder relations, corporate citizenship, links with financial performance and developments in the field of ethics have become extensions of CSR theories and practices.138 It is important to mention here, the key initiatives of HLL and Tata like ETI/ETP/Fair Trade/Individual Company Codes etc.
CSR and Small Tea Growers
In the emerging new model of the tea industry however, small tea growers with low costs of production, are hardly in a position to address issues of CSR. Financial constraints are the main reason for this, as CSR processes add to costs of production. As expressed by some brokers and buyers, Implementing CSR in the tea sector adds to production costs. The Plantation Labour Act (PLA) also addresses issues in tea sector and CSR is an additional cost for the producers for the same processes. It
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seems needless. However, the international tea market demands that tea is produced in a socially and environmentally responsible manner. The initiatives of small growers like Peerumade Development Society (PDS) in Kerala who are involved in fair trade practices etc. are exceptions. While major companies like Hindustan Lever Limited or Tata Tea are profitable currently, small growers get low returns and therefore compromise on the quality of leaves in order to get minimum levels of earning out of their cultivation. CSR practices have remained confined to few big tea companies, are still equated with philanthropy and have not been integrated within core business strategies. This has more to do with the tea management culture developed over more than 100 years.140 The global tea brands often pass on the costs of necessary improvements down the supply chain to their suppliers while claiming the reputational benefits of these improvements as well as the commercial gains from their CSR stance. The growing NGO movement and consumer campaigns are demanding that large companies take responsibility for the entire supply chain, from plucking of green leaves to reaching the end consumer. The following table summarises the major concerns and issues of CSR in small holdings. Table 7.2 The TBOD for CSR in small holdings Threats Protectionism by backdoor Opportunities Business case benefits: Better alignment with consumer concerns, cost savings, productivity and innovation Growers as beneficiaries of CSR initiatives Broader benefits of CSR, e.g., Lifelong learning community development Drivers Supply chain pressure from TNC codes of conduct and demand certification Shifting markets, the need to align production towards changing consumer preferences,
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The burden of compliance and monitoring The CSR paradox: Small growers unable to generate benefits from CSR Barriers Lack of technology, expertise, training and investment necessary to make improvements Few CSR initiatives oriented towards growers
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Little understanding of business case. Supply chain initiatives rarely extend beyond first level suppliers More pressing need to upgrade technology management and marketing Price competition and limited consumer p pressure
Source: Shatadru Chattopadhayay (2006)
internationalisation of standards Local pressure from regulation, public policy and civil society.
Strategic business case benefits
Small tea growers and tea industry workers in India are in difficulty owing to distortion of trade practices at both domestic and international levels as well as control of MNCs over the global tea market. Globalization has been marked by the efforts from MNCs to slice the value chain, and break the production process into many steps. MNCs are currently engaged in moving away from production processes and limit themselves to organizing and managing commodities i.e tea, garments, footwear, consumer electronics.141
Workers rights: focus area of CSR
A core area of CSR is the role and rights of workers. Fair wages, working hours and conditions, child-care centres, healthcare, redundancy, protection against unfair dismissals etc have been the key issues which CSR policies have addressed. Workers who are key stakeholders often have no awareness on the Code of Conduct and have no role to play in its development or implementation. Therefore the issue of collective bargaining and the role of trade unions vis--vis tea industry need further examination in the present models of CSR. Discussions on female workers and their role in decision-making processes are rarely addressed. Women workers constitute the majority in both large and small tea gardens in India. Though trade unions address issues of workers, attention to female workers is minimal. Women are also stakeholders as customers, shareholders, suppliers, supply chain workers, and community members. Whether from a social justice, stakeholder or business case perspective, CSR should systematically address the question of gender equality.
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Chai Time The Business Case for Integrating CSR Practices in the Small Tea Holdings
CSR policies that are currently being practiced in tea gardens give rise to questions about whether the tea sector implements them for economic reasons or because CSR policies have intrinsic merit.142 There has been few or no empirical tests in support of the intrinsic merit143 and this makes CSR policies open to accusations of being mere gimmicks for profitable public relations and marketing strategies. Figure 7.3 CSR and welfare matrix
The CSR and welfare matrix shows how closely each factor is related. Raises Social Welfare Raises Profits Reduces Profits Good Management Borrowed Virtue Situationat at Garden Water Supply Insufficient water supply Sufficient Water Impact on Producer Reduce running expenditure Additional expenditure CSR in Tea Garden Welfare
Source: formulated from field work
Reduces Social Welfare Pernicious CSR Delusional CSR Impact on labour Epidemic diseases Impact at Garden Low total productivity
No waterHigh borne productivity
Productivity
Profit
The figure on the following page demonstrates the three broad areas under which CSR works, though each aspect of CSR has many indicators. As demonstrated in the figure, the social, environment and welfare measures are deeply related to the business case of the tea industry. Since the industry is labour intensive the productivity of the worker is closely linked to the productivity of the industry as a whole. Welfare measures in different areas directly influence the workers as well as the industry. CSR practices denote different things to the various stakeholders. Field observations have shown that though many stakeholders are aware about CSR practice in the tea industry they hardly address these issues in their business.144 For instance, brokers point out that it is necessary to look
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7.4 Process of CSR in Small Tea Sector
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into the matter of social and environmental responsibilities as the international market is more case sensitive to these issues. TThe following table summarises the perspectives of various stakeholders regarding CSR and its implementation in the tea industry in India. Table 7.5 Perspectives of stakeholders on CSR and tea industry in India
Stakeholders Workers at Small Tea Gardens
Small Growers/other tea producers
Perspectives Not part of it, not addressing labour issues, especially women. No role of decision making process and there are hardly any CoC suited to the small tea holdings including the Fair Trade codes. Increase the cost production How CSR increase the productivity and business case is not clearWhether there should be the same social, economic and environmental responsibilities of the big planters and the small growers How the cost of improvement in the small holdings are shared between different actors is a major issue as the margins lies mainly at the upper end of the value chain. The big tea companies need to share the cost of improvements and this should not be pushed to the small holders as their sole responsibility.
Trade Union
Research Institutes NGOs
BLF Brokers Auction Centres Registered Buyers Upcountry Buyers
CSR is going beyond law; there should not be any efforts to dilute the mandatory laws with voluntary CSR guidelines.The CSR practices should be evolved in consultation with the trade unions and should play a role in its implementation PLA already exist, whether CSR add the /Statutory Board/ additional cost, can we focus on fullyimplementation of PLA rather go for CSR, Benefits of CSR to Producers are still ambiguous and doubtful No direct control over productionKnowledge to be acquired for usage of fertilizers No control over production sector, but dialogue with producers and buyers are on CSR is out of their control and it works only as a platform for auction Looks for quality and price.Though they are aware about the CSR never insist on producers CSR is not part of the business since consumers are not demanding
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Retailers No mechanism to trace back to gardenConsumers are not demanding, and many cases their preference on regional mark instead CSR at gardens Not aware of the CSR but prefer good quality of tea.
Consumers
Source: Formulated from field work
Ethical Trade Initiative and Fair trade
The Ethical Trading Initiative (ETI) is an alliance of companies, NGOs and trade unions working to promote and improve the implementation of corporate codes of practice which cover supply chain working conditions. ETI is a UK based partnership of NGOs (including Oxfam, the Fairtrade Foundation and Save the Children), trade unions and High Street companies. ETIs aim is to ensure that internationally recognised labour standards are observed at all stages in the production of High Street goods sold internationally. The ETI seeks to achieve this by ensuring implementation of codes of conduct that embody such standards, and backing them by monitoring and independent verification. The table below shows the CoC and its implementation. Table 7.6 Code of Conduct of ETI
Base Codes Employment is freely chosen Freedom of association and the right to collective bargaining are respected Working conditions are safe and hygienic Child labour shall not be used Living wages are paid Working hours are not excessive No discrimination is practiced Regular employment is provided No harsh or inhumane treatment is allowed Implementation Member companies accept the principle that the implementation of codes will be assessed through monitoring and independent verification; and that performance with regard to monitoring practice and implementation of codes will be reported annually. Companies will engage with other members in the design, Implementation and analysis of pilot schemes to identify good practice in monitoring and independent verification and share this experience with other members. Company members will draw on this experience in establishing where relevant with other ETI members work plans to implement programmes of monitoring, independent verification, and reporting, and will report progress against these programmes to and through the ETI in a format and timing to be agreed. Workers covered by the code shall be provided with a confidential means to report failure to observe the code and shall be otherwise protected in this respect
Source: Shatadru Chattopadhyay (2006)
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The origins of Fair Trade can be traced to 1940 when churches in North America and Europe provided relief to refugees and poverty-stricken communities by selling their handicrafts to the northern markets. In 1988, the Marx Havelaar convention in Holland established international standards to define what constitutes liveable wages, and what constitutes safe and healthy working conditions. This created the Fair Trade Labelling Corporation, an international non-profit organization that certifies farms and growers as Fair Trade.145 Fair Trade focuses on trading with poor and marginalised producer groups and helps them to develop skills and sustainable livelihoods through the trading relationship. Fair Trade pays fair prices that cover the full cost of production and enables producers to earn adequate wages to live and other fair rewards. Fair trade targets small farmers and supports them to become involved in international trade by guaranteeing a minimum price to producers. It provides the credit required by farmers for orders to be fulfilled and pays premiums to provide further benefits to producer communities. This trade encourages the fair treatment of all workers and demands good conditions for them in the workplace and throughout the supply chain. It also aims to build up long-term relationships, rather than looking for short-term commercial advantage. The conditions and terms of trade of Fair Trade are given in following table. Table 7.7 Fair Trade conditions and terms of trading
Conditions Small scale farmers can participate in a democratic organisation. Plantation/factory workers can participate in trade union activities and have decent wages, housing, and health and safety standards No child or forced labourProgrammes for environmental sustainability
Source: Amaeshi M K and Adi B (2006)
Terms of Trading A price that covers the cost of productionA social premium to be used by the producers to improve their living and working conditions Advance payment to avoid small producer organizations falling into debt Contracts that allow long term planning and sustainable production practices
Small farmers can join Fair Trade if they have formed organisations (cooperatives, associations or any other), which are able to contribute to the social and economic development of their members and their communities and are democratically controlled by their members.146 The success story of villagers whose life changed from one of deprivation
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and impoverishment after they participated in Fair Trade practices147 is set out below. They are currently exporting organic Darjeeling tea to US consumers. With the initial support from local NGO, Darjeeling Ladenla Road Prerna (RCDC), and Tea Promoters of India (TPI) villagers of Harsing, Yankhoo and Dabaipani in Darjeeling began their own cooperatives and developed four organic tea gardens which were run according to Fair Trade Standards. Samyukta Vikas Cooperative is the first non-plantation cooperative tea supplier established in Darjeeling. Tea leaf production from the villages has grown steadily since the first collection by TPI in May 1998. Tea collectors are selected from the community by each hamlet committee, and paid a wage by TPI. Other co-operative members transport the leaves to TPIs nearest tea garden where it is processed and blended for export.148 The initiatives of Fair Trade have had impact on small growers though there are certain issues that are unaddressed. In Fair Trade the role of trade unions is extremely limited. The trade union leaders interviewed mentioned that the issue of collective bargaining needs to be further elaborated in Fair Trade norms. It is demonstrative in nature and might not have the capacity to replace the normal trade in tea. The issue of monitoring needs to be understood better. Some questions that need to be asked: Can CSR be the same for big players, medium planters and small growers? Should the CSR yardstick be the same for all of them or should there be different requirements for different sizes? How can the essential differences be brought in and how can CSR Codes be observed throughout the supply chain? How is the cost of observance shared?149
Consumers preference and participation in CSR
The study also discusses the participation of consumers as part of an ethical group. Consumers have been seen to demand environmentally, socially and ethically superior goods150 and play a major role in the value chain of the tea industry. It is important to understand how their social consciousness, based on criteria of environmental and social responsibility influences selection of products. Their understanding on various social issues within the tea sector is based on how informed they are about the environmental and social conditions under which products they buy have been produced.
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Studies that examine consumers preferences with regard to CSR issues present arguments that are conflicting. Some claim that consumers are aware and demand products that conform to CSR standards, while others claim that they are not aware about CSR standards on specific products. The study on consumer demands in OECD markets revealed that the actual effects of CSR on the perception and behaviour of consumers are mixed and unclear.151 Existing market research reveals that consumers of OECD are increasingly attaching importance to this issue and are interested in buying goods that match their expectations. However, the actual purchasing behaviour of consumers does not match their statements and attitudes. 152 A study conducted in Middlebury, Vermont clearly states that consumers generally respond positively towards higher levels of CSR. 92 percent of consumers say they would be influenced in their purchase by the knowledge of a companys responsibility. In addition to this, roughly 36 per cent of all individuals surveyed had read a CSR report. This indicated that many members of the Middlebury community were familiar with the concept of CSR and its implications. However, the study also pointed out that the attitudes of consumers did not reflect in their actions.153 Studies conducted in various countries show that the consumers prefer products which are produced under environmentally and socially responsible conditions. However, the behaviour pattern of the consumers does not match their preferences. From the surveys reviewed, a substantial number of consumers also express a willingness to pay more for products associated with acceptable environmental and labour conditions of production.154 For instance, in a survey conducted among adults of several countries in 2006, an average of 39 per cent of respondents reported they had chosen to buy a product or service because of the companys ethical, social or environmental reputation. In individual countries the shares were: United States 45 per cent United Kingdom 42 per cent France 34 per cent Italy 35 per cent Germany 28 per cent Spain 26 per cent When asked whether they had advised someone against using a product or service of a company because of its environmental, social and ethical
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policies, affirmative responses were: United States 41 per cent United Kingdom 26 per cent Germany 22 per cent Italy 21 per cent France 17 per cent Spain 16 per cent 155 A survey conducted in several developed countries to study consumer attitude towards CSR also shows that a majority of them were aware about the issues of social responsibilities. Around 8 out of 10 among the British public reported in 2005 that it was important to know about a companys activities in society and the community before forming an opinion of it. 35 per cent said it was very important for a company to display a high degree of social responsibility when forming decisions about buying a product or service from a particular company or organisation.156 In a survey in 2000, 70 per cent of the European public stated that a companys commitment to social responsibility was an important consideration when buying a product or service. This was particularly prominent in Spain (89 per cent agreed) and the Netherlands (81 per cent agreed).157 In other survey 64 per cent French participants of a poll said they would like to know the conditions of production of the products they buy. 73 per cent said a social label would influence their purchase decision positively.158 Culture, market concentration and other factors seem to play a major role. Companies seem to prefer certification and labelling schemes from private standard institutions rather than the government, often with a view of what competitors are doing. 159 The role of companies in communicating their responsible practices to the consumers and appealing to their sensitivities to various issues are also key elements that create awareness among them. A survey conducted on consumer reactions to socially responsible and environment friendly tea in India demonstrates that consumers displayed a low level of involvement with the social and environmental issues in the food and beverage industry.160 Research reveals that the social and environmental issues do not influence buying decisions of the consumers. In general, though they are aware about certain issues they are merely passive onlookers. The environmental issue i.e. good for health scored over other issues. Social issues in isolation failed to evoke any interest. The concept of tea grown with adherence to social and environmental
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norms created positive responses. Uniqueness and distinctiveness got high scores. In all, 20 per cent of the respondents claimed awareness of the tea production process. Mumbai claimed the maximum awareness (27 per cent) followed by Kolkata (23 per cent) and Bangalore (21 per cent) and the lowest awareness was recorded in Delhi (8 per cent). MNCs and Government fails to communicate responsible practice related products in India. Advertisement and promotional schemes hardly address the issues of social and environmental responsibilities at production level.161 Taste and preferences of consumers are not habituated naturally by themselves. It is constructed consciously over the period. The penetration of MNCs in remote villages can be cited as example as to how brand companies create awareness and preferences among the consumers. They use the mass media for wide advertisements and give many offers with their packets to attract new consumers for their newly launched products. Similarly retailers also have a major role in the choice of consumers, especially in villages.162 The market is dominated by the MNCs and a major share of their income, consumer products companies, comes from villages.163 They create a space where the MNCs products are available and where there is shortage in basic food items. The concept of social responsibility at the production segments never see the space in the process of the market intervention of the big companies. Effective communication could be one of the missing links along with the other standard factors between potential consumer demand and purchasing behaviour.
CSR and Trade Initiatives in Tea Industry
The following section provides case material from a selection of corporate-community ventures and initiatives from small tea growers in India tea sector.
Initiatives from Small Tea Growers in India
There is a widespread impression in the tea production sector that the produce of small tea growers is of inferior quality and fetches low prices at auctions. The case studies in the following section disproves this and demonstrates the fact that small growers who are organized well can perform just as well, and in fact serve as role models. An interesting fact about small initiatives is that they are all the results of joint ventures of various stakeholders at different levels i.e. TEAMFCO a BLF from Assam. This initiative fetches higher prices when compared to other estate factories that hold major shares in the direct market with their own brands.
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Industry Level Initiatives CSR approach of Tata Group1 Tata Tea has initiated various welfare projects to provide welfare and economic benefits to their workers. Some of them are listed below: Srishti - located in Munnar, Kerala. DARE- Educational and special help to children who have learning disabilities. Vocational Training Centre (VTC) - conducts courses in blacksmithy, carpentry, tailoring and knitting. Aranya- A natural dye manufacturing unitThe Tata Group has already adopted a comprehensive written code of conduct for each company in the group called the Tata Code of Conduct which serves as a guide to its employees on the standards of values, ethics and business principles, which should govern their conduct. The Tata Group is also a participant of the Global Compact announced by the Secretary General of the United Nations in 1999. Tata Tea has adopted the Tata Business Excellence Model as a means of driving excellence through the organization as also the Balanced Score Card methodology for tracking progress on longer term strategic goals. CSR approach of Unilever Limited Unilevers CSR reporting is oriented towards three principal issues: The social impact of Unilevers products, principally on peoples health through nutrition and hygiene. The steps Unilever takes to minimize its environmental footprint and secure sustainable supplies of key raw materials. The role of corporate operations in creating wealth and how this benefits stakeholders and local communities. Hindustan Lever Limited: developing markets at the bottom of the pyramid2 Hindustan Lever generates approximately half of its business from rural areas, where products are sold over 100,000 towns. However, by the late 1990s, those markets were saturated and the company sought penetration into the 500,000 smaller villages and remote parts of the country with poor infrastructure and limited retail coverage. For this, Hindustan Lever tapped into the growing number of womens SHGs. The Shakti programme trains women from SHGs in selling, commerce and book-keeping. With this initial training they can choose to set up their own business or become Shakti distributors. Hindustan Lever took a conscious decision to address only women through this programme, perceiving they would be the best communicators for the companys message and education. The Shakti project has proved to be a great success. After the pilot phase, it expanded to over 13,000 Shakti women entrepreneurs, selling to 70 million consumers. It has been expanded using information technology. Through the i-Shakti programme, village kiosks with internet linked computers provide access to information in villages which are not reached by television, radio or even newspapers. Hindustan Lever aims to scale up this program to reach 100 million rural Indian consumers.3
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To address the crisis in the Indian tea sector, Unilever and its subsidiary Hindustan Lever: Applies ethical trade principles to all trade with producers in developing countries as standard corporate practice. Pays fair and sustainable prices and negotiates with trade unions and other stakeholders to find practical ways to stabilise the price of tea. Supports locally-owned and locally-driven processes in tea producing countries to ensure decent living and working conditions on tea estates. Supports the participation of workers and tea producers in standard setting processes and assists suppliers in meeting such standards. Transfers ownership of their plantations in a transparent and responsible way in consultation with trade unions and other stakeholders in order to protect the rights of plantation workers, adivasi and tribal communities and smallholder tea producers. Supports the introduction of a legal duty of care on directors of multinational companies under UK law.
1 2
See details of CSR of Tata Tea in www.tatatea.com Beyond Corporate Social Responsibility: The Scope for Corporate Investment in Community Driven Development, Report No. 37379-GLB, December 21, 2006, World Bank. 3 Unilever Environmental and Social Report 2005; www.unilever.com and Hindustan Lever; www.hll.com
Peermade Development Society (PDS) in Kerala Peermade Development Society (PDS) is a registered NGO working for the integrated and sustainable development of the rural poor in Idukki District, Kerala. PDS has initiated the comprehensive organic tea promotion programme for small and marginal farmers in Idukki district. As part of this, PDS promotes a joint venture of The Sahayadri Organic Tea Factory and The Sahayadri Tea Farmers Consortium in the region. The factory currently supports around 1088 farmers who are members of Consortium.167 It is an attempt to promote long term sustainable organic production methods, and takes into account environmental issues and helps marginal farmers get premium prices for the tea produced in the neighbouring areas of Peerumadu. Though the initiative attempts to focus on production sector marketing is also one of the major challenges it seeks to address.168 PDS has also initiated quality awareness programmes i.e. plucking and pruning methods, for small growers in the region in association with the Tea Board.169 PDS has adopted Fair Trade practices in an attempt to enable small farmers to use them for economic and social development. They would
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otherwise have been unable to develop at a sustainable pace owing to unviable returns from their gardens. Fair Trade benefits reach the smallest of the marginal growers and basic capacity building also help to attain sustainable development. A farmers consortium has been formed, which is democratically elected and has a transparent form of administration. The general body of the farmers is empowered to change the consortium members if the majority of the members decide that such a change is warranted. The benefits of Fair Trade are decided by the general body and projects are taken up after its approval. Frequent meetings are held and there is a minimum requirement for the general body to meet at least once a year. A womens development wing has been formed and entrusted with the task of upgrading quality of green leaves harvested, improving on the standards of organic cultivation and identification of projects that could be taken up under the fair trade premium norms.170 The factory has the capacity of producing 6-8 lakh kgs of made tea per annum, thought the factory is currently under-utilizing its capacity. A positive scale of economics and proper utilization of their potentialities would enable them to fetch relatively higher prices for their farmers. Marketing organic tea in domestic as well as in international markets is a challenging task. Despite the potential available in domestic markets lack of proper channels and options are proving constraints to expanding the market. United Small Tea Producers Association (USTPA) Nilgiris United Small Tea Producers Association (USTPA), which has been formed in association with Partners in Change (PiC), New Delhi, is a new initiative among small growers from Nilgiris. It has the broad objective of promoting sustainable livelihood for small tea producers. USTPA is the outcome of a series of consultative workshops organized by PiC with small tea growers in Nilgiris with the purpose of exploring different possibilities of jointly addressing the crisis in the tea small holdings in Coonoor. Initially USTPA started with around 400 small growers from five neighbouring villages in Nilgiris. The major areas of focus within the initiative are to: Improve the living and working conditions of small tea producers and workers Promote coherent, collective, coordinated and concerted (4Cs) approach of small tea producers of TN with regard to various social, economic and environmental issues related to the tea sector Engage with various stakeholders in the tea industry on behalf of the small tea producers
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Initiate various agricultural improvement programmes in the small tea producing areas Positive changes that have occurred within a short period Organized small growers and negotiated with other stakeholders, especially with the Tea Board within a short span of time. Availing subsidies and other grants from the Tea Board as a result. Created awareness among small growers regarding quality improvement and the importance of co-operation among each other for their own well-being and for sustainable livelihoods. Made efforts to directly involve national level companies and purchase directly from small tea gardens in order to procure better prices in the long run. Attempted to move up in the value Constraints: Difficulties in finding markets for green leaf. Dependency on the leaf agent and BLFs for selling their green leaf Measures to mitigate the ecological imbalances and other environmental problems owing to large-scale conversion of forest land into tea cultivation are proving to be a challenge because the region is known as for large scale forest conversion into tea cultivation. JustChange, Gudalur, Tamil Nadu JustChange is a network pioneered by the Adivasi Munnetra Sangam (AMS) from Gudalur, and three more peoples organisations - Bhoodhan Vikas Mandal (BVM), SAWARD and Sahabagyi Vikas Abhiyan (SVA) in Gudalur.171 The basic objective of the initiative is to ensure that the profits are shared by the various stakeholders who engage in trading including workers and consumers. JustChange seeks to link these producers, consumers and investors in a co-operative chain where they can work for the mutual benefit of all within the chain, irrespective of where they might reside. The network seeks to change the structure under which trade is conducted in a way that will change the power relationships between labour and capital. Stan Thekkekkara, Chairman and CEO, says that We need a structure that recognizes that labour and capital have important roles to play in the economy, and in a way, ensure that they are not in competition with each other but work in tandem for mutual benefit172
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The final value of the tea when consumed goes back to the common pot and when books are closed, the surplus is divided between all the shareholders. JustChange challenges the notion that investment is just a matter of the capital employed, that one can scoop up the entire surplus of any economic activity simply by putting up the necessary capital. Instead, JustChange offers a structure where it is possible for any participant in any economic activity to be seen as an investor as long as they are willing and prepared to work as part of this structure. JustChange ensures that the generation of surplus is not for the benefit of any one participant but for all. The purpose of economic activity then changes from the creation of wealth (profit) to the creation of well-being for all. However, it has been observed that the impact of this trade practice is limited to a particular region and so also its viability. It can therefore be considered as one of the alternative methods available to the industry. TEAMAFCO TEAMAFCO is a well-accepted and recognised BLF in Assam and has been instrumental in developing the small plantation sector in the District of Dibrugarh in the state of Assam as well as in Arunachal Pradesh. It manufactures CTC teas in its units at Assam and Arunachal Pradesh. The average auction price of TEAMAFCOs tea (CTC leaf) is about Rs. 87/per kg. whereas the average price in auctions at Guwahati is about Rs.77/ - (2006 June 14-26 sale, Guwahati Tea Auction Centre The price fetched by this CTC demonstrates that BLFs can also provide good quality tea and find space in traditional auction centres. We provide follow-up to tea growers on aspects such as quality and technical guidance for the usage of pesticides. We have noticed that small growers sometimes do not give the leaf if it is not of good quality. We occasionally arrange for our vehicles to collect the leaf directly from the gardens to maintain its quality till it reaches the factory.173 A resource person from GTTA, Auction Centre, Guwahati, says, The tea from TEAMAFCO always fetches a higher and better price than the tea from many of the well-known estate factories though the quantity they provide for auctions is less.174 Table 7.8 shows the green leaf rate effective from 1 Augst 2006. TEAMAFCO monitors the quality of green leaf strictly and has in many cases sent it back due to the low quality.175 Small growers often sell green leaves to other BLFs if the quality of green leaves is not matching with stadandard of TEAMFCO.
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Services provide by TEAMAFCO to small tea growers Guidance on leaf plucking and storage Vehicles to transport leaf, and assistance with identifying leaf agents Strict monitoring of leaf quality Awareness on use of pesticides Financial assistance if necessary Table 7.8 Price realization of green leaf of TEAMAFCO Fine (in %) From To 71 Onwards 66 70 61 65 55 60 51 54 46 50 41 45 40 Below Effective Rate(In Rs. P) 10.50 10.00 9.50 9.25 9.00 8.75 8.00 6.50
Source: Price list of green leaf, TEAMAFCO, Dibrugarh.
Self Help Groups (SHGs) in Assam The movement began with initiation from the Tea Board keeping in view the prime objective of the X plan period (2002-06) that sought to stress on the improvement of quality and enhance the productivity of the existing tea areas.176 It has become imperative to organize the small tea growers sector by forming tea producers societies/SHGs for achieving this goal. SHGs demonstrate modern post-harvest technologies in leaf handling, storage and transportation to produce and supply better quality of green leaf to the manufacturing units.177 Small growers are being motivated to set up SHGs amongst themselves so that it becomes easier not only for obtaining technical support but also for disposal of the green leaf directly to the manufacturing factories at reasonable prices. Main Objectives Technology and information dissemination Collection, storage and transportation of leaves
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Procurement and supply of inputs Financial assistance to set up leaf collection centres in places close to growers fields, purchase of weighing balances and leaf carry bags/crates etc is given to SHGs by way of 100 per cent grants. 50 per cent of the cost of purchase of transport vehicles required for carrying the leaf from the collection centres to the processing factories178 is also provided. Apart from the financial assistance, to produce better quality and impart managerial and technical skills, the board would send two people from each society for training so that each society had trained managerial and technical expertise in-house.179 SHGs have helped create awareness about the importance of quality products and enthusiasm within the small tea sector and receive support from the small growers. As some of the members point out,180 Earlier the price of green leaf was fixed by the BLF or leaf agent, now we fix the price of our green leaf. Constraints of SHGs Most SHGs find that their activities at the garden-level do not help small growers to move upward in the value chain, and there is a tendency to limit themselves to the lower levels of the value chain. There is a need to form groups which can participate in decision-making at various levels of the value chain. It has also been noted that though the concept of SHGs has been adapted from Kerala, SHGs are not working in that State.181 While SHGs are formed to help in marketing they do not play significant roles in the process. On the contrary they buy low quality tea and blend it according to the demand, which is more for low-priced tea rather than quality.182 Discrimination based on gender is also one of the reasons that SHGs have roles to play only in the lower levels of the value chain rather than in the decision-making process. As part of the CSR trade initiatives big companies like Tata Tea Limited and Hindustan Lever Limited have initiated various projects for the welfare and economic benefits of their workers. CSR practices in the small tea sector would help forge links between big companies and the small tea sector. The effect of CSR is limited and consumers are not knowledgeable about the products they purchase. There are problems in marketing organic tea in domestic as well as in international markets. Though there is a lot of potential in the domestic market itself, the lack of different channels and options to expand the market are some constraints. Additionally, the small tea sectors fail to address environmental issues. Large-scale conversion of forest land to tea cultivation, and measures to
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correct ecological imbalance and other environmental problems sometimes pose challenges to small growers. Fair Trade initiatives have impacted small growers, even though there are certain questions that are unaddressed. The role for trade unions is extremely limited in Fair Trade practices. The trade unions interviewed mentioned that the issue of collective bargaining needs to be further elaborated in Fair Trade norms. It is demonstrative in nature and may not be able to replace the normal trade of tea. The issue of monitoring needs to be understood better. There is widespread ambiguity on CSR and fair-trade/ETI practices. Different stakeholders look at the concept of CSR, its implementation and various trade initiatives differently. It has been observed that many stakeholders are aware about the CSR practice and tea industry though they hardly address the issues in their business. How can a uniform code be implemented? Achieving consensus of multi-stakeholders on a uniform code and different international standards are challenges in the Indian tea industry.
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Chapter 8
Challenges and Competence of Small Tea Segments

Policy options and Recommendations
Introduction
This chapter summarises the role of various stakeholders and processes in the value chain of the small tea sector and enquires how they can make the small tea sector more competitive in a sustainable way. It makes an attempt to delineate the prevalent characteristics of different stakeholders in the small tea industry and tries to formulate the feasible intervention options and institutional innovations to make small tea segments more competitive at the international level. This study tried to situate how competitive production segments can be developed among small tea growers so that they can be integrated into the value chain of the Indian tea industry to empower them, strengthen their capacity and livelihood. Low income returns , limited market accessibility, high cost of production, low quality of production, low price realization, ineffective role in tea industry, inadequate collective bargaining power and so on are the existing challenges facing the small tea segment sector. The major initiative is the effective entry points and effective governance that would collectively address the present and future challenges for the small tea growers in industry. It is also important to see how small tea segments can be strengthened through capacity building in a sustainable way and what the challenges this sector faces are. Though many attempts have been initiated by various institutions, government bodies, the Tea Board and non-profit organizations to introduce new development pathways in the small tea sector over a long period, effective implementation and enforcement of these institutional innovations was lacking.
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Prevalent characteristics Nature of Work, Wage and Social Security The majority of the workers in small tea gardens are temporary and casual workers and most of them are migrants. The wage rate is below than the official minimum wage rate in all states except Kerala. However, in some regions of Kerala, the wage is fixed according to the weight of green leaves which workers collect each day rather than regular daily wage. It is reported that very often, they are paid less than the official minimum wage. In addition, payment is also irregular in many small tea gardens in India. Since the workers do not have any other alternative, they are forced to stay back in tea gardens. In many regions, workers are appointed only during the peak season and family labour replaces hired labour in the off season or when price of green leaf is low. Role for Workers in Decision Making There is no role for workers in decision making in the value chain of the tea industry. Welfare measures and working environment of workers have hardly been addressed in gardens in all the producing regions in India. Workers do not have any common platform for collective bargaining/ negotiations for their basic rights such as minimum wages, adequate working conditions and health care facilities and so on. Gender Discrimination In many tea gardens female workers are paid lower wages than their male counterparts. It is also noticed that female workers are engaged to carry green leaves to the store room or to the leaf agent rather than usual leaf plucking due to their low wages. No welfare and social security measures are specifically taken in any of the small tea gardens for female workers. Lack of Training and Safety Measures for Workers No training has been conducted for the workers to upgrade their skills and to use fertilizers/medical sprays to prevent from any health problems. It has been observed that workers are not offered any measure by small holders to look after their health and safety. Health measures and health care are the responsibility of individual workers. No social-environmental benefits are allotted to workers at small tea gardens. In many cases workers receive only some gifts other than usual wages during the festival season. Lack of Associations/Unions among Workers
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There are no associations/unions for workers in small tea gardens. In fact, trade union leaders in plantation sectors suggested that there are many problems for workers in small tea segments but there is no union to address their issues. However, some initiatives have been taken in different regions but constraints such as the majority of workers being temporary workers and the large number of tea gardens have delayed the implementation of these initiatives. Potential Outcome/Risks on tea industry Productivity of Labour and Tea Cultivation Inadequate working conditions and lack of training for the workers lead to low productivity of labour in small tea gardens. Lack of health care facilities make workers incompetent and affect their productivity as well. Unavailability of skilled labour and inefficient working conditions have a major role in the low production and productivity in small tea segments as a whole. Incompetence of workers and low productivity are the main challenges that the small tea sector faces in competing at international standards and participating in fair trade and so on. Low quality and the insensitivity to social and economic issues prevalent in small tea segments are the major reasons why tea from small tea segments is not preferred by many buyers and big companies in the world market. Recommendations /feasible intervention options Initiate an institutional mechanism with representation of multistakeholders from the tea industry, Government bodies and nodal agencies to provide minimum and regular wages for workers at small tea gardens. Development schemes meant for workers such as training programmes and skill up-gradation programmes, healthcare, adequate housing facilities and other necessary welfare measures can be materialized only through separate institutional framework and small holders are unable to provide otherwise. Institutional support for governing promotional schemes for workers is required and workers should be adequately represented in such schemes. The participation of workers and their role in value chain of tea industry can be enhanced through this collective institutional and social network.
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Chai Time Small Tea Cultivators
Prevalent characteristics Title Deeds Lack of title deeds for cultivable land of tea cultivation is a major concern for small tea segments in India. This is severe in the case of West Bengal where, for example, around 6000 petitions are pending for N.O.C. in recent times. Registration with Tea Board Absence of title deeds prevents cultivators from registering with the Tea Board. In all regions, except Tamil Nadu, the registered small growers are very few. 90.8 percent of small tea holders are registered in South India, whereas it is only 17 percent in North India. The high share of unregistered small growers is also a major problem since they fail to avail of subsidies and financial assistance under various schemes of the Tea Board and other financial institutions. Lack of Associations It has been noted that associations among the small growers could help in negotiations and collective bargaining for better price and financial assistance from various Government bodies including the Tea Board. However, in many regions of India, small growers are not organised. Associations are formed in some regions but they are still not very effective. It has been observed that in Idukki, problems of forming Self Help Groups, getting registration and title deeds, etc, could have been solved if the existing associations had functioned better. Many of the associations reported that they are in initial phase of forming new associations to address the issue of tea cultivation rather than paying attention to various agricultural crops. In Assam and West Bengal, the associations could address many issues of small tea holders but still, they have reported that they are looking to enhance their capacity to build strong collective power in the future. Marginal Growers The share of marginal growers is high in the small tea sector. They mostly own less than 5 acres of cultivated land and are predominantly unregistered producers. They get relatively lower prices for green leaves and face severe problems in meeting their cost of production. Mostly, family labourers are engaged in cultivation rather than hired labourers. Marginal growers are relatively high in Kerala and Assam. Competitiveness of Gardens There are no uniform leaf collecting practices, for instance, regular
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plucking time for small tea growers in India. This affects the price of green leaves as these tea growers fail to maintain good quality. Instead of quality, small growers very often rely on the quantity of leaves. There are no measures to maintain high quality leaf in small tea segments. Leaf agents still play a major role in quality of green leaves. It has been observed from the field that leaf agents often mix various quality leaves together before selling it to the BLFs . This is mainly to maintain minimum quality of leaves because it contains a high share of low quality- leaves. The price fixation is based on overall leaf quality though some of BLFs have their own grading system based on quality. This automatically reduces the price of leaves. In many regions, especially in Dibrugarh, the lack of transport facilities and long distance from gardens to factory are also deciding factors in determining the quality of leaves. Interconnectedness of different stakeholders The multi-stakeholders approach in production sector is lacking in small tea segments. There is no interconnectedness and dialogue among stakeholders in various value-addition processes of the value chain of the tea industry. Many nodal agencies are ineffectual in the development of the production sector due to the lack of social and collective networks among small holders. Furthermore, co-operatives and Self Help Groups have limited their role in the initial phase of production. In many regions, Self Help Groups are stuck at the phase of leaf collection and cannot move up further in the value chain in the tea industry. Cost of Production Almost all cultivators reported that they are unable to meet high cost of production and fail to maintain their gardens properly. Uniform standards for proper maintenance in small tea gardens are very limited though agencies like UPASI with the Tea Board have made many initiatives to upgrade the quality of production. Only a few cultivators could maintain their garden in a sustainable manner by regular harvesting, fertilizing, weeding, pruning, control of pests and diseases and carrying out other sundry activities on time. This is mainly due to inadequate returns from cultivation and lack of proper training and awareness on the part the cultivators. Many small growers started their tea cultivation due to the demonstration effect and this has affected the quality of production in different ways. For example, many producers in Assam bought their tea plants from the Darjeeling due to Darjeeling fame. As noted earlier, the quality of leaves and productivity is related to geographical factors as well.
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Forest Land Conversion and Ecological Imbalances A study of many regions show that a high percentage of forest land have been converted into tea cultivation since the post 90s. The issues of deforestation/conversion of forest land into tea cultivation have hardly been addressed on the eve of drastic expansion of tea cultivation in different regions in India. There can be many impacts of these ecological imbalances over a period. For instance, soil erosion is one of the major concerns in agricultural land in the high ranges of Kerala. Social and Economic Responsibilities There are no mechanisms to ensure that small growers provide minimum working conditions and welfare schemes to workers. At present, no small grower has provided basic social and economic facilities to workers. The issues of inadequate healthcare, water, inadequate sanitation and lack of good shelter are prevalent in small tea gardens. As stated, this induces low productivity in workers at small tea gardens. It has been widely accepted that various aspects of social, economical and environmental issues and response towards them are crucial constituents in competing with national and international markets. Limited Upward Mobility in the Value Chain There is no deciding role for small growers in the value chain of the tea industry. The process of value chain is used as an organised system of exchange from production to consumption with the purpose of increasing value, maintaining the quality and competitiveness. It hardly gives any space to small growers. Due to incompetent production structure and financial instability, small growers fail to negotiate with various agents for better price and stable market. There are no interlinks between big companies and small tea cultivators so that they can get direct access to various markets. The accessibility in national and international market is still a constraint for small growers due to their low profile production structure and inaccessibility to multi-stakeholders. The high cost of production is also a constraint in facilitating social and economic responsibilities in gardens unlike in the plantation model. Introduction of Organic Cultivation At present, organic cultivations are very few in small tea segments. As noted, lack of co-operatives or associations has forced them to limit themselves to organic cultivations. Small landholdings, inadequate financial assistance and lack of awareness are the major reasons which have prevented many of them from shifting to organic cultivation. Though fair-trade promotes organic cultivation, its share is very little in the world market.
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Potential Outcome/Risks on tea industry The non-registered small tea growers are unable to use subsidies and other welfare schemes from the Tea Board effectively. Lack of associations and title deeds are constraints in accessing financial assistance from Government bodies and other financial institutions. It is reported that small growers are unable to maintain the quality of their green leaves. Their returns are declining over the period since many of them give priority to the quantity of leaves rather than quality. Irregular maintenance affects their returns from the market and this leads to the supply low quality leaves to factories. The deteriorating quality of green leaves excludes the growers from competitive markets. Inadequate working conditions and irregular payment and employment for workers have led to paucity of skilled labour and regular workers in the peak season. Low productivity and inability to ensure the basic social and environmental responsibilities lead to low participation in alternative trade practices and the international market in the long run. Recommendations /feasible intervention options Implement right over the land to small growers. This would increase the number of the beneficiaries of the Tea Board and this is crucial for sustainable nature of production, quality and platform for small growers. Monitoring and creating new development schemes for small tea cultivators can also sustain all regions if there is high participation from cultivators. Strengthen and increase the participation of small growers implementing various quality upgradation programmes at various levels of productions through various agencies and institutions. Develop a mechanism to maintain quality of leaves and fair price at garden level with the involvement of various stakeholders, development agencies and Government bodies in the locality. Provide inter-linkages and participation with various stakeholders including civil societies, Tea Board and other international agencies. This would also help to obaining feasible financial assistance from various agencies and Government institutions. Increase subsidies to various production and marketing process specifically and implement its efficient use in sustainable way. This would provide a situation where farmers can add value for their green leaves from the garden itself. Develop market inter-linkages with multinational companies with the
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aid of various nodal agencies to mitigate the impact of short-term industrial fluctuations, crisis of one sector to another, decline of price and quality and cost of production and so on. The underlying social and economic issues related to the international market which contributes to this situation in the long term should also be addressed. The innovative quality up-gradation programmes by UPASI, KVK and the Tea Board underline how formal institutions can develop and deploy new strategies for otherwise imperilled smallholders (Neilson and Bill Pritchard, 2006). Introduce self- help groups in each region to reduce dependence on leaf agents so as to ensure fair price to producers and quality of leaves. Initiatives should be taken to expand their formulation in various phases of value chain of tea industry other than those centred around cultivators and leaf agents. Licensing leaf agents in locality would also improve the quality of green leaves and stabilize the price of green leaves. The drastic conversion of forest land into tea cultivation can cause ecological imbalance, biodiversity losses and decline in ground water levels in a particular locality. Therefore, reforms to issue title deeds of cultivated land and to increase productivity are crucial in reducing the conversion of forest land and maintaining ecological balance.
Bought Leaf Factories
Prevalent Characteristics Drastic increase in Factories There has been a steady growth in the number of private tea manufacturing factories in India in the post 90s. In Assam, the number of BLFs increased to 162 in 2004 from 119 in 2001. Similarly, in West Bengal, the number of BLFs was 79 in 2004 while it was 44 in 2001. There is high tendency among newly-launched and technically-competent BLFs to direct sale rather than the Auction. They remarked that they get better price in direct sales and they get financial assistance as advance from private buyers which is used as working capital. Technical Competencies Most of the BLFs are inefficient in the economics of production due to their technical inefficiency. However, there is an emerging scenario of technologically upgraded BLFs in India, especially in Upper Assam. It is reported that most of BLFs are equipped with outdated manufacturing units and unskilled and temporary technicians and workers. There is also
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a consensus among wholesalers and retailers that longevity of made tea from BLF is very short and some of them are reluctant to buy it due to this. New Phase of Production On the eve of the crisis in the plantation model in India, many BLFs sustain in the industry due to their high productivity and low cost of production. Due to high cost of production, many factories have also closed down in the recent period. Expansion of BLFs has also led to an increase in tea cultivation especially by marginal farmers. It has also generated wide employment options. Adulteration It is noted that many BLFs increase the volume of output by practising various methods of adulteration. This affects both the individual as well as the overall price of tea from BLFs like it reduces the quality of tea and decreases the overall price in the Auction. There is no strict monitoring of green leaves and many of them do not have any measures in place to maintain the quality of green leaves which they collect from leaf agents. Inadequate Market and Working Capital The flaws and limitations of BLFs vary from region to region. These include lack of high quality inputs, unavailability of markets, inadequate working capital, insufficient skilled workers, lack of training and quality upgradation programmes and so on. The quality of made tea is influenced in two ways: the presence of improper manufacturing units with unskilled labourers in the factory and due to the low grade green leaves with adulterated in various ways. Potential Outcome/Risks on tea industry The incompetent structure of BLFs leads to production of low quality of made tea. Due to the absence of strict monitoring and standards, there is no control over the quality of green leaves procured from small growers and leaf agents. Low quality of made tea pushes down the average price of tea in the Auction. The increase in supply due to various means of adulteration causes only a decline in demand and price in the long run. The increase in direct sales leads to low price realization in both direct and the Auction sales in the long run. The base price of direct sales is the average price of the Auction sale. Since tea is available in the direct market, the price realization is low in the Auction. BLFs intake all the available green leaves irrespective of the quality of leaves. This leads to the production of low-quality tea in gardens. BLFs produce high volume of made tea but
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mostly, as reported, low-quality tea. This pushes down the average price of tea in auctions. The present structure and process of BLFs leads to the vicious circle of low quality and low price linkages rather than expanding their market internationally. Recommendations /feasible intervention options Quality upgradation: Create a role for BLFs in the value chain of industry and create awareness of how their role in the value chain industry is important. This will make BLFs themselves to take part in the quality upgradation programmes. Various stakeholders and Government bodies should make an attempt to improve the quality of production from BLFs. There should be a continuous mechanism to encourage, monitor and sustain to provide high quality green leaves from small holders. Financial Assistance: There should be financial assistance for working capital for BLFs. Financial assistance and subsidies to the BLFs can increase their productivity and quality of production. Continuous monitoring and evaluation of their performance make a base for various subsidies and financial assistance. Since BLFs confronts problems from region to region, the intervention should be locality-specific. Monitoring: There should be strict monitoring from Government or Tea Board in the production of tea to prevent adulteration of tea. The monitoring process should be at different levels of intervention of the production process. There should be strict procedures for providing license and this should also based on the BLFs production profile. Open-up markets: Various stakeholders and nodal agencies work together to open up markets at the international level for BLFs. This would enhance direct participation from Big Companies in the production segments of the small tea sector. Initiate a linking process and provide mechanisms for BLFs to expand their market at the international level through various alternative trade practices. The trade practice in Indonesia in which multinational tea companies are increasingly contracting with larger agro-processing firms who are able to effectively coordinate deliveries and quality standards from small farmers through effective supply chain management is worth mentioning here (Neilson and Bill Pritchard (2006).The common platform of participation of various stakeholders only could make a space where BLFs can negotiate for better market openings at the international level.
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Sustainable Livelihood for Small Tea Growers through CSR Buyers and Retailers
Prevalent characteristics Participation of buyers Tea buyers purchase tea from the auction centres and directly from BLFs. It has been observed that the number of buyers participating in the Auction has declined over the period. As stated, direct sale is increasing over the period and most of the buyers prefer direct sale from producers. It is reported that the Auction dominates with the proxy buyers of multinational companies. The role of small and regional buyers in price mechanism is very limited since they buy a relatively small size of total stock. It is reported that the buying mechanism and its supply to the upcountry markets are kept private within buyers and it is conceived as their trade secret. Buyers find hardly any need to address the issues of social and economic responsibilities and welfare measures of workers at gardens in their trade mechanism. Tea buyers are not necessarily the bidders for tea in auction centres all the time They also act as multiple roles such as either packeters/blenders who buy for their own brands or packets, buying agents who buy tea at auctions on behalf of other tea dealers and even as retailers in their own localities. It is reported that many of the retailers come across difficulties for registration and getting license from the Tea Board. In the loose tea market, very often, various levels of adulteration are prevalent which is done by the retailers mainly to increase their profit from the original tea. This also denies the real taste of good quality tea to consumers as their preferences mainly rely on retailers. Regional packeters and retailers sell packet tea on their own brand in their locality. It has been observed that the sale of stolen tea from factories is prevalent in many tea-producing regions. Generally retailers prefer tea with which they can make good profit and they are not sensitive about the social and economic responsibilities issues in tea gardens. There is no interface between producers and retailers., However, retailers play a major role in deciding consumers tastes and preferences especially in rural markets. Unregistered retailers are quite common and institutional set-up lacking to forbid them from getting access to the tea markets. Potential Outcome/Risks on tea industry It is reported that low participation of buyers and proxy buyers lead to low bargaining in the later phases of auction and is may lead to low or stable prices for further lot size. The price mechanism is very often dominated by big buyers and their role in price fixation at various phases
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of the auction is significant. As reported by the auctioneers, unproductive competition due to low participation rates may not lead to high and steady prices for tea. As stated, increase in supply due to the import of low quality and low price tea in the local markets also causes low price realization in the Auction. Due to the consideration of short-term profit, low quality, adulterated tea and imported tea ae sold in retail markets in the rural areas. There is no interface between producers and retailers and it influence on promotion of high quality tea. It is reported that adulterated tea in local market push down demand for quality tea and it may harmful to health as well. Consumers may not avail and access quality tea and mostly what they are offered is based on the retailers preferences. Recommendations /feasible intervention options Initiatives should be taken to increase sale through the Auction sale by creating some mechanism to increase participation of buyers from different segments. The movement from development agencies and the consumer campaigns may build the direct linkages with buyers and small tea growers which may create awareness and increase demand for their tea at the Auction. Initiate institutional reforms to create awareness and provide sale promotional schemes to retailers to provide better quality to consumers. This will also make buyers and retailers more conscious about social and economic issues in the tea gardens. Initiate the participation of non-profit organizations and other stakeholders as at present intervention of various stakeholders are limited at the retailer and consumer level.
Consumers
Prevalent characteristics Consumers preference for tea is very limited mainly because the market is dominated by various soft-drink companies. Many consumers consider that tea is not a healthy drink. There is a lack of availability of good teadrinking (teashops) outlets at different regions and even in tea-producing regions. Lack of tea promotion with its various varieties, for instance tea as a health drinks, is lagging in the tea market. Continuity in genericpromotion schemes through various phases and ways are limited. There are no direct linkages of interaction with tea producers and consumers. Consumers prefer good-quality tea but are hardly conscious about the social, environment and economic responsibilities at gardens. As stated,
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though consumers are willing to pay the same, their behaviour patterns do not show their preferences. The domination of branded tea of multinational has created their own consumers over the period due to various schemes and options. At present, the market is very limited. So, to choose high quality tea specifically from small tea segments, even if consumers are intend to do so is difficult, if not impossible Potential Outcome/Risks on tea industry The low per capita consumption of tea in India shows that there is high potential to utilize the market. If an initiative is taken to strengthen the domestic market, it would also demand an increase in the volume of production. Consumers are becoming more quality conscious but the choice for them is limited. Due to various promotional schemes, advertisements and levels of intervention, the consumer market is dominated by soft drinks. The expansion of tea market in this present market scenario is very difficult. The existing process of tea industry provides no space for consumers to be part of the whole value chain of tea industry. As noted by other studies, consumer behaviour and consumption patterns in India hardly get space to address the social and environmental issues and workers conditions in the tea industry. Recommendations /feasible intervention options Intensify various schemes for generic promotion of tea with wide varieties of tea products. It is important to introduce a variety of tea outlets/accessibility of quality tea can be launched with the joint venture of various stakeholders. Extensive and intensive promotion schemes should be launched through the various channels including media and other public spaces. Create awareness about social and environmental responsibilities of the product and sensitiveness of working environment at the production sector through various forms of communication. Introduce outlets of various-priced and various varieties of tea where consumers, irrespective of class get access to good quality. Urbancentered outlets only provide access to a minor portion of consumers otherwise. This would also provide linkages with production sector and consumers. The promotional programmes and studies need to address the different segments of society irrespective of purchasing power and behaviour of customers and social groups. This also creates a situation where consumers can choose their own tea in various retailers rather than focusing on very few classes of consumers in urban areas. Initiate the linkages with production sector and the consumer level
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through the involvement of the retailers. Various marketing channels appropriate to region to region (for instance, use of Self-Help Groups, PDS shops and so on) should be used for this. We find that small tea segment are competent in many ways but are incompetent to address the social, economic and environmental responsibilities at the production level. It is also important to empower the small tea segments to rise to the preferences of consumers who seek environmentally, socially and ethically-superior products. More significant than this is that it is to identify strategic interventions that the small tea sector can make to strengthen local business competitiveness in infrastructure and re-position regulations so that they can act in a advantageous competition making an advantage of it rather than finding it as a hindrance. The production and market segments of small tea emerge as a new alternative to the plantation-model economy. The emergence of this new model with its own dynamism influences production, domestic market and the labour market as well. A sustainable growth policy for tea cultivation to support small tea segments will necessitate coping with recent initiatives of short-term remedies for tea industry and a holistic and stable policy environment. This initiative, as noted by Jayne T S, et al. (2006) is crucial to generating the economy-wide benefits to the poor associated with the inter-sectoral multiplier effects associated with structural transformation. As noted, a large number of people depend on the tea industry in India and it also produces a good amount of foreign exchange for the country. As formulated above, the necessity of multi-stakeholders approach or common platform is inevitable due to small units and scatteredness of small tea segments. They can attain accessibility despite their vulnerable individual conditions, control or negotiate over resource allocation and participate in decision making, and alternative trade to intervene in international market due to adoption of the multi-stakeholder approach. Investments to the networks of association of small holders and other stakeholders have become important to facilitate the structural transformation of the small tea segments of the Indian tea industry. It is quiet necessary to have intervention and co-ordination of major development and nodal agencies to expand their market through various forms of trade and other suitable schemes. Effective governance is central to the effective operation of various state enterprises and donor agencies and markets (Jayne T S, et. al, 2006) to enhance these institutional innovations. Institutional innovations, as argued by Neilson and Bill
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Pritchard (2006), are decisive for small holders to compete with the estate sector. How to create a common platform with the involvement of various stakeholders with attention to the institutional underpinnings of markets for coordination between producers and sellers, multinational input and commodity trading firms, a supportive public sector and other mechanisms to reduce the costs and risks of investing in the value chain of tea industry needs to be researched further. Finding workable strategies and effective governance to make small tea segments more competent and move-up in the value chain are to be the key challenges in the small tea segments in India
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Notes
2
Chambers, 1993:11., Chambers, R. 1993.
Challenging the Professions: Frontiers for Rural Development. London: Intermediary Technology Publications.
3 4 5 6 7
Source: Ministry of Commerce and Industry, 2005 Tea Statistics (2005), J Thomas & Company Pvt. Ltd and www.indiateaportal.com www.indiateaportal.com Tea Statistics, (2003), Tea Board of India, Kolkata.
NSSO 55th report, as quoted in A.F. Ferguson & Co. (March, 2002) Report on Primary Marketing of Tea in India, Tea Board, GOI. Ibid. Saji (2005), Indian Tea Industry: Value Chain and Domestic Market. see details in http://www.indiainfoline.com/sect/teil/ch06.html Tea Statistics (2003), Tea Board of India, Kolkatta.
8 9
10 11
The advertisements and other promotional ventures of soft drinks dominate in urban and villages spaces in India. The majority of the youngsters have some prejudices on habit of drinking tea.
13 14
12
Per capita consumption is average consumption per head of total population in Kilogram.
Tea Act for Registration, Tea Board of India, Kolkata.
15
Steps taken by Tea Board for small Growers Development, Compiled report, Tea Board (2006), Kolkata
Smallholder Model in the Tea Industry of Sri Lanka And Kenya (2001), Feasibility Study on Community Participation on Tea Plantations Plan Sri Lanka; Management Frontiers (Pvt) Ltd.
17
16
http://tcdc.undp.org/sie/experiences/vol1/Tea%20leaves.pdf
B Sivaram (2000) Productivity Improvement and Labour Relations in the Tea Industry in South Asia, ILO.
19
18
Tea Statistics 2002-03, Tea Board of India, Kolkata
B Sivaram (2000) Productivity Improvement and Labour Relations in the Tea Industry in South Asia, ILO .
21
20
Ibid.
22
Smallholder Model in the Tea Industry of Sri Lanka And Kenya,Feasibility Study on Community Participation on Tea Plantations Plan Sri Lanka; Management Frontiers (Pvt) Ltd.
23 24 25
Tea Statistics 2002-03, Tea Board of India, Kolkata. K. N. Reddy and N.S. Balaji Rao http://www.sasnet.lu.se/tribalbalaji.pdf
The name, Badaga, is derived from Vadagar and means north, i.e., people from north, i.e., Karnataka.
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The migration of the Badagas to the Nilgiri hills happened over several centuries starting mainly with the fall of the Vijayanagaram empire in 1565 at the hands of the Moslems to Tippu Sultans conquest of Mysore in the late 18th century. The Badaga community comprises six major sub-groups. The Wodeas or the Lingayats who trace their origin to the Wodeyars of the royal house of Mysore. The Kongaru from the Kongu region in the plains. The Haruvas or the Brahmins. The Adikaris or the Magistrates. The Kanakkas or the account keepers. The Gaudas or the cultivators and the Toreas or service-providers. The Gaudas are the dominant group and generally suffix their names with Gowder. Though each group continues to preserve its identity there is hardly any social or cultural segregation among them.
27 26
http://www.geocities.com/TheTropics/Cabana/3841/badaga.html Census of India,( 2001), provisional. Discussion with small tea growers and Brokers, Coonoor Discussion with Small Tea Growers in Coonoor. Calculated from data collected from the interview with small tea growers from Coonoor. Interview with the member of co-operative tea factory in Coonoor.
28 29 30 31
Ibid.
32 33 34
The rate is Rs. 60 per Kg, and the local market the tea rate is Rs. 80-120 depends on the quality.
35
Literature and awareness of using knives for leaf collection and so on, UPASI, Coonoor Ibid.
36 37
These Sri Lankan repatriates came to India under the October 1964 accord between Prime Ministers Lal Bahadur Shastri and Sirimavo Bandaranaike. They were settled in the Nilgiri region by the government.
38 39 40 41
Interview with female temporary workers in small tea gardens in Coonoor. Tea Statistics (2003) Tea Board of India, Kolkatta. Uma Devi, Plantation Economy, Usha T V (2002) Plantation and crisis in Tea industry in Kerala. 19 per cent of the population (Census, 1991)
Ibid.
42 43
11.62 per cent of the total cropped area of the Idukki district, Kerala (Kerala Economic Review 2005)
45 46
44
Discussion with tea cultivators, Peerumade Kerala. Interview with small tea growers in Peerumade, Idukki district, Kerala. Ibid.
47 48
This is one of the problems with small tea cultivation in Kerala. Many of the small growers from Coonoor, Tamil Nadu, reported that they could avail the financial assistance from the Tea Board for cultivation related matters and even financial allowance for the education for their children. It could mainly achieve only those who have registered with Tea Board.
49 50
Discussion with Tea Board resource persons, Tea Board, Kolkata.
Meeting held with Tea Board Regional Director, Kochi with the small growers in Peerumade in July, 2006, regarding the registrations and other issues related to the small tea cultivations.
51
Ibid.
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52 53
Interview with small Tea Growers at Peerumade.
Shatadru Chattopadhayay (2005), Productivity & Decent Work in the Tea Industry in India. A Consultative Report by ILO, March 2005.
54 55
Focused group discussion with small tea growers in Peerumade.
See details in Shatadru Chattopadhayay (2005), Productivity & Decent Work in the Tea Industry in India. A Consultative Report by ILO, March 2005
56 57
District Economic Profile, www.keralagov.in
Interviews with migrant workers, some of them were earlier casual workers in small tea gardens in Pambabnar.
58 59
Interview with small tea growers in Peermade
Discussion with women worker from small tea gardens in Peerumade, Idukki district, Kerala. Plucking of two leafs and a bud makes the quality of leaf better because of chemical reactions it generates during
61 60
Interview with workers from small tea gardens in Peerumade, Idukki District, Kerala. Interview with workers from small tea gardens in Pambanar, Idukki District, Kerala Interview with one of the trade union leaders in Kerala.
62 63 64
See advent of small-holder tea sector in Jeta Sankrityayana (2005), Plantation Labour in the West Bengal Tea Industry in Productivity & Decent Work in the Tea Industry in India. A Consultative Report by ILO, March 2005. Jeta Sankritayan, Productivity, Decent Work And The Tea Industry In North Eastern India-Plantation Labour In The West Bengal Tea Industry, ILO, 2005
66 67 68 69 65
Indian Tea Association, Annual Report, 1985 Jeta, 2005 Jeta 2005
Jeta Sankrityayana (2005), Plantation Labour in the West Bengal Tea Industry in Productivity & Decent Work in the Tea Industry in India. A Consultative Report by ILO, March 2005. Discussion with small tea cultivators North Bengal. Discussion with BLF owners in North Bengal. Ibid. Discussion with West Bengal Small Growers Association members.
70 71
72 73 74
Discussion with Association members.
75
Though the issues are came up in public space through the media no Government intervention made any difference on this deprived situation. There are some temporary measures but many implementation failed before meet the victims.
76
Nutritional survey of tea workers on closed, re-opened, and open tea plantations of the Dooars Region, West Bengal, India, October, 2005; http://blog.stonegrooves.net/05-11/ final-report-malnutrition-of-tea-workers.html.
77
Discussion with officials at Tea Board, Regional Office, Guwahati
TEAMFCO, a Bought Leaf Factories situated in Dibrugarh district of Assam. Teamfaco argues that BLFs also have a major role in maintaining the quality of green leaves. Details of TEAMFCO is given in a Chapter 7
78
116

79 80 81
As pointed from the Officials, Tea Board, Guwahati Interview with committee member of Association of small tea growers, Assam Detailed discussion of SHG in Assam has included in separate session below. Techno-Economic Survey of Small Tea Growers in Assam ( 1994), Tea Board, Kolkata.
Discussion with resource persons, Tea Board, Guwahati
82 83
Problem of Small Tea Gardens: A case study of Dibrugarh District, Assam. Partha Ganguli (2000).
85 86 87
84
Ibid. Interview with one of the workers
John Humphrey and Hubert Schmitz (2000) Governance and Upgrading: Linking Industrial Cluster and Global Value Chain Research, Working Paper No. 120, Institute of Development Studies (IDS), University of Sussex, UK. Wilkinson 1995, Quoted from John Humphrey and Huber Schmitz (2000).
88 89
The value chain is also organised in many different ways mainly as a producer-driven commodity chain and buyer-driven commodity chain. Generally, buyer-driven commodity chains refer to those industries in which large retailers, marketers and branded manufacturers play pivotal roles in setting up decentralised production networks in a variety of exporting countries, typically located in the third world. The distinction between buyer driven and producer-driven value chains highlights the role of retailers and brand name companies (the buyers) in structuring global trade in labour intensive products and the role of producers in structuring global production in capital and technology intensive industries
90 91
Saji (2005). Indian Tea Industry: Value Chain and Domestic Market.
The formal description of key stakeholders, see http://commerce.nic.in/Proposed%20eauction.pdf and detailed discussion of other stakeholders are included in the discussion of developing the argument of value chain in small tea growers in concerned sessions.
93
Saji (2005), Indian Tea industry: Value Chain and Domestic Market Ibid.
94 95
See Report of Primary Marketing of Tea in India (2002), A F Ferguson & Co. submitted to Tea Board, GOI, for detailed discussion on rule and practices of auction system in India
96 97 98
Saji (2005), Indian Tea Industry: Value Chain and Domestic Market. Discussion with Auctioneers in Cochin.
It is not official but depends on the personal relationship with buyers and brokers to promote the business. Discussion with brokers from Coonoor.
99
Ibid. Tea Board, see details of Tea Board and its function
100
see the details of how MNC dominates the tea market in India, Shatadru (2006). International workshop of tea industry in India., Darjeeling see the details of how MNC dominates the tea market in India, Shatadru Chattopadhyay (2006). International workshop of tea industry in India., Darjeeling
103 104 105 102
101
Ibid.
Methodology for value chain analysis.
Source: Tea Board of India, 2003.
117
Chai Time
106 107
Auction price, Various Auction Centres Report Weekly Market Report( 2006)Tea Auction Centre, Coonoor. Tea Digest, CTTA, Kolkatta.
Discussion with Resource Persons from Tea Board, Guwahati and BLF Owners in Assam.
108 109 110
See details of function of auction system and price mechanism in A F Ferguson & Co. (2002) and Saji (2005).
111
Discussion with Brokers in India. See Saji (2005) for further discussion in tea auction and quality of tea.
112
113
V. Ramaswamy, A strong role for tea auctioneers, http://www.thehindubusinessline.com/ 2003/09/22/stories/2003092200010900.htm Saji (2005), Indian Tea Industry: Value Chain and Market.
114
115
Discussion with brokers in Coonoor. It is not official but depends on the personal relationship with buyers and brokers to promote the business.
116
See details of crisis in Indian tea industry, for instance, Shatadru (2005 & 2006) and CEC (2003).
117
A F Ferguson & Co. (2002) Report on Primary Marketing of Tea in India , Tea Board, GOI, for detailed discussion on rule and practices of auction system in India
118
A F Ferguson & Co. (March, 2002) Report on Primary Marketing of Tea in India, Tea Board, GOI, for detailed discussion on rule and practices of auction system in India
119
See details in Saji (2005). Discussion with various brokers and buyers in India. Discussion with brokers.
120 121
122 Many brokers disagrees this process. They claim that if auction prices become higher their profits will increase. However, this needs to be addressed separately. 123 Nalllasangam, demands that there should be strict action against the adulteration at BLF level. They argue that the adulteration process reduce the quality of tea and automatically the market will decline and price of tea also reduce at auction level. 124 125
Discussion with Brokers at Coonoor and Guwahati. Ibid.
Plenty of adulterated tea, Mathrubhoomi, (Malayalm Daily), July 14, 2006.
126 127
See the details of role of national and regional packeters in domestic tea market in India, Saji (2005) and A Ferguson (2001)
128 The preferences of the retailers are based on their margin, benefits and other facilities. See Saji (2005) for details of retail market. 129
Impact Report, Quality Upgradation Programme in Small Tea Sector, Nilgiris, Tea Board & Upasi-Krishi Vigyan Kendra, Coonoor, The Nilgiris, February, 05, 2004
130
For instance, Nerittu valangale vangi misritamakki ela edukkunna thottangalkku nalkunnathukondu kittunna nanmakalum labhavum (Malayalam), Tea Board & UPASIKVK, Quality Up-gradation Programme, October, 2003.
131
Quality Upgradation Programme in Small Sector ( September, 2003) Tea Board & UPASIKVK, The Nilgiris. Techno-Economic and Socio-Economic Survey of Kerala Tea Industry (1994), Tea Board,
132
118

Kolkata.
133 134 135 136 137
Ibid.
Strong C, 1997 Smith C N, 1990 Minton, A. and Rose, R; 1997 and Robert J. C, 2004 Schwartz, M S & Carroll, A B 2003 Discussion with some of the brokers and buyers, Kolkata.
Friedman, M 1970
138 139 140 141
Shatadru Chattopadhyay (2006). Donaldson, T & Preston, E L. 1995 Harrison. J G & Freeman, R E. 1999
Ibid.
142 143
The issues of CSR are discussed with all stakeholders in major tea producing regions, namely Assam, West Bengal, Tamil Nadu and Kerala, in India during the field work.
145
144
As quoted in Shatadru Chattopadhayay and Pramod John (2007), Bitter Beans The Coffee Crisis and its impact in India Partners in Change, New Delhi.
146 147
Ibid.
Shatadru C and Pramod J (2007)
148 See details in Shatadru Chattopadhayay and Pramod John (2007), Bitter Beans The Coffee Crisis and its impact in India Partners in Change, New Delhi. 149
Shatadru Chattopadhyay (2005). Minton and Rose, 1997
150 151
Barbara Flies et. al, CSR and TradeL Informing Consumer about social and environmental conditions of globalised production, OECD, Trade Policy working paper, http:// www.olis.oecd.org Ibid.
152 153
Kevin Bright et. al (2005), Consumer Responses to Corporate Social Responsibility in Middlebury, Vermont
154
Barbara Flies et. al, CSR and TradeL Informing Consumer about social and environmental conditions of globalised production, OECD, Trade Policy working paper, http:// www.olis.oecd.org. Ipsos G6 Study of February 2006, quoted from Barbara Flies et. al, (2007) MORI, September 2000, quoted from Barbara Flies et. al, (2007). Alter Eco France, March 2000, quoted from Barbara Flies et. al, (2007) Barbara Flies et. al, (2007). MORI, 2003. Survey of British public 2026, quoted from Barbara Flies et. al, (2007)
155 156
157 158 159 160
Franziska Krisch (2006) Report on findings of a study Of consumer reactions to Socially responsible and Environment friendly tea , CEC, delhi and fakt consult for management, training and technologies, Germany, Traidcraft, UK.
161
Discussion with Buyers, Kolkata. Saji (2005), Indian Tea Industry: Value Chain and Market.
162
119
Chai Time
163 164
See Uniliver.com
see details of CSR of Tata Tea in www.tatatea.com
165
Beyond Corporate Social Responsibility: The Scope for Corporate Investment in Community Driven Development, Report No. 37379-GLB, December 21, 2006, World Bank.
166 Unilever Environmental and Social Report 2005; www.unilever.com and Hindustan Lever; www.hll.com 167 168
PDS- note on PDS.
Proposal for promoting marketing activities of organic tea through various visual, audio and print media in the state of Kerala by SOTF, unpublished document collected from SOTF, Peerumade, Kerala.
169
Quality Up-gradation Project for Tea- in Small Sector, Supported by Tea Board & PDS, Peerumade, Kerala.
170 171
Discussion with PDS resource person.
See details of this trading initiatives in http://www.justchangeindia.com and http:// www.adivasi.net

172 173 174
http://www.feasta.org/documents/review2/thekaekara2.htm
Discussion with resources person, TEAMFACO office, Dibrugarh. Discussion with resource person from TEAMAFCO, Dibrugarh.
Discussion with Resource person from GTTA, Auction centre, Guwahati. Discussion with Director, Tea Board of India. Kolkata.
175 176
177
See the details of schemes in Tea Plantation Development Scheme: Scheme for Setting up of Pilot Tea Producers Societies (SHG) amongst Small Tea Growers, Tea Board, Dispur, Guwahati.
178 179
Ibid.
Discussion with Director, Tea Board of India, Kolkata.
One of the members in SHGs pointed out that this is the one of the positive outcome which they can communicate with others, SHG units, Assam.
181
180
As stated by the one of the resource person from Tea Board, Kolkata. It also shows that lack of association and initiatives are the one of the factors of the tea sector in Kerala which lags behind attain the financial assistance from the Tea Board. It has been observed from the field that the high tendency of the agents those who works in tea sector pointed out that the intervention from Tea Board is lacking and Tea Board has major role to play.
182 It is also noted in session above that the SHS groups in the participated in marketing sells low quality tea in the rural areas mainly in tea shop and it made notice that it is harmful and not tested the quality control.
Indian Tea Association: Indian tea scenario (Kolkata, 2002).
120
121
Chai Time
122

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Sustainable Livelihood for Small Tea Growers through CSR

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Sustainable Livelihood for Small Tea Growers through CSR

Sustainable Livelihood for Small Tea Growers through CSR

Sustainable Livelihood for Small Tea Growers through CSR

CAGR Compound annual growth rate

CTTA Calcutta Tea Traders Association

OECD Organization for Economic Co-operation and Development

Sustainable Livelihood for Small Tea Growers through CSR

Sustainable Livelihood for Small Tea Growers through CSR

Sustainable Livelihood for Small Tea Growers through CSR

Sustainable Livelihood for Small Tea Growers through CSR

Sustainable Livelihood for Small Tea Growers through CSR

Sustainable Livelihood for Small Tea Growers through CSR

Indian Tea Industry Pattern and Growth

Export 94.9 (50.6%)

Sustainable Livelihood for Small Tea Growers through CSR

Figure 2.2 Trend of Production of Tea in India

Figure 2.3 Export of tea from India

Domestic Consumption of Tea

Sustainable Livelihood for Small Tea Growers through CSR

Figure 2.4 Domestic Consumption of Tea in India

Sustainable Livelihood for Small Tea Growers through CSR

Figure 2.6 Per Capita Consumption of Tea in Various Countries

Source: Tea statistics (2003), Tea Board of India

Small Tea Sector in India

South India North East North India Total India

61773 5595 9903 71676

68000 45132 58256 126256

90.8 12.4 17.0 56.8

Sustainable Livelihood for Small Tea Growers through CSR

Source: Tea Statistics ( 2003), Tea Board of India

Productivity of Small Tea Gardens

Sustainable Livelihood for Small Tea Growers through CSR

Source: Calculated from Tea Statistics (2003), Tea Board of India

Economics of Small Tea Growers in India

Sustainable Livelihood for Small Tea Growers through CSR

Source: Tea Statistics (2003), Tea Board of India

Kanyakumari Tirunelveli Madurai Coimbatore Nilgiris Tamil Nadu

1 1 2 7 61974 61985 No.

6 3 3 45 171 228 No. 85.7 75.0 60.0 86.5 0.3 0.4

Source: Tea Statistics, (2003), Tea Board of India.

Sustainable Livelihood for Small Tea Growers through CSR

Sustainable Livelihood for Small Tea Growers through CSR

SMALL TEA GROWERS IN IDUKKI, KERALA

Sustainable Livelihood for Small Tea Growers through CSR

Source: Tea Statistics (2003) Tea Board of India

Profile of Small Tea Gardens

Sustainable Livelihood for Small Tea Growers through CSR

(Percentage of Total Tea Cultivation )

Source: Tea Statistics, (2003), Tea Board of India.

Sustainable Livelihood for Small Tea Growers through CSR

Sustainable Livelihood for Small Tea Growers through CSR

SMALL TEA GROWERS IN WEST BENGAL

Sustainable Livelihood for Small Tea Growers through CSR

Tea Cultivation of Small Tea Growers

Sustainable Livelihood for Small Tea Growers through CSR

Total petition received for N.O.C. 1960 1947 2005 129

Total N.O.C issued up to 30-12-2005 620 865 249 49

Sustainable Livelihood for Small Tea Growers through CSR

Source: Bijoy Gopal Chakraborty, United Forum (2006)

Sustainable Livelihood for Small Tea Growers through CSR

SMALL TEA GROWERS IN ASSAM