More than 90% of the tea factories in the Nilgiris have shut down since Saturday, due to a standoff between tea sellers and buyers.
According to Thiagaraj Hutchi Gowder, president of the Nilgiris Small Tea Growers Association, the standoff between the two parties is due to a billing system that is being insisted upon by large tea buyers.
Previously, a simple billing system was in place at auctions where brokers and auctioneers will be issuing bills of sale on behalf of the sellers. This had ensured that there was transparency over the prices paid for the teas by the buyers.
However, after the implementation of the GST, major buyers have been insisting on using an older method of transaction whereby the buyers pay the brokers and brokers in turn pay the money to the producers.
Earlier, payment would be made to the producers through a tea settlement account through a settlement bank.
Since the producers had objected to the payment being made via the brokers, major buyers have stopped purchasing tea from the producers. The tea producers insist that the buyers are attempting to arm-twist them during this season due to high-cropping, which, combined with the buyers not purchasing tea at the auctions, has led to warehouses becoming filled with tea stocks.
“Around 60 lakh kg of tea are in the warehouses and prices have come down by almost ₹20 per kg,” said Mr. Gowder.
H. B. Ananthan, president of the Nilgiri Bought Leaf Tea Manufacturers Association, in a statement, said that, “In view of the non-movement of teas, we are finding it very difficult to make green leaf payment to small tea growers.”
Meet to be organised
The Nilgiri Bought Tea Leaf Manufacturers Association has announced that it will stop operations of factories till July 21, and has called on the Tea Board to help resolve the issue amicably.
C. Paulrasu, Executive Director of Tea Board, told The Hindu that the sellers feared that they may get short-changed by the brokers and buyers.
“We have arranged for a meeting with all the parties at the Tea Board headquarters in Kolkata and hope that the issue gets sorted in the coming days,” he said.
