Can there be a minimum support price for green leaf?

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SEEKING SUCCOUR: Workers plucking tea leaves in estates along the Ooty-Kotagiri road.
SEEKING SUCCOUR: Workers plucking tea leaves in estates along the Ooty-Kotagiri road.

V. Jayanth

‘There is a provision under the Tea Act for fixing a floor price’

‘Ad hoc measures do not solve the problem’

Crop diversification suggested for small growers

CHENNAI: With no signs of an end to the deep crisis confronting the small tea growers of the Nilgiris, they have now demanded a ‘floor price’ for the green leaf produced by them. In other words, they want a minimum support price (MSP) of Rs. 10 a kg for the produce from the small growers.

Both the Centre and the State governments extended a special subsidy scheme for the Nilgiris’ small growers, offering them Rs. 2 more than the market or auction price. In 2000, the Centre offered a price subsidy for made tea, but only for about six months, to the tea producers. Later, in 2005, the State government extended a lump-sum subsidy directly to the small growers.

The contention of the small growers and the Save the Nilgiris Campaign (SNC) is that ad hoc relief measures only add to the uncertainty, and do not solve the problem faced by the small growers. They cite the example of prices fixed for many commodities in the past to argue the case for an MSP type floor price for the green leaf.

“There is a provision under the Tea Act for fixing a floor price. As there is no public or State procurement of tea, there will be no burden to the government. The Tea Board can ensure the success of this proposal as it enjoys control over the tea factories,” argues D. Venugopal of the SNC. It has been estimated that there are about 65,000 small growers in the Nilgiris, with a planted area of about 40,000 hectares. They produce around 300 million kg of green leaf. The total earnings from small growers’ tea in the market have been estimated at just over Rs. 600 crore.

According to some of the small growers, despite the continuing crisis for six years and more, and the very low price they get at the auctions, the average price of tea in the market for the consumers has hovered around Rs. 80 a kg. Even with a floor price of Rs. 10 to the small growers, there will be no impact on the consumer market. The margins have improved, while the producer remains in the grip of a severe crisis. Though auction prices have fluctuated, the three-year average for the small growers works out to just about Rs. 5 a kg.

What sparked the tea crisis in the ‘Queen of Hill stations’ was the break up of the Soviet Union and the growth of a strong Russia, a market which imported mainly tea from the Nilgiris but virtually gave up this product and went to other sources, plunging both the Badaga growers and the Sri Lankan repatriate workers in a crisis. A long-term solution now being suggested is diversification. In the 1980s, the small growers switched over from vegetables to tea, because of the boom. Now they are being advised to get back to vegetable cultivation or crop diversification.



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