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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
Chai Time
Sustainable Livelihood for Small Tea Growers through CSR
CHAI TIME
Sustainable Livelihood for Small Tea Growers through CSR
Shatadru Chattopadhayay
Senior Programme Manager, Partners in Change, New Delhi
Saji M. Kadavil, Research Consultant and Author
Edition, first: 2007
ISBN: 81-903505-6-0
Published by
Partners in Change
C-75 South Extension Part II
New Delhi 110 049
Tel: +11-41642348–51
www.picindia.org
The authors assert moral and legal right to be identified as authors of this work.
All rights reserved with the Publisher.
Copying and use in any form without the express permission of the publisher is prohibited.
Cover design: Argee/Wordmakers
Printed and bound in India at the National Printing Press, Bangalore
Sustainable Livelihood for Small Tea Growers through CSR
Chai TimeSustainable Livelihood for
Small Tea Growers through CSR
Partners in Change
Sustainable Livelihood for Small Tea Growers through CSR
Abbreviations 6
Glossary 7
Preface – Liesbeth Unger 11
Foreword – Viraf Mehta 13
Introduction
The problems of small tea growers 15
PiC and small tea growers 17
Objectives and Methodology 18
Methodology 18
Overview of Chapters 19
Indian Tea Industry - Pattern and Growth
Overview of the Tea Industry in India 24
Trend of Production 25
Export of Tea - Variations and Growth 26
Domestic Consumption 28
Indian Tea Industry and the ‘Crisis’ 31
India’s Small Tea Sector
Small Tea Growers in India 33
Productivity of Small Tea Gardens 34
Economics of Small Tea Growers in India
Small Tea Growers in Coonoor, TN 38
Small Growers in Idukki, Kerala 44
Small Growers in West Bengal 52
Small Growers in Assam 60
Value Chain and Small Tea Growers
Value Chain and Tea Sector 66
Competitiveness of New Model in Tea Sector
Cost of Production of Green Leaf for
Small Growers 73
Bought Leaf Factories 74
Floor Prices at Gardens 78
Price Mechanism at Auctions 78
Adulteration and Formation of Quality
in Various Stages of the Value Chain 81
Supply/Demand of Tea at Different
Localities 83
Corporate Social Responsibility
and Small Tea Sector
CSR and Tea Sector 87
CSR and Small Tea Growers 89
Workers Rights - Focus area of CSR 90
The Business Case for Integrating CSR
Practices in the Small Tea Holdings 91
Ethical Trade Initiative and Fair Trade 94
Fair Trade Practices 94
Consumer Preference and
Participation in CSR 96
CSR and Trade Initiatives 99
Initiatives from Small Tea
Growers in India 101
Policy Recommendations and Feasible
Intervention Points
Notes 111
4
Sustainable Livelihood for Small Tea Growers through CSR
Chai TimeSustainable Livelihood for
Small Tea Growers through CSR
Table of Contents
List of tables
production of tea in the World 25
International tea markets 27
Destination-wise Indian Tea Exports 28
Demand and Supply of Tea 32
Registered Tea Gardens in India 33
Share of Small and Estate Gardens 34
Share of Small Growers in Indian States 35
Yield of Tea Cultivation 36
Tea Cultivation in Tamil Nadu 39
Tea Cultivation in Kerala 47
Tea Cultivation in West Bengal 5
NOC Petition of Tea Growers in W. Bengal 56
Price Realization for Green Leaf in W. Bengal 57
Tea Cultivation in Assam 61
Production Cost for Green Leaves in India 74
Growth of BLFs in India 75
Price Realization of Various Factories 76
Beneficiaries of Subsidy from Tea Board 84
Impact of Quality Upgradation Programme
on Small Tea Growers 85
CSR standards, Codes and Practices 88
The TBOD for CSR in Small Holdings 89
CSR and Welfare Matrix 91
Process of CSR in Small Tea Sector 92
Perspectives of Stakeholders on CSR
and Tea Industry 93
List of figures
Tea Industry in India 24
Trends of Tea Production in India 26
Tea Exports from India 27
Domestic Consumption of Tea 29
Domestic Market for Tea 30
Per capita Tea Consumption in
Various Vountries 31
Growth of Tea Gardens in Tamil Nadu 39
Growth of Tea Gardens in Kerala 46
Growth of Tea Gardens in W. Bengal 54
Growth of Tea Gardens in Assam 60
Value Chain Small Tea Growers in India 68
Price Differences at Auction in Coonoor 76
5
Sustainable Livelihood for Small Tea Growers through CSR
Abbreviations
BLF Bought leaf factory
CAGR Compound annual growth rate
CoC Code of conduct
CSO Central Statistical Organisation
CSR Corporate Social Responsibility
CTC Cut, torn and curl
CTTA Calcutta Tea Traders Association
ETI Ethical Trade Initiative
HLL Hindustan Lever Limited
KVK Krshi Vigyan Kendra
ITA Indian Tea Association
ITC International Tea Committee
MNCs Multinational companies
NAS National Accounts Statistics
NOC No objection certificate
OECD Organization for Economic Co-operation and
Development
PDS Peerumadu Development Society
SHG Self-help Group
TMCO Tea Marketing Control Order
TPI Tea Promoters of India
UPASI United Tea Planters Associations of South India
USTPA United Small Tea Producers Association
VCA Value Chain Analysis
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Sustainable Livelihood for Small Tea Growers through CSR
Glossary
Assessment: A study to determine whether, and to what extent, labour practices comply
with the provisions of a code of labour practice. The term can refer to the study of a
workplace but can also apply to more general studies such as to an industry within a
country. A ‘study’ means a systematic investigation that covers all points of the relevant
code. Where this concerns a workplace it means a study involving the gathering of
robust verbal, documentary, visual and physical evidence. Preliminary studies meant for
detecting the likelihood that code provisions are not being observed are referred to as
risk assessments and are understood to be less robust. Where such assessments do not
involve the actual inspection of the workplace they are referred to as desk-based risk
assessments
Auction: Sale of tea in an auction room on a stipulated date, and at a specific time. Tea
auctions are held in India, Sri Lanka, Indonesia, Kenya and Malawi. These auctions
only sell teas from their particular areas. The London Tea Auction held every Monday
morning (barring public or bank holidays) in the city of London, is the only true
international tea auction, where teas from all over the world are sold.
Black tea: Fresh-picked green tea leaves are withered, spread out on racks to dry, and
then crushed by rollers to release the juices from them (fermented or oxidised). The
leaves turn brown and are then fired (or dried) by hot air and sorted into grades.
Blend: a mixture of teas from several different origins to achieve a certain flavour
profile. Most branded teas in the United States use 20 or more origins to achieve their
desired taste.
Blender: Tea taster who decides on the proportions of each different tea required to
produce the flavour of a given blend.
Broker: The person who negotiates the buying and selling of tea from producers, or for
packers and dealers, for a brokerage fee from the party on whose behalf he acts.
BOP: Broken Orange Pekoe - Full-bodied black tea comprising broken segments of
somewhat coarse leaves without tips. The smallest among leaf grades, it gives good colour
in the cup and is used for several blends.
BP: Broken Pekoe - Full-bodied black tea comprising broken segments of coarse leaves
without tips.
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Sustainable Livelihood for Small Tea Growers through CSR
Brick tea: Chinese and Japanese teas mixed and moulded into bricks under high pressure.
Once used as a form of currency.
Child labour: Child labour refers to work done by a child younger than 15 years, unless
local Legislation has set a higher age.
Code of practice/conduct: In the context of ethical trading, a code of practice (or code
of conduct) is a set of standards concerning labour practices adopted by a company
and meant to apply internationally, and in particular, to the labour practices of its
suppliers and subcontractors.
Collective bargaining: The right to collective bargaining refers to the right that workers’
organizations have to negotiate with employers or their organizations on behalf of their
members to determine working conditions and terms of employment
Corporate Social Responsibility (CSR): A concept of business ethics based on the idea
that companies have stakeholders who are broadly defined as individuals or groups
affected by the activities of the company. The idea of CSR is that a company should be
accountable to its stakeholders. For this reason the subjects of CSR focus on how
companies should identify and ‘engage’ stakeholders and how they should determine,
measure and report the impact of their activities on others. (The terms social auditing
and social reporting have emerged in this context.)
CTC: Cut, Tear and Curl, a machine process which cuts the withered leaves into uniform
particles to facilitate complete oxidation. Typical of most black tea grown in India and
other lowland producing countries, and used in teabags to create a stronger tea of
deeper colour.
Darjeeling: Province in northern India that produces black tea famous for its exquisite
bouquet.
Dark: A dark or dull colour which usually indicates poorer leaf
Dimbulla: A district in Sri Lanka (Ceylon) that produces full-bodied black tea.
Dust: The smallest broken leaves left over after all manufacturing processes are finished.
ETI Base Code: The code of labour practice based on key conventions of the ILO that
ETI requires its members to uphold. Its content was negotiated and agreed to by the
founding trade union, NGO and corporate members of ETI. It is accompanied by a set
of general principles governing its implementation.
Externality: A side-effect or consequence (of an industrial or commercial activity) which
affects other parties without this being reflected in the cost of the goods or services
involved; a social cost or benefit.
Fair trade: Fair Trade is an alternative approach to conventional international trade. It
is a trading partnership which aims at sustainable development for excluded and
disadvantaged producers. It seeks to do this by providing better trading conditions, by
awareness raising and by campaigning. Fair trade differs from ethical trading in that its
8
Sustainable Livelihood for Small Tea Growers through CSR
primary focus is on improving trading relationships rather than labour practices. It
engages primarily with marginal producers, and aims to establish an alternative trading
model rather than working within the confines of conventional international trading
relationships.
Flush: Young tea-leaf shoots. The term also refers to the various harvests. ‘First flush’ is
the early spring plucking and the ‘second flush’ is harvested in late spring and early
summer. A second flush has a stronger flavour than the first flush.
Freedom of association: The right of all workers to join or form a trade union of their
own choosing and carry out trade union activities without interference from their
employer or from public authorities.
Garden: The name of a specific plantation used to identify fine harvests produced solely
from that garden.
Green tea: Unfermented tea that is immediately heated (or steamed) to kill the
fermentation enzymes. It is then rolled and dried. Naturally low in caffeine, the brew is
very light in colour. Green teas range from a light, fragrant taste to a very bold vegetal
flavour.
Import Quota: A form of protectionism used to restrict the import of goods by limiting
the legal quantity of imports.
Oolong tea: Semi-oxidised tea from China or Formosa; a diplomatic tea in that
Oolong is a compromise between black tea and green tea. It is more delicate than black
tea and stronger than green tea. The floral Ti Kuan Yin produces a clear mellow brew
and is famous for its light fragrance.
OP: Orange Pekoe: Of higher quality than Pekoe leaves, it is not a variety of tea but a
term which describes the size of the leaf. It is a black tea comprising leaves of 8-15 mm.
It has fewer tips than FOP, because it is plucked later in the season and generally refers
to tea from Sri Lanka (Ceylon). Leaves are long, thin and rolled length wise.
Orthodox tea: Tea was processed this way for centuries, by hand, with great care. Some
of today’s great teas are still produced in this manner.
Pan-fired: A kind of Japan tea that is steamed then rolled in iron pans over charcoal fires.
Pekoe Souchong: Black tea, produced by a coarse plucking of the third leaf on the
bush. Each leaf is rolled into a ball.
Pekoe: A grade of black tea produced by a medium plucking of the second leaf on the
bush.
Ploughman’s lunch: A meal featuring hearty meat and cheese sandwiches, pickled
vegetables, sweets and served with tea as the main beverage.
Pouchong: A kind of scented China tea, so called from the Cantonese method of
packing in small paper packets, each of which was supposed to be the produce of one
choice tea plant.
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Sustainable Livelihood for Small Tea Growers through CSR
Rooibus: Bush tea from Africa. Caffeine-free, it may be purchased as a variety or
blended with herbs and flavourings.
Scented tea: Green, semi-fermented or black tea that has been flavoured by the addition
of flowers, fruit or essential oils. Earl Grey is one of the most famous of scented black
teas. Madame Butterfly is a green tea scented by the addition of flowers and flavouring.
Stakeholder: As developed for the concept of Corporate Social Responsibility the term
refers to any individual, community or organization that affects or is affected by the
operation of a company. Stakeholders may be internal (e.g. employees) or external (e.g.
persons performing work who are not employees, and maybe also customers, suppliers,
shareholders, financiers or the community). For instance, in the context of ethical
trade, the workers whose working conditions are the subject of codes of labour practice
are recognized as having the greatest ‘stake’ in ethical trading.
Tariff: A Government-imposed tax on imports.
10
Sustainable Livelihood for Small Tea Growers through CSR
Preface
Are we romanticizing the small farmers by wanting them to survive and
have a better position in the value chain? Or are they not sustainable in the
long run and are big companies right in preferring tea from large estates,
from whom the quality is much better to control?
This study of small growers in the tea sector in India is showing us how
important it is to include small growers in the value chain, not only from
developmental perspective, but also from the perspective of a supply of
varied, good quality tea for an affordable price.
When the recommendations of this study are implemented, the most
important benefits are for: the migrant, seasonal workers dependent on
work in small gardens who will be better protected, the small growers and
their families who will be supported more when they have land titles,
registration and knowledge on markets and prices, and consumers in India
who will have better access to a wider variety of tea with higher quality.
Already several associations between small growers in the tea sector exist,
one of which the USTPA in Nilgiris, in association with Partners in Change,
supported by Oxfam Novib. These associations will be crucial for the new
model of production in the tea sector, where small growers have more
power to negotiate.
The international market and the domestic market in India are
dominated by a few big players , who have a lot of influence on prices via
the auction, or via direct sales, on quality and on the demand of consumers.
However, when we look at the initiatives that are currently taken to improve
the situation for people and environment in the production of tea, these
companies are not playing a leading role at all. As we are learning from this
study the problems are complicated, yet millions of people depend on the
tea sector for their livelihoods and many of them live in deplorable
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Sustainable Livelihood for Small Tea Growers through CSR
conditions. Therefore the problems cannot be ignored and need to be
dealt with the sooner the better. As the study rightly points out, all
stakeholders in the value chain, have to be involved, some at the national
level, some at international level and others at local level. You would expect
the most influential players to take responsibility, take a lead and invite
others to work with them. More direct relationships between buyers and
small growers will be beneficial for both of them.
For Oxfam Novib, the large tea buyers/packers, retailers have primary
responsibility to ensure that small producers are not excluded as a result of
increasing requirements in the areas of food safety, quality and volume. By
making improvements a shared effort and not solely the responsibility of
the small producer, these companies can play an important role in
facilitating development and poverty alleviation in India.
Liesbeth Unger
Oxfam Novib
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Sustainable Livelihood for Small Tea Growers through CSR
Foreword
India is one of the the largest producers and consumers of tea in the
world. It produced over 900 million kilograms (kg.) of tea and consumed
771 million kgs. in 2006. India also exports about 180 million kg. of tea
every year. The tea industry is the second largest employer in India, with
more than 1.2 million workers on permanent rolls. Women constitute 50
per cent of the workforce. The number of workers employed goes up
significantly if the casual workers are also included.
The auction prices of tea consistently fell in an unprecedented manner
during 1998–2003 leading to a situation that they were even lower than
the cost of production. The decline in tea prices has led to downward
pressure on farmers’ incomes and labourers’ working conditions in many
Indian tea estates and small holdings with less than 10.12 hectares of land.
Such low prices may force the small tea growers to compromise on quality,
environmental aspects, and labour situation which in turn may lead to
their exclusion from many markets, high cost of production, and
environmental pollution. In the long run this may further bring down the
tea prices and could affect the sustainability of the entire tea industry. At
the same time the challenge is to make the tea market work for all, even
when tea prices start improving.
Increasingly Indian tea companies are integrating corporate social
responsibility into their core business practices and moving away from
philanthropic approach. It is widely acknowledged that improved social,
environmental and economic practices of the tea companies across the
supply chain can lead to remunerative prices for tea small growers and fair
wages to the workers in one hand and better access to markets, reputational
benefits, increased workers satisfaction and loyalty leading to increased
productivity, increased savings through better environmental management
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Sustainable Livelihood for Small Tea Growers through CSR
and reduction of cost of production on the other. Partners in Change
along with all its partners remained committed to this agenda.
The present study conducted by Partners in Change with support from
Oxfam-Novib is an in depth analysis of the drastic expansion of the small
growers, the issues around livelihood and competitiveness of small tea-
growers in all the four tea producing states of Assam, West Bengal, Tamil
Nadu and Kerala. 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. It also provides valuable
recommendations on how to overcome those barriers for sustainable tea
industry.
The study was made possible through the active participation of different
stakeholders including the small tea growers, auctioneers, representatives
from processing factories, trade unions, business leaders, several civil society
organizations as well as many academicians.
I am confident that this study can contribute significant inputs to small
tea growers, civil society organizations, policy-makers, business leaders as
well as academicians towards unleashing the immense potential of the Indian
tea industry.
Viraf Mehta
Chief Executive
Partners in Change
14
Sustainable Livelihood for Small Tea Growers through CSR
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. 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
15
Sustainable Livelihood for Small Tea Growers through CSR
profit accruing to them is very marginal. The reasons for this are several,
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 from 1998 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 grower model of tea production which was increasing when the
prices were high as a sustainable system for future as the cost of production
of small growers is low compared to big estates. However, the small growers
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
16
Sustainable Livelihood for Small Tea Growers through CSR
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
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.
Partners in Change and Small Tea Growers
In the tea sector Partners in Change strives to make businesses
accountable to all its stakeholders through out the supply chain
commensurating to their influence in those chains, laws of the land and
also ensure that they don’t lobby to change laws and like to examine their
responses to their own stated policies and sectoral codes of conduct. The
aim is not merely to make the companies more profitable but to make
them more responsible.
In the case where such instruments does not exist as in the case of tea
small holdings PiC engages in multi-stakeholder dialogues aimed towards
developing relevant social and environmental standards, ensuring
remunerative prices and living wages through better access to market and
equitable sharing of profits, and through addressing the issue of food
security.
We believe that while the low tea prices as it has been prevailing for
quite some time now may force the tea growers to compromise on quality,
environmental aspects, and labour situation, such practices leads to denial
of access to many markets, high cost of production in the form of less
productivity and environmental pollution. This may lead to the prices of
tea further going down in the long run and could affect the sustainability
of the tea industry.
Hence, PiC has been active for last three years to create an enabling
environment for sustainable and equitable economic growth of the small
tea growers. This PiC seeks to do by building partnerships of small tea
growers with the big tea companies under CSR framework. Such
partnerships would help in improving the quality of tea produced by small
tea growers by using the technical knows how available with the big
companies leading to small growers getting a better price.
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Sustainable Livelihood for Small Tea Growers through CSR
It is also crucial to develop a mechanism of serious stakeholder
engagement with social and environmental issues. Hence, It will involve a
programme to develop a social and environmental guideline for the small
tea growers in association with other actors in the supply chain so that it
opens up new markets for them. The present research is an effort towards
that direction and aims to capture the key social, economic and
environmental issues around small tea growers and workers in the tea supply
chain.
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
grower 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
18
Sustainable Livelihood for Small Tea Growers through CSR
stakeholders. The study in all four regions specifically covered:
� Small growers
� 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
19
Sustainable Livelihood for Small Tea Growers through CSR
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
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 90’s. 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
20
Sustainable Livelihood for Small Tea Growers through CSR
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. .
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
21
Sustainable Livelihood for Small Tea Growers through CSR
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
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 90’s. 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.
22
Sustainable Livelihood for Small Tea Growers through CSR
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 consumers say
that they are influenced in their purchasing by knowledge of a company’s
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.
23
Sustainable Livelihood for Small Tea Growers through CSR
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.1
Chapter 2
Source: Tea Statistics (2005) J Thomas & Company Pvt. Ltd and www.indiateaportal.com
N. India –
Production
700.9 (74.5%)
Figure 2.1 Tea Industry in India (figures are in Million kilograms)
Export
94.9
(50.6%)
S. India –
Production
227.8 (24.5%)
Export
92.6
(49.4%)
Export
187.6
Domestic
Consumption
757
All-India Production
927.88
24
Sustainable Livelihood for Small Tea Growers through CSR
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. China’s tea production has increased
from 835.23 Million kilograms in 2004 to 934.86 Million kilograms in
2006 whereas India’s production has decreased from 934.86 in 2004 to
927.98 in 2005.2
Table 2.1 Production of Tea in the World
Country 2004 Share 2005 Share
(in mn. kgs) (in %) (in mn. kgs) (in %)
India 892.96 27.0 927.98 27.14
China 835.23 25.2 934.86 27.34
Sri Lanka 308.09 9.3 317.2 9.28
Kenya 324.6 9.8 328 9.59
Bangladesh 55.63 1.7 58.62 1.71
Vietnam 97 2.9 109 3.19
Indonesia 164.82 5.0 165.85 4.85
Malawi 50.09 1.5 37.98 1.11
Tanzania 30.69 0.9 30.36 0.89
Others 551.23 16.7 509.15 14.89
Total 3310.35 100.0 3419.58 100.00
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
25
Sustainable Livelihood for Small Tea Growers through CSR
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
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
India’s 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. India’s exports
on the other hand, have declined from 12.8 per cent in 2004 to 12.3 per
cent in 2005.3
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 India’s unpredictable
performance in the export market. Export trends fluctuate each year, and
Source: Tea Statistics (2003), Tea Board of India and Tea Statistics (2005),
J Thomas & Company Pvt. Ltd.
26
Sustainable Livelihood for Small Tea Growers through CSR
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
191 million kilograms.
Table 2.2 International Tea Markets
Country 2004 Share 2005 Share
(in mn. kgs) (in %) (in mn. kgs) (in %)
India 197.67 12.8 191.85 12.3
China 280.19 18.2 286.56 18.4
Sri Lanka 290.6 18.9 298.77 19.1
Kenya 333.8 21.7 339.13 21.7
Vietnam 70 4.5 88 5.6
Tanzania 24.17 1.6 22.5 1.4
Indonesia 98.57 6.4 102.29 6.6
Malawi 46.6 3.0 42.98 2.8
Zimbabwe 14.91 1.0 8.45 0.5
Others 183.39 11.9 179.8 11.5
Total 1539.9 100.0 1560.33 100.0
Source: Tea Statistics (2005) J Thomas & Company Pvt. Ltd and www.indiateaportal.com
Figure 2.3 Export of tea from India
Source: Tea Statistics (2005) J Thomas & Company Pvt. Ltd and www.indiateaportal.com
Another notable feature which could be observed is that in 1999, India
exported about 102 million kg to Russia, or nearly 60 per cent of Russian
total import of tea. However, by 2003, exports dropped to 42.76 million
27
Sustainable Livelihood for Small Tea Growers through CSR
kg and by 2006 to 42.99 million kgs, The lucrative Russian market is
being replaced by unpredictable markets like Iraq and UAE.
The bulk of India’s production comprises the CTC variety. However,
Kenya dominates the world CTC market because of higher quality and
cheaper rates, Sri Lanka dominates the orthodox markets and China the
green tea market. The world’s biggest export market, Russia, is dominated
by Sri Lanka (45 per cent) and the other two biggest markets – the UK and
Pakistan – are dominated by Kenya (46 per cent and 65 per cent,
respectively).
Table 2.3: Destination-wise Indian Tea Exports (in Million kgs)
2005 2006
Country 2005 2006
quantity Quantity
CIS 48.13 42.99
Iraq 35.82 42.13
UAE 26.54 21.73
The Rest of the world 26.41 35.42
UK 21.36 19.99
Pakistan 14.99 11
USA 9.08 7.89
Kenya 5.91 8.52
Germany 4.85 4.13
Afghanistan 3.06 7.35
Netherlands 2.91 2.71
Source: Tea Board of India, 2007
Domestic Consumption of Tea
India is still the largest consumer of black tea in the world with domestic
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
Figure 2.4 Domestic Consum
28
Sustainable Livelihood for Small Tea Growers through CSR
respectively4. 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).5 The average annual per capita consumption of tea in
India varies considerably from region to region. It f luctuates from a
maximum of 1.2 kilograms in Punjab to a minimum of 0.36 kilograms in
Orissa.6
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
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 non-branded/
packet tea was inferior. Consumers were offered branded teas in a variety
of aromas and flavours, packed in compact, attractive packets.7 Most of
Figure 2.4 Domestic Consumption of Tea in India
Source: Tea Statistics (2003), Tea Board of India and www.indiateaportal.com
29
Sustainable Livelihood for Small Tea Growers through CSR
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 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.8 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-à-vis
other countries like UK (2.24 kilograms), Ireland (2.96 kilograms), Turkey
(2.6 kilograms) and Sri Lanka (over 1.38 kilograms).9
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.10
The figure 2.6 shows that per capita consumption11 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 2.5 Domestic Consumption( in Mn.Kg)
Source: Tea Statistics (2005) J Thomas & Company Pvt. Ltd and www.indiateaportal.com
30
Sustainable Livelihood for Small Tea Growers through CSR
Indian Tea Industry and the ‘Crisis’
During 1998-2003 many tea plantations closed down and several others
abandoned by their managements as tea prices tumbled to a record low.
Thousands of workers were not paid their wages for months and basic
facilities like water, electricity and healthcare stopped. In situations where
closure and abandonment have not become a norm, the management was
forced to intensify work by either reducing the number of workers or
increasing the task load. This kind of situation led many of the tea industry
people and civil society organisations to refer it as ‘tea crisis.
The small growers have no control over green leaf prices and price
fluctuations in the auctions directly and immediately affect their price
realisations. Small growers during the crisis went for plunder plucking,
Source: Tea statistics (2003), Tea Board of India
increasing volumes at any cost to survive. Due to their inability to raise
resources, they have also abandoned almost all tea agricultural practices
like pruning, weeding and applying manure.
The consistent and unprecedented fall in tea auction prices, to the extent
that they are even lower than the cost of production, is perceived as the
most important cause of the present crisis. The average auction prices fetched
by tea producers of South India fell from Rs 68.79 per kg in 1998 to Rs
57.10 in 1999 and Rs 40.30 in 2003. The northern tea gardens have not
remained immune to this downtrend. From Rs 80.22/kg in 1998, the
price came down to Rs 69.80/kg in 2001 to Rs 61.32 in 2003.
Figure 2.6 Per Capita Consumption of Tea in Various Countries
in kilograms)
31
Sustainable Livelihood for Small Tea Growers through CSR
Any discussion with the stakeholders will lead to four major reasons
behind the fall in tea auction prices: Falling exports, growing imports,
falling tea consumption in India and rising labour costs.12 The availability
of the excess tea in the market was no doubt the single most important
reason for the fall in tea prices. Although, during the year 2005-07 has
seen improvement in the tea prices which has led to many stakeholders
declare that the crisis is over, the effect of this long crisis is still being felt by
all the stakeholders particularly the marginalised and the vulnerable ones
like the small growers and the workers.
Table 2.4 Demand and Supply of Tea (in million kgs)
Year 1995 1996 1997 1998 1999 2000 2001 2002
Production 754 780 810 874 824 846 854 826
Import 1 1.25 2.61 8.93 9.99 13.43 16.58 22
Total supply 755 781.25 812.61882.93 833.99 859.43 870.58 848
Domestic
consumption 562 580 597 615 633 653 673 685
Export 163.7 160 203 210 192 207 182 201
Total demand 725.7 740 800 825 825 860 855 886
Accumulated net tea stock28.3 69.55 82.16140.09 149.08 148.51 164.09 126.09
Source: Shatadru Chattopadhayay, Productivity, Decent Work and the Tea Industry in Southern
India, ILO, 2005.
32
Sustainable Livelihood for Small Tea Growers through CSR
Small Tea Sector in India
Small Tea Growers in India – an overview
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,1
owing to the reason that small tea growers, particularly in the north-eastern
regions do not possess documents for the land they possess.2
Table 3.1 Registered Tea Gardens in India
Region Registered with Reported Percentage
with Tea Board by Associations Registered growers
South India 61773 68000 90.8
North East 5595 45132 12.4
North India 9903 58256 17.0
Total India 71676 126256 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 country’s tea and in Kenya small holdings accounted for
Chapter 3
33
Sustainable Livelihood for Small Tea Growers through CSR
61.6 percentage of production in 2000.3 In India the majority of small tea
growers are from Southern India, mainly the Nilgiris region.
Table 3.2 Share of Small and Estate Tea Gardens in India
Small Growers Big Growers
Region No. of Area Prod- No. of Area Prod-
Estates in Ha uction Estates in Ha uction
Assam 98.2 15.2 14.5 1.8 84.8 85.5
W. Bengal 96.5 8.4 17.1 3.5 91.6 82.9
Others 98.0 42.5 20.3 2.0 57.5 79.7
Northern India 97.9 14.5 15.4 2.1 85.5 84.6
Tamil Nadu 99.6 57.1 55.0 0.4 42.9 45.0
Kerala 97.5 13.0 3.4 2.5 87.0 96.6
Karnataka 50.0 3.9 4.0 50.0 96.1 96.0
Southern India 99.4 41.9 39.2 0.6 58.1 60.8
All India 98.7 20.6 21.2 1.3 79.4 78.8
Source: Tea Statistics ( 2003), Tea Board of India
The number of small tea gardens has registered a high increase in Southern
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 India’s 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.
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, India’s 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
34
Sustainable Livelihood for Small Tea Growers through CSR
Tab
le 3
.3 S
har
e of
Sm
all G
row
ers
Am
on
g D
iffe
ren
t Sta
tes
in I
nd
ia
(Fig
ure
s in
bra
cket
s sh
ow
th
e per
cen
tage
sh
are
agai
nst
All In
dia
leve
ls
Reg
ion
Sm
all G
row
ers
Big
Gro
wer
sT
ota
l
Nos
Are
aP
dn
.N
os
Are
aP
dn
.N
os.
Are
aP
dn
.
Ass
am4
24
92
41
24
96
277
07
80
22
94
34
37
05
57
43
27
227
06
83
43
33
27
(33
.7)
(38
.9)
(35
.2)
(47.
7)
(56
.0)
(56
.1)
(33
.9)
(52
.5)
(51
.7)
W.B
enga
l8
39
89
50
03
22
45
30
810
3613
15
5776
87
06
11
311
318
80
21
(6.7
)(8
.9)
(18
.1)
(18
.8)
(25
.3)
(23
.6)
(6.8
)(2
1.9
)(2
2.4
)
Oth
ers
727
77
35
521
08
148
99
67
82
92
742
517
32
210
40
0
(5.8
)(6
.9)
(1.2
)(9
.1)
(2.4
)(1
.3)
(5.8
)(3
.4)
(1.2
)
Nort
h I
nd
ia5
816
75
810
49
71
21
23
63
43
014
53
46
25
59
40
34
011
18
6317
48
(46
.1)
(54
.7)
(54
.5)
(75
.6)
(83
.7)
(81.0
)(4
6.5
)(7
7.8
)(7
5.3
)
TN
619
85
431
57
7876
42
28
32
46
26
43
57
62
21
37
561
914
31
21
(49
.1)
(40
.7)
(44
.2)
(14
.0)
(7.9
)(9
.7)
(48
.7)
(14
.7)
(17.
1)
Ker
ala
59
99
481
019
69
15
43
2157
55
80
361
53
36
967
5777
2
(4.8
)(4
.5)
(1.1
)(9
.4)
(7.8
)(8
.5)
(4.8
)(7
.2)
(6.9
)
Kar
nat
aka
16
83
23
216
20
45
56
01
32
21
28
58
33
(0.0
)(0
.1)
(0.1
)(1
.0)
(0.5
)(0
.8)
(0.0
)(0
.4)
(0.7
)
Sou
th I
nd
ia6
80
00
48
05
08
09
65
39
86
66
64
12
5761
68
39
811
471
42
067
26
(53
.9)
(45
.3)
(45
.5)
(24
.4)
(16
.3)
(19
.0)
(53
.5)
(22
.2)
(24
.7)
To
tal I
nd
ia10
0.0
100
.010
0.0
10
0.0
10
0.0
10
0.0
10
0.0
10
0.0
100
.0
Sou
rce:
Tea
Sta
tist
ics(
2003),
Tea
Boar
d o
f In
dia
35
Sustainable Livelihood for Small Tea Growers through CSR
in the small grower sector, since 1992 onwards.4 Sri Lanka has in fact
reduced the overall area under tea by nearly 57 thousand Ha, compared to
the planted area in 1980.5
Productivity patterns in the small tea gardens and large-estate sectors
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. India’s
performance (1690 kilograms) is lower than Kenya (2235 kg.) but better
than Sri Lanka (1611 kilograms)6 in terms of average yield per hectare of
total production of tea. Kenya has a much higher growth in yield per Ha
than India.7 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).8
Table 3.4 Yield of Tea Cultivation
Region STGs Tea Estates
Yield (Kg/Ha) Yield (Kg/Ha)
Assam 1340 1601
Darjeeling 545
W. Bengal 3394 1770
Northern India 1670 1601
TN 1825 2203
Kerala 409 1569
Karnataka 2800 2476
Southern India 1690 2004
All India 1680 1690
Sri Lanka 2300 1875
Kenya 1651 1933
Source: Calculated from Tea Statistics (2003), Tea Board of India
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.9 The productivity of small tea gardens in India is far below that of
36
Sustainable Livelihood for Small Tea Growers through CSR
Sri Lanka (2300) though West Bengal (3394) and Karnataka (2800) show
high productivity.10 The figures below summarize the productivity of tea
sector in India and other major tea-producing countries that are in
competition with India.
37
Sustainable Livelihood for Small Tea Growers through CSR
Economics of Small TeaGrowers 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.1 The Badagas2 probably migrated during
the 16th century and are undoubtedly migrants from the plains of Karnataka,
earlier the State of Mysore.3 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. 4. 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. 5
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
are scattered over 4-5 regions mainly in Coonoor, Kotagiri and Gudaloor
Chapter 4
38
Sustainable Livelihood for Small Tea Growers through CSR
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 growers has witnessed a distinct growth
in the post 1990s and currently the number of small growers has grown to
more than 50,000 in Tamil Nadu. Small tea cultivation in Tamil Nadu
accounts for 55 per cent of the State’s total tea production.
The Nilgiris region constitutes the major share of small tea gardens in
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.
Table 4.1 Tea Cultivation in Tamil Nadu
Small Tea Gardens Estate Tea Gardens
(up to 10.12 Ha) (above 10.12 Ha)
Actual
Nos. Area Prod. Nos. Area Prod.
000kgs. 000kgs.
Kanyakumari 1 2 6 431 141
Tirunelveli 1 4 3 796 1692
Madurai 2 13 3 960 1318
Coimbatore 7 56 141 45 11678 26983
Nilgiris 61974 43082 78623 171 18597 34223
Figure 4.1 Growth of Tea Gardens in Tamil Nadu
Source: Tea Statistics (2003), Tea Board of India
39
Sustainable Livelihood for Small Tea Growers through CSR
Tamil Nadu 61985 43157 78764 228 32462 64357
(Percentage of total tea cultivation )
No. Area Prod. No. Area Prod.
Kanyakumari 14.3 0.5 0.0 85.7 99.5 100.0
Tirunelveli 25.0 0.5 0.0 75.0 99.5 100.0
Madurai 40.0 1.3 0.0 60.0 98.7 100.0
Coimbatore 13.5 0.5 0.5 86.5 99.5 99.5
Nilgiris 99.7 69.8 69.7 0.3 30.2 30.3
Tamil Nadu 99.6 57.1 55.0 0.4 42.9 45.0
Source: Tea Statistics, (2003), Tea Board of India.
Majority of the small growers in the Nilgiris were earlier growing
vegetables but when the prices of tea boomed during 1990s most of the
small growers converted their land into tea holdings.6 Despite the large-
scale shift from vegetable cultivation to tea, the present crisis in the tea
sector has compelled growers to think of other alternatives. 7 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
this influenced me to do the same...”8
The pattern of shifting to tea cultivation from the earlier dominant
practice of cultivating vegetables and agriculture crops began long ago. 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 90’s. Tea cultivation was also more attractive in terms of
work and was less risky as compared to vegetable cultivation.
The period post 90’s 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.
40
Sustainable Livelihood for Small Tea Growers through CSR
Nature of Production
The average leaf production in small tea holdings of Nilgiris is 5000-
6000 kilograms per acre annually.9 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 co-
operative 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.
It is common that local leaf agents often deny taking green leaves when
there is high supply”10
The factory also provides time-bound loans and other financial assistance
to growers who are members of the co-
operative factory. They also get ‘made
tea’ at lower rates than the local retail
market.11
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. Maintaining consistency in quality requires
greater investments such as timely spraying of medicine, pruning, and timely
application of fertilizers.
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
Major problems in tea
cultivation
� Low prices
� Insufficient funding for proper
maintenance
� Low quality of the tea leaf
� Lack of associations/networks
41
Sustainable Livelihood for Small Tea Growers through CSR
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.12
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.13 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 Grower’s 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 outside the
country were mainly from Sri
Lanka14, 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 owner’s
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
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.
42
Sustainable Livelihood for Small Tea Growers through CSR
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 festivities15 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 Nadu16 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.
Their socio-economic situation has deteriorated down the years. Many of
43
Sustainable Livelihood for Small Tea Growers through CSR
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
1877.17
During the initial years, the total area under tea cultivation was 200-
500 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
9 percent (36,821 Ha) of the total cultivation area of tea in India
44
Sustainable Livelihood for Small Tea Growers through CSR
currently is in Kerala.
The Idukki District is characterized by large scale migration of people
from Kerala’s 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 Hydro-
electric 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.18
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 large-
scale 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. 19 This resulted in an increase in population in the hilly taluks
STATISTICS FOR IDUKKI DISTRICT
Total number of tribal settlements 245
Number of tribal settlements in Thodupuzha 74
Number of tribal settlements in Peermade 34
Number of tribal settlements in Devikulam 126
Number of tribal settlements in Udumbanchola 34
SC/ST population 2.07 lakhs20
Total area of tea cultivation 23557 Ha21
45
Sustainable Livelihood for Small Tea Growers through CSR
of the district, especially in Udumbanchola and eastern parts of
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.22
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)
Source: Tea Statistics (2003) Tea Board of India
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.
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.
46
Sustainable Livelihood for Small Tea Growers through CSR
Table 4.2 Tea Cultivation in Kerala
Small Tea Gardens Estate Tea Gardens
(up to 10.12 Ha) (above 10.12 Ha)
Actual
No. Area Prod No. Area Prod.
Palghat 28 21 70 5 831 2845
Malapuram 1 174 0
Trichur 1 529 1467
Trivandrum 1 3 5 962 320
Quilon 89 138 14 1210 349
Eranakulam 2 2 0 0 0
Kottayam 953 776 226 1 64 31
Idukki 4857 3773 1498 99 22980 38709
Waynadu 69 97 175 28 5407 12082
Kerala 5999 4810 1969 154 32157 55803
(Percentage of Total Tea Cultivation )
No. Area Prod No. Area Prod.
Palghat 84.8 2.5 2.4 15.2 97.5 97.6
Malapuram 0.0 0.0 0.0 100.0 100.0 0.0
Trichur 0.0 0.0 0.0 100.0 100.0 100.0
Trivandrum 16.7 0.3 0.0 83.3 99.7 100.0
Quilon 86.4 10.2 0.0 13.6 89.8 100.0
Eranakulam 100.0 100.0 0.0 0.0 0.0 0.0
Kottayam 99.9 92.4 87.9 0.1 7.6 12.1
Idukki 98.0 14.1 3.7 2.0 85.9 96.3
Waynadu 71.1 1.8 1.4 28.9 98.2 98.6
Kerala 97.5 13.0 3.4 2.5 87.0 96.6
Source: Tea Statistics, (2003), Tea Board of India.
47
Sustainable Livelihood for Small Tea Growers through CSR
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
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 leaves…”23
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’.24 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.25
The Tea Board also reports that Kerala has very few registered buyers.26
There are however some recent initiatives among small growers to come
together and form new associations and begin dialogue with the Tea
Board.27 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
48
Sustainable Livelihood for Small Tea Growers through CSR
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 are also not
aware who the major players in the value chain of tea are…”28
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”. 29
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.30
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
49
Sustainable Livelihood for Small Tea Growers through CSR
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
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.”31
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 Grower’s 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 daily-
wage 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.
50
Sustainable Livelihood for Small Tea Growers through CSR
Around 22 estate factories have closed in Idukki district itself.32
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.
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.33 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.”34
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’.”35
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
51
Sustainable Livelihood for Small Tea Growers through CSR
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
don’t get the wages on time either.”36
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.”37 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.”38
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.”39
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
80’s. But wide- spread development of small tea gardens began in the post
90’s. 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
52
Sustainable Livelihood for Small Tea Growers through CSR
gardens in India also became evident at about this time.40 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
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.41
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 grower 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.42
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.
53
Sustainable Livelihood for Small Tea Growers through CSR
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 1951.43
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 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.44
Figure 4.3 Growth of Tea Gardens in West Bengal
Source: Tea Statistics (2003), Tea Board of India
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
54
Sustainable Livelihood for Small Tea Growers through CSR
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.
Table 4.3 Tea Cultivation in West Bengal
Small Tea Gardens Estate Tea Gardens
(up to 10.12 Hct.) (above to 10.12 Hct.)
No. Area Prod. No. Area Prod.
(in ha.) 000kgs (in ha.) 000kgs
Darjeeling 0 0 0 85 17463 9180
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.
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,
and even more dramatically from 163 hectares to 23 hectares in the Terai.45
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.
55
Sustainable Livelihood for Small Tea Growers through CSR
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.
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 Total petition received Total N.O.C issued
for N.O.C. up to 30-12-2005
Jalpaiguri 1960 620
Darjeeling 1947 865
Uttar Dinajpur 2005 249
Coochbehar 129 49
Source: V Chakraborty (2006)
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 growers 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.46 BLF owners indicate that
growers need training on different aspects of cultivation with a view to
improve the quality of leaf.47 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...”48
56
Sustainable Livelihood for Small Tea Growers through CSR
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
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 year’s 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 Average Price.Rs/Kg
2000 6.02
2001 7.11
2002 5.89
2003 5.30
2004 7.71
2005 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
57
Sustainable Livelihood for Small Tea Growers through CSR
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.”49
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
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 Growers’s 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.50
Workers in the Small Tea Gardens
The workers in small tea gardens are mostly casual/temporary workers.
Their wages are often less than the official wage rate of the State. In many
58
Sustainable Livelihood for Small Tea Growers through CSR
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 growers. 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 growers themselves and majority of the employment is given to women
workers primarily for plucking activities.. The small growers who have 20
acres or more land however do provide some benefits and have some welfare
provisions for the workers other than the usual wages. However, it not
based on a formal system and depend to large extent on the benevolence
and the financial capacity of the small grower.
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
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.51
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,
59
Sustainable Livelihood for Small Tea Growers through CSR
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.52
SMALL TEA GROWERS IN ASSAM
The spread of small tea gardens began in early 90’s and peaked in late
90’s. The number of tea gardens increased specifically from 1993 onwards
and the numbers continue to grow.
Source: Tea Statistics (2003), Tea Board of India
Figure 4.4 Growth of Tea Gardens in Assam
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.
Small growers in Assam get relatively better prices. At present Rs.11/- is
the average price for tea leaves/kg. 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
60
Sustainable Livelihood for Small Tea Growers through CSR
Table 4.6: Tea cultivation in Assam
Districts Up to 10.12 Hectares Above 10.12 Hectares
Actual
Nos. Area Prod. Nos. Area Prod.
000kgs 000kgs
Darrang 1446 853 1229 94 40840 74514
Goalpara 251 374 566 12 3149 5465
Kamrup 41 53 108 13 3401 4326
Lakhimpur 448 252 356 13 4541 8723
Dibrugarh 22590 25762 36012 244 67936 122994
Nowgong 341 253 334 23 7788 11362
Sibsagar 16893 12809 15367 256 63953 99876
Cachar 102 340 350 104 32435 45219
N.Cachar 0 0 0 8 4071 4340
Karbi Anglong 380 553 963 13 1320 1223
Assam 42492 41249 55285 780 229434 378042
Percentage of total
Darrang 93.9 2.0 1.6 6.1 98.0 98.4
Goalpara 95.4 10.6 9.4 4.6 89.4 90.6
Kamrup 75.9 1.5 2.4 24.1 98.5 97.6
Lakhimpur 97.2 5.3 3.9 2.8 94.7 96.1
Dibrugarh 98.9 27.5 22.6 1.1 72.5 77.4
Nowgong 93.7 3.1 2.9 6.3 96.9 97.1
Sibsagar 98.5 16.7 13.3 1.5 83.3 86.7
Cachar 49.5 1.0 0.8 50.5 99.0 99.2
N. Cachar 0.0 0.0 0.0 100.0 100.0 100.0
Karbi Anglong 96.7 29.5 44.1 3.3 70.5 55.9
Assam 98.2 15.2 12.8 1.8 84.8 87.2
Source: Tea Statistics, (2003), Tea Board of India
helps them obtain high price realisation from the market”53 . It is important
to note that one of the BLFs, TEAMFCO, achive high price realisation
61
Sustainable Livelihood for Small Tea Growers through CSR
and they have also focus to improve the
development of the small growers.54
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
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 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
Continuous instruction on use
of chemicals and knowledge
about leaves is important. BLF
should control the quality of
Leaf with small growers -
TEAMFCO.
“Lack of knowledge of tea
cultivation in small tea
segments has negatively
affected the productivity and
quality of the tea leaves in the
region”- Tea Board
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Sustainable Livelihood for Small Tea Growers through CSR
of tea is related to and dependant on geography as in the case of Darjeeling.55
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 of the major problems faced by
small growers in Assam. Only 25 per cent of the growers have registered
with the Tea Board. When asked growers say, “Land issues are not settled
yet, so we are unable to register with the Tea Board. This makes it impossible
for us to avail of the benefits provided by the Tea Board.”56
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.”57
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.58 Tea cultivation has entered forest land including reserved
forest and government land and most of them are have 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. Work-
ers are offered only min-mum
wages and no other benefits
such as Gratuity, PF, etc.
Additionally, steady employ-
ment is available only during
“Employment has increased due an increase in
the number of small tea gardens.” – Association
of Small Tea Growers.
The generation of employment is not sustainable
in terms of minimum wage and working days.
Wage and working days are regulated only in
peak season. Workers are forced to find jobs in
other agricultural fields during the off-seasons.
This pattern of employment by small tea gardens
is not attractive to skilled labourers.
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Sustainable Livelihood for Small Tea Growers through CSR
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
estimated to be 4.36 per Ha, comparatively higher than that of estate gardens,
at 2.39 per Ha.59 No permanent labour was employed and the causal labourers
received daily wages ranging from Rs. 60 to Rs. 65 per day.
Often many workers known as tea tribes are forced to leave their places
of work and look for jobs in other sectors. Tea labour communities
constitute the oldest among Assam’s 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.60
Among the workers, a majority of them are from tribal groups, also
known as the tea-tribe community. They are manly Santhals, Mundas,
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
tea-labourer community which lives in villages neighbouring the tea estates
and provides casual labour to them depending on seasonal demand.61
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.”62
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
64
Sustainable Livelihood for Small Tea Growers through CSR
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 off-season.
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.
65
Sustainable Livelihood for Small Tea Growers through CSR
Value Chain and SmallTea 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.1
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.2 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 chain3 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).
Chapter 5
66
Sustainable Livelihood for Small Tea Growers through CSR
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.4 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.5
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.6
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
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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
makers. Tea marked as high quality in auction centres may not be in demand
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
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Sustainable Livelihood for Small Tea Growers through CSR
representation 5.1 below 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.7 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’.8
The amount is remitted to the producers after deducting 1 per cent
brokerage and government levies such as sales tax. The buyer’s 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
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.9
The value of and demand for tea is fixed through negotiations and
convergence with producers. Tea auctioneers have regular dialogues with
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Sustainable Livelihood for Small Tea Growers through CSR
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.10
They have direct links with buyers as well as producers. They also keep
in direct contact with semi-whole-sellers.11 This requires strong
international connections as well as a network of correspondents all over
the world. Additionally, auctioning companies occasionally give short-term
finance12 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.13 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
administrative control of the Ministry of Commerce and Industry,
Department of Commerce. The functions of the Tea Board are directed
towards:
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Sustainable Livelihood for Small Tea Growers through CSR
� 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.14
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.15
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,
shipping agencies etc. Due to this control on entire production process
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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.16
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.17
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.18
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Competitiveness of NewModel of Production inTea 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. This new model is
charecterised by big integrated tea companies moving out of tea production
processes and consolidating the packaging segment. The present phase of
globalisation has intensified competition among various players and the
big players are trying to consolidate or increase their brand presence across
the world. For example, Tata Tea’s major emphasis on plantation business
has over the years shifted significantly, as the company has transformed
itself into a major global player in the world’s branded tea market. As
much as 86 per cent of the turnover of Tata Tea’s consolidated operations
now comes from sale of branded products. The same goes for Hindustan
Unilever which also completely moved out of tea production.
Experts believe that this change in strategy by big companies is essentially
meant to dispense with the estate system, as the companies are not willing
or unable to provide social benefits like housing, water, education, health,
etc., to their workers. The emphasis of reducing costs has been entirely on
labour. One of the labour journals claims that the strategies for such
activities would be:
Chapter 6
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a) Growth in production of tea through expansion of small growers
and sourcing green leaves from them.
b) De-link processing factories from plantation-related regulations by
supporting BLFs on cost conversion basis.1
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.
However, majority of the labourers work as temporary workers in both
production and manufacture and the small growers receive much lower
price in the auction markets. 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.
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. 1.74 2.12 1.6 1.78 1.26
Wages 3.58 2.87 2.73 2.92 4.54
Direct Expenses 0.15 0.69 0.32 0.11 0.19
Overheads 0.81 0.64 0.42 0.52 0.6
Total cost per
kg. of green leaf 6.27 6.32 5.07 5.33 6.59
Average price
realisation 7.41 5.5 4.54 4.87 5.35
Source: Compiled report on small tea growers, (2005), Tea Board of 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. small growerThere has been a steady
growth in the numbers of private tea manufacturing factories in India in
the post 90’s. 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
� 185 factories in Tamil Nadu producing 81 million kgs of tea
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Sustainable Livelihood for Small Tea Growers through CSR
� 18 factories in Kerala producing 3 million kgs of tea2
The following table shows the growth of BLFs in India.
Table 6.2 Growth of BLFs in India
Region 2001 2002 2003 2004
No. Prod. No. Prod. No. Prod. No. Prod.
(mn. kg) (mn. kg) (mn. kg) (mn. kg)
Assam 119 43.0 139 53.29 151 65.32 162 77.6
West Bengal 44 24.6 56 33.44 69 37.74 79 49.59
Others 4 0.5 4 1.67 8 2.78 9 3.04
North India 163 67.5 199 88.4 228 105.8 250 130.23
TN 155 65.6 159 67.43 182 75.9 185 80.72
Kerala 13 2.1 13 1.49 17 3.03 18 2.95
South India 168 67.6 172 68.6 200 78.19 205 83.79
India 331 135.2 371 157 428 183.99 455 214.02
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.3
In Tripura BLFs fetch better prices than estate factories. The 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.4 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.
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Table 6.3 Price Realization of Various Factories in Guwahati
Region Co-operatives BLFs Estates
Price in Rs/Kg.
Arunachal 44.45 60.65
Assam Valley 57.32 54.70 64.43
Cachar 41.37 47.54
Nagaland 63.54
Tripura 46.85 44.54 43.66
Source: Compiled data in season 2005-06, from Auction Centre, Guwahati.
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.
Source: Market Report (2006), Coonoor Auction; Compiled by UPASI
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.5
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.
Figure 6.1 Price difference at Auction in Coonoor
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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.
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.
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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.
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), 1984.6 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.7
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
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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.8
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.9 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.10 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. 11 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.12
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 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
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high.13 While producers and consumers were affected, buyers were not.
There is a wide gap between auction prices and retail prices.14 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 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.15 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.16
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.
It is generally felt that buyers often push down the price in the auction.17
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
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low participation they can easily bid with lower than the earlier price of
the tea of same grade.18 In this way big companies play a major role in
price realisation and dominate the large segments of the market of tea.
Lower prices at the auctions benefits the big companies and therefore
they have a major stake at keeping the prices at auctions low.19 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.
Though the volume of trading tea through auctions is gradually
decreasing and often the small holders are not in a position to benefit
from the auction system the system remains very relevant. The primary
reason is that private sale prices are determined using auction prices as a
bench mark.
Adulteration and Formation of Quality in VariousStages 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
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:
3.1. BLFs produce various kinds of tea of different grades: They sell
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tea at various levels - at auctions, through direct sales and local
wholesalers/semi-wholesalers and retailers, based on quality.
3.2. Tough it cannot 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.20 It has been reported
by some of the brokers21 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.22
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
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lead to severe health hazards.23
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.24
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 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
(QUP) for BLFs in Coonoor.
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Sustainable Livelihood for Small Tea Growers through CSR
Table 6.4 Beneficiaries of Subsidy from Tea Board
Region Number of Total STGs % of STGs
beneficiaries
Assam 311 42492 0.73
W.Bengal 166 8398 1.98
S. India 48018 68000 70.61
Source: Small Tea Growers, Compiled Report (2005), Tea Board of India
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
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.25
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
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.
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Sustainable Livelihood for Small Tea Growers through CSR
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.26 Table 6.5 shows the effectiveness of the quality
upgradation programmes for small growers in Coonoor.
Table 6.5 Impact of Quality Upgradation Programme
on Small Tea Growers
Parameters Existing QUP Achievement
Harvesting Practices Technologies in Quality centres
and Pruning Recommended areas run by SHGs
Harvesting
interval in days 18-21(extended Rush period: 8 to 10 10-12 Rush period
interval) Lean period: 10-12 13-12 lien period
No Plucking 18 to 20 rounds 30.32 rounds 28 rounds
rounds in a year ( less)
Pruning Ranging from 4-5 year pruning 5 years
interval 8 to 10 years cycle
Pruning Generally low 18-24 inches 18 to 20 inches
height height below (medium/light pruning)
10 inches (low pruning)
Tipping height At 16-18 inches At 28 inches At 28 inches from
fromground level ground level
Yield increase
per ha of green 6250 10,000 9,000
leaf(Kgs)/ year
Price realisation Rs.6 Rs. 7.51 Rs.7.50
Income per ha Rs 37,500 Rs. 70,000 Rs. 67,500
Cost of
production
at Rs.5/Kg Rs.31250 Rs.50,000 Rs.45,000
Net Profit per
ha per year Rs. 6250 Rs. 20,000 Rs.22,500
Benefits by
adopting
technologies – Rs.18,750 Rs. 13,750
Source: Tea Board & UPASI – KVK (2004)
A resource person from the Tea Board observes that despite the presence
of several initiatives being taken by regional institutions such as UPASI-
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Sustainable Livelihood for Small Tea Growers through CSR
“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.
KVK at Coonoor and the Agricultural University, Jorhat, Assam to improve
the quality of tea the impact is limited.27
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.28 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.
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.29 As a resource person from the Tea Board observes,
“The interventions of the Tea Board with associations from the local 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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Sustainable Livelihood for Small Tea Growers through CSR
Corporate SocialResponsibility and Small TeaGrowers
CSR and Tea Sector
The social, environmental and economic consequences due to the operations
of a business have a direct impact on human lives. Therefore, an enterprise
is considered responsible if it assumes responsibility for minimizing the
negative impact and maximizing the positive impact due to its operations
on all its stakeholders, within its sphere of influence, in relation to
recognition and fulfillment of human rights.
To achieve this, ‘We’ believe a ‘Responsible Business’ must integrate
the following corporate social responsibility elements in its core business
strategy:
� Compliance with the national laws and voluntary standards or codes
to which it has signed on
� Accountability to all its stakeholders across its sphere of influence
(particularly, supply chain)
� Institutionalisation and internalization of responsible management
practices.
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
Chapter 7
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Sustainable Livelihood for Small Tea Growers through CSR
points in industry. This gives the opportunity and the space for wide-
ranging discussions at various levels. There is a demand from consumers,
CSOs and even government for products which are socially and
environmentally sustainable, and for CSR commitments across the supply
chain 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 environmental1 and social responsibility2
as well as consumer boycotting.3 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.4
The following table summarises major standards and practices of CSR.
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
Corporate Governance
Rights and treatment of Shareholder
Governance policies and business
Principles Information disclosure and
reporting
Responsibilities of the Board
Customer/end-user care
Economic
Monetary flows to the public sector
Employment and human resource
Development Procurement and supply
chain management
Technology transfer andintellectual
property rights
Environment
Environmentally safe production,products
and services
Resource and energy efficiency
Environmental impact assessment and
management
Environmental reporting and Management
systems
Table 7.1 CSR Standards, Codes and Practices
Source: Minton, A. and Rose, R (1997)
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
that responsibility accordingly falls upon the corporation. But the precise
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Sustainable Livelihood for Small Tea Growers through CSR
manifestation and direction of the responsibility lies at the discretion of
the corporation..5
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.6 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
The small tea growers working on tiny plots and most of the time with
family based employment 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
Table 7.2 The TBOD for CSR in Small Holdings
Threats Opportunities
Protectionism by backdoor Business case benefits: Better alignment with
consumer concerns, cost savings,
productivity and innovation
The burden of compliance and monitoring Growers as beneficiaries of CSR initiatives
The CSR paradox: Limited reputational Broader benefits of CSR, eg. Lifelong
or business benefits for small grower. learning community development
Barriers Drivers
Lack of technology, expertise, training Supply chain pressure from TNC codes of
and investment necessary to make conduct and demand certification
improvements
Few CSR initiatives oriented towards Shifting markets, the need to align
growers production towards changing consumer
preferences, internationalisation of
standards
Little understanding of business case. Local pressure from regulation, public
Supply chain initiatives rarely extend policy and civil society
beyond first level suppliers
More pressing need to upgrade
technology management and marketing Strategic business case benefits
Price competition and limited consumer
pressure
Source: Shatadru Chattopadhayay (2006)
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Sustainable Livelihood for Small Tea Growers through CSR
Plantation Labour Act (PLA) also addresses issues in tea sector and CSR is
an additional cost for the producers for the same processes. It seems
needless.”7 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 notable 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, and even there CSR is 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.8
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.
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.9
Worker’s 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-à-vis tea industry need further examination in the present
models of CSR.
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Sustainable Livelihood for Small Tea Growers through 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.
The Business Case for Integrating CSR Practices in theSmall 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.10 There has been few
or no empirical tests in support of the intrinsic merit11 and this makes
CSR policies open to accusations of being mere gimmicks for profitable
public relations and marketing strategies.
The CSR and welfare matrix shows how closely each factor is related.
Raises Social Welfare Reduces Social Welfare
Raises Profits Good Management Pernicious CSR
Reduces Profits Borrowed Virtue Delusional CSR
Situationat Impact on Impact Impact
at Garden Producer on labour at Garden
Water Insufficient Reduce Epidemic Low total
Supply water running diseases productivity
supply expenditure
Sufficient Additional No water- High
Water expenditure borne productivity
CSR in Tea Garden
Welfare Productivity Profit
Source: formulated from field work
Figure 7.3 CSR and Welfare Matrix
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Sustainable Livelihood for Small Tea Growers through CSR
The following figure demonstrates the three broad areas under which
CSR works, though each aspect of CSR has many indicators.
Child Care Enhance the Increase the labour
Productivity of Productivity
mother
Economical
High Margin Quality, move Competitiveness
for Small Tea Growers on value chain
Environment
Health Safety Reduce the Risk Increase the productivity
Ecological Balance getting affected disease and production, profit
and Biodiversity
Environmental
Sustainability
7.4 Process of CSR in Small Tea Sector
Sustainability of
production,
Productivity and
Profit,
Move up in
value chain
Competitiveness
in national and
international
Market ,
As demonstrated above, 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.12 For instance,
brokers point out that it is necessary to look 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.
Source: Formulated based on field work
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Sustainable Livelihood for Small Tea Growers through CSR
Table 7.5 Perspectives of Stakeholders on CSR and Tea Industry in India
Stakeholders Perspectives
Workers at Small Not part of it, not addressing labour issues, especially
Tea Gardens 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
Small Growers/ growers
Other tea producers 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.
CSR is going beyond law; there should not be any efforts to
Trade Union 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
Research Institutes PLA already exist, whether CSR add the /Statutory Board/
NGOs additional cost, can we focus on fullyimplementation of PLA
rather go for CSR, Benefits of CSR to Producers are still
ambiguous and doubtful
BLF No direct control over productionKnowledge to be acquired
for usage of fertilizers
Brokers No control over production sector, but dialogue with
producers and buyers are on
Auction Centres CSR is out of their control and it works only as a platform
for auction
Registered Buyers Looks for quality and price.Though they are aware about the
CSR never insist on producers
Upcountry Buyers CSR is not part of the business since consumers are not
demanding
Retailers No mechanism to trace back to gardenConsumers are not
demanding, and many cases their preference on regional
mark instead CSR at gardens
Consumers Not aware of the CSR but prefer good quality of tea.
Source: Formulated from field work
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Sustainable Livelihood for Small Tea Growers through CSR
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. ETI’s 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.
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
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
Base Codes Implementation
Fair Trade Practices
The origins of Fair Trade can be traced to 1940 when churches in North
America and Europe provided relief to refugees and poverty-stricken
Source: Shatadru Chattopadhyay (2006)
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Sustainable Livelihood for Small Tea Growers through CSR
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’.13
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.
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
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
Source: Amaeshi M K and Adi B (2006)
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.14
The success story of villagers whose life changed from one of deprivation
and impoverishment after they participated in Fair Trade practices15 is set out
below. They are currently exporting organic Darjeeling tea to US consumers.
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Sustainable Livelihood for Small Tea Growers through CSR
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 TPI’s nearest tea garden where it is processed and blended for
export.16
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?17
Consumer’s 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 goods18 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.
Studies that examine consumer’s preferences with regard to CSR issues
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Sustainable Livelihood for Small Tea Growers through CSR
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.19 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.20
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 company’s 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.21
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.22
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 company’s 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
policies, affirmative responses were:
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Sustainable Livelihood for Small Tea Growers through CSR
� 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 23
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 company’s
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.24 In a survey
in 2000, 70 per cent of the European public stated that a company’s
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).25 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.26
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.27 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.28 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
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Sustainable Livelihood for Small Tea Growers through CSR
tea grown with adherence to social and environmental 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.29 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.30 The market is dominated by the MNCs and a major
share of their income, consumer products companies, comes from
villages.31 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.
Industry Level Initiatives
CSR approach of Tata Group32
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.
Box 7.1 Trade Initiatives
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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
Unilever’s CSR reporting is oriented towards three principal issues:
The social impact of Unilever’s products, principally on people’s 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 pyramid33
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 women’s 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 company’s 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.34
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.
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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.
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.35 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.36 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.37
PDS has adopted Fair Trade practices in an attempt to enable small
farmers to use them for economic and social development. They would
otherwise have been unable to develop at a sustainable pace owing to
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.
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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 farmer’s 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 women’s 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.38
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
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� Engage with various stakeholders in the tea industry on behalf of
the small tea producers
� 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 people’s organisations - Bhoodhan
Vikas Mandal (BVM), SAWARD and Sahabagyi Vikas Abhiyan (SVA) in
Gudalur.39 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
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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 benefit”40
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 TEAMAFCO’s 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.”41
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.”42 The table 7.8 shows the green leaf rate effective
from 1/08/2006.
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Table 7.8 Price realization of green leaf of TEAMAFCO
Fine (in %) Effective Rate(In Rs. P)
From To
71 Onwards 10.50
66 70 10.00
61 65 9.50
55 60 9.25
51 54 9.00
46 50 8.75
41 45 8.00
40 Below 6.50
Source: Price list of green leaf, TEAMAFCO, Dibrugarh.
TEAMAFCO monitors the quality of green leaf strictly and has in many
cases sent it back due to the low quality.43 Small growers often sell green
leaves to other BLFs if the quality of green leaves is not matching with
stadandard of TEAMFCO.
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
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.44 It has become imperative to organize the small tea
growers sector by forming tea producer’s 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.45 Small growers are being motivated to
set up SHGs amongst themselves so that it becomes easier not only for
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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
� 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 factories46 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.47 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,48 ‘‘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.49 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.50
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
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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
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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Challenges and Competence ofSmall Tea Segments PolicyOptions 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.
Chapter 8
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Characteristics and Challenges of major Stakeholdersof Small Tea Segments
Workers in Small Tea Gardens
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.
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
growers 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
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
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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 multi-
stakeholders 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 growers 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.
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
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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
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
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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 growers. 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.
Forest Land Conversion and Ecological Imbalances
A study of many regions show that a high percentage of forest land
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have been converted into tea cultivation since the post 90’s. 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 including the family
based workforce. At present, given the low returns, and unwillingness of
the big companies to directly engage with the small holders, they are not in
a position to integrate acceptable social and environmental standards in
tea production. However, this induces low productivity in at small tea
gardens.
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 other actors in the value chain. 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
growers.s.
� 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 obtaining 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.
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� Develop market inter-linkages with multinational companies with the
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 90’s. 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
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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 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
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Sustainable Livelihood for Small Tea Growers through CSR
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
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 growers.
� 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
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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.
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 up-
country 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.
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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 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 retailer’s 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 tea-
drinking (teashops) outlets at different regions and even in tea-producing
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regions. Lack of tea promotion with its various varieties, for instance tea as
a health drinks, is lagging in the tea market. Continuity in generic-promotion
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, 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. Urban-centered
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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
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 not
in a position 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.
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Investments to the networks of association of small growers 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
Pritchard (2006), are decisive for small growers 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
Chapter 1: Introdction1Indian Tea Association: Indian Tea Scenario (Kolkata, 2002).
2Chambers, 1993:11., Chambers, R. 1993, Challenging the Professions: Frontiers for Rural
Development. London: Intermediary Technology Publications.
Chapter 2: Indian Tea Industry: Pattern and Growth1Source: Ministry of Commerce and Industry, 2005
2Tea Statistics (2005), J Thomas & Company Pvt. Ltd and www.indiateaportal.com
3www.indiateaportal.com
4Tea Statistics, (2003), Tea Board of India, Kolkata.
5NSSO 55th report, as quoted in A. F. Ferguson & Co. (March, 2002) Report on Primary
Marketing of Tea in India, Tea Board, GOI.
6Ibid.
7Saji (2005), Indian Tea Industry: Value Chain and Domestic Market.
8see details in http://www.indiainfoline.com/sect/teil/ch06.html
9Tea Statistics (2003), Tea Board of India, Kolkatta.
10The 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.
11Per capita consumption is average consumption per head of total population in Kilogram.
12D. Chakrabarty, Secretary General of Indian Tea Association, “Current Crisis: A Challenge
Industry Should Face”, Labour File (May-June 2003).
Chapter 3: Small Tea Sector in India1Tea Act for Registration, Tea Board of India, Kolkata.
2Steps taken by Tea Board for small Growers Development, Compiled report, Tea Board
(2006), Kolkata.
3Smallholder 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.
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Sustainable Livelihood for Small Tea Growers through CSR
4http://tcdc.undp.org/sie/experiences/vol1/Tea%20leaves.pdf.
5B Sivaram (2000) Productivity Improvement and Labour Relations in the Tea Industry in
South Asia, ILO.
6Tea Statistics 2002-03, Tea Board of India, Kolkata.
7B Sivaram (2000) Productivity Improvement and Labour Relations in the Tea Industry in
South Asia, ILO .
8Ibid.
9Smallholder 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.
10Tea Statistics 2002-03, Tea Board of India, Kolkata.
Chapter 4: Economics of Small Tea Growers in India1K. N. Reddy and N.S. Balaji Rao http://www.sasnet.lu.se/tribalbalaji.pdf,
2The name, Badaga, is derived from ‘Vadagar’ means ‘north’, i.e., people from north, i.e.,
Karnataka.
3The 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 Sultan’s 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.
4http://www.geocities.com/TheTropics/Cabana/3841/badaga.html
5Census of India,( 2001), provisional.
6Discussion with small tea growers and Brokers, Coonoor
7Discussion with Small Tea Growers in Coonoor.
8Ibid.
9Calculated from data collected from the interview with small tea growers from Coonoor.
10Interview with the member of co-operative tea factory in Coonoor.
11The rate is Rs. 60 per Kg, and the local market the tea rate is Rs. 80-120 depends on the
quality.
12Literature and awareness of using knives for leaf collection and so on, UPASI, Coonoor
13Ibid.
14These 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.
15Interview with female temporary workers in small tea gardens in Coonoor.
16Tea Statistics (2003) Tea Board of India, Kolkatta.
17Uma Devi, Plantation Economy,
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18Ibid.
19Usha T V (2002) Plantation and crisis in Tea industry in Kerala.
2019 per cent of the population (Census, 1991)
2111.62 per cent of the total cropped area of the Idukki district, Kerala (Kerala Economic
Review 2005)
22Discussion with tea cultivators, Peerumade Kerala.
23Interview with small tea growers in Peerumade, Idukki district, Kerala.
24Ibid.
25This 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.
26Discussion with Tea Board resource persons, Tea Board, Kolkata.
27 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.
28Ibid.
29Interview with small Tea Growers at Peerumade.
30Shatadru Chattopadhayay (2005), Productivity & Decent Work in the Tea Industry in
India. A Consultative Report by ILO, March 2005.
31Focused group discussion with small tea growers in Peerumade.
32See details in Shatadru Chattopadhayay (2005), Productivity & Decent Work in the Tea
Industry in India. A Consultative Report by ILO, March 2005
33District Economic Profile, www.keralagov.in
34Interviews with migrant workers, some of them were earlier casual workers in small tea
gardens in Pambabnar.
35Interview with small tea growers in Peermade
36Discussion with women worker from small tea gardens in Peerumade, Idukki district, Kerala.
37 Plucking of two leafs and a bud makes the quality of leaf better because of chemical
reactions it generates during
38Interview with workers from small tea gardens in Pambanar, Idukki District, Kerala
39Interview with one of the trade union leaders in Kerala.
40See 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.
41Jeta Sankritayan, Productivity, Decent Work And The Tea Industry In North Eastern India-
Plantation Labour In The West Bengal Tea Industry, ILO, 2005
42Indian Tea Association, Annual Report, 1985
43Jeta, 2005
44Jeta 2005
45Jeta Sankrityayana (2005), Plantation Labour in the West Bengal Tea Industry in Productivity
125
Sustainable Livelihood for Small Tea Growers through CSR
& Decent Work in the Tea Industry in India. A Consultative Report by ILO, March 2005.
46Discussion with small tea cultivators North Bengal.
47Discussion with BLF owners in North Bengal.
48Ibid.
49Discussion with West Bengal Small Growers Association members.
50Discussion with Association members.
51Though 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.
52Nutritional 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.
53Discussion with officials at Tea Board, Regional Office, Guwahati
54TEAMFCO, 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
55As pointed from the Officials, Tea Board, Guwahati
56Interview with committee member of Association of small tea growers, Assam
57Discussion with resource persons, Tea Board, Guwahati.
58Detailed discussion of SHG in Assam has included in separate session below.
59Techno-Economic Survey of Small Tea Growers in Assam ( 1994), Tea Board, Kolkata.
60Problem of Small Tea Gardens: A case study of Dibrugarh District, Assam. Partha Ganguli
(2000).
61Ibid.
62Interview with one of the workers.
Chapter 5: Value Chain and Small Tea Growers1John 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.
2Wilkinson 1995, Quoted from John Humphrey and Huber Schmitz (2000).
3The 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
4Saji (2005). Indian Tea Industry: Value Chain and Domestic Market.
5The formal description of key stakeholders, see http://commerce.nic.in/Proposed%20e-
auction.pdf and detailed discussion of other stakeholders are included in the discussion of
126
Sustainable Livelihood for Small Tea Growers through CSR
developing the argument of value chain in small tea growers in concerned sessions.
7Saji (2005), Indian Tea industry: Value Chain and Domestic Market
8Ibid.
9See 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
10Saji (2005), Indian Tea Industry: Value Chain and Domestic Market.
11Discussion with Auctioneers in Cochin.
12It is not official but depends on the personal relationship with buyers and brokers to
promote the business. Discussion with brokers from Coonoor.
13Ibid.
14Tea Board, see details of Tea Board and its function
15see the details of how MNC dominates the tea market in India, Shatadru (2006). International
workshop of tea industry in India., Darjeeling
16see the details of how MNC dominates the tea market in India, Shatadru Chattopadhyay
(2006). International workshop of tea industry in India., Darjeeling
17Ibid.
18Methodology for value chain analysis.
Chapter 6: Competitiveness of New Model in Tea Sector1Ashim Roy, “Labour File”, May-June 2003
2Source: Tea Board of India, 2003
3Auction price, Various Auction Centres Report
4Discussion with Resource Persons from Tea Board, Guwahati and BLF Owners in Assam.
5Weekly Market Report( 2006)Tea Auction Centre, Coonoor.
6Tea Digest, CTTA, Kolkatta.
7See details of function of auction system and price mechanism in A F Ferguson & Co. (2002)
and Saji (2005).
8Discussion with Brokers in India.
9See Saji (2005) for further discussion in tea auction and quality of tea.
10V. Ramaswamy, A strong role for tea auctioneers http://www.thehindubusinessline.com/
2003/09/22/stories/2003092200010900.htm
11Saji (2005), Indian Tea Industry: Value Chain and Market.
12Discussion with brokers in Coonoor. It is not official but depends on the personal relationship
with buyers and brokers to promote the business.
13See details of crisis in Indian tea industry, for instance, Shatadru (2005 & 2006) and CEC
(2003).
14A 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
15A 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
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Sustainable Livelihood for Small Tea Growers through CSR
16See details in Saji (2005).
17Discussion with various brokers and buyers in India.
18Discussion with brokers.
19Many brokers disagrees this process. They claim that if auction prices become higher their
profits will increase. However, this needs to be addressed separately.
20Nalllasangam, 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.
21Discussion with Brokers at Coonoor and Guwahati.
22Plenty of adulterated tea Mathrubhoomi, (Malayalm Daily), July 14, 2006.
23Ibid.
24See the details of role of national and regional packeters in domestic tea market in India, Saji
(2005) and A Ferguson (2001)
25The preferences of the retailers are based on their margin, benefits and other facilities. See
Saji (2005) for details of retail market.
26Impact Report, Quality Upgradation Programme in Small Tea Sector, Nilgiris, Tea Board &
Upasi-Krishi Vigyan Kendra, Coonoor, The Nilgiris, February, 05, 2004
27For instance, Nerittu valangale vangi misritamakki ela edukkunna thottangalkku
nalkunnathukondu kittunna nanmakalum labhavum (Malayalam), Tea Board & UPASI-KVK,
Quality Up-gradation Programme, October, 2003.
28Quality Upgradation Programme in Small Sector ( September, 2003) Tea Board & UPASI-
KVK, The Nilgiris.
29Techno-Economic and Socio-Economic Survey of Kerala Tea Industry (1994), Tea Board,
Kolkata.
Chapter 7: Corporate Social Responsibility and SmallTea Growers1Ibid.
2Strong C, 1997
3Smith C N, 1990
4Minton, A. and Rose, R; 1997 and Robert J. C, 2004
5Friedman, M 1970
6Schwartz, M S & Carroll, A B 2003
7Discussion with some of the brokers and buyers, Kolkata.
8Shatadru Chattopadhyay (2006).
9Ibid.
10Donaldson, T & Preston, E L. 1995
11Harrison. J G & Freeman, R E. 1999
12The 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.
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Sustainable Livelihood for Small Tea Growers through CSR
13As quoted in Shatadru Chattopadhayay and Pramod John (2007), ‘Bitter Beans’ The Coffee
Crisis and its impact in India’ Partners in Change, New Delhi.
14Ibid.
15Shatadru C and Pramod J (2007)
16See details in Shatadru Chattopadhayay and Pramod John (2007), ‘Bitter Beans’ The Coffee
Crisis and its impact in India’ Partners in Change, New Delhi.
17Shatadru Chattopadhyay (2005).
18Minton and Rose, 1997
19Barbara 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
20Ibid.
21Kevin Bright et. al (2005), Consumer Responses to Corporate Social Responsibility in
Middlebury, Vermont
22Barbara 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.
23Ipsos G6 Study of February 2006, quoted from Barbara Flies et. al, (2007)
24 MORI, 2003. Survey of British public – 2026, quoted from Barbara Flies et. al, (2007)
25MORI, September 2000, quoted from Barbara Flies et. al, (2007)
26Alter Eco France, March 2000, quoted from Barbara Flies et. al, (2007)
27Barbara Flies et. al, (2007).
28Franziska 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.
29Discussion with Buyers, Kolkata.
30Saji (2005), Indian Tea Industry: Value Chain and Market.
31See Uniliver.com
32see details of CSR of Tata Tea in www.tatatea.com
33Beyond Corporate Social Responsibility: The Scope for Corporate Investment in Community
Driven Development, Report No. 37379-GLB, December 21, 2006, World Bank.
34Unilever Environmental and Social Report 2005; www.unilever.com and Hindustan Lever;
www.hll.com
35PDS- note on PDS.
36Proposal 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.
37Quality Up-gradation Project for Tea- in Small Sector, Supported by Tea Board & PDS,
Peerumade, Kerala.
38Discussion with PDS resource person.
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39See details of this trading initiatives in http://www.justchangeindia.com and http://
www.adivasi.net
40http://www.feasta.org/documents/review2/thekaekara2.htm
41Discussion with resources person, TEAMFACO office, Dibrugarh.
42Discussion with Resource person from GTTA, Auction centre, Guwahati.
43Discussion with resource person from TEAMAFCO, Dibrugarh.
44Discussion with Director, Tea Board of India. Kolkata.
45See 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.
46Ibid.
47Discussion with Director, Tea Board of India, Kolkata.
48One 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.
49As 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.
50It 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.
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Acknowledgments
We sincerely thank all the people who gave their valuable time and
shared their experience and insights with us, which made this study possible.
As are were too many people involved in various stages of the project,
we do not want to take the long route of listing all the names and say
thank you to every one. But, we gratefully remember all the people involved
in one way or other. We will remember them always and it is a fact that
many of them have become our good friends in the course of the study and
the follow up actions for improvement of the tea supply chain.
We specially acknowledge the deep interest shown in the report by
Viraf Mehta, Chief Executive, Partners in Change and Liesbeth Unger of
Oxfam Novib, Netherlands. We also thank them for writing the Foreword
and the Preface respectively. We are also thankful to Mr. Pramod John,
Senior Programme Manager of Partners in Change for painstakingly going
through the draft report and offering his valuable comments and suggestions.
We sincerely thank the trade unions and small tea growers associations
from West Bengal, Assam, Kerala and Tamil Nadu. The study would not
have been possible without the active participation of several individual
small tea growers, exporters, NGO leaders, consultants, government officers
particularly from Tea Board of India, auctioneers, corporate executives and
all others who allowed us to enter their lives and learn from their experiences.
We thank Koshy Mathew, Wordmakers Bangalore for the editorial and
design support and Rajiv Govind for the cover design.
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Researchers and Authors
Dr. Shatadru Chattopadhayay
Senior Programme Manager
Shatadru Chattopadhayay is a doctorate in South Asian Political Economy
and received his education at Delhi University and Jawaharlal Nehru
University (New Delhi). Shatadru has been involved for the last eight years
in various research, campaign, advocacy and capacity-building programmes
around trade and labour rights issues, both nationally and internationally.
He also specializes in designing and implementing Corporate Social
Responsibility programmes involving different stakeholders across the value
chain of businesses. He has worked with/initiated many multi-stakeholder
networks for improving social, economic and environmental practices of
businesses with a focus on marginalised stakeholders.
He has been associated with the tea sector in India and abroad for the
last ten years as a researcher and as an active stakeholder with the goal of
making tea industry more sustainable. Currently he is working with Partners
in Change and managing programmes on key CSR issues across the value
chain of tea, coffee, cotton and garment sector. He has written or coordinated
various research works on these sectors. He also actively participates in
various CSO alliances and networks related to CSR in India and South
Asia.
Saji M Kadavil
Research Consultant and Author
Pursuing PhD in Economics in Jawaharlal Nehru University, New Delhi
on issues of livelihood and agro based industries in India. Has been
associated with Government institutions, Non-Governmental Organizations
and academia as research consultant and educator. Major works include
Tea industry in India; Inequality in Development of Social groups;
Negotiation of Livelihood Trajectories of Marginalized Communities;
Poverty – Development Issues.
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Sustainable Livelihood for Small Tea Growers through CSR