TEA IN TAMIL NADU

A Commodity Study in Nilgiris and Coimbatore Districts

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT TAMIL NADU REGIONAL OFFICE, CHENNAI 2006

STSqZFT ^'QcTT ^ : rt# 17 Study Series No: Cheimai 17

Foreword Tea is cultivated in an area of 1.14 lakh hectares in South India with an annual production of more than 2,000 lakh kgs. Tamil Nadu leads both in terms of area and production of tea in South India, with maximum concentration and production in Nilgiris district. The present study is an attempt to address issu^s related to cultivation, processing, marketing and export of tea in Nilgiris and Coinfibatore districts. Besides, the study also identifies different stages in supply chain management, assesses the role of credit, examines Government policies in tea Sector and also the R&D initiatives undertaken by Tea Research institutions. The demand- supply imbalance has created a pressure on tea prices. The situation is alarming today when the prices of green tea leaf have gone down from Rs. 18/kg during 1997-98 to Rs. 6/kg during 2003-04. This has been the major factor affecting the economics of tea gardens for the small growers. Due to the rising cost of production, tea estates have also been affected. Auctions still continue to remain the primary marketing channel despite the relaxation to the manufacturers of made tea to sell tea through any source. Based on the findings, the study recommends boosting replantation activities, restructuring of INDCOSERVE, formation of joint liability groups among the small tea growers, aggressive tea marketing campaigns, promotion of new innovative products like iced tea and emphasis on R&D in cultivation and processing technology. It is hoped that the report will be useful to everyone interested in the development of tea sector.

Chennai 31 March 2006

(Dr. Prakash Bakshi) Chief General Manager

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Credit List Overall Direction: Department of Economic Analysis and Research, National Bank for Agriculture and Rural Development, Head Office, Mumbai Guidance: Dr. Prakash Bakshi, Chief General Manager Dr. K.V. Nagaraju, General Manager Review of Report: Padma Raghunathan, Deputy General Manager G. Santhanam, Manager Analysis of Data and Drafting of Report: Dr. Shalini Yadav, Manager Field Visits and Data Collection: Dr. Shalini Yadav, Manager A. Parthava, Assistant Manager

Acknowledgements National Bank for Agriculture and Rural Development, Tamil Nadu Regional Office, Chennai gratefully acknowledges the assistance and cooperation received from the officials of Tea Board, TANTEA, INDCOSERVE, Department of Horticulture and UPASI during the study. Thanks are due to the LDM, Canara Bank, Secretaries of Coonoor Tea Trade Association, Coimbatore Tea Trade Association, Plantation Labour Association and Processing Units' Association for the discussions held on different issues of tea sector. We express sincere gratitude to Shri L. Nanjiah, a progressive farmer and an owner of Bought Leaf Factory in Nilgiris district for the indepth discussion held on the cultivation and processing of tea. National Bank also acknowledges the cooperation received from all the sample farmers, estates, processing units, auctioneers, commission agents, warehouse owners, retailers, wholesalers and exporters for their encouraging responses during the study.

Contents Page No. Foreword Credit List Abbreviations Basic Data Sheet Executive Summary i ii iv v vi

Chapters 1 2 3 Introduction Objectives and Methodology Trends in Production, Yield and Prices of Tea Sector in Domestic and International Markets 4 5 6 7 8 9 10 Economics of Tea Gardens Tea Processing Tea Marketing International Tea Trade Supporting Services in Tea Sector Banking Aspects of Tea Sector Role of Institutions/Organisations/Associations in Tea Sector 11 Government Policies and Research & Development in Tea Sector 12 13 Constraints ajid Strategies for Tea Industry Summary and Conclusion Annexures List of Evaluation Study Reports 76 83 88 99 71 16 31 42 52 58 62 64 1 4 7

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Abbreviations

BCR BLFs CIS CST CTC FAO FRR GLC Gol GoTN GTL ha HADP ICAR INDCOSERVE kg KVK MCX MT NABARD NILMA NPV NTRF P&M PDS QUP R&D TANTEA TEASERVE TMCO TNCSC TNGST TRF UCEL UPASI

Benefit Cost Ratio Bought Leaf Factories Commonwealth of Independent States Central Sales Tax Crush- Tear- Curl Food and Agriculture Organisation Financial Rate of Return Ground Level Credit Government of India Government of Tamil Nadu Green Tea Leaf Hectares Hill Area Development Programme Indian Council of Agricultural Research The Tamil Nadu Small Tea Growers' Industrial Co-operative Tea Factories' Federation Limited kilogram Krishi Vigyan Kendra Multi Commodity Exchange of India Ltd Metric Tonne National Bank for Agriculture and Rural Development Nilgiris District Tea Producers' Marketing Company Net Present Value National Tea Research Foundation Plant & Machinery Public Distribution System Quality Upgradation Programme Research and Development Tamil Nadu Tea Plantation Corporation Limited Tea Manufacturers' Service Industrial Co-operative Society Limited Tea Marketing Control Order Tamil Nadu Civil Supplies Corporation Ltd Tamil Nadu Government Sales Tax Tea Research Foundation UPASI Commodities Exchange Limited United Planters' Association of Southern India

IV

Basic Data Sheet 1 Study Area 2 Reference Year of Study 3 Average Replantation Cost per ha (Rs. lakh) Small Growers Estates 4 Average Annual Maintenance Cost (Rs.) Small Growers Estates 5 Small Growers (excluding subsidy) FRR (%) NPV@15%DF(Rs./ha) BCR 6 Small Growers (including subsidy) FRR (%) NPV@ 15%DF(Rs./ha) BCR 7 Average Quantity of Made Tea Produced (lakh kgs) BLFs Estate Factories TANTEA INDCO 8 Average Investment Cost (Rs. Lakh) BLFs Estate Factories TANTEA INDCO 9 Average Annual Operational Cost (Rs. Lakh) BLFs Estate Factories TANTEA INDCOSERVE 10 FRR BLFs Estate Factories TANTEA INDCO 11 Exporters Margin (Rs./kg) Producer Exporters Merchant Exportes Nilgiris and Coimbatore districts of Tamil Nadu 2003-04 2.26 3.09 48706 61454 11.2 -4503 L24 0.88 15,47 3886 1.01 5.19 11.11 7.66 8.88 212.36 395.75 363.50 207 63.47 140.51 102.27 123.07 16.94 26.22 17.01 0.81 17.47 1.67

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Executive Summary Tea industry in India is facing a crisis. There has been a decline in the prices of green lea leaves and made tea, which has affected the farm economics of the tea growers in the country. Moreover, the Indian tea exports have also declined due to the emergence of new and more cost effective tea producing countries in other parts of the world. The present study was conducted with the major objectives to study the trends in area under cultivation, production, productivity, export- import and price movements of tea in the domestic and international market; to identify different stages and issues in supply chain; to assess the role of credit in the supply chain; to assess the possibility of innovations in tea sector and to examine R&D efforts initiated by Tea Research institutions. The study covered a sample of 18 small growers and 5 estates cultivating conventional tea, 2 estates c ultivating organic t ea, 8 p recessing units m anufacturing CTC a nd orthodox I ca, 2 producer exporters, 4 retailers, 2 wholesalers, 2 auctioneers, 2 commission agents and 1 warehouse unit were selected and visited during the study in Nilgiris district. A sample of 3 merchant exporters were also covered to analyse the cost and potential of tea exports in Coimbatore district. Discussions were held with officials of Tea Board, UPASl, TANTEA, INDCOSERVE, TEASERVE, LDM and Secretaries of various associations to get an insight of the different aspects of tea sector. All the costs and income have been assessed and analysed at reference year prices. The reference year for the study was 2003-04. All the sample estates were cultivating only tea. Average land holdings for the sample small growers was 2.94 ha and that for the sample estates was 300 ha. Average plant population was 12350 per ha for the sample small growers and 13000 per ha for the sample estates. Replantation cost has been taken as the investment cost for tea gardens and the average replantation cost per ha capitalised upto 3 years for sample small growers worked out to Rs. 2.26 lakh and the same capitahsed upto 4 years for the sample estates worked out to Rs. 3.09 lakh for the sample estates. Average maintenance cost for the sample small growers was Rs. 48706 and Rs. 61454 for the sample estates.

VI

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* Average price realised for the GTL by the sample growers was Rs. 6 per kg. The sample estates cultivating inorganic and organic tea were owning processing units for the manufacture of made tea. Hence, they were making use of GTL produced in their estates for the manufacture of niade tea. * CTC and orthodox are the two main methods of tea manufacturing in Nilgiris district. The economics of the sample units was worked out and the FRR was 16.94 per cent for BLFs, 26.22 per cent for estate factories, 17.01 percent for TANTEA and 0.81 per cent for INDCO. The sample unit owned by INDCO is not viable as the processing cost has been high and the price realised at auction has been the least. * The management of supply chain of tea is complex involving intermediaries and the marketing margins are shared by the intermediaries as the consumers do not purchase made tea directly from the processing units or the auction centres. Auctions are the primary marketing channel for tea in South India. About 75 per cent are still being sold through auction centres despite the relaxation given to the manufacturers of made tea to sell tea by any means by Tea Board under TMCO order. * The main constraints faced by the tea industry are low price realisation for GTL as well as made tea at the auctions, replantation not being undertaken extensively, lack of quality upgradation by the processing units, lack of adequate marketing campaigns, etc. Recommendations * The study recommends various measures for improving tea cultivation, processing, marketing, exports,financingand R&D. Some of the major recommendations are: *- Quality standards in the plucking of green leaves may be adhered to for better price realisation. * Awareness to be created about the benefits of replantation as this would help to bring about improvement in yield. * The role of INDCOSERVE in improving the conditions of small tea growers is well recognised. It is necessary to restructure the cooperative sector in Nilgiris in order to improve its efficiency and competitiveness. Good governance, professional management and internal democracy needs to be restored.

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Formation of SHGs and Joint Liability Groups may be encouraged among the growers. This may help the group to avail bank finance.

An appropriate policy for organic farming covering issues related to its coverage, financial support during the conversion period, creation of linkages among the farmers, processors, traders and consumers and increasing public awareness of the benefits of organic agriculture may be designed.

Tea processing units may replace the old machinery with new ones in a phased manner. Differential pricing method may be followed by the BLFs, whereby quality leaf is paid a higher rate. This would have a good impact on the quality of made tea produced.

Promotional schemes for tea to be launched. There is a need to create market demand for tea. Aggressive marketing may be followed by the big companies like Tata, HLL, etc, to divert consumers from soft drinks to tea. New products like iced tea, herbal tea, etc may be promoted to increase penetration in the market.

Effective mechanism for checking multi- financing may be developed and documents of land records to be updated so that the small growers can avail bank finance. This would also enable the growers to register with Tea Board.

Cost of production for made tea is high as compared to China, Russia, CIS, Poland. Therefore, Indian tea is not able to compete in the international market. There is a need to enhance the productivity and reduce the cost of production to make Indian tea competitive globally. This is possible by R&D efforts in areas like plant improvement, plant nutrition and processing technology.

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Chapter 1 Introduction

Tea (Camellia species) originated in South East Asia and China is the first country to use tea as a beverage. The word tea is derived from t'e of the Chinese Fukien dialect and in Cantonese, tea is known as ch'a. In this form, the name has reached India, Iran, Japan and Middle East. Tea plant in its natural state grows into a small or medium sized plant. At present, there are three different varieties of tea plant viz., Assam variety, China variety and Cambod variety.

1.2

More than 45 countries spread over all the continents except North America cultivate tea.

The important tea growing countries of the world are India, Sri Lanka, China, Indonesia, Georgia and Argentina.

1.3

The saga of development of tea in India is fascinating. Tea was reported to be growing in

India in the early 19th century. The search for tea in Assam was started by the East India Company as an alternative source of supply to United K ingdom which until then was mainly dependent on China. With the emphasis on indigenous tea in Assam, the first commercial effort in organised tea cultivation was started by Assam Tea Company in 1839. Tea plants sent from Calcutta Botanical gardens were reported to be grown in Nilgiris district in Tamil Nadu in 1839 but was cultivated on a commercial scale by 1853.

1.4

From a modest beginning in 1839, India today is the world's single largest producer of tea

and also one of the largest exporters of tea. The total area under tea in the country increased from 0.3 million hectares during 1960-61 to 0.5 million hectares during 2003-04 and the production which was 300 million kgs during 1960-61 has increased to 850.5 million kgs during 2003-04. (Economic Survey, 2004-05). India accounts for about 28 per cent of the global production of tea.

1.5

In India, tea is grown in Assam, West Bengal, Tamil Nadu, Kerala , Kamataka, and to

some extent in Himachal Pradesh and Tripura. South India accounts for nearly 25 per cent of the 1

total national production. The exports of tea from this region are of the order of 100 million kg per annum, which constitutes more than half of the total tea exports from the country. 1.6 Tea is one of the major plantation crops grown in Tamil Nadu. It is cultivated mainly in

the hilly and high rainfall zones of Nilgiris, Coimbatore, Dindigul, Theni, Kanyakumari and Tirunelveli districts. In South India, Tamil Nadu leads both in terms of area and production followed by Kerala and Kamataka. 1.7 Tea has occupied an important place in Indian economy for the last several decades. In

fact, tea industry is regarded as one of the most important agro based industries in India. It provides direct employment to over one million workers in the country. Unlike other agricultural crops, tea provides the highest employment per unit of arable land. In 2002, there were 12.55 lakh people employed in tea plantations. Women contributed about 50 per cent of the workforce. Many more are employed by other sectors related to tea and tea trade like tea machinery, packing, warehouses, etc. 1.8 Tea industry earns foreign exchange for the country and the contribution of tea to the total

agricultural exports eamiiigs was 4.96 per cent during 2003-04 (Handbook of Statistics on the Indian Economy, RBI, 2004-05). The exports of tea from India during 2003-04 was 183.1 million kgs in quantum and Rs. 1636.9 crore in export earnings as against 211.3 million kgs in quantum and Rs. 2003.2 crore in export earnings during 1997-98 (Economic Survey, 2003-04). It is estimated that more than 16 per cent of total tea exports in the World arefromIndia. 1.9 Besides, it also generates revenue to Cenfral and State Governments through indirect

taxes related to tea manufacturing and sale of the finished product. It is estimated that about Rs. 10000 to Rs. 12000 per ha is paid by the industry as Government revenue in different forms. 1.10 However, the tea sector in India is passing through a difficult phase. The productivity has

declined from 1865 kg/ha in 1997 to 1625 kg/ha in 2002. There has been a decline in green tea leaves prices, which has affected the farm economics of the tea growers all over the country. The

prices of made tea sold at Indian auctions registered a decline during 2002 over 2001 and this has put the small tea growers into difficulty. Moreover, new and more efficient sources of tea supplies has emerged in different parts of the world. All these have become a cause of concern for the Tea industry, Tea Board and Government. Against this background, a study was undertaken to examine the current status and the entire supply chain management of tea sector.

Chapter 2 Objectives and Methodology

Objectives The present study was conducted with the following objectives: To study the trends in area under cultivation, production, productivity, export /import performance and price movement of tea in both the domestic and international markets. To identify different stages in the supply chain- production, value addition and marketing in the supply chain and their functioning in terms of efficiency, viability and sustainability of tea. To study and identify the issues in the supply chain at different stages and to suggest policy measures to improve the management of supply chain system. To assess the extent and effectiveness of linkages among different entities in the supply chain system, constraints on backward and forward linkages, if any, and suggest alternative strategies for improving the same. To assess the role of credit in the supply chain system, adequacy or otherwise of credit support, both for working capital and investment, at each stage of tea production. To assess and explore the possibility of innovations in the tea sector like organic tea, value added tea in terms of its competitiveness in the global market. To examine R&D efforts initiated by Tea Research institutions.

Selection of Districts 2.2 The study was undertaken in Nilgiris district, where tea cultivation is concentrated in

Tamil Nadu. Details of area and production of tea in the State is given in Chapter 3 of the report. It may be observed that both area under tea (81.6%) and production (70.3%) is maximum in Nilgiris. Hence, Nilgiris district was selected for the detailed study. The production, processing and marketing units were selected in Nilgiris district. To study the export aspects, the merchant exporters in Coimbatore district were selected for the study.

Selection of Sample 2.3 To study the aspects of tea production, a sample of 18 small growers (having area below

10.12 ha) and 5 estates (having area of 10.12 ha and above) were selected randomly. Among the small growers, 8 farmers selected were members of INDCO factories. Among the sample estates, 1 estate selected was owned by TANTEA. A sample of 8 processing units manufactuing CI C " and orthodox variety were selected in Nilgiris district to understand the method of processing, cost involved, viability and constraints, if any, related to processing. In order to estimate the price spread and study various aspects of marketing, a sample of 4 retailers and 2 each of wholesalers, auctioneers and commission agents and 1 warehouse owner were selected for the study. To assess the cost on exports, constraints and potential, a sample of 3 export units (merchant exporters) in Coimbatore district were selected for the study. Discussions were held with 2 sample estates' proprietors who were directly engaged in export of tea. Hence, they were also treated as a sample for producer exporters. Details of sample coverage of the study are given in Table 2.1. Table 2.1 Sample Design SI. no. Segments 1 Farm level Small growers Small Growers (members of INDCO) Small Growers (non- members of INDCO) Total Estates 2 Processing Units by Method of Manufacture CTC Orthodox Processing Unit making use of Tea Waste 3 Marketing Retailers Wholesalers 4 Export Units Merchant Exporters Producer Exporters Number of Sample

8 10 18 5

4 4 1

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Data Collection 2.4 The study is based on both primary and secondary data. Primary and secondary data were

collected to know about different aspects of tea in Tamil Nadu. Primary data was collected by survey method by using questionnaires and interview. Secondary data were collected from the Regional Office of Tea Board of India, Coonoor, Tea Research Station of the United Planters' Association of South India (UP AS I), Coonoor and Department of Economics and Statistics, Chennai. Discussions were held with Secretary of Tea Trade Associations, association of Niigiris Small Growers', Processors, Exporters, etc, officials of TEASERVE, TANTEA, INDCOSERVE, Tea Board and UPASI regarding different aspects of tea cultivation, processing, futures trading, etc. A uctioneers (brokers), commission a gents, p luckers, e tc w ere a Iso interviewed d uring t he study to understand their viewpoints. A review of information on tea industry available on'the internet was made and published materials on Tea were also made use of

Analysis of Data 2.5 Data collected were tabulated and analysed by using statistical tools like averages.

Viability of investment (production and processing) have been worked out in terms of financial rate of return by using discounted cash flow method .

Reference Year for the Study 2.6 The reference year for the study was 2003-04. All the costs and benefits have been

collected and estimated with respect to the reference year prices.

Chapter 3 Trends in Production, Yield and Prices of Tea in Domestic and International Markets

Tea is an important beverage and is generally placed in the polymorphic specis. Camellia Sinensis. There are three main varieties of tea plant- China, Assam and Cambod. It is grown in areas where the climate is moist and there is well distributed rainfall. Tea can grow at altitudes ranging from sea level to about 6000 feet above, but it grows best in regions near the Equator.

Area, Production and Yield of Tea in tlie World 3.2 India, China, Sri Lanka, Kenya and Indonesia are the major tea growing countries of the

world. Table 3.1 gives the detail of the area, production and yield of tea in different countries of the world. Table 3.1 Area, Production and Yield of Tea in Different Countries (Area in lakli lia, Production in lakh kgs and Yield in kg/ha) Countries Area India China Srilanka Indonesia Kenya Vietnam Turkey Others Total Source: Tea Digest, 3.3 4.2 10.84 2.21 1.38 1.01 0.68 0.89 4.42 24.5 2003 1992 2002 Production Yield Production Yield Area 1625 8384.74 7323.72 1743 5.15 657 7453.74 5598.27 516 11.34 1652 3106.04 1.87 1788.7 809 1116 1727.92 1.54 1448.34 1049 2051 2871.02 1862.09 1.39 1880.72 1012 840 532 0.83 362 1854 1420 0.76 1755.83 1562.69 1344 4841.11 3.6 999.45 4417.6 30644.53 1157 26.48 995 24382.04

It may be observed from the Table 2.1 that the area under world tea cultivation during

2002 has registered an increase of 0.85 lakh ha over 1992. Similarly, there has been an increase of 6262.49 lakh kgs of world tea production and the yield has increased from 995 kg/ha to 1157 kg/ha during the same period.

3.4

Among the major tea producing countries, the area under tea cultivation has increased by

22.61 per cent in India, China (4.61%), Kenya (37.62%) and Indonesia (11.59%) during the period 1992 to 2002. But the cultivated area has gone down in Sri Lanka by 15 per cent during the same period.

3.5

Tea production in India has increased by 1061.02 lakh kgs, Sri Lanka (1317.34 lakh kgs),

China (1855 lakh kgs), Indonesia (179.58 lakh kgs) and Vietnam (478 lakh kgs) during the period 1992 to 2002.

Quantity and Prices of Made Tea Sold at Auctions in Major Producing Countries 3.6 Details of quantity and prices of made tea sold at major auction centres in the world are

given in Table 3.2. Table 3.2 Quantity and Prices of Made Tea at Major Auction Centres (Quantity in million kgs, Price equivalent in US $) 1981 1991 2003 1998 Auctions Quantity Price Quantity Price Quantity Price Quantity Price 1.20 India 477.77 376.19 1.61 1.85 500.57 1.77 442.36 1.54 Colombo 273.23 199.45 0.94 226.14 1.42 2.08 256.03 0.95 33.77 Jakarta 37.04 33.56 1.68 1.45 23.99 1.36 285.84 1.54 Mombasa 40.34 1.61 1.42 243.57 1.89 126.11 15.90 0.93 1.19 Limbe 8.35 1.25 19.36 0.87 18.03 1.17 1.49 47.79 Chittagong 35.64 1.09 42.44 1.24 44.90
Source: Tea Digest, 2003

3.7

It may be observed that the annual average prices of made tea in the different auction

centres have registered a decline at all the major auction centres during 1998 over 2003. There has been an increase in quantity sold at all the major auction centres except Limbe during the same period. Average tea prices of Sri Lanka and Kenya was higher than that of Indian tea prices during 2003.

3.8

Details of quantity and prices of made tea sold through different auction centres in India

is indicated in Table 3.3 and Figure 1.1.

8

Table 3.3 Quantity and Prices of Tea sold at Auction Centres in India
fr\t,nw.*t4^, : _ I1,U !,-. T. r>_ ; i . _ \

Table 3.3 Quantity and Prices of Tea sold at Auction Centres in India
(Quantity in lakh kgs, Price in Rs./kg) Auction Centres Kolkatta Guwahati Siliguri Amritsar North India Cochin Coonoor Coimbatore South India All India 1991 Quantity Price 1389.98 1386.44 919.55 3.88 3699.85 596.06 409.12 310.82 1316.00 5015.85 1998 Quantity Price 823.80 1402.26 723.56 7.18 2956.80 585.86 708.47 172.46 1466.79 4423.59 2003 Price Quantity 1338.74 1386.64 870.90 1.90 3598.18 506.33 405.86 223.31 1179.53 4777.71

48.22 40.90 37.79 32.67 42.88 35.53 28.46 34.37 33.07 40.31

87.33 78.76 74.66 51.96 80.22 73.31 65.06 68.74 68.78 76.43

68.13 59.01 54.58 28.62 61.31 45.78 34.55 38.30 39.93 56.03

Source: Tea Digest, 2003 North India figures include quantity sold through Teaauction.com in 2000 & 2001 and in South India, TEASER VE data are included which started on 1.10.2003

Fig. 1.1 Quantity of Made Tea sold in Indian Auction 4

Jt South India ^ North India

Fig. 1.2 Prices of Made Tea In Indian Auction 90 -,80 o>

^70 .60 .S 50

40 30 1991

1998
Years

2003

South India * " ' North India

3.9

It may be noted from Table 2.3 that the average sale price of tea at the Indian auction

centres was Rs. 76.43/kg in 1998. In 1997, there was a decline in the production of Kenyan and Indonesian tea which may have pushed up the demand and prices of Indian tea to historic levels in 1998. Since then, the prices have been continously declining and the price was only Rs. 56.03/kg in 2003. The prices at South Indian auction was only Rs. 39.93/kg as compared to North India auction which was Rs. 61.31/kg during 2003. This is because the quality of tea produced in North India is superior to that produced in South India.

Area, Production and Yield of Tea in India 3.10 India is one of the largest producer of tea in the world. In India, tea is cultivated mainly in

the States of Assam, West Bengal, Tamil Nadu, Kerala and Kamataka. Table 3.4 gives the details of the area, production and yield of Tea in the country. Table 3.4 Region- wise Area, Production and Yield of Tea in India (Area in lakh ha. Production in lakh kgs, Yield in Kg/ha) Years North India South India All India Area Producti Yield Area Producti Yield Area Production Yield on on 1461 3.09 4377.9 5604.27 1416 0.74 1126.37 1645 3.83 1794 2541 7541.92 3.45 5629.26 4.2 1631 0.75 1912.66 1675 3.95 6508.07 1771 5.09 8539.23 1647 1.14 2031.16 8384.74 1625 4.01 6317.48 1802 5.15 1575 1.14 2067.26 Tea Digest, 2003

1981 1991 2001 2002 Source:

10

Fig 1.3 : Share of Area under Tea Culti.in India 2002

-wVW

22.1%

' "L -u^juiKHKJi

7 7 . 9 % ^ ^ ^ ruijvU'! South india 35 North India

Fig. 1.4 Share in Tea Production in India 2002 24 7%

75.3% |i:i:l South India 3S North India

3.11

It may be seen from Table 2.4 that the area and production of tea is more in North India

as compared to South India. During 2 002, the area under tea cultivation was 4.01 lakh ha in North India (77.87%) whereas, it was 1.14 lakh ha in South India (22.13%) and the production was 6317.48 lakh kgs (75.35%) in North India and 2067.26 lakh kgs in South India (24.65%). Share of Different States in Tea Cultivation 3.12 About 14 States in India produce tea, of which Assam and West Bengal in North and Tamil Nadu, Kerala and Kamataka in South India are the five most important States producing tea. Together, they account for 97 per cent of the total area cultivated under tea and about 99 per cent of the total tea production in the country. The State- wise area and production of Tea in India is presented in Table 3.5. 11

Table 3.5 State- wise Area, Production and Yield of Tea (Area in lalch ha, Production in lalch legs. Yield in kg/ha)
States Assam West Bengal Other Northern States Tamil Nadu Kerala Kamataka All India 1991 2.33 1.01 0.11 Area 1998 2.51 1.05 0.15 Production 2002 1991 1998 2002 2.7 4,005.54 4,670. 4,333. 46 27 1.13 1,552.16 1,937. 1,880. 89 21 0.18 71.56 98.23 104 1991 1,717 1,523 684 Yield 1998 1,856 1,835 2002 1,601 1,662

0.38 0.34 0.01 4.2

0.63 0.36 0.02 4.74

0.75 0.37

1,199.37 668.03

0.02 45.26 5.15 7,541.92

1,320. 46 659.4 3 54.61 8,741. 08

1,431. 21 577.72 58.33 8,384. 74

3,104 2,078 1,926 1,794

1,893 1,563 2,741 1,625

2,290 2,594 1,794 1,844

Source: Tea Digest, 2003 3.13 It may be noted from Table 3.5 that area under tea cultivation is the highest in Assam

followed by West Bengal, Tamil Nadu, Kerala and Kamataka. In terms of production also, Assam ranks first followed by West Bengal, Tamil Nadu, Kerala and Kamataka. The average yield rate of tea was the highest in Kamataka followed by Tamil Nadu, West Bengal, Assam and Kerala during the period 1998 to 2002. Production of Made Tea in India by Different Metliods of Manufacture 3.14 At present, major part of made tea produced in India is of CTC type (88.7%) followed by orthodox (10.74%) and green tea (0.56%), while in 1961, orthodox tea constituted about 57 per cent of the total tea produced. Green tea produced had always formed a small part of tea production and has remained at around 1.5 per cent. CTC forms a relatively large part of made tea produced in North India (78%) compared to 22 per cent in South India.

12

Tirr

Status of Tea Cultivation in Tamil Nadu 3.15 Tea is one of the major plantation crops grown in the State. It is cultivated mainly in the

hilly and high rainfall zones of Nilgiris, Coimbatore, Dindigul, Theni, Kanyakumari and Tirunelveli districts. In South India, Tamil Nadu leads both in terms of area and production followed by Kerala and Kamataka. The area under tea cultivation in Tamil Nadu was 75619 hectares which is about 66 per cent of the total area under tea cultivation in South India and the production in the State was 1431.21 lakh kgs (69.23%) of the total tea production in South India during the year 2002. Districtwise area and production under tea in the State is given in Tabic 3.6. Table 3.6 District- wise Area and Production of Tea in Tamil Nadu (Area in ha and Production in lakh kgs)
SI. No. Districts Area Madurai Tirunelvel i 3 Nilgiris 4 Kanyakum ari 5 Coimbator e 6 Total State Source: Tea Digest, 2003 1 2 945 800 26260 434 10195 38634 1991 Producti on 30.8 23.79 846.77 1.78 296.23 1199.37 Area 941 800 49759 434 11609 63543 1998 Production 30.75 18.83 939.72 1.19 329.97 1320.46 Area 973 800 61679 433 11734 75619 2002 Production 13.18 16.92 1128.46 1.41 271.24 1431.21

Fig. 1.5 Area under Tea in Tamil Nadu SOTO60^50^ 40< 302010 0 D Area (ha) 2000 1500

Fig. 1.6 : Production of Tea in Tamil Nadu (lakh KG)

1000-500--

1991

1998

2002

1991

1998

2002

13

3.16

It may be noted from Table 3.6 that the maximum concentration of tea was in Nilgiris

district (81.56%) and the production was also maximum (79%) in Nilgiris district in the State during 2002.

Trends in Productivity of Tea in Tamil Nadu 3.17 District- wise tea productivity during the period 1991 to 2002 in Tamil Nadu is given in Table 3.7. Table 3.7 Tea Productivity in Tamil Nadu (kg/ha) Districts Kanyakumari Tirunelveli Madurai Coimbatore Nilgiris Total Tamil Nadu Source: Tea Digest, 2003 1991 410 2974 3259 2906 3225 3104 1998 274 2354 3268 2842 1889 2078 2001 270 2224 3239 2653 1559 1751 2002 326 2115 1355 2312 1830 1893

Tea Productivity in Tamii Nadu

3500 3000
(0

=3)2500 2000 1500

1991 Productivity in TN

1998
Years

2001

2002

14

3.18

It may be seen that the productivity of tea in the State has declined from 3104 kg/ha in

1991 to 1893 kg/ha in 2002. Factors leading to low productivity are decrease in the number of bushes in the already existing gardens, replantation of old bushes not undertaken, etc.

15

Chapter 4 Economics of Tea Gardens

This chapter deals with farm economics of tea cultivation in Nilgiris district. The economics of tea cultivation has been estimated by dividing the tea growers into two sectors: small growers and large estates. Small growers are classified as those having an area below 10.12 ha and estates are those having an area of 10.12 ha or above. Benefits have been assessed in terms of net income earned from the activity during the reference year.

4.2

Tea crops are grown in plains as well as at elevations upto 2400 metres above mean sea

level. Tea grown at higher altitudes has good flavour while that grown in plains has better liquor. It requires moist climate with a heavy rainfall of 150 to 300 cms well distributed throughout the year. The entire Nilgiris district is hilly with a minimum and maximum height of 750 to 2950 metres above the mean sea level. Tea is grown in approximately 70 per cent of net cultivated area and is the mainstay of the economy of the district. Tea cultivation is prevalent in Coonoor, Kothagiri, Ooty and Kundha regions in the district.

Category of Farmers 4.3 As stated in chapter 2 of the report, a sample of 1 8 small growers and 5 estates were

selected for the study. 50 per cent of the sample small growers were members of INDCO tea factory. T he m embership fee for t he m embers r egistered w ith INDCO w as R s. 2 500 p er a ere which is to be paid once and the entrance fee is Rs. 500. Registration number is allotted to each member. Sample farmers who were members of INDCO factory were found to avail facilities from the factories like supply of inputs- manures, planting material, pesticides at their door steps.

4.4

As regards the ownership pattern of the sample estates, it was found that 40 per cent of

the sample estates were proprietary, 40 per cent were private limited companies and 20 per cent was owned by TANTEA.

16

4.5

All the sample farmers and estates were found to avail technical advice from UPASI. For

instance, advice on application of pesticides, manures, etc., and demonstration and training programmes on tea cultivation were organised by UPASI for the benefit of tea growers in the district. 4.6 All the sample farmers were agriculturists except 1, who was also owning a provision

store besides cultivating tea. All the sample estates were having tea gardens and were also owning tea processing units for the manufacture of made tea. Land Holdings and Cropping Pattern 4.7 4.1. Table 4.1 Land Holdings (ha)
SI. no. 1 2 3 4 5 6 7 Land Holdings (ha) Small Growers Upto 4 4.1-8 8.1 -10.12 Total Estates Upto 100 101 and above Total Number 13 4 1 18 2 3 5

Details of land holdings owned by the sample growers and estates are presented in Table

4.8

It may be observed from Table 4.1 that 72 per cent of the sample small growers had land

holdings upto 4 ha, 22 per cent had holdings between 4.1 to 8 ha and 6 per cent had holdings above 8 ha. but less than 10.12 ha. 40 per cent of the sample estates had land holdings upto 100 ha and the rest (60%) had above 100 ha. Average land holdings of the sample small growers was 2.94 ha and that of sample estates was 300 ha. The holdings owned by the small growers were rainfed but for sample estates, 9.4 per cent were irrigated and the rest (90.6%) were rainfed. All the sample covered during the study were cultivating only tea.

17

'

I illl '

Age of Sample Tea Gardens and Plant Population 4.9 The age of sample tea gardens (other than replantation) varied between 25 to 80 years

for small growers and estates. Average plant population was 12350 per ha in the sample small growers' farm and the same was 13000 per ha in case of sample estates.

Shade Trees 4.10 Shade trees are planted to regulate temperature and increase humidity at the bush level,

serve as wind break, reduce injury caused by ultraviolet radiation, minimise soil erosion, help to maintain ecological equilibrium, minimise loss of water through evaporation, etc. Only sparse shade, about 60% mid-day sunlight is required for tea. Some of the shade trees for tea plantations are A. Chinensis, Grevillea Robusta, A. Odoratissima, Acacia Lenticularis, Derris Robusta, etc.The permanent shade tree for tea plantations in South India is Silver Oak {Grevillea Robusta). Grevillia Robusta was found to be the shade tree planted by all the sample covered during the study. The economic life of silver oak is 40-50 yrs and generates additional income by way of sale as timber and fuel.

Investment/ Replantation Cost for Tea Gardens 4.11 The age of tea bushes in Nilgiris district is estimated to be more than 60 years. The

Government policy in South India is not to encourage establishment of new tea gardens but to uproot the old gardens and replant there. Hence, replantation cost is taken as the cost of investment for tea gardens in the study area. Replantation cost includes the cost of uprooting old bushes, land levelling, revetments, digging pits, planting, etc. Replantation was undertaken by only 22 per cent of the sample small growers. Majority of the sample have not undertaken replantation due to financial constraints and expected crop loss in the initial years. However, 80 per cent of the sample estates were found to replant their tea gardens on an average of 2 ha land and 1 tea estate has been replanting 2 ha of tea gardens every year for the last 10 years. The main reason for not undertaking replantation by 1 sample estate (20%) was due to the fact that good clonal varieties were planted about 25 years ago. Since the replantation has been undertaken by the sample in the last 5-6 years, the same was estimated at reference year prices. The average replantation cost per ha capitalised upto 3 years for sample small growers worked out to Rs. 2.26 18

lakh and the same capitalised upto 4 years for the sample estates worked out to Rs. 3.09 lakh. There may be variations in the replantation cost for different farms in the district as the uprooting and land levelling cost will be more in hilly regions. Item- wise cost for replantation per ha for the sample during the first year is given in Table 4.2 and details for the first 4 years of investment are indicated in Annexure I. Table 4.2 Average Replantation Cost (Rs./ ha) SI. no. Particulars 1 Uprooting 2 3 4 5 6 7 8 9 Small Growers Estates 39,000 (19.75) 14,000 (7.09) 37,500 (18.99) 26,000 (13.17) 39,000 (19.75) 6,500 (3.29) 5,500 (2.78) 350 (0.18) 22,200 (11.24) 7,440 (3.77) 197,490 (100)

Figures 4.12

37,050 (21.87) Land Levelling 10,890 (6.43) Revetments, drains, 25,123 boundaries (14.83) Pitting 24,700 (14.58) Planting Material 37,050 (21.87) Planting 6,175 (3.64) Lining, watering pits 4,800 (2.83) Silver oak planting cost 350 (0.21) Recurring cost for 21,285 maintenance (12.56) Labour for farm operations 2,000 (1.18) Total 169,423 (100) in brackets indicate percentage to total

It may be seen that the major items of replantation cost are uprooting, revetments and

planting for both small growers and estates. The total replantation cost during the first year worked out to Rs. 169423 for the sample small growers and Rs. 197490 for the sample estates.

19

Green tea leaves can be plucked from 2nd year onwards and reaches the stabilised yield in the fifth year.

Field Practices for Maintenance of Tea Gardens Manuring 4.13 In tea plantations, mainly chemical fertilisers are appHed. Nitrogenous fetihsers in the

form of urea, ammonium sulphate, calcium ammonium nitrate, etc are used. Phosphate and potash are also applied wherever necessary. The fertiliser is applied in two or three rounds. All the sample estates were found to apply chemical fertilisers like urea, potash, etc for three rounds during the year.

Irrigation 4.14 Tea is mainly a rainfed crop and there is a limited scope for irrigation. Extended drought

adversely affects the growth of bushes, hence supplementary irrigation is required. It was observed that the holdings owned by the sample small growers were rainfed but for sample estates all the sample estates had sprinkler irrigation facilities on 9.4 per cent of the average land holdings.

Pest Management 4.15 Red spider mite (oligonychus cqffeae), the largest of all tea mites has assumed

significance due to its widespread occurrence in all the tea growing regions of South India. This mite first appeared in Gudalur in the year 1999-2000 and gradually spread to other parts of Nilgiris district. It infests upper surface of mature leaves causing reddish brown spots at the points of sucking, making the infested fields distinct from a distance. Severe infestation may lead to defoliation. A study by UPASI TRF revealed that the mite can cause more than 18 per cent loss in crop if the infestation is severe. Recommended dosages of chemicals like dicofol, ethion, quinalphos, wettable sulphur, etc may be applied after plucking to control the pest. The sample gardens were found to take preventive measures against red spider mite like spraying of pesticides - zolon, sulphur, etc as prescribed by UPASI from time to time.

20

Disease Management 4.16 There are different root, stem and leaf diseases that affect tea. Blister blight (Exohasidiuni

Vexans) was first reported in South India in 1946. It is a primary leaf disease that affects tender shoots and succulent stems. This disease results in crop loss and the quality of made tea is affected as the leaves affected by blister produce flaky tea. Crop loss may be as high as 16per cent due to these kind of diseases. The first sign of infection is the production of pale yellowish circular spots about 13 mm in diameter on the first three young leaves. For blister blight control, chemicals like copper oxychloride, nickel chloride, safnik, triazole fungicides like bitertanol, propiconazole, etc are recommended. The planters were found to normally use a spray schedule to combat pests and diseases. Plant diseases were also found to be prevalent in the sample gardens. The most common plant disease was blister blight. All the sample growers were reported to be using chemicals like copper fungicide, blue copper, nickel chloride, etc to control this disease.

Weed control 4.17 Morphologically, the major weed groups are either dicotyledonous or monocotyledonous.

It is estimated that the dicot weeds can cause 12 per cent crop loss and monocots 21 per cent crop loss. Mulching suppresses weeds and helps moisture conservation. Besides manual weeding, chemicals like dalapon, glyphosate, paraquat, etc were used for weed control by the sample.

Pruning 4.18 Pruning is an important field operation. It is done by cutting the branches of tea at a

height of 32 to 40 cms at a specified interval. The bushes are generally pruned periodically to prevent lateral growth and provide a good spread of lateral branches. The principal objectives of pruning are: to re-establish the initial vigour of the shoot system to stimulate growth, maintain convenient h eight for plucking, control crop during rush period, remove dead wood and help rejuvenate bushes that have crossed the period of maximum productivity, maintain quality in made tea, etc.

21

ir

4.19

There are different types of pruning as rejuvenation pruning, hard pruning, medium

pruning, light pruning and skiffing. The factors that affect choice of pruning system are health of the bushes, quality and quantity of crop needed, growth characteristic of plant type, etc. If the tea bushes are left continously unpruned, it would lead to the formation of large knots on the bushes accompanied by general thickening.

4.20

Pruning was done by all the sample small growers and estates. The pruning cycle adopted

by the sample was 4 years i.e. 25 per cent of total area under tea is being pruned every year. Labour was employed by the sample on a contractual basis and the average cost for pruning for small growers worked out to Rs. 6175 per ha and Rs. 6500 per ha for the sample estates @Rs.0.50 per bush. Plucking is carried out after 3 months of pruning and 50 -100 kg of green leaf is plucked in each round. After 1 year, full fledged plucking is be carried out.

4.21

Burial of pruning was also undertaken by the sample estates as this helps in water

conservation and increases the soil fertility.

Infilling 4.22 Infilling is done during the pruned year. Pegging is done to protect the plants fi-om being

trampled. It helps in increasing the productivity and reduction in the cost per kg of made tea and hence improves the economies of tea gardens as a whole. All the sample estates were found to undertake infilling operation and on an average 100 to 400 plants per acre were planted. Infilling was being undertaken by 3 sample small growers (16%). The average infilling cost worked out to Rs. 450 per acre for the small growers and Rs. 1800 per acre for the sample estates. Details are given in Table 4.3.

22

Table 4.3 Average Infilling Cost (Amount in Rs.) SI. no. Particulars 1 Average no. of plants infilled/ acre 2 Cost per plant 3 Total cost for plant 4 Manuring and other field operations @ Rs. 1.50/plant 5 Total infilling cost 100 3 300 150 400 3 1,200 600

450

1,800

Plucking 4.23 Plucking denotes harvesting of tea crop. The quantity and quality of harvested crop

depends upon the standard of plucking. Proper training and skills are required for plucking as indiscriminate removal of buds would adversely affect the health of the bushes. It is generally accepted that fine plucking makes the best quality tea as it is picking of two leaves and a bud. Medium or coarse plucking increases the quantity of harvested crop but only at the cost of quality and also affects the health of the bushes. Leaf standards are fine- 2 leaves & a bud or single leaf banji, medium- 3 leaves and a bud or 2 leaves banji, coarse- more than 3 leaves are plucked.

4.24

Plucking interval is also important for efficient harvesting of tea. It influences yield,

quality of harvested leaf and plucking average. As recommended by UPASI, the frequency of plucking maybe once in 7-10 days during high cropping months and 12-15 days during lean season. Recommended rounds in a year is 26 to 28 rounds depending upon elevation, weather conditions and age fi-om pruning. Plucking rounds at a shorter interval with fine plucking can give better quality of made tea than leaves plucked at longer intervals. Apart from quality, plucking interval also affects the quantum of leaves. As the plucking interval is increased, there is a continous increase in yield but quality deteriorates.

4.25

Plucking was mostly done manually by the sample small growers and estates and on an

average, there were 25 plucking rounds in a year. Female labour were employed for plucking and
23

III

were paid wages at the rate of Rs. 2 per kg of leaf plucked and an incentive of 50p per kg was given for plucking green leaf more than the scheduled quantity.

4.26

About 80 per cent of the total green leaves plucked from the tea gardens of small growers

were 3 leaves and a bud, 10 per cent were a single leaf banji and the remaining 10 per cent were coarse plucking. It was also observed that the entire stem of the bushes were also plucked to generate revenue at the cost of quality. The estates laid stress on plucking good quality leaves and about 70 per cent of the total leaves plucked were 2 leaves and a bud. 4.27 Shear harvesting was used by the sample estates during rush periods for effective crop

harvesting. Flat instead of steep shears may be used and 3-4 rounds shear harvesting during high cropping season is recommended by the research institutions. Studies by TRF have indicated that continual shear harvesting adversely affects bush health resulting in crop loss of 10-20 per cent. Therefore, integrated shear harvesting is recommended.

Maintenance Cost for Tea Gardens 4.28 Maintenance cost on tea gardens includes cost on fertilisers, peticides, weedicides,

hai-vesting, pruning, etc. The maintenance cost on tea gardens is taken from the year of stabilised yield. Details of average maintenance cost for the sample small growers and tea estates are given in Table 4.4.

24

Table 4.4 Average Maintenance Cost (Rs. per ha) SI. Particulars no. 1 fertilisers 2 3 4 5 6 8 9 10 11 *mu Small Growers Estates

10,218 8560 (17.57) (17) 950 micronutrients 650 (1.33) (2) 2,000 Mulching material* (once in 5 2,000 years) (4.11) (3) 2,900 pesticides 2,470 (5.07) (5) 2,710 weedicides 2,717 (5.58) (4) 1,000 Disease mgt 988 (2.03) (2) 29,640 Plucking cost 24,700 (48) (50.71) 9,300 Labour cost for farm 4,800 operations other than plucking (9.86) (15) 2,736 Pruning & Infilling cost 1821 (3.74) (4) 61,454 48,706 Total (100) (100) ig ching material is applied once in 5 years and pruning infiUii cost is once in 4 years &

* Figures in brackets indicate percentage to total

4.29

It may be noted from the Table that the maximum cost incurred by the sample small

growers (50.71%) and estates (48%) has been on plucking.

Yield of Green Tea Leaf 4.30 Details of yield and price realised for green leaf for small growers (both members of INDCO and non - members) during 2003-04 are indicated in Table 4.5.

25

Table 4.5 Average Yield and Sale Price of GTL SI. no. Particulars Small Growers 1 Average Yield of GTL/ ha (kg) 2 Average Sale Price/kg 3 Gross Income/ha (Rs.) 4 Total cost/ha (Rs.) 5 Net Income/ha (Rs.) * Sample estates are utilising GTL for their own factories 4.31 Estates 12350 6 74100 _ 48706 25394 14820

As may be seen, the yield of GTL was 12350 kg per ha and 14820 kg per ha for the small

growers and estates respectively. The average price realised by the sample small growers during 2003-04 was Rs. 6 per kg. Net income worked out to Rs. 25394 per ha for the small growers and the net income of sample estates is calculated in terms of yield of made tea. As stated earlier, all the sample estates had processing units for the manufacture of made tea. Hence, they were making use of GTL produced in their estates in their own factories.

Marketing of Green leaf 4.32 Small growers in Nilgiris district are generally covered by co-operative (ENDCO) and

bought leaf factories. The sample small growers (non- members of fNDCO) were supplying green leaf to BLFs which had their collection centres in the villages. Members of INDCO factories were supplying GTL to the INDCO factories which also had collection centres nearby. It was revealed during the study that these members are not bound to sell their GTL to INDCO :and :sometirnes when the bought leaf factories offer price slightly higher than that offered by fNDCO factories, the members sell off their GTL to them causing a shortage of GTL to these factories.

Financial Viability 4.33 The economics of tea cultivation has been worked out with the following assumptions:

The tea gardens start yielding green leaves from the second year onwards and stabilised yield is obtained from the fifth year.
26

Tea plants give yield for a long period of time, which may be more than 70 years. However, for the study, the economic life of the garden has been assumed at 25 years. Tea gardens have double hedge planting. As the sample farmers have been involved in tea cultivation since a very long period, the predevelopment income has not been taken into consideration. The gross income from sale of tea has been calculated for both the pre- stabilised and stabilised period. The residual value of tea plant and silver oak tree has been taken into account for calculating the gross benefits. FRR has been calculated both with and without subsidy for replantation. All the costs and income has been calculated at reference year prices. The cash flow statement for the small growers is given in Annexure II and 1 1 and the 1

4.34

financial parameters worked out are indicated in Table 4.5 and 4.6. The sample estates were utilising the GTL produced in the processing of made tea in their own factories. As such, the economics of tea cultivation for the sample estates have been calculated by taking into account the yield of made tea and has been discussed at length in chapter 5 of the report. Table 4.5 Economics of Tea Cultivation (excluding subsidy)
Sl.no. 1 2 3 4 5 Particulars FRR (%) NPV of cost at 15% DP (Rs./ha) NPV of Benefits at 15% DP (Rs./ha) NPVatl5%DP(Rs./ha) BCR Small Growers 11.2 386812 341781 -45031.24 0.88

Table 4.6 Economics of Tea Cultivation (including subsidy)

SI. no. 1 2 3 4 5 Particulars PRR(%) NPV of cost at 15% DP (Rs./ha) NPV of Benefits at 15% DP (Rs./ha) NPVatl5%DP(Rs./ha) BCR 27 Small Growers 15.47 386812 390699 3886 1.01

4.35

It may be observed from the Table that the FRR for sample small growers worked out to

15.47 per cent with subsidy and the same was 11.2 per cent without taking into account the subsidy for replantation. The price realised for GTL was Rs. 18 per kg during 1997-98. At this price, with the same investment and maintenance costs, the FRR was worked out and the same was 39.41 per cent. Major factor which has affected the economics of the tea gardens for the small growers is low price realisation for green leaves, which has been very less during the last 5 years. Further, the quality of green tea leaves produced by the small growers are not upto the mark. Sometimes after plucking of GTL, the BLFs do not make arrangements to collect the leaves which lead to deterioration in the quality of leaves. 4.36 The sample small growers have not claimed any subsidy for pruning and rejuvenation

from Tea Board as it was felt that the procedure is quite cumbersome. However, the sample growers undertaking replantation have availed subsidy for the same. 4.37 Break even price for green tea leaf of sample small growers was calculated by using the

following formula:

BEP = F/Y-V where, F= Annual Fixed Cost Y= Income V= Variable Cost 4.38 Expenditure incurred on plucking has been included under fixed cost and the cost

incurred on fertilisers, micronutrients, pesticides, weedicides, disease management, mulching, pruning and labour cost for farm operations have been taken as variable cost. With these items of expenditure, the break even point worked out to 0.48 and the break even level of green leaf was Rs. 2.88.

Organic Tea 4.39 The Indian organic farming industry is in a nascent stage and was estimated at Rs. 100

crore in 2002. According to a survey of International Federation of Organic Agriculture

28

Movements & Stiftung Oekologie & Landbau in 2003, India has about 41000 ha land under organic farming, which is only 0.03 per cent of the cultivated area. 4.40 Total world production of organic tea was estimated at around 9 million kgs in 2001

which represents about 1 per cent of the total global tea production. The production of organic tea in India was 3.15 million kgs in 2001 which is one- third of the world production. (Export of Organic Products from India: Prospects & Challenges, Occasional Paper No. 97, EXIM Bank, 2003). Other main producers of organic tea are China (4.5 million kgs) and Sri Lanka (1.1 million kgs). Darjeeling has the highest number of estates under organic cuUivation followed by Assam and South India.

4.41

Table 4.7 gives the number and area of organic and in- conversion organic tea cultivation

in India. Table 4.7 Estimated Number and Area of Organic and In- conversion Organic Tea Cultivation in India SI. no. Regions No. of Estates 21 15 14 50 Area (ha) 4,000 1,400 2,500 7,900 Production (lakh kgs)* 8.49 510 23.49

1 Darjeeling 2 Assam 3 South India 4 Total Source: Tea Board ofIndia, 2001 *Darjeeling Planters Association 4.42

A sample of 2 organic tea estates having their own processing units were visited during

the study. One estate was found to produce only organic tea, whereas, the other estate was producing organic tea partially in 65 ha (total land holdings 800 ha.) and had just completed the conversion period. Reasons for organic tea cultivation cited by the sample were that the product has a niche market and there is a demand for organic tea in the export market. Contour planting in double hedge was done. These estates produce tea without the use of synthetic chemicals like pesticides, fungicides, herbicides and fertiUsers. Pest, disease and weed control are made by natural methods. Vermiculture, compost and oil cakes are applied instead of chemical fertilisers. The minimum conversion period was reported to be 3 years from the last usage of synthetic 29

flf

chemicals. Tea can be marketed as 'organic tea' only after the conversion period. The certification of organic production is made by the Institute for Marketecology (IMO), Switzerland, which has its branch office in Bangalore and the estates have to pay Rs. 1 lakh per annum to get the organic certification.

4.43

It was reported by the sample estates that additional labour is required for compost

preparation, manual weeding, application of organic manures, etc. Besides, the inputs used for pest control are also costlier as compared to non- organic production. So, the production cost is around 40 per cent higher than conventional tea. It was also reported that the productivity level of organic tea estates were the same as that of non- organic estates and there was a fall in productivity level of about 25 per cent during the conversion period.

4.44

The maintenance cost was reported at an average of Rs. 1 lakh per ha per annum.

Item-wise break up of maintenance cost is not indicated as the same was not revealed by the sample estates during the study. The sample estates were found to manufacture orthodox tea by natural fermentation. The estate manufacturing organic tea partially was taking care to properly clean the factory before the manufacture and separate troughs and driers were being used. Crates were used for transportation of green leaves for maintaining the quality.

4.45

The marketing channels for organic tea by the sample was: >direct export >retailers

Organic tea estates Organic tea estates

The sample estates were found to have direct tie up with the consumers in the importing countries like Germany and U.K. The market price of the organic tea was quoted as Rs. 400 per kg as compared to inorganic tea which varied between Rs. 100 to Rs. 120 per kg.

4.46

Problems faced by the sample organic estates was that of marketing and 1 sample estate

was found to sell almost 50 per cent of the organic tea as conventional tea. The other problems cited were high certification cost and declining premium price.

30

Chapter 5 Tea Processing

An attempt has been made in this Chapter to analyse the various aspects of tea processing by Bought Leaf Factories (BLFs), factories owned by estates, INDCO, and TANTEA.

Methods of Tea Processing 5.2 There are two main methods of tea manufacturing being carried out in Nilgiris district-

CTC (crush-tear- curl) and orthodox. To manufacture black tea, leaf is usually withered and rolled by rolling in the conventional tea rollers or is passed through rotorvane and CTC rollers which exert drastic action on the withered leaves. When the optimum stage in the chemical change is reached, action of the enzyme is arrested by drying the fermented leaf in a current of hot air in suitable tea dryers. Different steps in CTC tea manufacture are- withering, green leaf sifting, reconditioning, roUing, fermentation, drying, grading and sorting and packing. The CTC method of manufacture is similar to that of orthodox method except in rolling which is more severe and the object is to achieve intensive fermentation. This brings a reduced size of the leaf and ruptures most of the cells.

5.3

In orthodox type of tea manufacture, the withered leaves are rolled on specially designed

orthodox rollers which twists and crushes the leaves thereby rupturing the cells. The maceration is less as against CTC processing. Different steps involved in orthodox tea manufacture arc withering, preconditioning, rolling, roll- breaking and green leaf sifting, femientation, drying, grading and sorting and packing. The South Indian tea consists mainly of orthodox type.

5.4

Advantages of CTC manufacture are it brews quickly, yield more cups of tea per kg, has

domestic market as tea liquor is in demand. Less caution is needed for plucking, hence, is considered good by plantation owners. But the process may diminish natural flavours of tea. On the other hand, orthodox- diffuses slowly, brews less cups of tea per kg and is costly to produce. The slow process of manufacture allows to retain majority of delicate flavours inherent in the plucked green leaf and fetches premium price.
31

5.5

As mentioned in Chapter 3, processing units owned by estates, T ANTE A, INDCO and

bought 1 eaf were covered during the study. BLPs are the factories which purchase GTL from other growers for manufacture of made tea. These factories came into existence in Tamil Nadu in 1960s. As per the estimates o f Tea B oard, out of a total 369 bought leaf factories producing 155.93 million kg of made tea in the country, 160 BLFs (43.3%) are in Tamil Nadu with total made tea production of 74.46 million kgs in 2002. Unlike the co-operative factories which have small growers as their members, the BLFs do not have any members and are free to purchase green leaf from any grower. The estate factories use the GTL of their own estates to manufacture made tea. The role of TANTEA and INDCOSERVE has been discussed in Chapter 10 of the report. Type of Ownership 5.6 Table 5.1 gives the details of ownership pattern of the sample processing units. Table 5.1 Ownership Pattern
SI. no. 1 2 3 4 5 6 Type of Ownership Proprietary Private Ltd Partnership Co-operative Government Total BLFs 1 2 1 3 3 1 1 1 Estate 2 1 TANTEA INDCOSERVE

5.7

As may be seen, 2 BLFs were partnership firms and 1 was a proprietary. 1 processing unit

was owned by TANTEA, a Government undertaking and 2 estates were owned by proprietors, 1 was a private limited company and 1 unit was a co-operative society. Methods of Manufacture 5.8 Manufacture of made tea was either of CTC or orthodox type. Among the sample units surveyed, 50 per cent of the units were manufacturing tea of CTC type and the other 50 per cent were manufacturing orthodox tea. It may be mentioned that the sample bought leaf and INDCO factories were manufacturing CTC tea and sample units owned by TANTEA and estates were
32

fW

manufacturing orthodox tea. Tea was being graded into leaf and dust varieties and the common grades of CTC and orthodox tea were brokens, fannings and dust.

Collection of Green Tea Leaves 5.9 BLFs and INDCO factories have collection centres at different places in the villages to

collect GTL. Although the BLFs are free to purchase GTL from any source, the sample units reported to have purchased GTL only from small growers. They had employed agents to collect GTL and were paying commission @ 15 p per kg. The units owned by estates and TANTEA had their own lorry to bring the tea leaves from the gardens to the factories.

Quantity Purchased and Price Paid for GTL 5.10 The sample BLFs were also owning estates of an average land holdings of 30 ha and were

manufacturing tea from the GTL of their own estates also. The average quantity of GTL purchased and the price paid to the small growers by the sample BLFs and to the members by the FNDCO factory during the reference year is depicted in Table 5.2. Table 5.2 Average Quantity of Tea Leaves Purchased and Price Paid SI. no. Particulars 1 Average Quantity Purchased (lakh kgs) 2 Average Price Paid (Rs./kg) 5.11 BLFs 16.35 6 INDCO 35.5 6

As may be seen from Table 5.2, the average quantity of GTL purchased by the BLFs and

INDCOSERVE were 16.35 and 35.5 lakh respectively and the average price paid was Rs. 6 per kg. As already indicated in Chapter 4, members of INDCO factories are not bound to sell their GTL to INDCO and sometimes when the bought leaf factories offer price slightly higher than that offered by INDCO factories, the members sell off their GTL to them causing a shortage of GTL to these factories. It was also observed that bought leaf and INDCO factories often made advance payments to the small growers against the supply of GTL.

33

Made Tea Produced 5:12 The average quantity of made tea produced by the sample units is depicted in Table 5.3. Table 5.3 Average Made Tea Produced (lakh kgs) SI. no. Particulars BLFs TANTEA Estate NDCOSERVE Factories 4.44 44.46 30.67 16.35 35.5
-

1 Own Estate GTL 2 Average Quantity of GTL Purchased 3 Total GTL 4 Average Made Tea Produced 5.13

20.79 5.19

44.46 11.11

30.67 7.66

35.5 8.88

The average made tea produce was 5.19, 11.11, 7.66 and 8.88 lakh kgs by the sample

BLFs, estate factories, TANTEA and INDCO factory.

Investment Cost 5.14 Major items of investment cost for a tea processing unit are land, construction of civil

works and installation of plant and machinery. Machinery for manufacture of CTC type includes investment on CFM machines, CTC machine, fermentors, drier, googie, troughs, sifter, winnower, rotorvane, shrudder, other motors, etc and that on orthodox type includes investment on troughs, rollers, drier, winnower, sifter, googie, ball breaker, etc. Majority of the sample units had their own land and TANTEA had taken the land on lease and were paying Rs. 12500/ ha per annimi as lease. The cost of machinery for CTC and orthodox type at the reference year prices was ascertained from the dealers of the same. The cost on civil works was collected at historical prices and converted to reference year prices by using suitable price indices. Table 5.4 gives the details of average investment cost excluding land at reference year prices for the manufacture of CTC and orthodox tea by the sample.

34

Table 5.4 Average Investment Cost at Reference Year Prices (Rs. lakh) SI. no. 1 Particulars 1 BLFs 2 Estate Factories 3 TANTEA 4 1 INDCOSERVE Operational Cost 5.15 The operational cost for a tea processing unit included expenses on items like electricity, At Reference Year Prices 212.36 395.75 363.5 207

firewood, repairs of machinery, insurance, salary, transport, brokerage, cess to Tea Board, warehousing charges, etc. Table 5.5 indicates the average operational cost per annum for the sample units.

35

Table 5.5 Annual Operational Cost for Sample Processing Units (Rs. lakh) SI. no. 1 2 3 Particulars BLFs* 11.67 8.30 5.19 4.41 10.39 0.50 0.51 2.55 5.40 4.15 1.93 1.55 0.19 1.69 2.59 2.45 63.47 Estates 25.00 17.78 11.12 9.45 22.23 0.50 1.11 7.66 25.48 6.52 3.43 3.33 0.44 2.66 3.81 0.00 140.51 TANTEA 17.23 12.25 7.66 6.51 7.66 0.50 0.77 9.39 22.78 6.01 3.08 2.25 0.30 2.20 3.68 0.00 102.27 INDCO* 19.98 10.88 11.88 5.77 8.88 0.65 1.02 22.50 19.71 4.35 1.96 2.61 0.34 2.97 4.24 5.33 123.07

Electricity Firewood Repairs for Machines 4 Generator & Lorry Maintenance 5 Transport Charges for GTL 6 Taxes 7 Insurance 8 Salaries 9 Wages 10 Packing Cost 11 Brokerage 12 Cess 13 Loading/Unloading Charges 14 Warehousing 15 Transport to Auctions 16 Agent Commission for GTL 17 Total * exc uding price paid for CJ T L

5.16

Maximum expenditure on the operational costs were on electricity and firewood for the

sample BLFs. On the other hand, wages and salaries constituted major items of operational cost for the sample estates, TANTEA and INDCO.

5.17

The sample units employed labour for different factory operations like withering, rolling,

fermenting, drying, sorting, packing, etc. Labour were employed both permanent and casual @ Rs. 75 per day by the BLFs and the other sample units were providing fringe benefits @ 25% of

36

IT

the basic wages. The permanent labour employed were provided facilities like staff quarters, medical facilities, etc by the sample units.

Processing Cost of Made Tea 5.18 On the basis of the annual operational cost incurred by the sample units, the average

processing cost per kg of made tea was calculated and has been indicated in Table 5.6. Table 5.6 Average Processing Cost Per kg of Made Tea (Rs./kg) SI. no. 1 2 3 4 5.19 Particulars BLFs Estate Factories TANTEA INDCOSERVE Average Processing Cost 12.23 12.64 13.35 13.85

It may be seen from Table 5.6 that the average processing cost per kg of made tea worked

out to Rs. 12.23, 12.64, 13.35 and 13.85 respectively for the sample BLFs, estate factories, TANTEA and INDCOSERVE. An average of 4 kg of green tea leaves are required for manufacturing 1 kg of made tea. Thus, any price less than Rs. 3 8 per kg{Rs. M a s average processing cost + Rs. 24 as price for GTL) of made tea would result in operational losses to the factories.

Marketing Channels 5.20 Made tea manufactured by the sample units was marketed through different channels. Majority of made tea produced by the BLFs was marketed through auctions (95%) and 5 per cent was marketed directly to the retailers. Besides, as stipulated by Tea Board, 2 per cent of the total made tea produced was also declared as tea waste by all the sample units and the same was being sold at an average rate of Rs. 20 per kg. It was revealed during the study that 3 kg was drawn as sample by the auctioneers for a lot. The lot may consist of a minimum of 5 bags or 100 bags of made tea. As such, it was difficult to estimate the amount of made tea as sample given by the processing units to the auctioneers. Hence, the same has not been taken into account. Table 5.7 gives, tlje details of made tea marketed through different channels by the sample units. 37

Table 5.7 Percentage of Made Tea Marketed through Different Channels SI. no. Particulars BLFs 95 5 0 INDCO 98 2 0 TANTEA 98 2 0 Estate Factories 70 5 25

1 Auctions 2 Retail 3 Direct Exports 5.21

As may be observed from the above Table, maximum percentage of made tea by all the

sample processing units were marketed through auctions. BLFs and estate factories were marketing 5 per cent of the total made tea produced through retailers and the sample unit covered under INDCO and TANTEA were marketing 2 per cent of the made tea produced by retail. Only the sample estate factories were found to directly export on an average 25 per cent of the made tea produced.

Price Realised 5.22 The average price realised for made tea by the sample units through different marketing

channels is given in Table 5.8. Table 5.8 Average Price Realised (Rs./kg) SI. no. Particulars 1 Auctions 2 Retail 3 Direct Exports 5.23 BLFs 40 70
-

INDCO 37 63

TANTEA 42 70
-

Estate Factories 45 73 65

The average price realised per kg at the auctions was the highest at Rs. 45 for the sample

estates a s t he q uality o f made t ea p roduced w as g ood a nd i t w as the 1 owest for INDCO (Rs. 37/kg). The retail price for the sample units have been calculated by taking into account the actual price realised by the manufacturer. Tea waste was sold directly to chemical factories at Rs. 20/kg.

38

Gross and Net Annual Income 5.24 Income for the sample bought leaf factories was realised from the sale of made tea

through auctions, direct marketing and also by the sale of tea waste. Net Income has been calculated by taking into account all the operational cost and gross income for the sample units. The stabilised average income realised by the sample units is given in Table 5.9. Table 5.9 Annual Gross and Net Income (Rs. lakh) SI. no. 1 2 3 4 5.25 Units BLFs Estate Factories TANTEA INDCO Gross Income 258.33 517.14 322.87 332.84 Net Income 47.19 220.62 112.94 -3.43

The net income realised for the sample estate factories was the maximum, whereas, it was

the least for the sample INDCO factory. This was due to the fact that the price realised for the made tea manufactured by the unit was low as compared to other sample units and the operational cost was high.

Financial Viabilty 5.26 The financial viability of the sample processing units have been worked out based on the

following assumptions: The economic life of plant and machinery is assumed at 15 years and that of civil structures at 25 years. However, the financial analysis has been restricted to 20 years in this study. The residual value of investment has been worked out at reducing balance method at a depreciation rate of 5 per cent for civil structure and 10 per cent for plant and machinery. The residual value of tea bushes and silver oak has also been taken into consideration while calculating the viability for BLFs, estates and TANTEA. Cost of land has not been included in the cost of investment. The cost incurred by the sample BLFs, TANTEA and estate factories on their tea gardens have been taken into account in calculating theFRR. All the costs and benefits have been assessed at reference year prices. 39

5.31

2 sample units involved in blending of tea were also visited. It was observed that the

units were purchasing made tea from different auction centres and blending was being done manually in different ratios. On an average, 2 tons of made tea were being blended per day by the sample units, for which 4 labourers were required and who had to be paid @ Rs. 100 per labour per day. After blending, packeting is done manually mostly by female labour. The packet blended tea was being sold @ Rs. 65 to 120 per kg whereas, loose blended tea is sold @ Rs. 40 per kg.

5.32

Other value added tea being produced are herbal, chocolate, masala, mint, ginger, rose,

diabetea, slim, iced tea, etc. For instance, in the manufacture of herbal tea, herbs like gymnesylvestre is blended.

41

Chapter 6 Tea Marketing

This chapter analyses in detail the marketing aspects and the pricing structure of tea in Nilgiris district. Nilgiris district is a major tea producing district in South India but the made tea from Nilgiris is mostly consumed in other parts of the country and are also exported.

6.2

Tea is sold through well established auction system and auctions continue to remain the

primary marketing channel for tea in South India. It is estimated that about 75 per cent of tea produced are still being sold through the auction centres despite the relaxation under clause 17 of TMCO order, which grants full freedom to the manufacturers of made tea by any means. At present, tea is auctioned through the following centres in South India- Coonoor, Cochin, Coimbatore and TEASERVE. All the 4 centres are now e- auction. There are advantages of eauction over manual bidding like transparency, speed, post sales data readily available, etc. But there are certain disadvantages of electronic auction also like breakdown of server, VSAT disturbance, etc. Further, if the system hangs, then the sellers and buyers have to wait for 30 minutes and conduct auction manually.

6.3

Details of the quantity sold and average price per kg at Coonoor and Coimbatore auction

centres during 1995 to 2003 are given in Table 6.1 and Table 6.2. Table 6.1 Quantity Sold and Average Price per kg at Coonoor Auction Centre Years Orthodox CIrc Total Quantity Average Quantity Average Quantity Average (tonnes) Price (tonnes) Price (tonnes) Price (Rs./kg) (Rs./kg) (Rs./kg) 38.10 5,678 48,329 40.59 54,007 40.33 4,857 65.06 57.62 65,991 65.08 70,848 39 4,164 46.71 66,604 38.52 70,768 36.78 55,656 36.09 60,665 5,009 44.44 40,586 34.55 34.12 38,052 2,534 41.11 Coonoor Tea Market Report

1995 1998 2000 2002 2003 Source:

42

Table 6.2 Quantity Sold and Average Price per kg at Coimbatore Auction Centre Orthodox CIrc Total Quantity Quantity Average Average Quantity Average Price (tonnes) Price (tonnes) Price (tonnes) (Rs./kg) (Rs./kg) (Rs./kg) 42.07 6987 17749 1995 43.98 10762 40.83 68.74 4584 74.30 66.72 17246 1998 12662 33274 43.35 55.00 40.15 2000 7169 26105 38.30 18894 37.84 3437 40.82 22331 2003 Source: Coimbatore Tea Market Report Years 6.4 It may be observed that the average price per kg has gone down at both the auction

centres. The average price which was Rs. 65.06 and Rs. 68.74 per kg at Coonoor and Coimbatore auction centres during 1998 has gone down to Rs. 34.55 per kg at Coonoor auction centre and Rs. 38.30 per kg at Coimbatore auction centre during 2003.

6.5

TEASERVE (Tea Manufacttorers' Service Industrial Co-operative Society Limited) is the

new electronic tea auction centre under the co-operative fold inaugurated on 13 September 2003. It is the world's first electronic auction centre at Coonoor and has commenced its regular tea auctioning since 1 October 2003. It was registered as a co-operative society on 28 August 2002.

6.6

The objective of TEASERVE is to ensure transparency in tea auctions and offer

remunerative prices to the producers, so that reasonable rates are paid to the growers. All co-operative institutions and public sector undertakings engaged in tea manufacturing, bought leaf factories. State Government and estate tea factories are eligible for admission as member of TEASERVE. As on 15 February 2005, there were 167 seller members and 399 buyer members (275 are from other States) of TEASERVE.

6.7

The management of TEASERVE vests with the Board of Directors consisting of 11

members, of whom 7 are elected fi-om among the members of TEASERVE, 1 expert from tea industry, 1 nominee from Tea Board, 1 nominee of GoTN and the Managing Director is the exofficio director.
43

6.8

The advantages of TEASERVE are that it is a producers co-operative society with no role

for the auctioneers (brokers). Auctioneers charge 1 per cent commission on the sale value. On the other hand, the charges of TEASERVE are only 0.13 p per kg for a 10 bag lot. While the existing auction system allows a drawal of 3 kgs per lot as sample for the brokers, in TEASERVE, only 1.5 kg per lot is drawn as sample. In order to encourage the sale of tea through TEASERVE, GoTN has given concessional rate of TNGST at 4 per cent and CST at 2 per cent. Despite these advantages, only 15 estates have registered themselves as members. This is mainly because the price realised at TEASERVE is less than other auction centres.

6.9

Indcoserve are the main participants at TEASERVE. Table 6.3 gives the quantity and sale

of made tea through TEASERVE. Table 6.3 Sale of Made Tea through TEASERVE SI. no. Years 1 2003-04 (October 2003 to March 2004) 2 2004-05 Quantity (kgs) 8,067,294 17,887,413 Value (Rs. crore) 26.76 75.55

6.10

It can be noted from Table 6.3 that there has been a sale of 259.54 lakh kg of made tea for

a value of Rs. 102.31 crore upto 31 March 2005.

Marketing Channels 6. U Marketing channels are sets of interdependent organisations involved in the process of making a product or service available for use or consumption. It is estimated that out of the total sales at the auction centres of Tamil Nadu, about 50 per cent of sales are inter state, 40 per cent are exported and 10 per cent are consumed within the State. However, during the study, the important marketing channels identified in the district are enumerated below: I. For BLFs and INDCO factories (within the State) Small Grower >Processing units auctioneers >wholesaler Commission agents 44 >retailers >consumers >auction centres

//.

For BLFs and INDCO factories (outside the State) >Processing units auctioneers >auction centres >proxy buyers

Small grower

commission agents

///.

For estates & TANTEA (within the State) >Processingunitsauctioneers >auctionCentres >

Plantations

wholesaler

>retailers

>consumers

Commission agents IV. For estates & TANTEA (outside the State) >Processing units Auctioneers V. Exports >Processing imits >direct exports > auctioncentres > proxy buyers commission agents

Plantations

Plantations

Plantations exporters

>Processing Units>destination countries

-> auctioncentres

>merchant

VI. Direct Retail Plantations >Processing imits->retailers >consumers

6.12

Among the various marketing channels, marketing of tea through auction centres is the

most popular channel.

Auctioneers 6.13 Auctioneers have been operating for the sale of made tea of the manufacturers at the auction centres. It was reported that they are required for market analysis, sampling, tasting, etc. The auctioneers charge 1 per cent of the total sales value realised at the auction from the sellers.

45

if

Commission Agents 6.14 Commission Agent is a middleman who does not have the title of goods but merely

negotiates price for the sale of goods that he handles. The commission agents also charge 1 per cent of the total sales value from the buyers.

Wholesalers 6.15 The wholesalers buy the made tea from the auction and blend, packet and sell it to the

retailers. The marketing cost of the wholesalers would be expenses on transport, blending, packeting, sales promotion, etc. Marketing cost for the wholesalers has been worked out and presented in Annexure Vlll.

Retailers 6.16 The sample retailers were purchasing different brands of tea from the estate factories,

Bought leaf factories, etc at 20 per cent margin and were selling at an average price of Rs. 120 per kg. Other tea like white and organic tea were sold @ Rs. 400 per kg. Value added tea like rose, ginger lime, chocolate, mint, masala, jasmine tea, etc were also being sold in a small quantity. No value addition was reported by the sample retailers. Loose tea is generally sold in retail through kirana stores @ Rs. 80 per kg and there is also a margin of 20 per cent on the same.

6.17

It may also be mentioned that within Tamil Nadu, TNGST of 8 per cent and CST of 4

per cent for made tea marketed outside the State has to be paid.

Price Spread 6.18 Price spread is the price paid by the consumer and the price received by the producer.

The economic efficiency of a marketing system of an agricultural commodity is generally measured in terms of the price spread. The smaller the price spread, the greater the efficiency of the marketing system. Marketing cost is considered in the study as all the costs incurred by an intermediary in moving the produce from one stage to another in the marketing channel. Marketing margin is that part of income which is over and above the marketing cost of the functionary. The price spread for different marketing channels has been worked out and presented in Table 6.4 and 6.5 and Annexure IX and X.

46

Table 6.4 Price Spread for Direct Export of Tea by Estates (Rs./kg) SI. no.
1 2 3 4 5 6 Particulars Cultivation cost Processing cost Export cost* Total cost Export Price Estates' margin Amount 16.56 12.64 18.33 47.53 65 17.47

*Worked out in Annexure XI Table 6.5 Price Spread for Merchant Exporters of Made Tea (Rs./kg)
SI. no. 1 2 3 4 5 Particulars Average Auction Price Export Cost* Total Cost Export Price Exporter's Margin Amount 40 19.33 59.33 61 1.67

*Worked out in Annexure XI 6.19 Thus, the supply chain of tea is long and complex involving a number of intermediaries. Generally, the consumer benefits, if the length of marketing channel is small. But, in the case of tea, since the consumers are not purchasing directly from the auctions or the processing units, the margins are shared by the intermediaries. Initiatives in Tea Marketing Public Distribution System 6.20 GoTN has initiated the sale of Nilgiris tea through PDS in order to boost domestic demand. Tea is purchased at the auction and blending and packaging is done by INDCOSERVE. The profits of the PDS are transferred to the co-operative factories to be passed on to the members of the co-operative. During 2003-04, tea sales by INDCOSERVE to PDS was of the value of Rs. 2110 lakh and direct sales was Rs. 13.45 lakh. Total profits increasedfi-omRs. 16.35 lakh during 1999-2000 to Rs. 130.35 lakh during 2003-04.

47

Tifr

6.21

Table 6.6 gives the details of tea used in the blend by INDCOSERVE, Coonoor

during April 2004 to March 2005. Table 6.6 Details of Teas used in the Blend by PDS, INDCOSERVE, Coonoor Bought Leaf Estate Factories Tea Factories' Tea 1 623,452 826,540 984,521 (20.03) (26.53) (31.61) Source: INDCOSERVE. Coonoor PDS Section
SI. no.

INDCO Tea

Assam Tea 679832 (21.83)

Total 3,114,345 (100)

6.22

Blending is done by samples drawn from PDS Godowns for table blend. Table blend

tasting based on the consistency for making original standard blend. A blend sheet is prepared which is handed over to PDS Section for carrying out bulk blending. After confirming the standard of table and bulk blend, packing is done. The total cost of blending is Rs. 13/ kg which includes all costs on labour, transportation from warehouse to blending godowns, packing material, etc. Tea is sold at Rs. 85/kg in PDS and the sale price is Rs. 100/kg.

6.23

India's first speciality tea auction, organised by Nilgiris Planters' Association was held

at Coonoor on 12 March 2005. There was record price realisations for high quality Nilgiri orthodox tea. A total of 4500 kg of speciality tea was on offer ranging from orthodox to white tea, green tea and organic tea and buyers were operating on behalf of clients from USA, Germany, Japan and Middle East. This would create awareness about Nilgiri teas the world over. Nonsuch Estate's 85 kg lot of'tea buds' fetched the highest price of Rs. 3300 per kg.

6.24

Earlier, it was stipulated under Tea Marketing control order that 75 per cent of tea

produced by plantations have to be sold through the auctions. This restriction has been removed now to give freedom to the producers to sell.

6.25

TANTEA has sales depots in Tamil Nadu for the sale of its branded tea. The total

sales through these sales depots was 1.20 lakh kgs with a value of Rs. 90.32 lakh during 2003-04. A sample of 2 entrepreneurs running these sales depot were visited and discussions were held. An average of 20 per cent margin is given by TANTEA on the listed price to the entrepreneurs running these depots and immediate payment has to be made to TANTEA. An initial deposit of Rs. 10000 has to be made to TANTEA which is reftindable if the entrepreneur decides to close the depot. An average of Rs. 120 is the listed price of TANTEA
48

branded tea and the samples were found to sell an average of 5 kgs of the brand and also 100 cups of tea @ Rs. 3 per cup every day.

6.26

Similarly, INDCO factories have depot shops for the sale of INDCO tea: The rent for

the shop is paid by the factories and is run by the factory workers who are paid @ Rs. 90 as wages and Rs. 40 for meals per day. The sales price of made tea at the depot visited at Ootty was Rs. 80 per kg and the depot was selling on an average 50 kgs of made tea and 1000 cups of tea @ Rs. 2.50 per cup every day.

6.27

The Nilgiris District Tea Producers' Marketing Co. Pvt Ltd is a consortium of

about 40 Tea manufacturers formed during 2003 with the objectives of Procuring quality green leaf from the small Tea Growers at a remunerative price. Manufacture of quality Tea in the brand name of NILMA and promoting Tea as a refreshing health drink. To eliminate multiple marketing channels and directly supplying tea to the consumers at a reasonable price.

6.28

There are a total of 56 dealers operating in different parts of Tamil Nadu like

Thanjavur, Tirupur, Cuddalore, Kumbakonam, etc. to market their brand of tea directly. Since the tea industry is in a bad shape, the company had started to get better prices for the blended tea. The members of the consortium are the suppliers of made tea and they are paid a price of Rs. 2 to 5 more than the auction price.

6.29

The Company has not fared well and now there are only 32 tea manufacturers in the

consortium. The main reason being too many directors and they are mostly interested in promoting their own factory made tea.

Futures Trading in Tea 6.30 Futures trading in durable agricultural commodities is required as they are not

consumed immediately after production. The device by which the futures market assist the producers in reducing price risk is called as hedging. Hedging acts as a price stabiliser during periods of surplus as well as shortages. Thus, hedging is an insurance against price risk.

49

IF

6.31

The prevailing marketing methods of tea - auctions and spot transactions has worked

well over the years. Due to changing times, it is feU that there is a need for futures trading to avoid risks to the sellers and buyers in the market. Futures trading provides flexible marketing tool enabling all the functionaries in tea to fix a price in advance and also a broad market for them.

6.32

By introducing fiitures trading in tea, price fluctuations in tea may be minimised in the

auctions as the buyers and sellers would get an advance indication of price from the futures market and they would be able to cover their risk by taking counter positions in the futures market. The basic difference between tea auctions and futures is that auctions deal in spot prices and futures deal in future prices. A gradual reorganisation of the auction with futures trading is the need of the hour to encourage a homogenous market.

6.33

UPASI had come up with the proposal of futures trading in tea in 2000. Tea futures is

not in existence in any part of the world. The Forward Markets Commission which is the regulatory body for commodities futures under the Ministry of Consumer Affairs, Food and Public Distribution, Gol, had provided 'in principle' approval to UPASI for fiitures trading in tea in July 2002. The 'in principle' approval granted by FMC expired on 1.3.2003 and was extended upto 31.7.2004 and 31.10.2004 and subsequently has been withdrawn. UPASI has set up a public limited company named UCEL (UPASI Commodities Exchange Limited). UCEL has aligned with MCX (Multi Commodity Exchange of India Ltd) to start futures trading. The platform will be provided by MCX and UPASI to provide the technical know how. Some infrastructural facilities are required for running the Exchange, like computers, application software, server, etc. They propose to set up a main office at Coonoor with trading hubs in Kochi and Coimbatore initially. It will be the First tea fiitures exchange in the world.

6.34

The main problem for futures trading in tea is that there are different varieties of tea

and the quality differs from garden to garden. Even within the same garden, the quality and grade differs. The quality of tea and the grades differ from garden to garden and also with the season, type of green leaf and tea clones. The solution to the problem is either Tea Board or UPASI may do standardisation even though there are difficulties in evolving quality parameters for tea.

50

6.35

There is resistance from both buyers and sellers to change the system of auction. A 1
r

workshop and live demo on futures trading was organised jointly by UCEL and MCX on 23 May 2005 at Tea Trade Association of Cochin, Kochi. The workshop gave an insight into actual trading in futures trading. This can be a solution to the resistance from buyers and sellers.

| | I i

51

Chapter 7 International Tea Trade Sri Lanka, India, Indonesia, China and Kenya are the major world exporters of tea. As per FAO report, world tea exports increased by 4.4 per cent in 2004 to reach 1.47 million tonnes and world tea imports increased by 1.5 per cent reaching 1.42 million tonnes. Details of major tea exporting countries during the period 1993 to 2003 are indicated in Table 7.1. Table 7.1 World Tea Exports (lakh kgs)
Countries India Sri Lanka Indonesia 1993 1753.18 2099.42 1239.26 2014.35 180.00 1883.90 2389.81 11559.92 2000 2068.16 2801.33 1055.81 2276.61 556.60 2169.90 3330.31 13308.72 2001 1825.88 2875.03 997.21 2496.78 682.17 2581.18 2455.26 13913.51 2002 2003* 1736.84 2010.02 2918.91 2859.85 1001.85 881.75 2522.73 2599.80 748.12 518.37 2724.59 2692.68 2531.14 2520.39 14387.55 13879.49

China
Vietnam Kenya Others Total

*Provisional Source: Tea Digest, 2003 7.2 It may be seen from the Table that India accounted for 14 per cent, Sri Lanka (19.8%),

China (17.5%), Vietnam (5%) and Kenya (19%) of the total world tea exports during 2002. During 2002, out of total world tea production of 30644.5 lakh kgs, about 47 per cent was exported. 7.3 World tea i mports for consumption registered an increase o f 40.24 m illion kgs d uring

2003 as compared to 2002. However, it is estimated that there would be a decline in imports of tea by 22.02 million kgs during 2003. Export and Import of Tea in India 7.4 India is one of the major tea exporter in the world. It ranks 4th in exports after Sri Lanka,
52

Kenya and China. In the CTC segment, Kenya dominates the world market because of its lower production cost. In the orthodox tea segment, Sri Lanka dominates due to higher output of orthodox tea and less production cost. Table 7.2 gives details of exports including instant tea for North and South Indian tea. Table 7.2 Export of Tea from North and South India (including instant tea) Years North India South India All India Quantity Value(Rs. Value(Rs. Quantity Value(Rs. Quantity (lakh kgs) lakh) (lakh lakh) (lakh kgs) lakh) kgs) 1617.24 56424.23 44474.38 416.37 11949.85 2033.61 1081.55 76335.60 431.68 21853.61 1806.90 98189.21 1002.48 118918.36 100265.87 1056.11 2058.59 219184.23 873.32 1026.69 1900.01 169578.58 101464.75 68113.83 914.04 1843.94 103948.76 929.90 62543.69 166492.45 946.41 55605.40 1830.74 163699.06 108093.66 884.33

1983-84 1993-94 1998-99 2001-02 2002-03 2003-04* *provisional

Source: Tea Digest, 2003 7.5 It may be noted that during 1983-84, about 80 per cent of the total Indian tea exported

was from North India and the trend has reversed from the year 1998-99. However, there has been only a marginal difference in the exports from North and South Indian ports during 2002-03 and 2003-04. During 2003-04, the export of tea from India registered a decline of 13.2 lakh kgs over 2002-03. The exports of tea from North India has increased by 32.37 lakh kgs but has declined by 45.57 lakh kgs in South India during the same period.

7.6

The exports of tea from India during 2002-03 was 1843.94 lakh kgs in quantum and Rs."

166492.45 lakh in export earnings as against 1900.01 lakh kgs in quantity and Rs. 169578.58 lakh during 2001-02, thereby registering a decline of 56.07 lakh kgs and the export earnings by Rs. 3086.13 lakh. The decline in export of tea during this period was mainly due to the decline In exports to Russia and Iraq. The other reasons leading to a decline in tea exports are emergence of new competition from Kenya and Vietnam besides China and Sri Lanka and deterioration of quality of the product. There has also been an increase in domestic demand of tea in the country. Domestic consumption of tea in India has increased from 562 million kgs in 1995 to 714 million 53

kgs in 2003. Further, highly priced Indian tea is not competitive to the new and cheap cost producers in the world. The unit export prices of major tea exporting countries are indicated in Table 7.3. Table 7.3 Unit Export Prices of Tea of Major Exporting Countries (in US $ per kg) Countries India Sri Lanka Indonesia Kenya China NA Source: Tea Digest, 2003 7.7 1991 2.45 2.02 1.30 1.58 NA 1998 2.66 2.82 1.68 2.07 2002 1.79 2.24 1.03 1.58 1.21 2003 1.97 2.2 1.09 1.68 1.38

It may be observed that the unit export prices of tea from India is more than China,

Indonesia and Kenya. In order to increase our exports and meet the challenges in the international market, there should be plans for output expansion with emphasis on increased productivity with quality. This can be done by replantation of old bushes.

7.8

Tea (Distribution and Export) Control Order, 2005 is in force since 1 April 2005. As per

this order, no distributor of imported tea or exporter shall himself or by any other person on his behalf import for export and distribute tea which is adulterated, not packed and marked in the manner provided in this order, any statement which makes false claim for tea.

7.9

Quality in tea is a relative term, which depends on customers' preference. The quality of

tea is judged by certain parameters like aroma, colour, strength, etc. In India, tea that do not conform to the specifications as laid down under Prevention of Food Adulteration Act, 1955 arc not allowed to be marketed. PFA is the minimum quality norm that has to be adhered. Tea exported from India have to adhere to stipulations under the EEC, Japan Food Standards, EU and Environmental laws in addition to the Indian standards and specifications. International requirements stipulated by various tea importing nations are similar to that of Indian standards. This has minimised the problems on quality standard of tea. International standards like ISO 54

9000 and HACCP are applied to tea. Various quality upgradation programmes have been undertaken by Tea Board and UPASI KVK. There has been an improvement in quality of Nilgiris tea and there is now a demand in markets of Maharashtra, Gujarat, Punjab, Rajasthan and Haryana. Earlier, it was in demand mainly in some of the cheaper domestic markets.

7.10

Tea from Nilgiris small sector was primarily exported to CIS markets. With the

improvement in quality, orthodox tea is being exported to quality markets like Middle East, Pakistan, U.K and Germany. There can be a further expansion of market share if the quality improves further. Nilgiris tea is grown in high elevation and has good flavour. There is more demand for the Assam tea as in the domestic market as it has strong liquor.

Imports of Tea into India 7.11 Quantity and value of tea imported into India during 1992-93 to 2003-04 is presented in

Table 7.4. Table lA Import of Tea into India Years Quantity (million kgs) 1992-93 1997-98 2000-01 2002-03 2003-04 Source: Tea Digest, 2003 7.12 Value (Rs. Crore) 1.37 2.61 15.35 22.49 11.1 5.14 17.79 96.67 105.32 66.96

It may be noted that imports of tea into the country has increased till 2002-03 but declined

by about 51 per cent during 2003-04. Tea was imported from different countries like Indonesia, Vietnam, Kenya, Sri Lanka, China, etc. It is estimated by Tea Board that during 2003, the total world's import for consumption was 1351.23 milHon kgs.

Merchant and Producer Exporters 7.13 There are mainly 2 types of exporters - Merchant and Producer Exporters. The main

difference between these 2 types of exporters are that the export of tea by producer exporters is 55

limited with their own manufactured tea and the volume handled is also less. On the other hand, the merchant exporters purchase tea from auctions and estates, blend and finally export to the destination countries. There is a saving mainly on warehousing and commission charges by the producer exporters.

7.14

A sample of 3 merchant exporters were visited during the study. It was revealed by the

sample that a contract is signed between the importer and exporter. After that, made tea is purchased from Auction centres, blending is done and sent for buyers' approval and a bid is offered. After the approval, final blend is made and tea is packeted and exported. Documents required for exports are: shipping invoice, bill of lading, GR form, quality certificate, etc. Due to competitiveness in the international market, payment is generally made on credit basis and due to the risks involved, ECGC cover is taken.

7.15

The average volume handled by the sample was 10000 tons in a year and were exporting

mainly to Russia. Machines were used for blending and the blender has a capacity of blending about 40-50 tons per day.

7.16

The sample estates directly exporting made tea were considered as a sample for producer

exporters. Cost on exports would include cost incurred on pre shipment, terminal handling charges, freight, insurance, etc. The average cost incurred by the sample merchant and producer exporters are indicated in Table 7.5 and the item- wise export cost is given in Annexure XI. Table 7.5 Average Export Cost (Rs./kg) SI. no. 1 2 3 4 5 Particulars Average Export Cost Average Cultivation cost Average Processing Cost Auction Price Total Merchant Exporters 19.33
-

Producer Exporters 18.33 16.56 12.64 47.53

40 59.33

56

7.17

Average Export cost and income realised by the sample has been worked out and depicted

in Table 7.6. Table 7.6 Average Export Cost and Income Realised SI. no. Particulars 1 Average Volume Handled 2 Average cost incurred 3 Average Export Price 4 Average Income 5 Average Net Income 7.18 Unit lakhkgs Rs. lakh Rs./kg Rs. lakh Rs. lakh Merchant Exporters 100 5,933 61 6,100 167 Producer Exporters 2.72 129.28 65 176.8 47.51

It may be observed that the average cost incurred by the sample merchant and producer

exporters was Rs. 5933 lakh and Rs. 129.28 lakh respectively and the average net income worked out to Rs. 167 lakh for merchant exporters and Rs. 47.51 lakh for the producer exporters.

57

Chapter 8 Supporting Services in Tea Sector

The various supporting services provided by UPASI Krishi Vigyan Kendra and Department of Horticulture, GoTN to the planters and manufacturers of tea in Nilgiris district are discussed in this Chapter. UPASI- Krishi Vigyan Kendra 8.2 UPASI KVK was set up by Indian Council of Agriculture Research in 1982 and it started

its activities from 1 April 1983. It is located at Coonoor in Nilgiris district and is a pioneer institution to impart training to the farming community, rural youth, extension and grass root level workers. UPASI - KVK is the first of its kind to promote the plantation crops specific to the hilly areas of Nilgiris district. The main role of the Kendra is to disseminate knowledge regarding cultivation, harvest and post harvest care and create awareness on market trends and opportimities.

8.3

The training programmes include short lectures, group discussions, problem solving

exercises and an extensive review of the technology available. Exposure visits are organised for the trainees to develop skills in them. Different training programmes on subjects like Tea cultivation, Tea processing. Nutrition Management, Horticultural Development, Animal Husbandry, etc are organised by the KVK. A total of 69 training programmes (57 on campus and 12 off campus) on tea cultivation were organised during 2003-04 covering 2909 beneficiaries. This programme was designed for the farmers, plantation executives, extension officials, college students and unemployed youth to analyse and acquire skills on tea plantation based farming system. The on campus training programmes included training on tea cultivation, replantation, rejuvenation and pruning and the off campus training programmes included programmes on plucking standards for SHGs and mite control. Training programmes on red spider mite control, planting and young tea management, soil sampling, etc have also been planned for the farmers by the Kendra during 2005-06.

58

8.4

Apart from training programmes, the Kendra also organises other programmes on

enterprises like beekeeping, vermicomposting, etc., which can be incorporated into plantation based integrated farming system. This can help the farmers to generate additional income.

8.5

A Mini Tea factory was set up by UPASI- KVK during 1994 with financial support from

Tea Board, ICAR, CAP ART and HADP. The main objectives are to impart training on quality tea making to factory personnel of small sector and to conduct vocational training on tea manufacture to the unemployed.

8.6

Different pamphlets and papers on orthodox tea manufacture, red spider mite in tea, CTC

tea processing, etc were published by KVK. The Kendra also comes out with publications like Tea News and monthly tea advisory circulars which are mainly related to tea.

8.7

It also utilises the services of All India Radio, Ooty for periodical announcement under

farmers' programme. Some of the programmes broadcasted are: impact of quality upgradation programme in Nilgiris, role of tea factories in processing quality tea, harvesting of tea, etc. During 2005-06, KVK proposes to utilise the findings in tea from TRF for transfer of technology to small growers in collaboration with UPASI Tea Research Foundation.

8.8

In collaboration with Department of Horticulture, Government of Tamil Nadu, the

Kendra also imparts training to horticulture officers on tea cultivation and the scientists of KVK also participate in the monthly workshops of training and visit system and highlight the cultural operations to be carried out in tea in order to disseminate the information to farmers by the extension personnel.

8.9

Tea Board had launched Quality Upgradation Programme for the small sector in Nilgiris

district in July 2000. Under this programme, the following programmes are conducted by KVK: Village awareness campaign are conducted mainly to create awareness among the small growers to improve cultural practices and to bring down the cost of cultivation by resorting to

59

cultural practices recommended by UPASI. During 2003-04, a total of 65 awareness campaigns were conducted in the district. Field visits are undertaken to monitor the progress of quality tea procurement centres. A total of 145 follow up visits were made by the QUP extension staff during 2003-04. Quality leaf procurement centres run by women SHGs have been set up to encourage improved cultural practices among the small growers and supply quality leaf to the procurement centres. Field advisory visits are conducted in areas near to the quality tea procurement centres run by SHGs. On campus training programmes on subjects like tea cultivation, replantation, rejuvenation, pruning, etc were conducted. A total of 53 such training programmes and covering 1020 beneficiaries were conducted during 2003-04. Need based programmes on subjects like mite awareness programme are also conducted for the benefit of the growers. Seminars related to tea cultivation and processing are conducted to disseminate the developments made under Quality upgradation programme both in field and factory areas. Crash training programmes on pruning, micro nutrients, weedicide application, plucking, fungicide application, etc are also conducted by the Kendra. Publicity is made by printing of pamphlets, hand bills on technical aspects, news letters, press release, exhibitions and local cable telecast.

8.10

Under the Tea Board -UPASI KVK- QUP (Factory) Programme, the services rendered by

the Kendra are: Quality upgradation experiments cum demonstrations have been carried out in different tea factories to improve the quality of tea processed in the tea factories. So far, 79 experiments cum demonstrations were carried out in tea factories in the district. A technical team comprising of experts in tea processing from UPASI KVK visit the factories and impart training on different techniques of quality tea processing. Follow up visits are also conducted to ensure that the recommendations made by the team is followed. Advisory visits are made to tea factories having problems regarding quality tea manufacture. 60

Tea makers from different tea factories are given information on quality tea manufacture. Studies on various factory related aspects like leaf standard analysis, capacity of CTC machine, e ffect o f fresh air i nside t he o rthodox r oiler, e tc w ere conducted t o i mprove t he standard of tea processing.

Awareness is created to improve tiie quality of tea manufacture in tea factories by publishing pamphlets, press release, local cable telecast, organising exhibitions, etc.

Quality awareness seminars and conferences are organised for bought leaf and INDCO factories.

Department of Horticulture, GoTN 8.11 The Department of Horticulture, GoTN, through its training and visit system offers

extension services to the small farmers in the district. Some of the extension services offered by the Department are: Training programme on different aspects of tea cultivation are being conducted by the Department. Tea clones at subsidised rates are being provided to the small farmers. Technical guidance with respect to cultivation aspects like plucking, plant protection, liming and weed management are provided to the farmers. Extension workers impart technical knowledge to the farmers. The Department also supplies inputs like manures, bio- pesticides for control of red spider mite, etc. Department of Horticulture, Tea Board and District Administration jointly launched Tea Quality Upgradation Programme on 22 December 2002 at Udhagamandalam. Agricultural inputs like seeds, sprayers, dolomite, agricultural implements, etc were distributed to farmers at subsidised rates. Village Awareness campaigns are conducted by the Department of Horticulture under Tea Quality Upgradation Programme. Main aspects covered during these campaigns are pruning, manuring and soil testing. Demonstration of tea pruning and plucking are organised for the benefit of the farmers. Exhibitions are also organised by the Department to explain the various methods for producing good quality leaves. 61

TUT

Chapter 9 Banking Aspects of Tea Sector

There are both short and long term credit requirements for tea sector. The short term credit requirements are for maintenance of tea gardens and meeting the day to day requirements for processing units. The credit requirements are provided by the Banks by way of cash credit and working capital to the processing units/ traders.

Ground Level Credit and Refinance Disbursement by NABARD for Tea in Tamil Nadu 9.2 Refinance disbursement under Plantation & Horticulture and Tea in the State during the

last four years is shown in Table 9.1. Table 9.1 Ground Level Credit and Refinance Disbursement under P&H and Tea in Tamil Nadu (Rs. lakh) Years P&H 2002-03 2003-04 9.3 GLC Tea 14290 17997 P&H 796 2472 Refinance Tea 385.76 235.73

10.31 6.75

It may be noted from Table 9.1 that although the ground level credit under Plantation and

Horticulture and tea has increased, the refinance disbursement has gone down during 2003-04 over 2002-03. Refinance disbursement under tea which was Rs. 10.31 lakh during 2002-03 has reduced to Rs. 6.75 lakh during 2003-04. Main reason for the decline has been the policy of the Banks not to avail refinance.

Banking Aspects 9.4 As discussed with the Bankers during BLBC meefing in Nilgiris district the small

growers have difficulty in availing finance from the Banks due to the prevalent joint patta system. It was reported that the title of land is in the name of great grandfathers and only land is distributed among the kith and kins without executing any proper documents to them. Thus, there 62

is an absence of title deeds and land documents for offering as collateral security, which poses a problem for the bankers to extend finance to the growers. It was observed during the field visit that t he s mall t ea g rowers m aintained t heir g ardens out oft heir o wn r esources a nd w ere a Iso taking advance from the bought leaf factories, where they were supplying GTL. Similarly, members of the INDCO factories were found to borrow loans from the factories. These loans were adjusted from the total green leaf supplied by the members to the factories. Thus, the main .limitation in availing bank loan was their inability to meet bank's requirement of providing collateral security. In Gudalur area, the growers have leased lands which cannot be mortgaged to avail loan.

9.5

40 per cent of the sample estates were found to borrow loans from commercial banks and

the rest (60%) were making use of their own funds for day to day operations.

9.6

Working Capital is required by the processing units for meeting the recurring expenses

like payment of wages, salary, repairs of machines, payments for electricity, firewood, etc. The different s ources for meeting working c apital requirements w ere b ank loan (25%), own funds (25%), partially bank loan and partially auctioneer (20%) and partially own fiinds and partially auctioneer (30%). The sample tea factories had also borrowed from auctioneers at a high interest rate to fund the increased working capital needs. Auctioneers charge 18 to 24 per cent interest on the loans advanced to tea factories.

9.7

Problem of multi- financing was reported with the same documents and hypothecation,

loan is taken from the banks and brokers by the units. This poses a risk for the bankers. Sometimes, there is also diversion of funds by the borrowers. There should be effective mechanism to check multi- financing and diversion of funds.

9.8

Banks a Iso p rovide over d raft facility to the t raders. B ut, t he sample t raders c ontacted

were found to use their own fiinds in the business since the tea business is mainly on credit. The sample exporters were found to avail pre- shipment and post- shipment export finance.

63

Chapter 10 Role of Institutions/ Organisations/ Associations in Tea Sector

The present chapter examines the role of different institutions, organisations and Associations in the promotion and regulation of Tea industry in Nilgiris district.

Tea Board 10.2 Tea Board is an apex body formed under Ministry of Commerce and Industry,

Government of India to regulate the area, production, sales and exports of tea in the country. Besides the regulatory functions, the Board also provides financial assistance for different activities. Some of the important Tea Board schemes to be implemented during the Tenth Plan period with a sanctioned outlay of Rs. 403 crore are: Tea Quality Upgradation and Product Diversification Scheme: The main objective of the scheme is to provide financial assistance to tea gardens/ factories for renovating the processing capabilities inorder to produce good quality tea. Replacement of old and worn out machinery is required to produce quality tea. Financial assistance is to be provided by Tea Board by way of subsidy @25% of the total cost which would include the basic cost of the machinery, taxes, freight, insurance and cost of commissioning, subject to a maximum of Rs. 25 lakh per unit. The subsidy is back ended and is paid in a single instalment after the installation of the machinery. Tea Board undertakes pre approval, post installation and evaluation inspection for the release of subsidy. All tea growers, manufacturers and others dealing with value addition of tea like blending, packaging, etc and registered with Tea Board are eligible for the subsidy. Items eligible for subsidy are electronic and mechanical sorters, electronic m onitoring d evices for c ontrol o f t ea p rocessing, p urchase of t ea m achinery for orthodox, green tea and speciality tea manufacture, replacement of old CTC rollers and other allied machineries, etc. The subsidy is not allowed for any equipment imported under Export Promotion Capital Goods scheme and for companies availing benefit of Tea Development Account S cheme 2 001 under section 3 SAB of Income Tax Act. Rs. 76.80 crore has been allocated by the Gol for this Scheme. The Deputy Chairman in Head Office and Executive

64

Directors in the Zonal offices at Guwahati and Goonoor are the sanctioning authorities under the scheme. Tea Plantation Development Scheme: Under this scheme, 25 per cent of the approved unit cost per ha is provided as subsidy and the rest 75 per cent has to be mobilised by the growers as their own funds or loans from the financial institutions. The activities eligible for subsidy under this scheme are replanting, replacement planting, rejuvenation, pruning and infilling and creation of irrigation facilities. This is for all the growers regardless of the size of land holdings. For small growers, there are subsidy schemes for new plantation in North East and Uttranchal, setting up of pilot tea producers societies and usage of mechanical aids (pruning machines) for field operations. The financial outlay sanctioned for this scheme during the tenth plan period is Rs. 98.59 crore. The rates of subsidy per ha in different instalments to be sanctioned by Tea Board are indicated in Table 10.1. Table 10.1 Tea Board Assistance under Tea Plantation Development Scheme (Rs./ ha) SI. no. Activity (per ha) 1 26,000 31,000 33,800 37,200 9,600 11,000 35,000 Years 2 13,000 16,000 7,800 6,200 3,200 5,000 34,000 3 13,000 15,000 10,400 9,300 3,200 -

Total 4 52,000 62,000 52,000 9,300 62,000 16,000 16,000 69,000

1 Replanting (plains) 2 Replanting (hills) . 3 Replacement Planting (plains) 4 Replacement (hills) 5 Rejuvenation, pruning & infilling 6 Rejuvenation, pruning & infilling (small growers) 7 New planting for small growers in non-traditional area in N.E States & Uttaranchal 8 New planting for small growers in Traditional Area (plains) 9 New planting for small growers in Traditional Area (hills)

15,000

23,000

38,000

30,000

20,000

50,000

65

10.3

Market Promotion Scheme is also in operation during the Tenth Plan period to provide

direct assistance to Indian exporters like providing financial assistance for market diversification, incentives for export of speciality tea, joint generic campaign in association with the Tea industry in domestic market, etc. Rs. 70 crore has been provided for Research & Development Scheme by the Tea Board during the Tenth Plan. R&D is to be undertaken by UPASI TRF, Valparai & Tea Research Association, Jorhat. A sum of Rs. 6.01 lakh has been earmarked for Human Resource Development Scheme. The focus of this Scheme would be on training programmes on export management, tea processing, tea cultivation, etc.

United Planters' Association of Southern India (UPASI) 10.4 UPASI is an apex body of planters of tea, coffee, rubber, pepper and cardamom in the

Southern States - Tamil Nadu, Kerala and Kamataka. It is a registered voluntary body of plantation growers of South India established in 1893. There are 13 District Planting Associations and 3 State Planters Associations affiliated to UPASI. It is the premier representative body of buyers, sellers, processors, exporters, co-operatives and all other market intermediaries of tea, coffee, rubber and spices. The important services rendered by UPASI are the dissemination of technical information relating to plantation industry, promote trade and commerce of plantation industry, undertake scientific research on plantation crops, etc. The organisation provides free advisory service to the tea growers.

10.5

In collaboration with Indian Council of Agriculture Research, UPASI KVK was set up in

1982 and it started its activities from 1 April 1983 with an aim to impart training to the farming community, rural youth, extension and grass root level workers. The services rendered by KVK has been discussed at length in Chapter 7 of the Report.

The Tamil Nadu Tea Plantation Corporation Limited (TANTEA) 10.6 A scheme, namely. Government Tea Project was started in Nilgiris district to rehabilitate the Sri Lanka repatriates by the Government of Tamil Nadu in 1968. Initially, the Project was managed by the Forest Department but in 1976, it was brought under corporate management in 66

the name ofTANTEA. The corporation is under the Department of Environment and Forest, GOTN a nd h as r ehabilitated permanently 2 445 families o f S ri L anka repatriates h y p roviding employment, housing and other amenities. 2 members in each family are given permanent employment and seasonal employment are given to the other dependents in the family. There arc a total of 6450 permanent workers in TANTEA, of whom, 4973 are Sri Lankan repatriates.

10.7

TANTEA is the largest individual holding in Nilgiris and has 4432 ha under tea

plantations. There are 8 factories owned by TANTEA with a total installed capacity of 1275 million kg of made tea per year. Table 10.2 gives the details of the factories owned by TANTEA. Table 10.2 Details of Factories owned by TANTEA SI. no. Factory Region/location Type of Manufacture Installed Year of commissioning capacity of made tea (m. kg) 1978 2.25 1980 0.75 1984 2.25 1988 2.25 1994 0.75 1995 1.5 1996 1.5 2001 1.5

1 Cherangode Gudalur 2 Tiger Hill Coonoor 3 Cherambady Gudalur 4 Pandiar Gudalur 5 Quinshola Kotagiri ' 6 Nelliyalam Gudalur 7 Lawson Valparai 8 Ryan Valparai Source: TANTEA, Coonoor 10.8

CTC Orthodox CTC CTC Orthodox CTC CTC CTC

The yield of green tea leaves from the estates owned by TANTEA has declined from

477.45 lakh kgs during 1999-2000 to 430 lakh kg during 2003-04. Similarly, the production of made tea, which was 113.11 lakh kg during 1999-2000 has declined to 106 lakh kg during 2003-04.

10.9

In addition to wages/salary, the corporation provides various welfare measures for staff

and labour. These include: rent free accomftiodation, creche, primary education, maternity benefit, leave with wages, sickness benefit, free medical facilities, free supply of liquid tea at

67

ir

workplace, family planning incentives, bonus, incentive for tea leaf plucking, free water supply, etc.

10.10 The corporation also maintains 3 garden hospitals at Kotagiri, Cherambady and Cinchona to provide medical care to the employees. It has also established TANTEA employees health fund with monthly contribution of staff members and provides financial assistance to the staff for certain surgeries and medical treatments.

The Tamil Nadu Small Tea Growers' Industrial Co-operative Tea Factories' Federation Limited (INDCOSERVE) 10.11 In order to help the small growers realise better price for their green leaves, the industrial co-operative tea factories were set up. There are 15 INDCO tea factories, out of which 14 are operating and 1 (Karumbalam) is under lay off w.e.f 5 February 2003. These factories are under the management of INDCOSERVE. INDCO Tea factories account for about 17 percent of the total production of tea in the Nilgiris district. INDCOSERVE has got ISO 9001:2000 certificate from Det Norkse Veritas, Norway for quality management system covering tea blending, packeting and marketing of tea and warehouse facilities.

10.12 The facilities and benefits to the members provided by INDCOSERVE include: providing manures and other inputs to the small member growers at cheaper rate through INDCO Tea factories and also marketing of finished goods.

10.13 INDCOSERVE a Iso provides v arious facilities t o the INDCO T ea factories: p roviding tools and spare parts at cheaper rate, warehouse facilities for storing made tea at Coonoor, Coimbatore and Cochin at a cheaper rate, supply of jute bags for packing of tea and also help the factories to market made tea. Financial support is also being provided to the member INDCO Tea factories. Table 10.3 gives the details of the INDCO factories in Nilgiris district and Table 10.4 indicate other details like the quantum of tea sold, value, etc.

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Table 10.3 Details of INDCO Tea Factories Particulars 1 Total INDCO Tea factories in operation 2 Total installed capacity (lakhs kg) 3 No. of members (as on 31.3.2004) 4 Acreage covered in acres (as on 31.3.2004) 5 Total no. of factories manufacturing CTC Tea 6 Total no. of factories making Dual production (CTC & Orthodox) Source: INDCOSERVE, Coonoor Table 10.4 Details of INDCO Tea Factories Particulars Unit Members No. Acreage acres Quantity of lakh kgs green leaf purchased 4 Quantity of lakh kgs made tea produced 5 Price paid for Rs./kg GTL lakh kgs 6 Tea Sales Rs. lakh 7 Value of Tea sales 8 Average Sales Rs./kg Realised Source: INDCOSERVE, Coonoor SI. no. 1 2 3 2003-04 2002-03 1999-2000 19158 20012 20973 30482 32456 34045 510.16 462.76 524.71 SI. no. 14 147 19,158 30,482 13 1

135.24

121.13

138

7.90 134.68 6302.66 46.37

5.65 120.90 4445.76 35.39

5.5 137.77 4256.2 30.19

10.14 It maybe noted from Table 9.4 that around 20000 small growers are under industrial co-operatives which have an aggregate installed capacity of more than 145 lakh kgs. The quantum of green leaf purchased was 510.16 lakh kgs and made tea produced was 138 lakh kgs during 2003-04. Main sales business of INDCOSERVE are: tea sales to PDS, Defence

69

FilF

Department, co-operative stores, agency sales to different parts of India, packet tea sales in Tamil Nadu and other States and supply of tea to exporters.

Other Associations in Nilgiris District 10.15 There a re different Associations to protect the interests of planters, manufacturers a nd exporters of tea in Nilgiris district. Some of these are: Planters' Association of Tamil Nadu, Nilgiris Small Growers' Association, Nilgiris Bought Leaf Tea Manufacturers' Association, etc.

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Chapter 11 Government Policies and Research and Development in Tea Sector

The Central and State Government policies for the tea sector are enumerated below:

11.2

In the Union Budget 2005-06, announcements made for the Plantation Sector are:

Government has set up an Expert Committee to suggest improvements to the operation of Price Stabilization Fund as the same has not proved effective.

The Government to withdraw the additional surcharge/ excise duty of Re 1 per kg on tea. This is expected to help the sector to reduce the cost of production and make it cost competitive in the global market.

A programme for massive replantation and rejuvenation is proposed by the Government. The finance Ministry has formally cleared the proposal of Rs. 4000 crore for replantation and rejuvenation. The replantation and rejuvenation of tea bushes would address the productivity issue and enable the plantations to compete in the world market.

11.3

Price Stabihsation Fund was created by the Ministry of Commerce and Industry,

Government of India to stabihsethe price of plantation crops. Small tea growers h aving land holdings upto 4 ha are eligible to become members of the scheme. It covers 23000 small tea growers in the State, out of 46490 eligible small tea growers in the country. Under the scheme, the participating growers have to contribute Rs. 500 as entry fees and open Price Stabilisation Fund Account with a nationalised bank. In normal years, each grower is required to deposit Rs. 500 every year in their account and GOI will also contribute Rs. 500 to each growers' account. If the price is high, the growers' contribution will be minimum of Rs. 1000, while the Gol will not make any contribution. If the price falls, the grower will not be required to contribute any amount while the GOI will be contributing Rs. 1000 per account and the subscriber grower will be permitted to withdraw an amount of Rs. 1000 from their account.

11.4

Tea Board has stipulated that all tea factories should declare a minimum of 2 per cent

production as tea waste to curb the practice of recycling tea waste. 71

Initiatives taken by the Government of Tamil Nadu 11.5 The State Government has announced on 11 July 2005 a subsidy of Rs. 2 per kg of green

leaf tea under the 'Small Tea Growers Protection Scheme' for the small growers in Nilgiris district. This scheme has been announced to safeguard the small tea growers against adverse market conditions. The subsidy is to be computed on a per acre basis and has been estimated at Rs. 28 crore. The subsidy is to be paid directly to the small growers for a period of 6 months.

11.6

The Chief Minister of the State has urged the Centre to redesign the Price Stabilisation

Scheme as the amount of rehef available to small tea growers of Nilgiris district is only Rs. 1000 per grower which is inadequate.

11.7

The Ooty tea scheme was launched by the Government of Tamil Nadu on 28 August

2001 with the objective to increase the sales of Nilgiris tea in the domestic market so that reasonable prices may be paid for green leaves to the small tea growers. Small tea growers demand for minimum floor price for GTL which cannot be assured by the Government. To solve their problems, the GoTN has launched Ooty tea through INDCOSERVE, Coonoor and to market the same to TNCSC & co-operatives for onward sale to public through PDS outlets. Department of Industries and Commerce, GoTN, Chennai is the implementing department through INDCOSERVE, Coonoor. Under this scheme, all the districts of Tamil Nadu are covered. INDCOSERVE has to procure and supply 300 MT of blended tea per month in the brand name of 'Ooty Tea' to Tamil Nadu Civil supplies Corporation Ltd (TNCSC) for distribution to general public through PDS. The tea procured are tested for their quality and conformity with their Prevention of Food and Adulteration Act. This ensures that the buyer gets good quality tea at low prices. The quality of Ooty tea is on par with any other branded teas. During the year 2003-04, INDCOSERVE has supplied 2804.16 MTs value Rs. 2103.12 lakh of Ooty tea to TNCSC and co-operative stores for distribution to fair price shops. The sale of Ooty tea was 11416.71 MTs and the total value was Rs. 8579.99 lakh during the period 28.8.2001 to 31.5.2005.

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11.8

Revival of tea plantation scheme in Kundha region is being implemented jointly by

GoTN and Tea Board. It is implemented in an area of 222.4 ha. The objective of the scheme is to help the growers uproot the old bushes and replant with new plants. Under the scheme, the cost of uprooting and refilling with a new plant is estimated at Rs. 62000 per ha. This amount is available as subsidy from Tea Board. Instead of releasing the subsidy directly to the growers. Tea Board arranges bank loan to the growers and the same is repaid in 3 instalments out of the subsidy amount by Tea Board and the interest portion on the loan amount is met out of funds sanctioned under HADP by GoTN. The State Government sanctioned Rs. 20 lakh for the scheme in September 2004.

Research & Development in Tea Sector 11.9 Tea research is carried out in India mainly at two centres: Tocklai Experimental Station

of the Tea Research Association, Jorhat, Assam, and Tea Research Foundation (TRF) of UPASI in Valparai, Coimbatore, Tamil Nadu. The establishment of Tea Experimental Station, now known as UPASI Tea Research Foundation (TRF) has been the principal landmark in the history of tea research in South India.

11.10 The main objective of TRF is to carry out and promote research related to production and processing of tea. TRF undertakes research and extension activities from its centre in Valparai and six regional centres in Tamil Nadu, Kerala and Kamataka. These regional centres are located in - Coonoor and Gudalur in Nilgiris district, Tamil Nadu, Meppadi, Wynad district and Munnar & Vandiperiyar in Idukki district, Kerala and Koppa in Chikmagalur district, Kamataka. These regional centres play an important role in identifying the reasons for gap between the potential and actual yields and recommend remedial measures.

11.11

TRF at Valparai has six divisions for undertaking Research Activities- Botany,

Chemistry, Entomology, Plant Physiology, Plant Pathology and Tea Technology. These divisions carry out research pertaining to their areas. For instance. Plant Pathology division carries out research on disease control and soil microbiology and Tea Technology division conducts research on quality improvement of tea.
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11.12 Some of the important contributions made by TRF during the last two decades are: Release of 27 clones for commercial cultivation in South India Development of a hormonal formulation for easy and fast rooting of vegetative cuttings Mechanisation of nursery grafting technique using the scion and root maker Recommendations on spacing for planting and plant population, methods of tipping, timing of pruning and use of pruning machines, use of shear harvesters, use of herbicides, etc. A schedule for fertiliser application was developed Placement method of phosphorus application has been suggested for improving efficiency Schedule for dolomite application developed on the basis of soil pH, applied nutrition and rainfall Established the importance of foliar application of phosphorus and magnesium Assessed the crop loss due to major pests such as mites Introduced botanical insecticides for mite control on tea in South India Safe harvest intervals for commonly used pesticides fixed Effect of pest damage on tea quality studied An integrated pest management package for tea was developed Eight fungicide schedules for the control of blister blight disease was identified Recommendations for the control of root diseases Identified rejuvenation pruning as the effective method for the control of stem diseases Beneficial functions of regulated shade in crop productivity highlighted Role of enzymes in tea processing Formulated a carbonated tea beverage known as 'Tea cola'.

11.13 Some of the important research carried out by the Foundation during 2003-04 were: Rejuvenating the old nursery plants by cleft grafting, effect of burial of tea prunings and phosphorus application on yield and soil properties, evaluation of plant growth regulators, genetic transformation studies in tea, bio- technological studies on tea blister blight pathogen. influence of sources of potassium fertilisers on. tea quality, tolerance of tea plant to foliar applied iron, influence of cultivation practices on soil characteristics, effect of Bacillus Thuringiensis on red spider m ites, c ontrol of red root d iseases, bio- chemical c hanges in tea leaves due to red
74

spider mite infestation, influence of water quality on tea brew, evaluation of flavour profile of Nilgiris tea, etc.

11.14 Besides, the extension scientists from the Regional centres of TRF also provide advisory servicesto the small growers and estates. The small tea growers i n N ilgiris d istrict aregiven special attention to improve the quality of tea.

National Tea Research Foundation 11.15 National Tea Research Foundation (NTRF) is an interactive research funded and set up by Indian Tea industry and NABARD. NTRF operates in liasion with Tea Board for supporting irmovative research in areas like plant physiology, plant protection, quality improvement, biotechnology, human health aspects of tea, tea economics and management. Projects for support are selected according to the norms formulated by its Governing body. Some of the NTRF funded projects are: extraction, identification, quantification and utilisation of endogenous growth hormones in tea, soil test crop response study for yield prediction and rationalisation of nitrogen and potassium manuring in tea, forecasting b lister blight and control of primary root diseases, bio- management of tea pests using indigenous natural enemies, pesticide residue in tea, role of enzymes in tea processing, anticarcinogenic effects of black tea, pharmacological evaluation of the medicinal properties of Indian black tea, etc.

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IT

Chapter 12 Constraints and Strategies for Tea Industry

Indian tea industry is passing through a crisis. Major problems faced by the different entities in the industry are discussed below:

Tea Cultivation (small growers) 12.2 The yield and quality of leaves is poor as replantation is not being done. There is a

disproportionately large area under the old and uneconomic bushes, which is one of the major constraints in improving productivity. 12.3 Plant diseases like red spider mite and weeds are widely prevalent. The cultural

operations and the recommended cultivation technology are also not being properly undertaken by the farmers. All these lead to a decline in yield. 12.4 The standard norm for plucking of leaf which is 2 leaves and a bud is not practised by

many growers. Sometimes due to increase in demand, excessive plucking is done without adhering to the plucking norms. Hence, small growers do not follow any scientific methods of plucking and pruning. These factors lead to a deteoriation in the quality of made tea. 12.5 Further, a 7 to 8 days cycle has been recommended as a standard cycle for plucking. But

the plucking is done on an average once in 15 days, leading to a deteoriation in the quality of green tea leaves. Small growers are more conscious of quantity rather than quality plucking. It was reported during the study that wherever quality was being adhered to, the price realised for GTL was still Rs. 10 per kg. 12.6 12.7 The production costs are increasing and so there is a fall in realisation. Most of the sample small tea growers were not aware of the credit facilities available for

tea and also the subsidy and other promotional schemes of Tea Board.

Tea Estates 12.8 The plantations maintain garden hospitals to meet the medical needs of the workers. Further, primary and secondary schools are also run by the plantations. This causes financial

76

burden to the estates. This is unlike other countries like Sri Lanka, where these things are taken care of by the Government. 12.9 There is also a problem of labour scarcity during 'rush' which is a seasonal factor.

Tea Processing 12.10 Due to the lack of quality upgradation by BLFs and INDCOSERVE, the quality of made tea is low. Most of the sample tea factories were found to use old and worn out machineries. Adequate number of troughs were also not available with 37 per cent of the sample units. Due to the usage of old machines, output has been low and cost of production is high. As indicated in chapter 10 of the Report, subsidy is to be provided by Tea Board @ 25 per cent of the total cost and the rest 75 per cent of the total funds have to be mobilised by the units themselves. Some of the sample units found it difficult to borrow from banks as they had already applied for other loans and had no collateral to offer. 12.11 Since, the quality of made tea produced by the bought leaf sectors is not at par with the corporate sectors, they could not fetch high prices in the market and in turn, the small growers or the leaf suppliers are unable to get an attractive price from the factories. 12.12 The c o-operative u nits find i t d ifficult t o o perate at full c apacity a s t hey a re b ound t o purchase GTL only from their members, who in turn are not bound to sell their green leaves to the INDCO factories. 12.13 The quality of made tea p roduced i s low as there are different quality o f green leaves produced by the members. This results in low price realisation for them. 12.14 The elected Board of INDCOSERVE has been superceded with effect from 25 May 200land now the Special Officer is discharging the functions of Manging Director. There is also a lack of professional management. 12.15 There are several other constraints like, the operational cost is high. 12.16 The estate factories also face the problem of high administrative cost.

Tea Marketing 12.17 There has been low price realisation in the auctions. The price at South Indian auctions which was Rs. 46.02 per kg have dropped to Rs. 40.29 per kg in 2003.
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12.18 Adulteration in tea like mixing of saw dust, colour, by some manufacturers has brought disrepute to Nilgiris tea. 12.19 There are some companies which enjoy monopoly to buy tea in bulk amount at low prices and prevent open bidding by others interested in trading of tea. Therefore, a ceiling may be fixed for the quantity of tea to be purchased by the licensed tea brokers so that they are not able to control tea trade. 12.20 There is a comparatively low private sales in South India. This is because the tea consumers are mainly in North India and there is a lack of marketing set up for tea in South India. 12.21 There has not been proper marketing campaigns for tea as compared to cola drinks.

Tea Exports 12.22 The dismal production of tea industry is mainly due to the internal constraints on production and exports. There is less demand in the international market and there is a fall in exports price realisation. 12.23 The quality of tea to be exported has to be adhered to in order to compete in the international market. 12.24 There is a stiff competition from the other tea producing countries especially Sri Lanka, Kenya and China who with their low production cost could capture even the traditional export markets for India like Russia and CIS. This had an adverse impact on South Indian tea which was the major exporter to Russian countries.

Prospects 12.25 Even when the industry is passing through a crisis, the made tea produced of quality standards have fetched good price. For instance, during the speciality auction organised by Nilgiris Planters' Association at Coonoor in March 2005, the produce (buds only) of an estate were purchased for Rs. 3300/ kg by an exporter. Hence, the prospects are bright provided the quality and other standards are being adhered to by the growers, processors, exporters and marketers in the domestic and international markets.

78

12.26 Value added t ea like iced tea, c hocolate tea, etc m ay be promoted among t he younger generation. The potential of Indian organic tea is high provided the growth of this sector is facilitated through effective support mechanisms.

Recommendations Tea Cultivation The Government may consider fixation of minimum price for the green leaf in Nilgiris to protect the interests of small growers. Similarly, the minimum floor price for made tea may also be fixed. Quality standards in the plucking of green leaves may be adhered to for better price realisation. There should be improvement in quality through quality upgradation measures. Awareness to be created about the benefits of replantation as this would help to bring about improvement in yield. Steps may be taken for replantation in a phased manner. There is a need to evolve integrated pest management system (1PM) for controlling tiie pests in the tea gardens. As the cost of manures and pesticides and other inputs are high, distribution of these inputs at subsidised rates to small growers may be given. Scientific training of pruning and plucking may be given to the small growers as keeping tea continously unpruned may lead to the formation of large knots on the bushes. Training to be imparted to the growers about the technology, practices in fanning, etc by agricultural universities. The role of INDCOSERVE in improving the conditions of small tea growers is well recognised. It is necessary to restructure the cooperative sector in Nilgiris in order to improve its efficiency and competitiveness. Good governance, professional management and internal democracy needs to be restored. As stated, members of the INDCO factories are not bound to sell their GTL to their respective factories where they are members, if the price offered by the BLFs is slightly higher than that of INDCO. These INDCO factories should see that the prices offered to their members are at par with the BLFs.

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Awareness is to be created among the small tea growers about the credit facilities available for tea and also the subsidy and other promotional schemes of Tea Board. Fanners have to update their information and management skills to reduce cost and maximise production and productivity. Even tea estates have to be cost effective in their operations and price

competitive in the market place- both domestic as well as international. Like other crops, contract farming system may be adopted for tea. For instance, the BLFs may enter into a contract with the growers. This would benefit both the growers and manufacturers as the growers would get reasonable prices and the manufacturers would get quality leaf Extension support with the help of UPASI may be intensified and provided to the small tea growers' sector. Steps may be taken to increase the labour productivity. Formation of SHGs may be encouraged among the growers. This may help the group to avail bank finance. Joint Liability Groups may be encouraged among the tea growers wherever non- availability of land records in the name of actual growers pose constraint to avail credit. An appropriate policy for organic farming covering issues related to its coverage, financial support during the conversion period, creation of linkages among the farmers, processors, traders and consumers and increasing public awareness of the benefits of organic agriculture may be designed.

Processing In order to maintain quality of made tea, BLFs and other manufacturing units may keep on upgrading machinery. A ceiling may be fixed on the quantity of leaf that can be accepted by each unit. Differential pricing method may be followed by the BLFs, whereby quality leaf is paid a higher rate. This would have a good impact on the quality of made tea produced. BLFs/INDCO factories may produce made tea from quality and sub-optimal quality leaf separately so that made tea produced from quality leaves could fetch higher prices.

80

Similarly, there should be a differential wage structure for the pluckers also. Higher wages may be given for 2 leaves and a bud so that the pluckers realise the benefits of good plucking. This is necessary as the pluckers feel that quality plucking would mean lesser volumes.

Marketing Electronic auction system as introduced by Tea Board is good but it has to be made foolproof Theflawsin electronic system needs to be rectified and to be made user friendly. Promotional schemes for tea to be launched. There is a need to create market demand for tea. Aggressive marketing may be followed by the big companies like Tata, HLL, etc, to divert consumers from soft drinks to tea. Private sales of tea is almost non- existent in South India due to the lack of a strong marketing set up and also due to the habits of the people and the competition from coffee and cola drinks. Marketing set up, infhistructure and effective distribution channels are required. GoTN may take steps to curb adulteration of Nilgiris tea. Quality to be maintained for both the domestic and international markets. Market potential for organic tea in the domestic market may also be explored and cost of certification to be brought down. New products like iced tea, herbal tea, etc may be promoted to increase penetration in the market. Technology to be made available forflavouredtea Exhibitions, workshops, etc to be organised to promote Nilgiris tea in the domestic and international markets. A common local brand for the made tea manufactured by BLFs needs to be promoted so that tea could reach a wider market. Steps may be taken to revive NILMA. Pharmaceutical effects of tea to be fully explored and to be marketed as a health drink. Recent research indicates that green tea maintains normal cholesterol level though the mechanism is not clear. Tea extracts containing chloroform, caffeine and gallocatechins decreases the mutagenicity of tumour. Black tea has high flouride c ontent which helps to protect against dental caries (Mingzhon et al., 1987). The natural antioxidant properties of tea may also help to combat the risk of developing heart disease. Thus, it is necessary that these

81

beneficial effects of tea may be fully explored and highlighted through promotional programmes. TEASERVE, which eliminates the brokers should be encouraged.

Banking Financing b anks m ay c ome forward t o finance tea s ector. T he d ifferent e ntities s hould b e made aware as to utilise bank funds efficiently. Effective mechanism for checking multi- financing may be developed. Documents of land records may be updated so that the small growers can avail bank finance. This would also enable the growers to register with Tea Board.

Exports Cost of production for made tea in India is high as compared to countries like Srilanka, China, Kenya, etc. Therefore, hidian tea is not able to compete in the international market. Further, in India, the social cost is borne by the management of the estates. In Sri Lanka, the same is borne by the Government. The Indian Government may consider to provide support to the estates to bring down the cost. There should be no compromise in the quality of made tea to be exported. Further, the import of cheap quality tea under the cover of 'import for export' needs to be discouraged. Infrastructure for export of tea to be developed. An export zone for tea may be developed to serve the clients in a better way. R&D There is a need to enhance the productivity and reduce the cost of production to make Indian tea competitive globally. This is possible by R&D efforts in areas like plant improvement, plant nutrition. Research is also required in processing technology. Due to the emphasis laid on orthodox tea, research is required to cater to the needs of orthodox tea manufacture. There is a need to intensify research in processing technology. Certain technologies to save thermal and electrical energy may be developed. It is necessary that the investment in tea research may be enhanced.

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Chapter 13 Summary and Conclusions

The study is an attempt to analyse the current status and the entire supply chain management of tea sector in Tamil Nadu. It was conducted with the major objectives to study the trends in area under cultivation, production, productivity, export- import and price movements of tea in the domestic and international market; to identify different stages and issues in supply chain; to assess the role of credit in the supply chain; to assess the possibility of innovations in tea sector and to examine R&D efforts initiated by Tea Research institutions.

The study was conducted in Nilgiris and Coimbatore districts of Tamil Nadu and covered the production, processing and marketing units in Nilgiris district and the sample merchant exporters in Coimbatore district as well. A sample of 18 small growers (having acreage below 10.12 ha) and 5 estates (having acreage above 10.12 ha) cultivating conventional tea and 2 estates cultivating organic tea were selected randomly. To understand the cost, viability and constraints of processing, a sample of 8 processing units manufacturing CTC and orthodox tea were selected. Among these sample processing units, 3 were BLFs, 3 estate factories, 1 unit each was owned by TANTEA and INDCOSERVE. In addition, a sample of 4 retailers, 2 wholesalers, 2 auctioneers, 2 commission agents and 1 warehouse unit were selected and visited during the study in order to estimate the price spread and analyse the various aspects of marketing. Sales depots of TANTEA and INDCOSERVE were also visited during the study. A sample of 3 merchant exporters and 2 producer exporters were covered to analyse the cost and potential of tea exports. Discussions were held with officials of Tea Board, UPASI, TANTEA, INDCOSERVE, TEASERVE, LDM and Secretaries of various associations to get an insight of the different aspects of tea sector.

All the costs and income have been assessed and analysed at reference year prices. The reference year for the study was 2003-04.

50 per cent of the sample small growers covered were members of INDCO, whereas, the remaining 50 per cent were non- members. 40 per cent of the sample estates were proprietary, 40 per cent were private limited companies and 20 per cent of the sample was owned by

83

TANTEA. All the sample estates were also owning processing units for the manufacture of made tea. All the sample small growers and estates were found to cultivate only tea. Average land holdings of the sample small growers was 2.94 ha and that for the sample estates was 300 ha. All the land holdings of the sample small growers were rainfed, whereas 9.4 per cent of the land holdings of the sample estates were irrigated. The average plant population was 12350 per ha for the sample small growers and 13000 per ha for the sample estates. Silver Oak (Gravillea Robusta) was the shade tree planted by all the sample growers and estates. The Government policy in South India is not to establish new tea gardens but to uproot the old bushes and replant them. Thus, replantation cost has been taken as the cost of investment for tea gardens in the study. It includes the cost of uprooting, land levelling, revetments, pitting, planting, etc. Majority (78%) of the sample small growers have not undertaken replantation due to financial constraints and the expected crop loss during the initial years of replanting. On the other hand, 80 per cent of the sample tea estates had replanted their tea gardens. Average replantation cost capitalised upto 3 years was Rs. 2.26 lakh for the sample small growers and Rs. 3.09 lakh for the sample estates capitalised upto 4 years. Maintenance cost on tea gardens includes expenditure incurred on items like fertilisers, pesticides, weedicides, harvesting, pruning, etc. Average maintenance cost for the sample small growers and estates was Rs. 48706 and Rs. 61454 respectively. Out of this, maximum expenditure has been on plucking by the sample small growers (50%) and estates (48%). Green tea leaves can be plucked from 2nd year onwards and reaches the stabilised yield from 5th year. Average yield of GTL was 12350 kg for the small growers and 14820 kg for the sample estates. The sample small growers were supplying GTL either to BLFs or INDCO and the average price realised was Rs. 6 per kg. All the sample estates were making use of GTL produced in their estates in their own processing units. Financial viabilty of tea cultivation was worked out. Since the sample estates had their own processing units and were utilising the GTL produced in the manufacture of made tea, the 84

economics of tea estates has been worked out by taking into account the yield of made tea FRR for the sample small growers excluding subsidy worked out to 11,20 per cent and the same with subsidy was 15.47 per cent. The price realisation for the small growers has been less during the last 5 years, which has been the major factor affecting the viability. It was reported that the price realised for GTL was Rs. 18 per kg during 1997-98. At this price, with the same investment and maintenance cost, the FRR worked out to 39.41 per cent. An average of Rs. 1 lakh was the maintenance cost for the sample organic tea estates, which is about 40 per cent higher than the sample conventional estates. It was reported that the productivity is the same as that of conventional estate but there is a decline in production during the conversion period. The main problem faced by the sample was that of marketing and 1 sample organic estate was found to sell almost 50 per cent of the organic tea produced as conventional (inorganic) tea. CTC and orthodox are the two main methods of tea manufacturing in Nilgiris district. Out of a sample of 8 processing units, 2 BLFs were partnership firms and 1 was a proprietary, 1 estate was a private limited company, 2 sample estates were proprietary, 1 unit was owned by TANTEA and 1 unit was a cooperative (INDCOSERVE). 50 per cent of the sample processing units were manufacturing made tea by CTC method and 50 per cent was orthodox tea. BLFs are the factories which purchase GTL from other growers for the manufacture of made tea. Unlike the co-operative factories which have small growers as their members, the BLFs do not have any members and are free to purchase GTL from any grower. BLFs and FNDCO factories had collection centres in the villages to collect green leaves, for which they had employed agents. Average quantity of GTL purchased by the sample BLFs and INDCO was 16.35 and 35,50 lakh kgs respectively, for which an amount of Rs. 98.1 lakh and Rs. 213 lakh were paid by them. Average quantity of made tea produced was 5.19 lakh kgs by the sample BLFs, 11.11 lakh kgs by the estate units, 7.66 by TANTEA and 8.88 lakh kgs by the sample INDCO. Major items of investment for a tea processing unit are land, construction of civil works and installation of plant and machinery. Average investment cost excluding land for the sample 85

BLFs, estate factories, TANTEA and INDCO worked oW to Rs. 212.36 lakh. Rs. 395.75 lakh, Rs. 363.50 lakh and Rs. 207 lakh respectively. Operational cost for a tea processing unit includes expensek on items like electricity, firewood, repairs of machinery, insurance, salary, wages, transpoijt, brokerage, cess to Tea Board, warehousing charges, etc. Average annual operational co^t inclirred excluding the price paid for GTL purchased was Rs. 63.47 lakh for the sample BLFs and Rs. 123.07 lakh for INDCO. The c^erational cost for estates and TANTEA was Rs. 140.51 lakh and Rs. 123.07 lakh respectively. Average processing cost per kg of made tea produced woiiked out to Rs. 12.23 for the sample BLFs, Rs. 12.64 for estates factories, Rs. 13.35 for TANTEA and Rs. 13.85 for the sample INDCOSERVE. Made tea manufactured by the sample units were maijketed mainly through the auction centres. The sample estate factories were only involved ih direct exports, which was 25 per cent of the made tea produced. The economics of the sample units was worked out and the FRR was 16.94 per cent for BLFs, 26.22 per cent for estate factories, 17.01 per cent for TANTEA and 0.81 per cent for INDCO. The sample unit owned by INDCO is not viable ^s the processing cost has been high and the price realised at auction has been the least. As stipulated by Tea Board, 2 per cent of the total made tea produced has to be declared as tea waste. The sample units were selling tea waste to factories manufacturing instant tea. Other value added tea being produced are herbal, chocolate, masala, mint, diabetea, iced tea, slim tea, etc. The management of supply chain of tea is complex involving intermediaries and the marketing margins are shared by the intermediaries as the consumer^ do not purchase made tea directly from the processing units or the auction centres. Price spread and marketing margins for different marketing channels identified have been worked out and indicated in chapter 6 of the report. Initiatives in tea marketing like sale of Nilgiris tea throu^ PDS, organisation of India's first speciality tea auction at Coonor by Nilgiris Planters' Association and formation of Nilgiris District Tea Producers' Marketing Co. Private Ltd hav^ been undertaken. An initiative to 86

eliminate the auctioneers has been taken by the GoTN by setting up of TEASERVE and in order to encourage sales through TEASERVE, incentives like concessional rate of TNGST of 4 per cent and CST at 2 per cent has been given. Although, there are certain problems like that of standardisation , UCEL had aligned with MCX to start futures trading in tea. The unit export prices of Indian tea was $1.97 per kg, which is higher than other countries like China ($1.38), Indonesia ($1.07) and Kenya ($1.68). In order to make Indian tea globally competitive, it is necessary that quality standards should be adhered to and the productivity should be improved. Average export cost for the sample merchant and producer exporters was Rs. 59.33 and Rs. 47.53 per kg. This is because the producer exporters save on commission, warehousing charges, etc. The average net income was Rs. 167 lakh for the sample merchant exporters and Rs. 47.51 lakh for the sample producer exporters. Supporting services which is very much required for any sector are provided by UPASl KVK and Department of Horticulture, GoTN in Nilgiris district. There are both short and long term credit requirements for tea sector. Due to the prevalence of joint patta system, the sample small growers have problems in availing bank finance. Hence, majority of the sample small growers were either using their own funds or taking advance from BLFs/ INDCO, where they were supplying GTL. There is also a problem of multi- financing with the same documents from the banks and auctioneers. Various initiatives taken by Tea Board to be implemented during the tenth plan period are Tea Quality Upgradation and Product Diversification Scheme, Tea Plantation Development Scheme, etc. UPASI TRF is involved in R&D of tea in South India. The main constraints faced by the tea industry are low price realisation for GTL as well as made tea at the auctions, replantation not being undertaken extensively, lack of quality upgradation by the processing units, lack of adequate marketing campaigns, etc. The study recommends various measures for improving tea production, processing, marketing, export, R&D and bank finance.

87

ANNEXUREI Replantation Cost for Sample Small Growers (Rs./ha) YEARS 1 146,138 I Investment Cost 23,285 2 Maintenance Cost* 169,423 3 Total Maintenance cost includes cost on plucking 2
-

3
-

23,569 23,569

33,741 33,741

Replantation Cost for Sample Estates (Rs./ha) YEARS 1 167,850 2 3

1 Investment Cost 29,640 2 Maintenance Cost* 197,490 3 Total "Maintenance cost includes cost on plucking

29,626 29,626

38,551 38,551

88

ANNEXURE II FRR of Sample Small Growers (Rs.) Excluding subsidy

SI. Particulars No. 1 146138 1 Investment cost 23285 2 Recurring cost 169423 3 Total Cost Income 4 excluding subsidy for replantation 5 Residual value of silver oak plants & tea bushes 6 Gross boiefit -169423 7 Net benefit 11.2 8 FRR(%) 341781.64 9 NPVof biefits@ 15% DP 386812.88 10 NPVof cost@ 15% DF -45031.24 11 NPV@ 15% DF 12 BCR 0.88 Years 2 3 4 5

23569 23569 10500

33741 33741 40500

41440 41440 60000

48706 48706 74100

10500 -13069

40500 6759

60000 18560

74100 25394

89

ANNEXURE III FRR of Sample Small Growers (Rs.) Incuding subsidy SI. Particulars No. 1 1 Investment 146138 cost 2 Recurring 23285 cost 169423 3 Total Cost 4 Income 31000 including subsidy for replantation 5 Residual value of silver oak plants & tea bushes 6 Gross 31000 benefit 7 Net benefit -138423 8 FRR(%) 15.47 390699.2 9 NPVof benefits @ 15% DF 10 NPVof 386812.88 cost@ 15% DF 3886.32 11 NPV@ 15% DF 12 BCR 1.01 Years 2 3 4 5

23569 23569 26500

33741 33741 55500

41440 41440 60000

48706 48706 74100

26500 2931

55500 21759

60000 18560

74100 25394

90

ANNEXURE IV FRR of Sample BLFs (Rs. lakh)

Particulars SI. No. 1 Capital cost P&M Civil work 2 Operational cost GTL purchased Own GTL cost 3 Total cost 4 Income including subsidy for replantation 5 Salvage value 6 Residual value of silver oak plants & tea bushes 7 Gross Benefit 8 Net Benefit 9 FRR(%) 10 NPV of benefits @ 15% DP 11 NPVofcost@15% DP 12 NPV (% 15% DP 13 BCR Years 1 115.16 97.2 63.47 98.1 6 167.57 213.82 69.86 107.91 8.7 186.47 235.15 76.8 118. 10. 205.7 258.3 2 3 4

59.1 271.46 0.62

0.62 -270.84 16.94 1347.37 1321.79 25.57 1.02

213.82 46.25

235.15 48.68

258.3 52.5

91

ANNEXUREV FRR of Sample Estates (Rs. lakh)

Sl.No. Particulars 1 1 Capital cost P&M Civil work 2 Operational cost Own GTL cost 3 Total cost 4 Income including subsidy for replantation 5 Salvage value 6 Residual vahie of silver oak plants & tea bushes 7 Gross Benefit 8 Net Benefit 9 FRR(%) 10 NPV of benefits @ 15% DP 11 NPVofcost@15% DP 12 NPV @ 15% DP 13 BCR 230.75 165 591 986.75 0.62 140.52 60 200.52 517.46 140.52 87 227.52 517.29 14 24 51 2 3 Years 4

0.62 -986.44 26.22 2828.87 2307.38 521.49 1.23

517.46 316.78

517.29 289.77

517 274

92

ANNEXURE VI FRR of Sample TANTE A (Rs. lakh)

SI.No. Particulars 1 1 Capital cost P&M Civil work 2 Operational cost Own GTL cost Total cost 3 4 Income including subsidy for replantation 5 Salvage value 6 R^idual value of silver oak plants & tea bushes 7 Gross Benefit 8 Net Benefit 9 FRR(%) 10 NPV of benefits @15%DF 11 NPV of cost @ 15% DF 12 NPV@15%DF 13 BCR 148.5 215 407.79 771.29 0.62 102.29 41.4 143.69 323.19 102.29 60.03 162.32 323.17 102.29 70.38 172.67 322.87 2 3 Years 4

0.62 -770.67 17.01 1771.65 1699.47 72.18 1.04

323.19 179.5

323.17 160.85

322.87 150.20

93

ANNEXURE VII FRR of Sample INDCO Factory (Rs. lakh) SI.No. 1 Particulars 1 Capital cost P&M Civil work Operational Cost including GTL Purchased Total cost Income Salvage value Total benefit Net benefit FRR (%) NPV of benefits @ 15% DP NPVofcost@15%DF NPV @ 15% DP BCR 102 105 0 207 0 -207 -414 0.81 1916.76 2172.24 -255.48 0.88 2 Years 3

2 3 4 5 6 7 9 10 11 12 13

336.27 336.27 332.84 332.84 -3.43

345.44 345.44 366.12 366.12 20.68

94

ANNEXURE VIII Marketing Cost for Wholesalers (Rs./kg) SI. no. 1 2 3 4 5 6 7 Particulars TNGST Commission Agent Transport from Auction to Godowns loading/unloading Blending Packeting (material & labour cost) Transport & Booking Charges to Distribution Centres 8 Sales Promotion 9 Total Marketing Cost 3.2 0.4 0.5 0.4 1 7 1 2 15.5

95

SI. No. Particulars

BLFs

Amount Cultivation cost for 4 1 kgof GTL Price received by 2 the Growers Growers' 3 margin processing cost including selling cost & 4 brokerage Total cost for the processing unit processor's margin Auction price Commission agent TNGST Wholesaler's purchase price Wholesaler's marketing cost* Wholesaler's margin Retailer's purchase price tax Retailer's margin MRP

ANNEX URE IX F rice Spread lor Marketing Channels 1 & III (Rs./lig) Estate facte ries INDCO % share in % share in % share consumer* consumer's consum s price s price price Amount Amount

15.78

16,56

15.78

24 8.22

25.00% .

24 8.22

30.0

12.23

12,64

13.85

5 6 7 8 9

36.23 3.77 40 0.4 3.2 -

29.16 15.84 45 0.4 3.2

38.7 -1.7 37 0.4 1.48

16.67%

37.50%

16.25

10

40.4

45.4

37.4

11 12

15.5 19.14'

15.5 35.1

13.78 12.82!

13 14 15 16

75.04 0.96 20' 96

36.50%

96 1.21 241 120

42.50%

64 1.2i
i

33.75

21.83% 100 00%

20.00% 100.00%

16: 80

20.00 100.00

Annexure VIII

96

SI. No. Particulars Cultivation cost 1 for4kgofGTL Net price received by the Growers Growers' margin processing cost including selling cost Total cost for the processing unit TNGST Selling price for units processor's margin Retailer's purchase price transport cost local sales tax Retailer's margin MRP

ANNEXURE X Price Spread for Marketing of Made Tea Directly sold to Retai Rs. /kg INDCO Estate factories BLFs % % share in % share in co consumer's consumer's pri Amount price price 15.78 16.56 15.78

2 3

24 8.22 -

25.00% -

24 8.22

4 5 7 8 9 10 11 12 13 14

12.23 36.23 3.2 70.2 33.97 70.2 0.5 1.2 24.1 96 48.13%

12.64 29.2 3.2 73.2 44 73.2 0.5 1.2 45.1 120 61.00%

13.88 37.88 1.2 63.2

63.2

26.88% 100.00%

39.00% 100.00%

16.8 80

97

ANNEXURE XI Average Export Cost (Rs./kg)

SI. no. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Particulars Commission Charges Transport Charges from Auctions Warehousing charges Blending Processing (sorting) Packing Material Labour Cost from Unloading to Stacking C&f charges Certificates from Inspecting Agencies Terminal Handling Charges Other pre- shipment Maintenance of Office Post Shipment Agent Commission Freight Insurance Total Merchant Exporters Producer Exporters 0.40 0.30 0.30 1.00 0.18 2.00 1.20 0.57 0.20 0.18 0.24 1.95 3.00 0.60 7.00 0.21 19.33

1.00 0.18 2.00 1.20 0.57 0.20 0.18 0.24 1.95 3.00 0.60 7.00 0.21 18.33

98

REPORTS PUBLISHED UNDER THE EVALUATION STUDY SERIES OF THE NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
A. Reports published by the Head Office of NABARD SLNa

Title ofEvakiation Study Reports

^

Year of Publication

[
I

1.

*Minor Inigadon schone - Construction ofNew Wells and Installation ofPumpsets theiEon in Solapur District, Maliarashtra *Minor Inigation Scheme - Installation of shallow Tubewells in Kamal District, Haiy ana *Bhadra Land Development Project-Scheme for Reclamation and DevelopmaitofLand,Kamataka *LandDevelopmentunderNagarjunaSagarPtoject, Miiy2igijdaTalluka,AndhraPra(ksh *Dairy Development Scheme in Jagadhri Block of Ambala District, Haryana *DairyDevelopmait Scheme inMogaAreaof FaridkotDisbict, Punjab *Poultiy Development Schone in Mulkanoor, Karimnagar Dishict,AndhtaPradesh *Mechanised Fishing Boats in South Kanara Disbict,Kamataka *Development of Acid Gardens in Nellore District, AndhraPradesh *Qioundwater Irrigation in Kota District, R^asthan Minor Irrigation in BhojpurDistiicti Bihar Develqjment of Grape Cultivation in Bijz^Jur Distinct Kamataka River Lift Irrigation Schone in PuneDishict, Maharashtra *Daiiy Development Schone in Weston Uttar Pradesh *River lift Inigation Scheme in KoUu^Jur Disdict, Maharashtia Sheep Rearing inNalgondaDistiict, AndhraPradesh *DevelopmentofCoflfee Plantation in Lower Plains Area, MaduraiDistiict, Tamil Nadu *Public Tubewells and Rivo-lifts in Orissa PowerTillosinHoo^yDisbict,WestBeng3l Commercial Poultiy in Kridina District, AncteaPradesh Dugwell Inigation inPal^District,Koala Tractors inNoilhBihar DaiiyDevelopment in Darjeeling District, West Bengal Tractors in Varanasi,Ghazipur and JauipurDistiicts, 99

1977 1977 1977 1977 1978 1978 1979 1979 1981 1982 1982 1982 1982 1982 1982 1982 1982 1984 1985 1986 1986 1986 1987

; | {
i

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

! [ [ [ \ | | I I I I

25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Uttar Pradesh Tractors and PowCT Tillers in Tamil Nadu Minor Irrigation in Mu2afi&magar District, Uttff Pradesh Dairy Developmait in QuilcMi District, Koala Dugwelllnigation in Dhenkanal District, Orissa Bamboo and Shallow Tubewells in Pumea District, Bihar Dugwell Irrigation in Nasik District, Maharashtra CalfRearing in North Arcot, Salon and Coimbatore Districts, Tamil Nadu Minor MgationinAllahabad District, Uttar Pradesh Coconut Develqanoit in Quilon District, Kerala Minor Irrigation in Purulia District, West Bengal Sprinkler Irrigation in Semi-arid Areas, Rcyasthan Dugwell Irrigation in Amravati District, Mahrashtra Marine Fisheries in Coastal Gujarat and Mahrashtra Financing of Shallow Tubewells under Massive National Programme in Haryana Financing ofAapplQ Orchards in Hill Districts, UttarPradesh Work Animals and Animal Driven Carts in MeemtDistrict,UttarPradesh Inland Fishery in Krishna District, Andhra Pradesh Bio-Gas Plants in Nainital and Rampur Districts, UttarPradesh Impact ofNFS Investments Lift Irrigation Schemes in Maharashtra Mandawan Wwatershed Project urxler Indo German Watershed Develcpmait-Maharashtra Self Help Groups in TamilNadu Micro Finance for Rural People- An Impact Stu(fy Non Farm Sector Investmoits- An Impact Investment SHG-Bank Linkage Programme for Rural Poor in India-An Impact Assessment An Impact Assessment of Investments in Rural Road and Bridges under RIDF * Reports are out of stock

1987 1987 1987 1987 1988 1988 1988 1988 1988 1988 1988 1989 1989 1989 1989 1991 1991 1991 1991 1994 1995 1999 2000 2000 2002 2002 2004

' \

: \ j [ | 1 I |

100

B. Reports Published by Regional Offices of NABARD RO/SeriesNo. Andhra Pradesh 1 2 3 4 5 6 7 8 9 10 11 12 Assam 1 2 3 4 Bihar 1 2 3 4 5 6 Clihattisgarii 1 Gujarat 1. 2 3 4 5 6 7 8 Shallow Tubewells in Bihar Deep Tubewells in Bihar Dairy Developmait in Begusarai & S i n ^ h u m i in Bihar Minor Irrigation Schemes in Samastipur District, Bihar IRDP in Ranchi District, Bihar Cold Storages in Bihar Minor Irrigation Investments in Chhattisgarii Poultry DevelopmCTit Scheme in Gujarat Dairy Development Scheme in Mehasana District, Gujarat Lift Irrigation SchemeofUkai Left Bank Main Canal-Gujarat Financing of Tractors in Mdiasana and Rgkot Districts, Gujarat InvestmentsFinanced underIRDPinValsadDistrict,Gujarat Marketyad in Je1pur,G^kot District, Gujarat Marine FishoiesinJunagaih District, Gujarat Buffalo Financing in Sabarkantha Districts, Gujarat 1988 1989 1989 19% 2000 2003 2005 1988 1989 1991 1992 1994 2003 2003 2005 Public Tubewells in Khamman District, Andhra Pradesh DevelcpmoitofGr^GardQis in RangaReddy District, AP Dugwell Irrigation in Chitoor District, AndhraPradesh Mang) Orchards in Krishna and Khammam Districts, AP On Farm Development in Khammam and Krishna Districts, AP Inland Fishery in West Godavari District, Andhra Pradesh Dairy develqjment in Krishna District, Andhra Pradedi Poultry layer Investment in Andhra Pradesh Food (Mango)PrDcessing in Visakhapatinam and Chittor districts Sheep Rearing in Mahabubnagar and West Godavari districts Sericulture Investmoit in Andhra Pradesh Rural Non-ferm Sector Investments Private Shallow Tubewells and lift Points in Assam Inland Fishery in West Tripura District, Tripura IRDP in Nagaon District FM(PowCT Tilla) in Sibsagar District 1988 1989 1989 1991 1995 19% 1999 2000 2001 2002 2003 2003 1989 1992 2000 2000 Title ofEvaluation Report Yearof Publication

101

Himadial Pradesh 1 Daily Devekpmait in Mandi District 2 Af^le cultivation in Shimla and Kinnaur Districts Jairniu & Kashmir 1 2 Kamataka IRDP in Baramullah District, Jammu& Kashmir Tractors in Jammu District, Jammu& Kashmir DevelqDment of G r ^ Gardens in Bangalore and Kolar Districts, Kamataka Borwell Financing in Chitraduiga and Kolar District, Kamataka Development of Coffee Garden in Kamataka Sericulture Devetopmait in MyscHie& Hassan Districts, Kamataka Lift Inigation Schemes in Belgaum District, Kamataka Poultry Developmait in Bangalore Drip Irrigation Programme in CJuIra Duig^ Daily Development in Kolar and Shimoga Distiict Saiculture in Kolar and Tumkur Districts Fuelwood Develcpment Project in Kamataka Participatory Irrigation Managent Institutions in Kamataka Betelvine ganJens in Trivandrum District, Koala Broiler Poultry Develcpnent in Emakulam Distiict, Kerala Development ofRubber Plantation in Kottayam Distiict, Kerala Fisheries Devdopment in Kollam District, Kerala Fami mechanisation in Palakkad and Emakulam Districts, Kerala RNFS in Malappuran and Ko/ikiode Districts. Kerala Spnnklcr Inigitlion iii Arcamul (iiuticii in Kiusiiniyixl Distiicl
Dairy De\ ctopmaii in Kolitun District

1997 2004

1992 1995

4 5 6 7 8 9 10 11 Kerab 1 2 3 4 5 6
/ 8 9 10
7

1989 1990 1992 1993 2000 2001 2002 2003 2003 2003 2004 1988 1990 1991 1992 1995 1998 2002 2002 2003 2004 2004

Vl lin Kasai^od and Kannur District in Kerala Ruiiil Non-Fann Sector Activities in KMolkun iuid AUijipu/ha
Distncts of Kerala

SHGs in Wayanad Dishicts ofKoala 11 Maharashtra 1 2 3 4 5 6 7 8 9 10 Lift Irrigation Schemes in Ahmednagar Distiict, Maharashtia Well Inigation in Aurangabad Distiict, Maharashtia Poultiy Development in Pune District, Maharashtra G r ^ Gardens in Nasik Distiict, Maharashtia Land Development in Kukkadi Project IRDP in Yavatinal Distiict, Maharastia Farm Mechanisation in Ahmednagar Distiict Post Harvest Centiies for Export ofGr^ies Rice Mills in Maharashtia Cold Storages in Maharashtia

1988 1991 1991 1993 1995 1998 1999 2001 2003 2005

102

Madhya Pradesh 1 Dugwell and Shallow Tubewell Irrigation in Narsinghpur, MP 2 Tractor Financing in Raisen and Vidisha Districts, MP 3 Commercial Laya- Poultry Development inlndore District, MP 4 IRDP in Sagar District, MadhyaPradesh 5 Rural Non farm Sector in Ujjain District Orissa 1 BetelvineGardens in Puri District, Orissa 2 Tractors in Sambalpur District, Orissa 3 Dairy Development in Cuttack and Ganjam Districts, Orissa 4 Brackish Water Prawn Culture in Puri District, Orissa 5 Minor Irrigation in Sambalpur District, Orissa 6 Shallow Tubewells inCuttak and Puri districts 7 DRIP &PLI Training in Gangam District 8 Group Financing undo" Farm Mechanisation in Orissa 9 Rural Bridges 10 SHG Bank Linkage Programme in KBK Region, Orissa Punjab & Haryana 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Rajasthan 1 2 3 4 5 6 Minor Irrigation Stmctures in KherwaraP.S.,Udaipur District Tractors in Alwar District, Rajasthan Mari<et Yard in Kekri-Ajmer District, Rajasthan Borewell in Jodhpur District, Rajasthan IRDP in Alwar District, Rajasthan Poultry in Ajmer District, Rajasthan 103 Poultry Farming in Punjab Dairy Development Schemes in Kama! and Rohtak Districts Tractore in Haryana Grape Gardens in Hissar District, Haryana Inland Fisheries inPaliala and Bathinda District of Punjab Financial Viability ofTractors in Punjab RNFS in Ludhiana and Sangrur of Punjab Water Conveyance System in Rewari & Mahendergaigh Districts Cold Storage in Jalandhar, Ludhiana &PatiaIa in Punjab Dairy Financing in Kurukshetra & Kaithal Districts ofHary ana Self Help Group in Kamal, Gurgaon and Bhiwani District Poultry in Sangur and Gurdaspur Districts in Punjab Tubewells in Bathinda, Hoshiarpur and Ropar District ofPunjab Agro Processing Units in Haryana Rural Roads in Muktsar district in Punjab Financing of Dairy Development (Buffaloes) in Patiala and Sangrur Districts of Punjab Tractor Financing in Kaithal and Faridabad Districts of Haryana

1988 1989 1992 1994 2005

1989 1989 1992 1994 1997 2000 2002 2003 2(X)4 2005 1987 1987 1994 1998 2000 2001 2001 2001 2001 2002 2002 2003 2003 2003 2003 2004 2005 1988 1991 1991 1993 1995 1995

7 8 9 10 11 Tamil Nadu 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Sprinkler Irrigation Sdiemes in Banner District, Rajasthaii Dairy Schemes in Bharatpur Districts Water Management Schemes in Jaipur Districts Minor Irrigation in Bikaner District Orange Cidtivation in Jhalawar District

1997 1999 2000 2001 2002

Poultry DevdopmoTt in Salem District, Tamil Nadu Dugwell Irrigation in Tamil Nadu Tea Gardens in Nilgjiis District, Tamil Nadu M I Investments under MAP in Tamil Nadu Jasmine Investmorts in Salan and Madurai Districts, Tamil Nadu Mini Dairy in Coimbatore&Periyar Districts, Tamil Nadu Marine Fisheries in Tamil Nadu Sericulture in Tamil Nadu IRDP in Tamil Nadu Modem Rice Mills in Tamil Nadu Coconut Development in Tamil Nadu MICP under K f W - N B V n in Ramnad&Trichy District District Rural Industries Prqect in Tininelvdi District Cold Storage in Tamil Nadu Rural Roads financed under RIDF in Dindigul District Combine Harvesters in Tiruvallur and Salem Districts of Tamil Nadu Uttar Pradesh 1 2 3 4 5 6 7 8 West Bengal 1 2 3 4 5 6 7 8 9 JO Minor Irrigation Schane in Jhana District, Uttar Pradedi Tractors in Western Uttar Pradesh Inland Fidieiy in Azamgarii and Deoria Districts, Uttar Pradeidi NFS in Moradabad District, Uttar Pradesh Saghan Mini Dairy, Allahabad District, Uttar P r a d e ^ Mushroom Cultivation in Dehradun District, Uttar P r a d e ^ Grape Gardois in Muzafl&magar District, Uttar Pradesh Minor Irrigation in RaiBardly District, Uttar Predesh Inland Fisheries Sdieme in Nadia District, West Baigal Betdvine Gardens in Midnapone District, West Bengal Bullock and Bullodc carts in Malda District, West Baigal Poultry Farming in (Broiler) in Midn^ur District, West Bengal Minor Irrigation Sdiemes in Biibhum District, West Bengal Floriculture in Midnapore District ofWest Bengal Modem Rice Mills and Mustard Oil Mills in Bankura, Burdwan and Nadia District in West Bengal* Land Devdopnent Sector in West Bengal Rural Road prq/ects ^P^^^ssessmentofSCPandTSPinWestBen^

1988 1989 1990 1991 1992 1994 1998 1999 2000 2001 2002 2002 2003 2003 2003 2005

1988 1992 1994 1994 1996 1997 1998 1998 1987 1989 1991 1999 2000 2003 2003 2004 ^m^

104