Tea industry seeks changes in price-sharing pattern

Against the backdrop of the current crisis following a sudden fall in prices of green leaf tea, the industry has asked for “review” of various provisions of the Tea Marketing Control Order (TMCO), 2003.

Besides dubbing many provisions of the TMCO “arbitrary” and “unfair”, the tea industry said the price sharing formula was difficult to comprehend.

TMCO defines the price sharing formula between tea manufacturers and green leaf suppliers based on the total gross proceeds from the sale of manufactured tea. The Assam government recently directed the Tea Board to implement TMCO after social unrest was brewing in the state following the abnormal dip in price of green leaf tea, which affected nearly 100,000 small growers.

Prominent among the reviews demanded by the industry was the price sharing ratio of 65:35 between the green leaf grower and manufacturers.

“Initially, the price sharing formula under TMCO was 60:40 but later the Tea Board had unilaterally changed it to 65:35. We demand a review of it, which must be preceded by a threadbare discussion,” said Bidyananda Barkakoty, chairman of the North Eastern Tea Association.

He said the ratio did not take into account the actual cost structure of both the grower and the manufacturer.

The tea industry has also sought a review of the present conversion rate of 21.65 per cent, as it said this did not take into account the tea waste generated.

The conversion rate is used to calculate the actual money to be shared with green leaf suppliers after applying the 65:35 ratio. Barkakoty said TMCO has completely failed to address the quality of leaf and processing facility.

The tea industry, following thorough discussions, will soon arrive at a consensus on what changes should be brought in TMCO, said Barkakoty. The Tea Board had recently sought the industry’s views to “arrive at a mutually acceptable price sharing formula”.