Small tea growers ask Centre to set up fair price discovery mechanism

Small tea growers, who contribute more than 50 per cent to the crop production of the country, have urged the Centre to set up a fair and transparent price discovery mechanism so that they can realise a proper value by selling leaves to factories.

In a letter to Commerce Minister Piyush Goyal, the Confederation of Indian Small Tea Growers Associations (CISTA) suggested a price protection scheme modelled on the lines of the minimum support price (MSP).

It said the Tea Board should undertake a detailed study to determine an equitable price-sharing ratio between small growers and factories.

Small growers are facing the persistent challenge of poor price realisation, which is undermining the sector's sustainability, CISTA president Bijoy Gopal Chakraborty said.

Small growers contribute more than 52 per cent to the country's tea production, and a proper price realisation mechanism should be identified so that livelihoods are sustained, he said.

Chakraborty said the association has already submitted a detailed status paper to the Commerce Ministry in May 2023, outlining the structural bottlenecks faced by the sector, which is suffering from chronic price realisation challenges.

He said the concept of minimum benchmark price should be replaced by a new methodology linked to the total sales value so that growers receive a fair and remunerative price.

CISTA favoured the Sri Lankan model, under which surplus earnings over auction averages are shared equally between factories and growers.

Proposing a price protection scheme for small growers, it said the average green leaf price currently ranges between ₹22 to ₹25 per kg, while the cost of production is hovering between ₹17 and ₹20 per kg.

The yield on a modest margin is ₹5 per kg for the growers, it said.

On the other side, agents typically charge ₹2 per kg, the CISTA said it is a big disincentive, and growers should be able to sell directly to factories.