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Tea growers not happy with Tea Board's new price sharing formula

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Michael Chen

Senior Web Developer
As an outcome of long process of movement and litigation, finally Indian Tea Board has introduced a price sharing formula(PSF) for the small tea growers( STG) and bought leaf factories( BLF) buying green leaf from them. But, STGs, dissatisfied with their share offered by the PSF and its level of transparency. As per the circular issued by Indian Tea Board, all bought leaf factories (BLF) in northern West Bengal tea belt will have to pay the price of Rs 10.17 to 11.15 per kg. for green leaf to be purchased from STGs during the month of September. This is going to be the first implementation of this new PSF. "This rate is to be re-calculated for every month on the basis of price realized by the BLF's from recognized Tea Auction centres for their output during previous month. As per the system for northern West Bengal tea belt, 65% of final realization amount is for STGs leaving 42% for the BLFs," said tea Board officials. "We appreciate the PSF. But this lacks transparency thus needs restructuring of whole system," said Mr. Bijoy Chakroborty, Secretary of Confederation of Indian Small Tea Growers' Association( CISTA), the apex body of Indian small tea growers organizations. Nationally, a round 65,000 small tea growers produce near 30% of the national annual yield. Tussle between STGs and BLFs over the price of green leaf has always remained a common issue throughout the country generating need of a PSF. Though a PSF came into existence in 2004, but, "Improper and inadequate implementation of that made it ineffective forcing us to demand for a new one," said Mr. Chakroborty. Following long litigation, the old formula was made defunct and Union Government was directed in October 2012 by judiciary to fix a 'realistic' price 'uninfluenced by artificial market forces' that has finally given birth of the present PSF. According to Ms. V. Yadav, Director, Ministry of Commerce and Industry, Government of India, this is a major step in the long awaited small tea grower development scheme. But, "To have transparency in this PSF, it needs to be made mandatory for the factories buying green leaf from us to sell at least 70% of their output through auction so that ITB can keep track of actual volume of price realized by them," demanded Mr. Chakroborty. However, "Given the present situation, it appears to be tough enough for ITB to implement that restriction on the factories as that may initiate large scale objection not only from the BLFs s but established gardens too," said industry insiders.  Source: articles.economictimes.indiatimes.com/2013-09-17/news/42148925_1_blfs-green-leaf-stgs

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