PRODUCTION-MIX (M.kg.)
	CTC			ORTHODOX			TOTAL
	2002	2001	+/-	2002	2001	+/-	2002	2001	+/-
North India	592	591	1	59	51	8	651	642	9
South India	166	167	-1	37	37	0	203	204	-1
All India	758	758	0	96	88	8	854	846	8
% of Total Crop	88.8	89.6		11.2	10.4

THE SMALL GROWERS' SECTOR

The Indian tea industry has always accommodated the twin production streams from the organised corporate holdings as well as unorganised small growers. Now, however, the rise in the number of small growers has reached alarming proportions and added to that are the bought leaf factories (BLFs). Both have been found to be largely responsible for the deterioration of the quality of Indian teas.
The small growers, typically holding 10-12 hectare of land, have been concentrated in south India with some distribution in Himachal Pradesh and Kumaon region of Uttaranchal. During the course of the 8th and 9th Five Year Plans a substantial number of agricultural farmers in Assam and north Bengal switched over to tea cultivation. During the mid-1990s when the prevailing prices were attractive, many small farmers started taking up tea cultivation on a large scale.

Over he past 10 years, there has been a 3.5 times increase in the number of holdings of small growers, four times increase in the area under cultivation by them and over three times rise in production. The contribution of this sector is now about 20 per cent of the total production.
Since 1998, during the span of three years (till 2001), tea production by the organised sector has decreased by 3.9 per cent in north India, by 4.7 per cent in south India and 4.2 per cent all-India. In contrast, the small growers sector has increased by 35.9 per cent in north India, 9.2 per cent in south India and 20.6 per cent all-India.

SMALL GROWERS PROFILE
	1991	2001	Cu. Growth rate (%)	Share in All India
				2002	2001  +/-
No. of Holdings	33713	115000	13.24	-	-
Area Under Tea (Hec)	25108	101000	14.93	5.97	19.73
Production (M Kg)	53	170	12.53	6.92	19.91
Labour Employed	66000	230000	13.30	6.32	18.67

 

THE BLF FACTOR

The proliferation of small growers has led to the establishment of numerous Bought Leaf Factories (BLFs) in both Assam and north Bengal, many of which are not registered with the Tea Board. The BLFs' primary source of raw material (green leaf) is the small growers.
Though the emergence of BLFs has certain positive implications by way of providing gainful economic activity, it has also led to problems for the tea industry as a whole. The areas of concern are:

. BLFs have no control over the maintenance of green leaf standards since it is procured from small growers. This causes a
considerable quality compromise of their produce. The output is often not in conformity with the PFA standards and has to be dumped at low prices. This adversely affects the country's tea industry.

. BLFs operate at much lower production cost because they operate under minimal statutory obligations. They are, therefore, able to dispose off their produce at very low prices. This is depressing the overall market price of tea to the detriment of the organised sector.

. There are no built-in incentives for BLFs to improve quality as they can transmit volatilities in market prices of made tea by a pass-through price mechanism which reflects in the purchase price of green leaf.

. The sourcing of green leaf by BLFs in currently not accounted for leading to serious quality issues involving the final output. Tea Waste generation by BLFs, as incidental to manufacture, is not appropriately accounted for by way of statutory declaration of Tea Waste (Control) Order.

BLF & COOPERATIVE FACTORIES PROFILE
States	No.	Production (M Kg)
Assam	135	50
West Bengal	42	30
Tripura	2	0.2
Himachal Pradesh	4	0.1
Tamilnadu	173	81
Kerala	13	2
Total	369	163.3

Certain regulatory issues of registration and declaration of Tea Waste have been taken up with the Tea Board to:

. Ensure registration of BLFs under the Factories Act and make them observe all statutory requirements under the Act.

. Conduct stringent checks on BLFs under the PFA Act & Rules to detect and stop instances of reprocessing and sale of tea waste. A few cases of detection should be logically pursued for prosecution highlighted to serve as a deterrent. The ITA has separately taken up the issue of small growers and BLFs with the district administration to ensure the following:

. Identification of total number of small growers, agents and BLFs in the districts.

. Quantification of the total green leaf harvested by the small growers as well as the area under tea cultivation

. Quantification of the production of made tea by the BLFs and sourcing of green leaf from the small growers

. Elimination of the possibility of green leaf theft from established gardens with a view to obviate law and order problems and evasion of revenue payable to the exchequer wherever applicable.