Tea, the most ancient beverage mankind has been enjoying, is still the most popular drink in the world. In India, it is grown in an area of 5.10 Lakh hectare. Since the first auction of Assam Tea made from indigenous plants held in London in 1839, tea plantation in India has been contributing immensely towards the socio economic development of the people of the tea growing regions of the country. Tea industry contributes substantially towards the national and state economy by way of enriching the foreign exchange reservoir and State exchequer besides employment. Today the major tea growing states are Assam, West Bengal, Tripura, Tamil Nadu, Kerala and Karnataka. It may be observed that about 78 per cent of the country's total area under plantation is located in North East India and Assam accounts for nearly 53 per cent of the all India production. Assam tea is well known for its rich taste and colour. Being an agricultural plantation crop and a major revenue generator, tea cultivation has become a lucrative profession in the North Eastern region that has very few business opportunities and plays a vital role in improving the socio-economic condition of the region. Along with large tea estates, cultivation of tea on small scale basis is also gaining momentum since last two decades in the region. ‘Small tea grower’ has been defined by the Tea Board of India as a person who is having tea plantation area upto 10.12 ha. Alone in Assam there are 400 registered small tea growers whereas the actual number is estimated to be above 50,000. According to the All Assam Small Tea Growers' Association, the small tea growers are coproducing over 65 million Kgs of green leaf which translates to nearly 14 million Kgs of made tea out of a total Assam production of over 345 million Kgs. These Small tea planters account for 29 percent of the state’s overall production and 14 percent of the country’s overall production. The small tea growers in Assam are mostly scattered in Sonitpur, Karbi Anglong, Dibrugarh, Tinsukia, Golaghat, Sivasagar, and Lakhimpur districts. But recently most of

the farmers of other districts of Assam have started cultivation of tea in small scale. These tea growers are playing great role in the upliftment of the rural economy of the problems hit state. 1.1 OVERVIEW OF PROBLEM Small Tea Growing Industry in Assam has immense potential from the points of both providing employment as well as generating revenue. It can be a lucrative profession and can play a vital role in improving the socio-economic condition of the economically backward state. But the small tea growers are facing many problems related to availability of finance, selling price, processing of tea leaves etc. They are forced to sell their tea leaves to big tea gardens at through away prices due to the absence of tea factories of their own. Hence taking into consideration the above aspects following objectives have been formulated. 1.2 REASERCH OBJECTIVES 1. To identify the constraints faced by the existing small tea growers in Assam so as to create opportunities for the new small tea growers. 2. To formulate a viable small tea growing model for the new small tea growers in the state that can be supported by Financial Institutions. 3. To study the feasibility of setting up of a Bought Leaf Factory (BLF).


2.1 Indian Scenario The Tea Industry in India is about 170 years old. It occupies an important place and plays a very useful part in the national economy. Robert Bruce in 1823 discovered tea plants growing wild in upper Brahmaputra Valley. In 1838 the first Indian Tea from Assam was sent to United Kingdom for public sale. Thereafter, it was extended to other parts of the country between 50's and 60's of the last century. However, owing to certain specific soil and climatic requirements its cultivation was confined to only certain parts of the country. Tea plantations in India are mainly located in rural hills and backward areas of Northeastern and Southern States. Major tea growing areas of the country are concentrated in Assam, West Bengal, Tamil Nadu and Kerala. The other areas where tea is grown to a small extent are Karnataka, Tripura, Himachal Pradesh, Uttaranchal, Arunachal Pradesh, Manipur, Sikkim, Nagaland, Meghalaya, Mizoram, Bihar and Orissa. Unlike most other tea producing and exporting countries, India has dual manufacturing base. India produces both CTC and Orthodox teas in addition to green tea. The weightage lies with the former due to domestic consumers’ preference. Orthodox tea production is balanced basically with the export demand. Production of green tea in India is small. The competitors to India in tea export are Sri Lanka, Kenya, China, Indonesia and Vietnam. There has been a dramatic tilt in tea disposal in favour of domestic market since fifties. While at the time of Independence only 79 million Kgs or about 31 per cent of total production of 255 million Kgs of tea was retained for internal consumption, in 2006 as much as 771 million Kgs or about 81per cent of total production of 956 million Kgs of tea went for domestic consumption. Such a massive increase in domestic consumption has been due to increase in population, greater urbanization, increase in income and standard of living etc. Indian tea export has been an important foreign exchange earner for the country. There was an inherent growth in export earnings from tea over the years. Till 70s’, UK was the major buyer of Indian tea Since 80s’ USSR became the largest buyer of Indian tea due to

existence of the trade agreement between India and erstwhile USSR. USSR happened to be the major buyer of Indian tea accounting for more than 50 per cent of the total Indian export till 1991. However, with the disintegration of USSR and abolition of Central Buying Mechanism, Indian tea exports suffered a set back from 1992-93. However, Indian tea exports to Russia/CIS countries recovered from the setback since 1993 under Rupee Debt Repayment Route facilities as also due to long term agreement on tea entered into between Russia and India. Depressed scenario again started since 2001 due to change in consumption pattern, i.e. switch over from CTC to Orthodox as per consumer preference and thus India has lost the Russian market. Another reason for decline in export of Indian tea to Russia is offering of teas at lower prices by China, South Asian countries like Indonesia and Vietnam. The major competitive countries in tea in the world are Sri Lanka, Kenya, China and Indonesia. China is the major producer of green tea while Sri Lanka and Indonesia are producing mainly orthodox varieties of tea. Kenya is basically a CTC tea producing country. While India is facing competition from Sri Lanka and Indonesia with regard to export of orthodox teas and from China with regard to green tea export, it is facing competition from Kenya and from other African countries in exporting CTC teas. Tea is an essential item of domestic consumption and is the major beverage in India. Tea is also considered as the cheapest beverage amongst the beverages available in India. Tea Industry provides gainful direct employment to more than a million workers mainly drawn from the backward and socially weaker section of the society. It is also a substantial foreign exchange earner and provides sizeable amount of revenue to the State and Central Exchequer. Presently, Indian Tea Industry is having• • • • • • • Total Turnover of Rs. 10000 Crores. 31 per cent share in global production and 15 per cent of world trade. Total net foreign exchange earned per annum is around Rs. 1847 crores. 9 tea Auction centers at Calcutta, Guwahati, Siliguri, Cochin, Coimbatore etc. 1655 registered Tea Manufacturers. 2008 registered Tea Exporters. 5148 number of registered tea buyers.

• •

The labour intensive tea industry directly employs over 1.1 million workers and generates income for another 10 million people approximately. Women constitute 50 per cent of the workforce.

2.2 Small Tea Growing Industry in Assam In Assam and other North Eastern States, the concept of growing tea in small holdings was unheard of until 1975, when a small beginning was made in Assam. Small farmers in these States started taking up tea cultivation on a large scale during the mid 90's due to good prices that prevailed during 1996-98. The average size of such holdings is less than one hectare. These small and marginal farmers are dependant on tea and derive major portion of their cash income from tea. Presently around 45,000 small growers are operating in the state of Assam and other North Eastern tea producing states. Since 1995, the quantity of tea produced and sold by the small growers has gone up many folds over the years. At present, the quantum of tea produced by the small growers in Assam and other North Eastern States is around 65 million Kgs. But many problems and constraints have weakened this small tea growing industry in the state. The small tea growers don’t get proper price for their produce from the large tea estates or from the BLFs often shown quality problem by the later. They don’t have ‘‘possession certificates” for their cultivating land due to which they are unable to register themselves with the Tea Board of India and get benefits from various policy initiatives. Due to the same reason they are also unable to get loans from banks. Thus the small tea growing industry in Assam is facing many problems which requires urgent attention from the state government. Initiatives should be taken to give them ownership titles of their lands to help them getting financial assistances from the Tea Board of India and financial institutions. Overview of the Small Tea Growing Industry in Assam • • • 14 per cent of India’s overall production. 29 per cent of Assam’s overall production. No. of Registered growers-400.

Actual no. of growers (estimated)-Above 50,000.


The available literature on Tea has been arranged as under: Barlow and Jayasooriya (1986) studied how changes took place in plantation sector in Sri Lanka due to the state interventions such as small farm support programs, land reforms and setting up of organizations for processing and marketing of tea. Tallontire Anne (2001) described how Business and Market affects the livelihood of small tea growers in Sri Lanka though they have a major share in total production in the country. In this paper he showed how the big companies though they assume themselves to be ethical in sourcing the tea leaves from the small tea growers but did that really help the poor? Lele (2002) described how in Kenya, formerly a government organization and now a private organization Kenya Tea Development Agency Ltd (KTDA) has extended services to the small tea growers such as green leaf tea collection, processing and marketing of tea. It was a big problem for the small tea growers to bring the tea leaves to the other factories as they are located at a larger distance from them. Herath D and Weersink A. (2003) in a presentation paper emphasized maintenance of quality of tea and processing aspects. They also discussed various aspects like transaction costs, management costs and technologically determined production costs etc. in tea cultivation. Boruah et al. (2005) described how tea is suited to the north eastern region and is a major revenue generator but facing constraints like lack of proper extension services, timely processing facilities etc. They also gave emphasis on the requirement of adequate financial assistance, which is essential for the promotion of small-scale tea cultivation. NABARD, Tamil Nadu Regional Office, Chennai (2006) in its research paper attempted to address issues like production, processing, marketing and export of tea in Nilgiris and Coimbatore districts of Tamil Nadu. 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. In this paper an alarming situation has been described where 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. Chattopadhayay Dr. Shatadru (2006) described how the price obtained by the small tea growers have declined from Rs. 18/Kg to Rs. 4/Kg which was resulted due to the reasons like quality aspect and less price obtained at the auction houses. He described the reasons behind getting fewer prices at auction houses to be market rigging and cited that there was enough evidence of price fixing by buyers in the auction houses. Bordoloi Satyajit (2006) gave emphasis on the commercial aspects of tea production. He hoped many more small growers would start growing tea in Assam on cooperative basis by forming cooperatives among themselves to gain more bargaining power and quality improvement of green tea leaves. Choudhury R. K. (2006) gave emphasis on how the small tea growers are often exploited by the large tea estate owners due to the absence of processing factories of their own. Also some major problems like inefficient management, lack of infrastructure etc. have been discussed by him.

To fulfill the objectives of the study following methodology was used during the study and for report preparation. 4.1 Research Design: Exploratory research design was adopted for the study considering the objectives of the study. 4.2 Area of Study: Sonitpur District of Assam of North East was selected as the area of study. 4.3 Source of Data: The entire study was based on secondary as well as primary data. 4.3.1 4.4.2 Secondary data: Internet, Journals etc. were thoroughly used for secondary data. Primary data: Primary data were collected from the small tea growers with the help of both open and close ended questionnaires and by in depth discussions with the personnels from financial institutions and BLFs. 4.4 Sampling Plan 4.4.1 4.4.2 Sampling unit: Sampling units comprised of small tea growers and personnels from financial institutions and BLFs. Sample Size: 1. Small Tea Growers-30 2. Bank personnels-2 3. BLF Owner-1 4.4.3 Sampling Technique: Multi stage and purposive sampling methods were adopted to carry out the study. Multi stage sampling technique was adopted for selecting the area of study and purposive sampling technique was adopted for selecting small tea growers and personnels from financial institutions and BLFs. North East Assam Sonitpur

Sonitpur district was selected as the area of study due to the presence of highest number of small tea growers in the district. Table No. 4.1: No of Small Tea Growers present in Assam District Sonitpur Karbi Anglong Dibrugarh Tinsukia Jorhat No. of Small Tea Growers 207 130 115 99 90 Source:-Tea Board of India, Regional Office, Guwahati, 2004 4.5 Research Instrument: Data were collected with the help of both open and close ended questionnaires by interacting with the small tea growers and by in depth discussions with the personnels from financial institutions and BLFs. 4.6 Data Analysis: Appropriate statistical and financial tools and techniques like Average, graphs etc. were used for the analysis of data. 4.7 Duration and Period of Study: The project was of 45 days from 1st March to 15th April, 2008.

5.1 Objective No. 1: To Identify the Constraints Faced by the Existing Small Tea Growers in Assam so as To Create Opportunities for the New Small Tea Growers. Assam is a state facing extremists-violence, flood, poverty, unemployment etc. problems since last three decades. Industrialization process is still very slow compared to many other states in India. Agriculture sector is still seeing traditional ways of cultivation resulting in low output and thereby low income which is insufficient to run their families. However a change is observed in Assam with regard to tea cultivation which is a major crop among the plantation crops. The number of growers taking tea cultivation as source of income in Assam is increasing rapidly and now it is over 50,000 in the state. They contribute about 29 % of the total production in Assam. The government of India and the state government are also trying to motivate this profession by announcement of various schemes such as subsidy schemes to the new planters, setting up of BLFs etc. The unemployed youths now in Assam don’t search jobs but want to become entrepreneurs and obviously tea is the first choice. But though the number of small tea growers in Assam has increased immensely in the last decade and they are contributing to the economy apart from having self-employment they are facing many problems in various grounds. Major Findings Were: 5.1.1. Requirement of Financial Assistance and Possession Rights: Organized Small tea cultivation needs high initial capital investment and continuous flow of working capital later during the production phase. Tea Board of India has declared various subsidy schemes for small tea growers and banks are also ready for providing loans to them. But the most important problem in availing these facilities is that most of the small tea growers don’t possess permanent land ownership titles for their lands. Normally banks advance term loan for setting up of the tea plantation on the basis of permanent land ownership title and registered with Tea Board of India. But banks give working capital on temporary land ownership title provided growers have some amount of permanent land. Hence it is the duty of the state government to give permanent ownership titles to the

small tea growers for their lands having temporary ownership titles so that they can avail these facilities for cultivation of tea. From this study it has been found that out of 30 small tea growers only 9 have availed the loan facility from various banks in the area. Other 21 growers have been using their own funds to raise the plantation. Some of them are unaware and some don’t have permanent ownership titles for their lands so unable to avail the facilities. [Exhibit 5.1]

Exhibit 5.1: Showing Percentage of Growers Taking Loan Facilities Small tea growers can avail facilities like subsidy from Tea Board of India and loans from banks only if they are registered with the Tea Board of India. They register themselves with TBI through organization like Small Tea Grower’s Association. For subsidy they have to apply directly to the TBI. 5.1.2 Awareness Level Regarding Various Aspects in Tea: Government of India has declared many schemes for the promotion of tea in the country because of the declining share of tea in the international market the reason of which has been identified as the deteriorating quality of tea. One important reason for this deterioration is the age old bushes which not only decrease the production of tea leaves but also quality of made tea. Hence Government of India has declared many schemes like subsidy for plantation and setting up of mini factories etc. to promote the cultivation of tea in the country. But due to the inefficient extension services in the country these

schemes have not been able to penetrate and hence lot of things have to be done to aware the growers in the country. Table No. 5.1: Table Showing Awareness Levels of Various aspects of Tea Cultivation Particulars 1. About Loan Facilities in Tea 2. Registration with TBI 3. About Subsidy Scheme of TBI. Total 21 21 21 No. of Growers unaware 4 10 10 % of Total 19 47 47

From Table No.5.1 it has been seen that growers are not aware of various aspects like subsidy scheme, importance of registration with the TBI etc. and need proper help from extension services. Out of these 21 growers, 11 growers are aware about TBI but as their lands are not permanently possessed hence have not been able to register with TBI through some kind of organizations like Small Tea Grower’s Association etc. and needs proper action from state government in giving them permanent ownership titles for their lands and already proper steps have been taken by State Government of Assam. 5.1.3 Problems Related to Marketing of GTLs: There are many problems in this regard and these are: 1. Small tea growers are unable to get a fair price for their produce from the big estates because the individual growers are unable to make much impact on them. Factories often rejects leaves showing quality complain. 2. The involvement of middlemen in the transactions of green leaf from STGs to the big estates also enhances problem. The middleman collects the leaves from the grower's plantation at Rs.50 less per kg of leaves which is said to be the transportation cost. 3. The STGs sell their farm produce i.e., green leaf to the big estates as they do not own processing factories. As there are a large number of growers, an individual grower supplies only an insignificant proportion of the total output and hence these growers have very low bargaining power and are unable to influence price for their produce. On the contrary, as the big estates owners have a monopoly in purchasing green leaf from the

STGs, they are able to influence pricing. The problem of fair price realization is further aggravated by the formation of cartels among the buyers. Thus, the small growers occupy the most vulnerable position in the tea supply chain. 4. 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. About 75 per cent are still being sold through auction centres despite the relaxation given to the manufacturers of made tea to sell tea in the market. 5. Differential pricing method may be followed by the big estates, whereby quality leaf is paid a higher rate. This would have a good impact on the quality of made tea produced. Now by analyzing the above problems and constraints following points can be derived: 1. As already proper steps have been taken by the Government of Assam in giving permanent land ownership titles to the small tea growers hence it is important to formulate and present feasible plans for getting subsidies from TBI and loans from Banks. 2. Bought Leaf Factory (BLF) is a tea processing unit which can be established by individuals or jointly. There are several subsidy schemes of Tea Board of India for setting up of BLF. Establishment of BLF will facilitate small tea growers to come together. Government of India is also planning to set up BLFs at various locations in various tea growing states. These BLFs will be managed initially by government and later these units will be managed by small tea growers on co-operative basis. Another benefit given by BLF will be the elimination of intermediaries from the tea supply chain which ultimately will provide benefits not only to small tea growers but also to the consumers. Keeping above factors in mind efforts have been done to create new opportunities for the existing and new small tea growers in the subsequent objectives 2 and 3.

5.2 Objective No. 2: To Formulate a Viable Small Tea Growing Model for the New Small Tea Growers in the State that can be Supported by Financial Institutions.

Tea plantation requires high initial fixed cost as well as working capital during the subsequent periods for maintenance. Generally in Assam the small tea growers employ their own funds to start the plantation in a small scale in streaks over time. It has been found that the area can go upto as less as 10 bigha. Hence they don’t attain economies of scale. Now a days financial institutions like banks are coming into this sector for providing credits to the growers. Banks provide both term loan for establishment of new tea plantation and working capital loan during production phases. To avail term loan for setting up of a new plantation a small tea grower must submit permanent possession certificate. But he can avail working capital loan during production phases by submitting temporary possession certificate provided a certain amount of land is under permanent ownership of the grower. A tripartite model is followed by the banks in case of providing loans to the growers. The STG obtains loan from the bank branch. They sale the green leaf to the Tea Estates. The green leaf Buying Tea Estate makes payment to STG through the bank branch. The bank branch deducts dues to the bank from the STG and then credits the balance to the account of the STG. But to avail subsidy a small tea grower must apply directly to the TBI. Hence to avail subsidy and loan a grower must submit a feasible plan including all the cash outflows and inflows of the plantation. He also must have to submit soil testing report, weather report of his area etc. Depending on his report banks go for project appraisal and take decisions as required. A detailed model for an area of 1 hac has been shown below.

5.2.1 Formulation of an Economically Feasible Small Tea Growing Model for an Area of 1 Hac: Area: 1 ha. Plant Population: 15000 Nos/ha. (Double Hedge System)

Table No.5.2: Mandays Requirements for Tea Plantation Sr. No. 1 2 3 4 5 6 7 8 9 10 11 No. of Mandays Particulars Clearing/Leveling and Land Preparation Drainage Application of OM Planting of Tea(Including Staking) Planting of Shade Trees(110 nos. for 1 ha) Mulching Pruning/Tipping Application of Fertilizers Application of Plant Protection Chemicals Manual/Chemical Weed Control Maintenance of Drainage, Fencing etc. TOTAL MANDAYS Year 1 75 40 30 135 10 30 10 20 15 40 405 Year 2 40 20 20 20 15 35 10 160 Year 3 25 30 20 15 30 10 130 Year 4 40 20 15 30 10 115 5th Year Onwards 40 20 15 30 10 115

In Table No.5.2 various Mandays requirements have been shown. It has been seen that the requirement of mandays are more in the first year during setting up of the plantation and decreases in the subsequent years and hence cost of cultivation also going down. It

has been found that the growers are following the double hedge system due to which the production may be more but the quality may deteriorate in the long run. Table No.5.3: Investment in Mandays & Materials Sr. No. Years Particulars 1 405 18225 2 160 7200 3 130 5850 4 115 5175 5th Year Onwards 115 5175 (Figs. in Rs)

A. MANDAYS (No.) 1 Cost of Labour @ Rs.45 / manday B. MATERIALS 2 3 4 5 6 7 Rent of Hired Tractor @ Rs.600/Bigha Tea planting Materials @ Rs.3 each Shade Tree Planting Materials @ Rs. 3 each Fertilizers Plant Protection Chemicals @Rs.300/lit. Weedicides C. PLUCKING COST (Rs.2.40/Kg of GTL) TOTAL(A+B+C)

4500 45000 330 5500 1,500 1000 NIL 86220

4500 6,000 1,700 1200 4320 24920

2250 6000 1,800 1200 10080 27180

6,300 1,900 1400 15600 30375

6,500 2,100 1500 21600 36875

From Table No. 5.3 it has been seen that the costs are more in the first year because of the costs like planting material costs and labour cost. Costs again increase from 3 rd year because of the increasing plucking costs. Table No.5.4: Yearwise Production of Green Tea Leaves (Figs. in kg green leaf/ha)

Particular YIELD

Year 1 NIL

Year 2 1,800

Year 3 4,200

Year 4 6,500

5th Year Onwards 9,000

It has been seen that the production is less in the 2nd year because of less branches and it increases from 3rd year because of more branches. But from about 30 years production as well as quality deterioration has been seen in case of Tea. Table No.5.5: Table Showing Net Incomes of the Grower YEARS GROSS INCOME @Rs.12/kg TOTAL COST NET INCOME 1 NIL 86220 -86220 2 21600 24920 -3320 3 50400 27180 23220 4 78,000 30375 47625 (Rs/ha) 5thYear Onwards 108,000 36875 71125

From Table No.5.5 it has been seen that no income is obtained in the first year as plucking is not done. But in many cases plucking is done in the very first year which is not a healthy practice. Also it has been seen that upto the 2nd year net incomes are negative as income does not exceed costs.

Table No.5.6: Table Showing Various Constituents of the Finance Scheme



AMOUNT (Rs) 138320

2 3 4


13832 34580 89908

It has been seen from Table No.5.6 that Unit cost is Rs.138320 which is taken for the first 3 years. Out of this total unit cost amount 10 per cent will have to be margin money i.e., will have to be provided by the grower himself. Subsidy amount (25%) will be given by Tea Board of India in two installments. First installment will be given immediately after the completion of planting by the grower and the second installment will be given after 12 months after planting. The subsidy amount will have to be collected by the growers by applying directly to Tea Board of India through institutions like Small Tea growers Association etc. Bank will provide rest 65 per cent money as term loan the interest of which is 11 per cent now and from the 3rd year bank will advance money as working capital as required by the grower the interest of which is 7 per cent. Government of India and respective state governments give 2 per cent subsidy each on interest rate to keep it at 7 per cent.

The Bank Loan and Repayment Schedule have been shown in Table No.5.7. Banks finance small tea plantation as term loan and working capital loans. Term loans are given for setting up of the plantation and working capital during the operational period and it starts from 4th year. It has been stipulated by NABARD that term loan will have to be considered upto 3rd year and from 4th year working capital schedule starts. There is an

initial moratorium of 4 years after which repayment schedule starts and within 8 years the term loan has to be repaid and working capital advancement continues.

5.3 Objective No.3: To Study the Feasibility of Setting up of a Bought Leaf Factory (BLF). BLF is a tea processing factory owned by individuals of which two third Green Tea Leaves should be from outside growers. Government of India has declared subsidy of 25

per cent for various machineries of this tea processing unit. BLF can be owned by individual grower or in groups. Government of India is encouraging setting up of BLF management of which will be headed by Government chosen personnels initially and later will be managed by small tea growers as cooperative societies. BLF is a capital intensive unit and hence requires support from various fronts such as Government and financial institutions like banks. Below a model for setting up of a BLF has been described. Table No.5.8: Various Costs involved in Plant & Machineries Sr. No 1 2 3 4 5 6 7 8 9 10 11 12 13 (in Rs Lacs)

Axial Flow Fan (2 nos.) Coal/Firewood Heater (2 nos.) Chain Grate Stoker Closed Withering Trough (10 nos.) Rotovane Conveyor Rolling Table CTC machine Rolled Leaf Sifter / Googie CFM Centrifugal Spot Humidifier Fan Food Grade Stainless Steel Sheet on Fermenting Beds Super Indirect Fired Coal/Firewood Heater


2 1.5 10 5 25 2.5


1.5 20 1.5 30


14 15 16 17

Speed Fibre Extractor Colour Sorter Electronic Cleaning Machine Tea Packing Table Storage Bins with Dehumidification System


12 15 8 1.5



18 With Fan 4.5 19 Cartoon/Pouch Packing Machine TOTAL 150

Various machineries as shown in Table No.5.7 have been used in a BLF. Various operations after which we can get made tea are withering, rolling, fermenting, drying, sorting & grading and packing which have been shown in the Exhibit No.5.1 below.

Table No.5.9: Table Showing various Operational Costs Sr. No 1 2 3 5 6 Electricity Coal/Firewood Generator & Lorry Maintenance Transport Charges for GTLs Salaries

(in Rs Lacs)


11.5 8 4.5 10.4 2.5

7 8 9 10 11 12 13 14 15 16 17

Taxes Insurance Wages Packing Costs Brokerage Cess Loading/Unloading Charges Warehousing Transport to Auction Houses Agent Commission for GTLs Repairs for Machines TOTAL

0.50 0.50 5.4 4 2 1.5 0.20 1.6 2.5 2.4 5 62.5

In Table No.5.8 various operation costs or working capitals have been shown of which electricity costs is highest. The grower in study has a land size of 26 hac from where he gets about 3 Lakh GTLs so he requires about 17 Lakh GTLs to feed his BLF. Table No.5.10: Table Showing Net Income

Particulars Total Costs incurred in GTLs purchased-17 Lakh Kgs @Rs.10/Kg

Amount 170

Made Tea Produced@1Kg/4Kg GTL GROSS INCOME @Rs.65/Kg at Auction Center TOTAL OPERATIONAL COST NET INCOME

5.20 338 62.5 105.5

From Table No.5.9 it has been found after analysis that the BLF owner has earned a net income of Rs. 105.5 Lac. He has purchased 17 lac Kgs of GTLs from other small tea growers @ Rs. 10/Kg on an average. Every Kg of GTL gives 1 Kg of made tea. At Auction Center per Kg made tea was sold at Rs. 65.

Table No.5.11: Table Showing Cash Flows for 5 Years Sr. No Years Particulars 1 2 3

(Figs in Lakhs)



Investment Costs 1 2 Plant & Machinery Civil Works 150 100 -

Operational Costs 3 Operational Costs 62.5 65.5 70.2 75


GTL Purchased Total Cost


170 232.5

170 235.5

178 248.2

178 253

Provision for Depreciation 15 (10%) Salvage Value Gross Benefit Net Benefit Nil Nil 338 105.5 338 102.5 345 96.8 88.5 345 92 13.5 12.15 10.93 9.84

In Table No.5.10 cash flows for 5 years have been shown. Net benefits have been calculated by taking operational costs only. Provision for depreciation has been taken as 10 per cent. Salvage value has been obtained by applying continuous depreciation method.


Small tea growing industry can boost not only the economy of a state like Assam but also can contribute immensely to the nation’s exports hence it is urgent to take care various problems existing in this industry from all fronts. Lots of things are to be done and initiated as the popularity of Indian Tea has decreased internationally. Hence by various schemes like replantation, technology upgradation etc. efforts have been made to get back that popularity again in the international market. The problems of not only of the small tea growers but also of the big estates should be solved without taking much time by seeing the increasing shares of various countries like Sri Lanka, Kenya etc in the international market. Soil testing facilities, extension services like use of proper doses of pesticides, fertilizers, giving the small tea growers permanent land ownership rights, encouragement of setting up of tea processing units, increase the subsidy level from existing 25 per cent to 33 per cent can revive and boost the existing small tea growing industry in the country.


Important suggestions and Recommendations have been given below 1. As the most important problem is of finance hence individual new and existing growers should be a part of some associations like Small Tea Growers Association, SHGs etc. so that they can register with the Tea Board of India (TBI) to avail the subsidy facilities and finance from banks. On Government’s front initiatives should be started taken to give the small tea growers permanent land ownership rights without which they can not avail subsidy and loans from banks. 2. As awareness level regarding various subsidy schemes of government is low among some growers hence extension system should be made strong. 3. Healthy agricultural practices such as soil testing, application of pesticides, fertilizers and plucking operations should be followed and it needs proper extension service efforts from agricultural universities, KVKs etc. It has been seen that tea from India have been

sent back due to pesticide residual complaints from various countries like Germany, Saudi Arabia etc. 4. If more numbers of Associations, SHGs exist then the bargaining capacity of the small tea growers will increase and will be able to get fair price for their produce. 5. Government of India should encourage setting up of more numbers of tea processing units in the state through setting up of Tea Growers Association, SHGs etc. which not only will give them better price for their tea leaves but also for their made teas as now such type of cooperatives, associations etc can sell their produce in the market directly after allowing by the government to sell in the market. This will also remove various intermediaries from the tea supply chain.

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