The document provides background information on the crisis in the Indian tea industry. It discusses the structure of the industry, including that India is the largest producer and consumer of tea globally. The tea industry employs over 1.1 million workers on plantations. Large plantations, which focus solely on tea production, range from 500-1200 acres and are often owned by large corporations. The document examines profiles of two major tea companies, Hindustan Lever and McLeod Russel, which own numerous plantations across India.
Original Description:
Original Title
Crisis in Indian Tea Industry Kerala Tamilnadu 2003
The document provides background information on the crisis in the Indian tea industry. It discusses the structure of the industry, including that India is the largest producer and consumer of tea globally. The tea industry employs over 1.1 million workers on plantations. Large plantations, which focus solely on tea production, range from 500-1200 acres and are often owned by large corporations. The document examines profiles of two major tea companies, Hindustan Lever and McLeod Russel, which own numerous plantations across India.
The document provides background information on the crisis in the Indian tea industry. It discusses the structure of the industry, including that India is the largest producer and consumer of tea globally. The tea industry employs over 1.1 million workers on plantations. Large plantations, which focus solely on tea production, range from 500-1200 acres and are often owned by large corporations. The document examines profiles of two major tea companies, Hindustan Lever and McLeod Russel, which own numerous plantations across India.
crisis in indian tea industry Introduction Centre for Education and Communication (CEC) initiated a Fact Finding Visit based on reports of deaths of workers on tea plantations and the consequent closure of tea plantations in Kerala and Tamil Nadu. A Team and their Terms of Reference were de- cided at a meeting of central trade union leaders, social activists, academicians, law- yers and journalists on November 6, 2002 in New Delhi. It was also decided that the team would visit Kerala and Tamil Nadu as two independent functional sub-teams and the reports would be integrated for publication. The India office of the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers (IUF) was later contacted to join the fact-finding exercise considering the work already undertaken by IUF in the tea sector. The Terms of Reference of the Fact Finding Visit were 1. Examine the condition of workers in the tea plantations of Tamil Nadu and Kerala in the context of the present crisis. 2. Examine the current dimensions of the economics of the tea industry. 3. To specifically assess if the tea industry is experiencing a crisis and to identify the various factors contributing towards the same. 4. To examine the various factors of price formation/ determination in the Indian tea industry. 5. To examine the role of various stakeholders viz. management, government and the trade unions. 6. Suggest various methods of campaigning to improve the condition of the workers. The Team The members of the Fact Finding Team that visited Kerala were Kanai Banerjee (CITU), S. N. Thakur (AITUC), P. K. Walanj (HMS), Prof. Virginius Xaxa (Delhi University), J. John (CEC) and Sindhu Menon (Labour File). The Fact Finding Teaam that visited Tamil Nadu included Suneet Chopra (AIAWU), P. A. Joseph (INTUC), Meena Patel (IUF), Ashim Roy (NTUI), M. Subbu (TMKTS) and Shatadru Chattopadhayay (CEC). Both the Teams met in Coimbatore on January 21, 2003 for mutual introduction, to identify major concerns and work out the logistics. The field visits were carried out from January 22-26, 2003 in the respective areas. Plantation Areas Visited The Fact Finding Team visited Pon Modi in the Trivandrum district and Peermade in Idukki the district of Kerala. In Tamil Nadu, the Fact Finding Team visited Coonoor and Gudulur in the Nilgiris and Valparai in the Coimbatore district. 10 crisis in indian tea industry Chapter 1 Structure of Indian Tea Industry India is the largest producer and consumer of tea in the world. It produced 854 million kg of tea and consumed 673 million kg. in the year 2001. Since independence, tea production in India has grown over 250 percent and accounts for 31 percent of the global production of tea. 1 At present, the total turnover of the Indian tea industry is around Rs. 10,000 crores. India also exports an average 180 million kg. of tea every year. The total net foreign exchange earned by the Indian tea industry per annum is around Rs. 1847 crores. The bulk of Indian tea is produced in the north- eastern states of Assam and West Bengal, along with the southern states of Tamil Nadu and Kerala. Tea production takes place in both large plantations and smaller gardens. The tea industry is the second largest employer in India with more than 1.1 million workers on permanent rolls. The number goes up significantly if the casual workers are also included. Most of the tea plantations are located in geographically isolated areas, the so-called plantation en- claves. These tea plantations are not just economic production units, but rather social institu- tions, which control the lives of their resident work force to a large extent. The plantations do not just offer employment; they are also responsible for providing housing, water, welfare and many other facilities that affect the daily lives of workers. Most tea-producing countries including India, have extensive legislation regarding the conditions on plantations but such laws have proved to be very difficult to implement and monitor. Hence, their impact is often limited. The sizes of big plantations vary between 500 to 1200 acres. These tea plantations focus solely on the production of tea, to benefit from the economies of scale. These big plantations are often part of a chain of plantations owned by large corporations and Multinational Corporations (MNCs). There are in total 88115 tea estates in India covering an area of 4.5 lakh hectares. 2 From these, approximately 98.2 percent of the estates belong to small growers with estates of sizes less than 10.12 hectares. Technically the growers holding up to 10.12 hectares under tea are considered small growers. However, they only account for 14.5 percent of the total area under tea and 11.1 percent of the total tea production. The bigger size estates (>400 hectares) account for about 48.3 percent of the total tea area and 53 percent of the total tea production. The estates that are between 200 to 400 hectares account for about 0.5 percent of the total number of estates but have 24.1 percent of the tea area and 25.2 percent of the total tea production. These big planters are the most influential players in the tea trade. Table 1: Distribution of tea estates in India Size of the registered tea estates (Hectares) Numbers (in %) < 10.12 98.2 10.12 - 50 0.4 50 - 100 0.2 100 -200 0.3 200- 400 0.5 > 400 0.4 Source: V.N. Reddy, Analysis of Tea Industry, presented at IUF India Tea Workers Meet, December 2002. 1 V.N. Reddy, Analysis of Tea Industry, presented at IUF-India Tea Workers Meet, December 2002. 2 Ibid. 11 crisis in the tea industry crisis in indian tea industry Large Plantations The Section 1 (4) of the Plantation Labour Act (PLA) 1951 3 provides a legal definition for the plantations. It states: A plantation is any land used or intended to be used for growing tea, coffee, rubber, cinchona, or cardamom which measures 5 hectares or more and in which fifteen or more persons are employed or were employed on any day of the preceding twelve months. Most of these plantations are situated in remote and uninhabited areas, where crops have not been previously grown. The plantation workers are usually immigrants. These labourers are often provided housing in the estates itself along with shops, basic services and recreation and cultural facilities. 4 These labourers are incorporated into a new form of society, the pattern of which is dictated by the management of the plantation and designed solely to suit the needs of the plantations. The owners of the tea plantations are also the rulers of their principality. 5 These plantation structures have been often criticised as being enclaves, alien and inward looking and cut off from all links with the surrounding people and economy. 6 The labour is hired from outside and given housing and incorporated into a new form of society, the pattern of which was dictated by the management of plantations. The owners of tea plantations were also the rulers of his principality. 7 Profiles of Some Big Tea Companies Hindustan Lever Hindustan Lever Limited (HLL) is Indias largest foods and beverages company. It also holds a leadership position in consumer goods, personal care products and speciality chemicals. It has around 36,000 employees, including 1300 managers all over India. HLL is a subsidiary of the multinational Unilever Ltd, which holds 52 percent of the equity. 8 Unilever is a Fortune 500 multinational, which sells over 1000 food, home and personal care brands through 300 subsidi- ary companies in 88 countries worldwide, with products on sale in another 70 countries. Unilever dominates the world tea industry, spanning plantations, processing and marketing. The acquisi- tion of Liptons in 1972 and Brooke Bond in 1984 effectively made Unilever the worlds largest buyer and distributor of tea. 9 At present, it handles 19 percent of the world tea production and has around 16,000 hectares of tea plantations in Kenya, Tanzania, Malawi and South Africa. 10 HLL has 15 tea estates and factories distributed between South India and Assam with a planted area of over 6800 hectares. The tea estates under HLL are currently witnessing significant growth 3 The PLA of 1951 was enacted by the parliament to provide for the welfare of and regulate the conditions of plantation labour. 4 Edgar Graham & Ingrid Floreing, The Modern Plantations in the Third World (London, Croom Helm, 1984), p.25. 5 G. E. Beckford, Persistent Poverty: Under-development in Plantation Economies of the Third World. (London: Oxford University Press, 1972), p. 75. 6 Graham & Floreing, n. 4, pp. 33-35. 7 G.E. Beckford, Persistent Poverty: Under-development in plantation economies of the Third World (London: Oxford University Press, 19723), p. 75. 8 The official website of the Hindustan Lever Ltd.< http://www.hll.com/HLL//businesscat.html> 6 Sep. 2001. 9 Unilever Tea <http://www.unilever.com/co/oc.html> 5 Oct. 2001. 10 Ibid. 12 crisis in indian tea industry in tea production after a few years of low productivity. In the year 2000, the tea production in HLLs plantations increased from 97,088 to 107.209 tons, which is an increase of 10121 tons. Their tea gardens in Southern India registered an increase of over 6 percent in the year 2000 to achieve an all time record average yield of 3419 kg per hectare (compared to an industry aver- age in South India of around 2400 kg). The yield per hectare from the Assam gardens at 2433 kg is again amongst the best in the industry (compared to an all Assam Industry average of about 1800 kg). 11 Almost all the tea produced at these plantations is now being used to support HLLs various packaged tea brands. The leading HLL brands of packaged tea are Brooke Bond Red Label in the premium segment and Brooke Bond A1 targeted at the lower end. Apart from these brands, HLL has several other brands like Lipton Yellow Label, Green Label, Taaza and Brooke Bond A-1, 3 Roses, Super Dust, Top Star, Ruby Dust etc., positioned in different price segments. Tata Tea Limited The Tata Group is one of the biggest industrial houses in India with interests in diverse busi- nesses such as steel, automobiles, tea, hotels, information technology and chemicals. Tata Tea has more than 50 tea estates in India. 12 It was the first tea company in India to set up processing and packing facilities at the tea estates itself. Tata Teas Curl Turned and Cut (CTC) factory at Kakajan in Assam processes nearly 0.1million kg. of tea per day. It also has a fully automated advanced tea factory at Madupatty in Munnar, Kerala. The instant tea manufacturing facility for exports, located at Munnar, is the largest instant tea factory outside USA. 13 Presently, Tata Tea is the leading tea plantation company in India and the largest integrated tea producer in the world. Tata Tea was incorporated in 1962 as Tata Finlay Ltd, and commenced business in 1963. Initially the company started with the instant tea factory at Munnar, Kerala and a blending/ packaging unit at Bangalore. The Company had a technical and financial collaboration with James Finlay & Co. Glasgow, UK. In 1976, it acquired the Indian interests of James Finlay & Company along with its 7 associate sterling tea companies. 14 Tata also acquired the foreign holdings of James Finlay and Mcleod Russell in December 1982. Consequently, in 1983, the Companys name was changed to Tata Tea Ltd. Tata Tea on March 31, 2000 acquired the entire shareholding of the worlds second largest branded tea company, Tetley Group Limited, for 271 million. Tetley has a major presence in many coun- tries and primarily blends, packs and distributes tea products (mainly in tea bags) in Canada, Australia, USA, and number of European countries including Poland, UK and Russia. It is the largest selling tea brand in the UK and Canada. The Tetley Group is still a profit making company with a good cash flow. 15 The acquisition of Tetley has made Tata Tea the second largest tea 11 Hindustan Lever Ltd, n. 8 12 India Infoline Sector Report on Tea, www.indiainfoline.com 13 Tata Tea Ltd, <http://www.tatatea.com/varied.html> 26 Sep. 2000. 14 It was said that a consideration of about Rs115million was paid through issue of equity shares (Rs19.8million) and Rs. 95million was retained as unsecured loans at 5% p.a. interest. (Tata Tea, http://www.indiainfoline.com /comp/tate/mr01.html , 20 Jan 2002. 15 Tata Tea Ltd, Directors Report (Kolkata, 31st July, 2000). 13 crisis in the tea industry crisis in indian tea industry multinational company in the world. Tetley has six production centres - two in both UK and USA, one in Australia and India each and all these centres have state-of-the art technologies and the latest facilities for tea bag packaging. Tata Tea has also witnessed a major growth in tea production. It went up from 71.1 million kg. in 1998 to 78.7 million kg. in 2000 to comedown at 73.4 million kg. in 2001. Most of the tea is sold in the packet form under various brand names. Tata Teas flagship brand has a 12 percent market share. Other Tata Tea brands are Kannan Devan, Chakra Gold, Gemini, Agni, and Lucky Cup. The Tata Teas brands have a dominant hold over the markets in Southern India. Tea Small Holdings Technically the growers holding up to 10.12 hectares under tea are considered small growers. In India, the small growers are mainly located in Nilgiris, Tamil Nadu but the numbers of small growers are growing significantly in West Bengal and Assam as well. In the last 10 years, there has been a phenomenal growth in the small growing sector as compared to the traditional organ- ised tea sector in terms of area and production (See Table 2). At present there are around 230000 small growers engaged in the tea production. Table 2: Small growers vs. Organised sectorte ( Heading 1991 2001 Cumulative Growth Rate (%) Area (Hectare) Smal l Growi ng Sector 25108 101000 14. 9% Organi sed Sector 395362 406196 0.3% All India 420470 507196 1.9% Production (M Kg) Smal l Growi ng Sector 52 170 12. 6% Organi sed Sector 702 684 -0.2% All India 754 854 1.3% S o u r c e : I n d i a n Te a As s o c i a t i o n , 2 0 0 2 % ) During the course of the 8 th & 9 th Plan periods, a substantial number of agricultural farmers in Assam and North Bengal switched over to tea cultivation. During the mid 1990s, many small 14 crisis in indian tea industry farmers started taking up tea cultivation on a large scale due to good prices prevailing in the market during 1996-98. The contribution of this sector is now about 20 percent of all the tea production in India. Table 3: The profile of small growers Headings 1991 2001 Cumulative Growth Rate (%) Share in All India 1991 2001 No. of Holdings 33173 115000 13.24 ~ ~ Area under tea (Hec) 25108 101000 14.93 5.97 19.73 Production (M Kg) 52 170 12.53 6.92 19.91 Labour Employed 66000 230000 13.30 6.32 18.67 Source: Indian Tea Association, 2002 The Tea Processing Factories There has been a steady growth in the numbers of private tea manufacturing factories in India during the 1990s. At present there are more than 135 tea factories in Assam producing 50 million kg. of tea, 42 factories in West Bengal producing 30 million kg. of tea, 173 factories in Tamil Nadu producing 81 million kg of tea and 13 factories in Kerala producing 2 million kg. of tea. Most of the small tea farmers sell their green leaves to these factories, and the factories after processing the tea, sell it in the auctions. Table 4: BLF and Cooperative Tea Factories in India (2001)
S t a t e s N u m b e r Pr oduct i on ( M Kg) Assam 135 50 West Bengal 42 30 Tri pura 2 0.2 Hi machal Pr adesh 4 0.1 Tami l nadu 173 81 Keral a 13 2 Total 369 163. 3 S o u r c e : I n d i a n T e a A s s o c i a t i o n , 2 0 0 2 15 crisis in the tea industry crisis in indian tea industry Tea Auctions The tea auction system brings the buyers and sellers together, to determine the price through interactive competitive bidding on the basis of prior assessment of the quality of tea. 16 Manufac- tured teas are dispatched from various gardens/ estates to the auction centres for sale through the appointed brokers, on receipt of which, the warehouse keeper sends an Arrival and Weigh- ment Report showing the date of arrival and other details pertaining to the tea, including any damage or short receipt from the carriers. The tea is catalogued on the basis of their arrival dates within the framework of the respective Tea Trade Associations, the quantities are determined according to the rate of arrivals at a par- ticular auction centre. In North India, brokers catalogue teas in the order of their arrival, and as soon as the closing date for the catalogues of each sale is arrived at, the sale is closed and subsequent arrivals are printed in the next sale in some other centre. In South India, the total quantity that is offered is taken up for the sale. Registered buyers, representing both the domes- tic trade and exporters receive samples of each lot of teas catalogued, which is normally distrib- uted a week ahead of each sale, enabling the buyers to taste, inform their principals and receive their orders well in time for the sale. 17 The brokers taste and value the tea for sale and these valuations are released to the traders. Guidelines for the price levels likely to be established when the tea is sold are formulated on the basis of these valuations and last sale price. The date of auction varies within the various centres of auctions in India. Different days are set aside for separate auctions of leaf/dust orthodox/CTC teas respectively. On the specified days, auctions commence in the morning and go on till evening and each broker sells by rotation, while the buyers congregating in the auction hall, openly bid and outbid against each other to win the tea at the highest price they can afford. 18 The rate of sales in the auctions is at the rate of 2.5 to 3 lots per minute. There are rules govern- ing the division of each lot among various buyers and the rate of bidding. As soon as the tea is knocked down under the hammer, the sale becomes binding on the buyer and seller alike. De- livery orders of the teas purchased by the buyers are then issued by brokers on prompt pay- ments made by the buyers as settlements following the sale, which when they present, the buyers take delivery from the particular warehouses and arrange for their dispatch to the con- sumer centres in India or abroad. The sellers are simultaneously sent documents confirming the sale of tea and the payments made by buyers remitted to their bank accounts. The brokers play a very crucial role here as well. They are solely responsible for collecting the sales tax form from the buyer and the brokers account sales are taken as sufficient proof by the sales tax authorities for the collection of the sales taxes. 19 The Calcutta Tea Traders Association (CTTA) plays the role of arbitrator who amicably settles any claims that may arise regarding quality or quantity discrepancies. The system of tea auctions which begun in the year 1861 has become the integral part of selling tea in India. 16 Mahendra P. Lama, Integrating the Tea Sector in South Asia: New Opportunities in the Global Market. South Asian Survey, 8.1 (2001), p.75. 17 Tea Web. Auction System. March 02, 2002 <http://www.teawebex.com/html/auction.html>. 18 ibid. 19 Tea Web, n. 17. 16 crisis in indian tea industry Chapter II General Observations on Vulnerability of Tea Garden Workers in Kerala 1. The enclave economy of plantations is built on the principles of exclusion, dependence and heightened vulnerability. Plantation workers are completely dependent on the plan- tations management for water, electricity, firewood, food, health and education. 2. Plantations supply water to the worker households from a common water tank. Interrup- tions in the supply of electricity stop the supply of potable water immediately and com- pletely. People have no other option but to fetch water from available sources kilometers away, usually down the hill, and in most cases, from scarce and contaminated sources. This contaminated water affects the hygiene of individuals, families and the plantation as a whole and increases recurrences of chronic water borne diseases. 3. Hospitals stop functioning when plantations close. Hospitals are exclusively run by the plantations and the doctors, nurses and health assistants are paid by the management and medicines are provided by them too. 4. In West Bengal and Assam, food is part of the wage packet. In Kerala, food is not part of the wage packet but the workers get subsidized food from ration shops. However, at both places, the closure of plantations forecloses peoples ability to access food, push- ing people to the brink of starvation or acute mal-nutrition and even death. People tend to opt for cheaper or available sources of food, resulting in chronic under-nourishment or food poisoning and slow death. 5. The temporary workers are from the permanent workers households. Permanent work- ers are mostly women, because in Kerala, plucking is a continuous activity and women usually do the plucking. Temporary workers, usually men and other adults in the house- hold, get work only for a few months in a year. As the main wage earners, women work- ers are under tremendous pressure. They are restricted by a lack of skill into entering other income earning activities, absence of alternate employment opportunities, unfavourable conditions to migrate long distances in search of alternate opportunities of work. They live through the experiences of husbands committing suicides, children starving and discontinuing their education, and seeing off daughters to far away places, in inse- cure conditions for jobs and voluntary or involuntary sale of their bodies. 6. The State government currently provides education, beyond the primary level. However, the elementary schools are far away from the plantations. Children usually have to travel more than 30 km every day, the transportation costs are partly borne by the plantation. This stops when plantations close down. Children stop their education because they have no money to commute to the nearest functional school (if any), no provision to carry food, no means to purchase books or other educational materials and in most cases no money to purchase the essential school uniforms. School children experience 17 crisis in the tea industry crisis in indian tea industry humiliation and prefer discontinuation of studies. Children may also stop going to school to augment parents income and look for elusive avenues of alternative income. 7. The plantation workers do not have rights over the houses in which they live. They may have lived in these houses for generations, but it remains the property of the plantation. The live threat of eviction and the absence of alternatives increase peoples sense of dependence on plantations and their incapability to respond to injustice. 8. Moreover, the plantation workers do not have access to any land, which could be utilised for subsistence cultivation or rearing of cattle. This situation denies any alternative in- come generation for plantation households. 9. The only income for plantation workers is the wage income, from either permanent or temporary work in the plantations. Once the plantations stop providing wages, workers face a sudden and dramatic loss of income. This pushes them to the brink of starvation and a feeling of helplessness in meeting the essential requirements of living, like buying essential food items, purchasing cloth for themselves and school uniforms for their chil- dren, paying fees and providing for the purchase of educational items, providing for the transportation expenses of their school going children, providing for the health require- ments for themselves and their family members and providing for even the basic needs of the elderly, physically challenged and sick among them. 10. When this happens to one family, others can help them. When it happens to a group of workers in one plantation, it could still be thought as manageable; when it happens to one plantation, workers may still explore possibilities of work in other plantations. But, when it happens in plantations one after another, affecting thousands of workers and their dependents, it develops into a situation of disaster, a calamity. It is important to note that the workers do not have any control over the factors that lead to the calamitous situation. 11. Fourteen plantations in the Peermadu and Vandiperiyaar regions of Idukki district, Kerala have closed down, rendering about twenty thousand plantation workers jobless and their family members are at the brink of starvation. Five plantations have closed down in the Ponmudi region of Thiruvananthapuram district, affecting about 5000 workers and their dependents. 12. How has this calamitous situation come about in the tea plantations of Kerala? Who could be responsible? What are the crisis affecting tea plantations and what are the factors that brought about this crisis? How have various stakeholders, the planters, the government, the trade unions and the public responded to this crisis? What should be done immediately to mitigate the sufferings of the people dependent on tea gardens for their survival and livelihood? What long term measures could be taken to address the causative factors of the crisis? The Fact Finding Team addressed some of these signifi- cant questions during its mission. 18 crisis in indian tea industry Chapter III Tea Plantations in Kerala The plantation sector plays an important role in the economy of the State contributing around Rs.2911/- crores to the States GDP, which comprises 44.72 percent of the total agricultural income and 10.38 percent of the States income. Kerala is the only State with a substantial stake in all the major plantation crops of tea, rubber, coffee and cardamom. It accounts for 45 percent of the planted area and 71 percent of the production of the plantation crops in the country. Plan- tations are labour intensive and provide round the year employment mostly in rural and backward areas where there is no other alternative employment opportunity. It is estimated that plan- tations directly employ 4.45 lakh persons and around 10.13 lakh growers earn their livelihood in this sector. In other words, a total number of 49.42 lakh persons or 17 percent of Keralas population are dependent on the plantation industry in Kerala. Plantations are the mainstay of Keralas economy, particularly in the rural sector. 1 The 1999-2000 data shows that Keralas poverty is only 12.72 percent compared to the all-India figure of 26.30 percent ranking it fifth among states, allowing for the effects of a remittance economy. This achievement in spite of low or moderate economic growth further validates Keralas human development focus. The Human Poverty Index (HPI) using the UNDP methodology (Index of survival deprivation, deprivation of education and depri- vation in economic provisioning with respect to safe water, health services and under-nourished children) is 0.15 for Kerala whereas it is 36.7 for the whole country. Similarly the Human Development Index (1995) (Index of life expectancy, educational attainment and income) for Kerala has been calculated as 0.628 whereas it is only 0.451 for the whole country. Against the total area of 4.38 lakh hectares under tea (2001) in the country Kerala accounts for only 0.37 lakh hectares. In respect of production, Kerala retains its share of eight per cent. Tea plantations owned by big companies employ a labour force of over 84,000 in the organised sector. Of late, small plantations of tea have started emerging in Idukki and Wayanad districts. Tea has a prominent place in Keralas Plantation Sector; in 2001, Kerala produced 69355 tonnes of tea from 36762 hectares of tea plantations in 154 estates. The State accounts for about 34 percent of the tea produced in South India and 10 percent of the national output. The tea planta- tions directly employ 98000 workers. Tea estates in Kerala are spread over the districts of Idukki, Thiruvanathapuram, Wyanadu, Kottayam, Palakkad, Kollam, Alappuzha, Malappuram, Trichur and Pathanamthitta. However, concentration of tea is in the districts of Idukki, Wyanadu, Palakkad and Thiruvanathapuram, in that order, according to the production figures in 1998-99. 1 Draft of the White Paper, The Association of Planters of Kerala, 2003 19 crisis in the tea industry crisis in indian tea industry Table 5 Area Under Tea in Kerala - Districtwise
District 1994-95 1995-96 1996-97 1997-98 1998-99 1 Thiruvananthapura- m 965 965 965 965 965 2 Kollam 1258 1258 1258 1258 1257 3 Pathanamthitta 91 91 91 91 91 4 Kottayam 2063 1947 1947 1947 1951 5 Idukki 23435 23402 23375 23375 23419 6 Eranakulam 2 2 2 2 2 7 Thrissur 496 505 523 523 529 8 Palakkad 825 829 829 829 829 9 Malappuram 174 174 174 174 174 10 Wayanad 5436 5432 5438 5438 5473 State 34745 34605 34602 34602 34690 Source: Agricultural Statistics, DES (http://www.kerala.gov.in/dept_planning/ecnomicrvw_04.htm) In 1998-99, of the 34690 hectares of tea grown in Kerala, 67.5 percent was grown in Idukki district. In Idukki district, tea is grown in Peermade, Udumbunchola and Devikolam taluks. Ac- cording to 1991 Census, the total area of the district is 5019 sq.km. with a population of 10.78 lakhs. The district accounts for 12.91 percent of the geographical area of Kerala State. Idukki is one of the districts in the state where linguistic minority exists. While the population of the district constitutes only 3.7 percent of the state, the migration to the highland region started before the formation of Kerala at the end of 19 th century. Tamilians came as plantation workers of the European planters in Peermade, Udumbanchola and Devikulam taluks. 2 According to the figures provided by the Association of Planters of Kerala 3 , of 154 estates in Kerala, Central Travancore has 36 estates covering 10,100 hectares of area and employing 2 http://www.kerala.gov.in/panchayat_statistics2001/idk_shis.htm 3 The Association of Planters of Kerala is a Company incorporated principally to look after the interests of the Member Plantation Compani es who grow t ea, coffee, cardamom and rubber i n t he St at e of Keral a. The primary objective of the Association is to represent producers interests at various forums and strive for the promotion of plantation commodities. (petition submitted before the Standing Committee of the Ministry of Commerce, 2002) 20 crisis in indian tea industry 26,000 workers. Temporary workers directly employed in these estates would constitute an equal number. As observed earlier, majority of these workers are Tamil immigrants. Table 6 Profile of Tea Industry - Kerala and Central Travancore Kerala Central Travancore No. of Estates 154 36 Area (Hectare) 37000 10100 Production 66 million kgs 15.9 million kgs Yield (Kgms/Hectare) 1863 1600 Labour Employed 98000 26000 Source: Petition submitted before the Standing Committee of the Ministry of Commerce by the Association of Planters of Kerala, 2002 The 36 estates in the Central Travancore are located in the Peermade 4 and Vandiperiyar 5 re- gions (Peermade Taluk and Azhutha block) of Idukki district. These are owned by 16 companies namely: 1. Peermade Tea Co. 2. MMJ Plantations 3. Pullikanam Estate 4. Haileyburia Estates 5. RBT Group I & II 6. Hope Plantations 7. A.V. George 8. Malamallay Estate 9. Churakulam Estate (MMJ) 10. The Karimtharuvi Tea Estate Ltd. 11. Harrisson Malayalam Ltd. 12. Aban Loyd Ltd. 13. A.V.Thomas Co. 14. Alampally Estates 15 .Periyar Connemara Estate 16. Chidambaram Estate 4 Peermade, the famous plantation town, takes its name from the Muslim saint Peer Muhammed, a close associate of the erstwhile royal family of Travancore. The tomb of Peer Muhammed is situated at Kuttikkanam about 6 km from Peermade. 5 This town situated 18 km from Thekkady, lies on the Kottayam Kumily road. The river Periyar flowing through the centre of this town nourishes its vast area. This is an important commercial centre in high ranges. 21 crisis in the tea industry crisis in indian tea industry The yield and production of tea in the Peermade and Vandiperiyar regions (Central Travancore) are as follows: Table 7 Yield Level and Production of Tea in Central Travancore, Idukki District, Kerala Year Kgs/hectares Production from Estates in Million Kgs Total Production including Small Growers in Million Kgs 1999 2210 22.40 23.60 2000 2186 21.90 23.70 2001 1940 18.30 21.50 2002 (till Sept.) 1300 9.66 12.00 Source: Document supplied to the Fact-Finding Team by the Central Travancore Planters' Association 6 through Vazhoor Soman of AITUC. In the Ponmudi region of Thiruvanathapuram district, the major plantations are owned by Mahavir Plantations and Jay Shree Tea & Industries Ltd. In Wayanadu, Assam Brooke Company is the major planter. 6 CTPA Office, Glenmary Estate, Glenmary P.O., Idukki District, Kerala 22 crisis in indian tea industry Chapter IV Observations from the Field Visit Both the Tamil Nadu and Kerala groups of the Fact Finding Team met in Coimbatore on January 21, 2003 with the objectives of introducing themselves, identifying major concerns and working out logistics. The field visits were carried out from January 22-26, 2003 in the respective areas. The Kerala Fact Finding Team visited the Bonacadu and Jay Shree Plantations in Ponmudi, Trivandrum district 1 on January 22, 2003 and Peermade Tea Co., Pasumalai, Vagamon, Alampally and AVT in Peermade Taluk of Idukki district 2 on January 24-26, 2003. Crisis in Kerala Tea Plantations The tea plantations in the major tea growing areas in the State, namely, the Central Travancore, Ponmudi and Wayanadu are reported to be facing a crisis. However, Munnar, another tea grow- ing region of Idukki district remains relatively unaffected. Moreover, a few plantations in the Peermade and Vandiperiyaar region are also unaffected by the crisis. This raises questions on the reasons for the crisis, and how some plantations managed to overcome it. Profiles of Visited Tea Plantations Bonacadu Tea Plantation The Bonacadu Tea Plantation is situated in the Vithura Panchayat of the Nedumangadu Taluk, Trivandrum district, in the foothills of the Agasthya Mountain range and surrounded by Paruthippally-Peppara Game Sanctuary. The company, which has a history of more than 100 years, is presently owned by Shailesh Bansali and Brothers of Mahavir Plantations 3 . Of 519 hectares owned by Bonacadu plantations, tea is grown in 376 hectares; cardamom in 76 hect- ares, rubber in 50 hectares and pepper, coco- nut etc. in 15 hectares. 460 permanent workers and 150 temporary workers are employed in the plantation. The Mahavir Plantation has other estates in Tamil Nadu. The management closed down and fled from the plantation in 1999.The plantation has defaulted 1 Mr. Thankadurai of CITU leads the FFT to the tea gardens in Ponmudi, Bonacadu and Jayashree Plantations. Prior to the visits to the plantations, the FFT met Mr. Viswambharan at the CITU office in Nedumangadu. 2 Mr. Vazhoor Soman of High Range Estate Labour Union (HRELU), AITUC made all arrangements for Fact-Finding Teams visit to the plantations, meetings with employers at CTPA office, the President of CTPA, Panchayat officials in Vagamon and various trade union leaders. 3 (Mahavir Plantations Limited (Tea and Spices Exports and Steamer Agents) Mahavir House, Milne Road, Wellington Island, Cochin 682003) 23 crisis in the tea industry crisis in indian tea industry on plantation tax, electricity bills and panchayat tax. Electricity has been disconnected. As there is no water supply; the pipes have rusted and disintegrated. The estate hospital is not function- ing; there are no medicines, or the facility of an estate doctor or staff nurses. The estate school is almost dysfunctional, with less than fifty students attending. functioning; there are no medicines, or the facility of an estate doctor or staff nurses. The estate school is almost dysfunctional, with less than fifty students attending. Encounter with Workers It was pitch dark, when we visited the place. Crying children, weak, pale, ailing people; their stories of misery, poverty, starvation and their unsuccessful struggle for survival powered us. Till now 14 people have died in the plantations due to starvation and lack of medical facilities. Vijayakumari lost her child during delivery because there was no doctor to attend to her and the family did not have a penny to take her to the far away hospital. Unable to bear the poverty and starvation any more, 44 year old S Mani committed suicide. The relatives and neighbours could not raise sufficient money to cremate the body. When the factory was closed and the owner fled the estate, the workers plucked the leaves and sold it to the planter in Kolachikkara estate in Ponmudi. They were paid Rs.4 per kg. Since the factory is now sealed they cannot pluck the leaves any more. The workers in the plantation go for cabling work, to cut reed in the forests, to plant saplings and also do manual labour. Even such jobs have become rare because there is a scarcity of jobs whereas there is no dearth of workers. All the staff in the factory has abandoned the estate. The machines are rusting. The company houses given to the workers are dingy one room sets in a very dilapidated condition. There are no bathrooms or any sanitation facilities provided for the workers. People use the open area for defecating and the river for their ablutions. The management provided electricity but, since the company closed down owing lakhs of rupees the power supply has been cut off. 163 people who left their jobs have yet to receive their Provident Fund and gratuity. Workers are still owed 40 months of salary. The management has not compensated the workers except for 40 kg. of rice and Rs.1000. Out of this, Chief Minister Antony gave 10 kg rice during Christmas. There is a school up to the 5 th standard run by the management, but the school is not functional now because, there are no children. The workers are members of different trade unions. But they feel that none of the unions have intervened strongly enough to emerge from the present crisis. Trade unions will function prop- erly only when the workers get their wages, says Babu Divakaran, a worker in the estate. Swarna Bhai of INTUC, P Nayanar of CITU, Thankamani of BMS also feel the same. Many have come up with the idea of co-operatives, but no concrete steps have been taken in that direction. 24 crisis in indian tea industry According to the workers, the owner, Bansali owes Rs. One crore and eighty-five lakhs to the government and the workers. They believe that he has taken loans offered by the government and invested the money in businesses in foreign countries. The present crisis in the Bonacad Tea Estate is man made. The owner is the culprit who has cheated the government and the workers. He fled the place after making huge profits but the workers continue to struggle here in the closed enclave of plantations without money to buy food or medicine. Jayashree Tea Plantation (Merchiston Estate) He explained that low productivity, high labour cost and militancy of trade unions have contributed to the sustained loss. Labour cost is 70 percentof the cost of production. Land labour ratio is one worker per one acre. The Ponmudi Es- tate pays workers Rs.77.26 per day as wages, though in Tamil Nadu, there has been a reduction of 10 percent in re- sponse to the crisis. The factory had almost closed down. The garden covered about 400 hectares of land and had more that 1500 workers. We took the opportunity of visiting the estate hospital. It had a capacity of 11 beds. The standard of cleanli- ness was very poor. Since the doctor was not present, the two female staff members present could not throw any light on the availability of medicines as also on the Zero occupancy of hospital beds. The manager himself had stated that the estate does not have a school and children have to go to the government school, which is nearly 25 km. away. The frequency of government buses from the estate is one per hour. erved that no maintenance had been done since decades. Not only that there were no sanitary blocks as required. The workers seemed to be very worried because the factory had almost closed down. Encounter with Workers Padmini is a plucker in the Jayashree Tea Plantation in Ponmudi and she has been a permanent worker for the last 12 years. The manager of the estate S K Kardile says that the workers of his estate are paid Rs. 77.26 per day. Yet, what Padmini gets on the 10 th of every month is a wage at the rate of Rs. 70.00. Padminis husband Surendran is unemployed. Their two daughters (22 and 18 years of age) go to an NGO - Kudumbashree to learn basket weaving. Sometimes they get paid for the baskets 25 crisis in the tea industry crisis in indian tea industry they weave. This is the place we stay, says Padmini pointing to the one room set, which houses the entire family. There are six such houses in each worker line. There are 300 such houses in the estate. The houses do not have bathrooms or toilets. At the end of every worker line there are the so-called bathrooms and toilets earmarked for each family. Most of them do not have doors. Women do not use these for bathing. They go to the nearby river. The management has allowed them to plant fruits and vegetables in front of the quarter.The most commonly seen trees are papaya and plantains. Earlier most of the households had their own cattle and the company employed people to graze them. Now the management has with- drawn that facility as it says that the factory is a loss-making unit.How can we have cattle, when no one is there to take care of it? asks Padmini. The management has even stopped cattle grazing on the estate property, she adds. Padmini quite often falls sick. The most common illnesses are body ache, fever and stomach ache. Plucking is not an easy job, we have to stand for hours with the heavy load of tea leaves on our back, says Padmini. The workers, especially the pluckers have to stand throughout their working hours. According to the Manager of the estate, it provides medi- cal facilities for the workers. There is a hospital with 11 beds for the workers run by the company. Dr. Mathews and Nurse Beena take care of the patients adequately and the medicines are pro- vided free of cost. According to Beena, people who come normally are patients with cold, cough, body ache and diarrhoea. The doctor is there only for namesake. We cannot ap- proach him after dark, be- cause he wi l l be total l y drunk, says Padmini. All the workers in the plantation made the same comment about the doctor. If he gives us injection the pain lasts for more than three days and the medicines are almost same for all illnesses. He gives the same medicine and injection for our cattle also, she says. There is electricity in the houses provided by the company. Since the management says it is incurring a loss, the workers are scared about their future. Temporary workers are now seldom taken. They are on the look out for jobs outside the estate. More than 150 people have opted for the voluntary retirement scheme (VRS) from the factory. The workers in the estate fear closure at any moment. We were informed by the workers that other plantations in the region - Brymore Estate and Inborcauld Estate had also closed down. We did not visit those gardens. 26 crisis in indian tea industry Tea Gardens in Peermade Region Thungamullay Estate RBT (Rai Bahadur Thakur) group of companies have two divisions, RBT Group I, with four estates (Munjamullay, Pambanar, Nellikai and Thengakal) and RBT Group II, with five estates (Thungamullay, Pasumullay, Granby, Mount and Koliekanam) in the Vandiperiyar and Peermade regions of Idukki district. Thungamullay, part of RBT Group II, employs 246 permanent workers and around 250 tempo- rary workers. The estate has been closed down since March 2000; the management left the plantation unattended and the workers, destitute. No wages have been paid for the last 20 months; the Provident Fund has not been deposited for the last 4 years and bonus has not been given for the last 2 years. Electricity has been discon- nected to the plantation and therefore, in the worker lines due to non-payment of dues. The drinking water supply to the worker lines in the plantation has been stopped completely. The estate hospital is non-functional with no medicines, doctor or nurse. The houses are in a dilapi- dated condition as a result of age and the absence of maintenance. Plucking of tea leaves or the necessary agricultural work is not carried out formally. Workers under the guidance of the staff organise plucking with the knowledge of the trade unions and the plucked leaves are sold outside. Encounter with workers No: 2325 is what she is known as. A 46 year old woman, Mary has this check roll number establish- ing her permanent stature of work. She works in the Thangumalai estate in Injikkadu block as a plucker. There was pindrop silence when we visited Mary in a one room house. Her daughter in-law Palthankam (23) had lost her baby girl three days ago. The child had developed fever and became unconscious. Since the company hospital was not functioning the child was taken to the Cherukulam hospital, where the doctors informed them that as the case was serious the child had to be taken to the Kumili Periyar hospital, around 14 km. away. Neither Mary nor her son Ayyappadas (Palthankams husband) had the money to take 27 crisis in the tea industry crisis in indian tea industry the child to the hospital and the child died before they could raise enough money to do so. Mary, her husband Palani (56), her sons Ayyappadas and Mohanadas (20), their wives Palthankam (25) and Nagamma (23), Sophiya (2 ) her grand daughter - all stay in a one room company quarter. Mary is the only permanent worker in this house. When there is work in the plantations, Palani gets some manual work, as do Ayyappadas and Mohanadas. There is no bathroom, toilet or sanitation facility in the company quarter. There is no electricity either, as the company did not pay their electricity dues. They go to the well down the hill to fetch water. For the last 2 years there is no work in the estate. The owner and the managers have run away from the area. The staff in the estate has coordinated the plucking of leaves. They have allotted specified areas for each worker to maintain. The worker plucks the leaves of that particular area, which are later sold by the staff. The workers are paid Rs.210 per week as store-cash 4 . When it is off season (January April) and there are less leaves to pluck they get only Rs.75 per week. Mary was paid Rs. 76.90 per day. The government provided rations to the workers but, this rationing system lasted only 4 weeks. The rice that was given was of very poor quality and the children who ate it had dysentery, says Mariadas, a worker in the estate. The middlemen are also using this opportunity to get labourers to work outside Kerala. Jagadammas (Check Role No: 2328) daughter was taken by Pushpakar, a contractor to Gujarat. Padmini, Maya, Nabeesa and Sara had similar stories to narrate about women being taken by contractors to different states especially to Gujarat for the shrimp processing units. Last year many people left the state but came back immediately. Many of them said that they were not given the salaries which they had been promised and also because the climate did not suit them. The contractors take only young people - especially girls of 18 to 20 years. There is a hospital but, it is non-functional. Nurses, Ayyamma (53) from Rajapalayam (working for the last 35 years), Anikkutty (48) from Changanasseri (working for the last 15 years) say diarrhoea, vomiting, jaundice, skin diseases and body-ache are commonly seen among the work- ers. Suma, a permanent worker says that she falls sick quite often and they have to go to the Churakulam hospital which is far away, for treatment. Her husband, a manual labourer very rarely gets work. The collection of firewood adds to their woes as they have to walk at least five kilometres to gather firewood. If I manage to get some money, I prefer to buy firewood rather than collecting it from such a distance. 4 people died in the estate last year. None of the workers families were given compensation or 4 During regular working conditions, the weekly payment given to the workers is called store-cash; which would be settled at the end of the month against monthly wages. Currently, workers were given only store-cash. 28 crisis in indian tea industry any other entitlement. Anthoniyamma, a permanent worker was granted gratuity after her death. This amount was granted only after Vazhoor Soman of AITUC filed a case. He has filed 400 such cases for the workers in the plantations. Pasumullay Estate Pasumullay Estate, part of RBT Group II, is located in the Vandiperiyar region of Idukki district. In two divi- sions, it employed 340 per- manent workers and around 500 temporary workers. Pasumullay Estate has been closed down since March, 2000. The management has left the estate. Wages have not been paid for the last 20 months. Provident Fund has not been deposited for the last 4 years. Bonus has not been given for the last 2 years. Electricity has been disconnected in the plantation and therefore, in the worker lines for non- payment of dues. Drinking water supply to the worker lines in the plantation has been stopped completely. The estate hospital is non-functional with no medicines, doctor or nurse. Plucking of tea leaves or the necessary agricultural work is not being carried out formally. Work- ers under guidance from staff organise plucking with the knowledge of the trade unions and the plucked leaves are given outside. Encounter with Workers 14-year-old Velankanni of Pasumullay estate committed suicide. She hung herself from the ceil- ing of her house. Utter poverty and starvation were the reasons for her decision to end her life. The immediate cause was that she did not have a school uniform. The doctor who did her post mortem says that there was no sign of food in her intestine. The people who saw her body say that her underwear was threadbare and full of holes. The girls stark poverty no food to eat, no dress to wear, no books to study - what does it reflect? It is a manifestation of the vulnerability of the members of the crisis-ridden families in the closed and abandoned tea plantations. Mariaselvam, Velankannis 45-year-old mother was in tears when she tried to explain how dear her daughter had been. Her husband Chinnapparaj could not control himself while narrating the incident. Mariaselvam has been a permanent staff member for the last 27 years. Besides 29 crisis in the tea industry crisis in indian tea industry Velankanni, she has two sons and a daughter. The estate had 17 staff out of which only 4 remain in the estate. Though the owner has aban- doned the factory, the staff and workers are trying to manage it by plucking, pruning and main- taining the bushes. 300 permanent workers are allotted specific bushes to pluck and maintain. They are paid Rs.100 to Rs.150 weekly, according to the quantity of the leaves they pluck and the supervisors get Rs.240 and the staff Rs.250. According to workers, the estate owes Rs.67 lakhs for electricity. When the owner fled, there was no one to pay the money. The workers quarters do not have electricity nor do they have drinking water. They walk 5 km. to the Periyar River for bathing, washing and to fetch drinking water. There is no way to send our children to school, the drop out rates have increased tremendously, says Jaykumar. How can we send them to school if we cannot provide them with at least one meal a day, he questions. 100 children might now be studying in the school; but children are increasingly dropping out. The eating habits of the people have changed a lot. They have stopped buying meat. They pick up the cheapest vegetable available in the market. They have exhausted all their savings. No new clothes are bought during the new season or at festival times. Some of the temporary work- ers in the factory have gone to Tiruppur in Tamil Nadu to work in the garment factory. In both the divisions of the estate, there were 14 deaths. Three were suicides due to poverty and debt and 12 due to the lack of medical facilities. Besides this, there were 4 cases of unsuccessful suicide attempts in the estate. Chinnayya who retired in 1996 did not get a penny from the fac- tory. His daughters marriage, which was already fixed, could not take place because there was no cash available. He pleaded with the management for help. Unfortunately, he died of a heart attack. According to the workers, the crisis in the estate is mostly due to mismanagement and partly due to the fall in tea prices (70 percent mismanagement and 30 percent is due to the falling prices.) The assets of this company are worth Rs 80 crore and the debt the company has is Rs.60 crore, says Vazhoor Soman of AITUC. Jayaraj, a supervisor in the estate, continues to live in the estate premises. N Dasan, the watcher, does his work loyally. The company does not pay a penny to these people. Yet,,they continue to look after the bushes and the machinery The management may come back one day, to start afresh. At that time every thing should be in order, says Jayaraj. They are loyal to the estate. For them the estate is the only option for survival. The estate will start functioning again - this is the expectation that keeps the workers alive. 30 crisis in indian tea industry Vagamon Estate Part of MMJ (Mi chael Manarcadu Joseph) Planta- tions, Vagamon Estate is in the Vagamon Panchayat of Idukki district. MMJ Planta- tions have two other estates i n the regi on, namel y Kottamalai and Bonami. All the three estates together have an area of 895.14 hect- ares and employ 1650 per- manent workers. All the three estates are non-functional since October 2002. In the Vagamon estate, however, salaries to the workers were not paid since July, 2001. The electricity supply to the plantation, to the factory and the worker lines was disconnected. There was no provision for drinking water. There was no ration supply, and workers did not have cash to buy provisions from the market. Children stopped going to school. The estate hospital was completely non-operational. The houses of workers were in a dilapidated condition with cracked walls and disintegrating roofs. Trade Unions took the initiative and divided the bushes among the workers. The workers pluck the green leaves and sell them outside. Encounter with Workers 14-year-old Aneesh in the Vagamon estate has been bedridden for the last 6 months. He is totally immo- bile. At times, he convulses violently His illness started with fever and spells of sudden unconsciousness. Aneesh was an 8th standard student in the Vagamon school. Now he has to be fed, dressed and all his needs have to be taken care of. His parents man- aged to take him to Kottayam Medical College Hospi- tal, where he had three brain scans. Every day he has to be given 12 tablets which, cost about Rs.300 per week. His mother Saraswathi is a permanent worker with MMJ Vagamon estate. The 31 crisis in the tea industry crisis in indian tea industry trade unions have divided the estate and she has 2000 bushes to maintain. She never gets more than Rs.100 to Rs.150 a week. Aneesh has three sisters and one brother - Mahalakshmi, Subbulakshmi, Anitha and Jayakumar. His father Nagayyan is jobless and is rarely able to pick up some manual work. Since the child requires 24 hours attention, he stays back with the child. 28-year-old Reji committed suicide by consuming poison leaving his mother Kaniyamma at the mercy of others. Rejis 3 month old son and his wife are in Ettuanoor, his wifes house. Kaniyamma is a permanent worker but there is no work at the factory. Reji who used to pick up temporary work at the plantations was at a total loss when the company closed. He did not have any other means of survival. The only person whom he could depend upon was his mother, but when she also did not get work, there was no way for him to survive. Unbearable poverty and the added pressures of the newborn child made him take this drastic step. Davids polio affected child requires medicines worth Rs.200 a week. She has studied upto the 7 th std. but, now the parents are not sending her to school. She may fall somewhere on the way because the medicines are not regular, says David. Davids wife goes out for manual work but it is not enough to help give them a decent survival. Palraj committed suicide after sending his wife Karuppamma to Tirunelvelli. His son Kanakaraj had gone to Tiruppur in search of a job when the mishap occurred. Palraj did not get any benefits from the tea plantations for which he was working. He had not been paid for 16 months and unable to look after his wife and children, Palraj ended his life by consuming poison. Kashi his neighbour and friend found him in a critical condition and took him to Kottayam hospital, but it was of no use. 58 year old Pazhani Swami says he is scared to stay in his house as it can collapse at any moment. All the quarters in that estate are in the same condition. The house is worse than a cattleshed and the roof leaks if it rains. The workers were given 6 weeks ration but, at present there is no ration. They have to walk more than a kilometre to fetch water. Gomathy who is a permanent worker does manual labour. Her husband left her and migrated to some other city. The Christian Sisters in the nearby Convent adopted one child and another daughter stays with her. Vasanthys problem is worse. One among her two sons has a kidney problem. 4 year-old Binu requires proper treatment, and good food, but in this situation of utter poverty and starvation how can she expect to feed her children. 50-year-old Chudala committed suicide because of poverty. 32 crisis in indian tea industry Meeting with Ashok Alampally, President, AKPA Ashok Alampally squarely blamed the export and import policy of the government for the crisis in the tea industry. He said that the government of India is not giving importance to tea because it has ceased to be an important foreign exchange earner since 1990. The Government of India imposes uniform excise duties on the export of tea, despite huge differences in the quality of tea from region to region. Vandiperiyar accounts for the second lowest quality of tea in India, yet it has to pay the same excise duty. In 1977, the Government of India imposed an export duty of Rs.5 per kg. It was removed in 1979. The export of CTC tea was banned during the period 1983-84 in order to bring down the price of tea in the domestic market. In 2001, the NDA government imposed a uniform central excise duty of Rs.2 per kg of tea, which was brought down to Rs.1 in 2002. He argued that tea, which is already under the Essential Commodities Act, is a mass consumption item, and therefore, should be free from Excise Duty. Table 8 Taxes and Duties Levied on a Tea Plantation Ce n t r e State Local Bodi es Income Tax Agricultural Income Tax Professional Tax Cess under the Commodity Act Plantation Tax Building Tax Excise Duty Land Tax Sanitary Tax Sales Tax/Purchase Tax Water Tax Central Sales Tax Lighting tax Factory Li cence Fee Drainage Tax Li cence Fee for Machinery Source: ' Draft of t he Whi t e Paper' , The Associ at i on of Pl ant ers of Keral a According to Ashok, the Indian tea industry has been ruined by the Russian market, where bulk tea was exported without any value addition. Once the Russian market was lost, it was not easy to capture other entrenched markets. This has resulted in an oversupply of tea in the domestic market. The crisis in the tea industry can be overcome if the Government of India facilitates the export of tea. He expressed concern that no value addition is taking place in duty free import for export, though major exporters and brands are engaged in this exercise. According to him, the import of Sri Lankan tea will not make a significant difference in the Indian market. 33 crisis in the tea industry crisis in indian tea industry Historically, Vandiperiyaar did not have a lobby and therefore our interests were not protected. Besides our contributions to the Tea Board (0.30ps per kg. of tea sold), we are paying a high agricultural income tax. Our hands are tied, we cannot do anything. Meeting with the Central Travancore Planters As- sociation (CTPA) The FFT had a rare opportunity to meet the managers of many tea plantations in Vandiperiyaar at the Vandiperiyaar Club, Peermade. Among the participants were Mr. D. B. King, General Manager (Opera- tions), AVT; J. Jayachandran, Group Manager, Hope Plantations; Vinay Maira, Group Manager, Harri sons Mal ayal am Ltd; B. Ambalatharasu, General Manager (Plantations), RBT and George P. Jacob, Manager, Churakkulam Tea Estates. Besides the Fact-Finding Team members, Vazhoor Soman of High Range Estate Labour Union (AITUC) also attended the meeting. CTPA presented the incongruity between the fall in prices and the increase in wages the most important factor that affects the survival of the tea industry. In 2001, compared to 1998, the prices realized came down 29 percent, while wages went up by 27 percent. Wages increase once in three years and DA increases every year. The DA increase is based on the Consumer Price Index (CPI) of Cochin since there is no CPI for Peermade. Table 9 Wages and Average Tea Auction Prices Year Auction Prices per kg of tea (Cochin) Wages per day 1998 73.39 59.41 1999 62.04 67.68 2000 51.33 72.66 2001 52.21 75.62 2002 43/44 77.26 Source: As given by CTPA during the meeting with FFT 34 crisis in indian tea industry The CTPA alleged that Kerala is the only place where the government declares a negotiated wage as the minimum wage. Wages in tea plantations are negotiated with the Plantation Labour Committee, a tri-partite body. The negotiated wage is Rs.77.26 in Kerala, which the government has declared as the minimum wage. This should be seen in contrast to the situation in Tamil Nadu, where the negotiated wage has been brought down by 10 percent due to a fall in tea prices and the declared minimum wage is Rs.50. Besides negotiated wages, the labour cost includes other benefits such as Provident Fund, gra- tuity, medical benefits, crche, sanitation etc. Considering all these, the CTPA argued that wages constitute 65-70 percent of the cost of production. Secondly, the CTPA argued that wages in Kerala are not linked to productivity. In Kerala, the standard output of plucked tea is 12-16 kg per worker per day, for which the wages are fixed. Besides this, workers get an incentive at the rate of 42 paise for 16-26 kg of additional tea plucked, 47 paise for 26-40 kg. of tea plucked and 50 paise for 40 kg or above. The CTPA alleges that the ongoing standard output has been fixed in 1952, when the yield per hectare of made tea per hectare was 652 kg. Now the yield per hectare of made tea has gone up to 1800-2000 kg in Kerala. Event then, the standard output has not been changed. It is imperative that the standard output be raised and the wages linked to productivity. Table 10 Cost of Production of Tea per kg (South India) in 2000-01
1998-99 1999-2000 2000-2001 Cultivation 7.72 7.76 6.97 Plucking 10.64 12.17 13.92 Manufacturing 7.04 7.06 6.96 Packing 3.79 3.80 2.75 Upkeep 3.23 2.97 3.08 Selling/Distribution 0.86 1.35 1.41 Welfare 7.47 8.41 9.28 Bonus 3.15 3.41 3.66 Head Office 4.85 4.35 4.19 Interest 1.71 1.90 2.46 Depreci ati on 1.96 1.96 2.28 Total 58.73 60.97 63.08 Source: UPASI, 2003 35 crisis in the tea industry crisis in indian tea industry They alleged that wage negotiations are a political game in Kerala; therefore trade unions are not willing to accept productivity-linked wages. Let us quote extensively from a document provided to us by the Chairman of The Association of Planters of Kerala, Plantations are highly labour intensive and labour wages and benefits constitute 50-60 percent of the cost of production. Kerala tea plantation wages are the highest for plantation labour in the world and the Kerala plantation industry has the dubious distinction of having the lowest labour productivity, lowest price realization and high cost of production. The standard output is the lowest in the country. Table 11 Comparison of Wages, Land and Labour Productivity and Prices with otherStates Kerala Tamil Nadu Assam West Bengal Labour Productivity 16Kgs. 25 Kgs. 20 Kgs. 24 Kgs. Labour Wages Rs.77.26 Rs.72.00 Rs.65.88* Rs.49.25* Minimum Wages Rs.70.79 -Rs.53.00 Nil Nil Land Productivity, yield etc. 1887 2468 1685 1909 Tea Prices South India Rs.43.79 North India Rs.66.17 *This includes concessions on food grains supply. The above coupled with the fact that plantations in Kerala, operate in relatively less congenial agro-climatic conditions, affects both land yields and tea quality, rendering the industry in Kerala to be very unviable. It is the above factors, which are particularly accentuated in the Peermade/Vandiperiyar area, that have led to the closure of 6 estates and 14 factories, where remedial measures have to be devised and implemented. And if timely intervention is not done many more estates will collapse. The industry has been requesting the trade union representatives in the PLC for substantial increase in the labour productivity since 1989. However, there has not been a positive reaction to the proposals made by the Industry. Realising the magnitude of the crisis and the plight of indi- vidual plantations, in the Tamil Nadu industry senior Trade Union leaders took the enlightened and pragmatic view that a time had come when sacrifice must be made all round and in the interest of salvaging the industry and in order to protect continued employment, agreed to a wage reduction by more than Rs.5, along with a substantial increase in productivity. While half a dozen plantations have closed in Kerala and many more are on the verge of closure, Tamil Nadu 36 crisis in indian tea industry was able to avoid a similar disaster because of the agreement for a moderate wage reduction coupled with higher labour productivity in the organised sector. It may be noted that out of nearly two lakh workers employed in Tamil Nadu plantations, only 60,000 workers receive wages at the settlement rates and the remaining 1,40,000 workers receive only about Rs.53 which is the statutory minimum wage in that State. The organised sector employing these 60,000 workers had the benefit of the recent reduction in the wages. The Governments declared policy on labour and industry is to link long term settlements with increased productivity. We would urge the Government to implement its policies without delay. The wage productivity linkage has a historic angle. Prior to 1950/1951 the daily crop to be har- vested by a plucker each month, fortnight or week was decided by the planter himself taking into consideration the agro-climatic conditions and the seasonal crop pattern. However, the Mini- mum Wages report of 1952 decreed an annual plucking average based on the crop from the years 1950-1951. The yield levels have since increased many fold but there has not been a suitable increase in the standard output. Besides, the threat of minimum wage revision has always made it impossible to really negotiate wage/productivity linkage. The result is there for all to see with ever rising wages and ever rising labour cost per kilo. In the recent wage reduction settlements, bills for two major planting regions in Tamil Nadu, the plucking scheme has been made more realistic enhancing the base outputs to 15 -30 kilos linked to green leaf yield of an estate for the moth cultured. Higher Wage or Continued Employment The question before us is whether the industry should survive with continued employment even if it means workers accepting a sacrifice in terms of a lower daily wage or higher wages and imminent closure of the estates. The Tamil Nadu experience is an eye opener, which the Kerala Trade Union Leaders should try and emulate. In the current scenario, the employment is more important than the wage level. Therefore, the workers and the trade union leaders cannot close their eyes to what is happening across the border. A State like Kerala should learn from past mistakes of having long and protracted strikes/lockouts, which has ultimately forced many of the industries to close down. This should not happen in the plantation sector, which is labour inten- sive and located in rural areas where alternate employment is just not there. Plantation sector is the largest single employer in Kerala. 5 UPASI has worked out the labour cost of plantation workers by monetising the benefits the plant- ers are expected to provide to the workers by law, mainly under the Plantation Labour Act. It is given in Table 7. 5 The Draft of the White Paper, The Association of Planters of Kerala, January 2003 37 crisis in the tea industry crisis in indian tea industry Table 12 Wage & Fringe Benefits of a Tea Plantation Worker Per D a y KERALA (Wage Under the expired Settlement as on 31.03.02) KARNATAKA (Wage Under the expired Settlement as on 31.03.02) TAMIL NADU (Wage Under the expired Settlement as on 31.03.02) Nilgiris (From 01-01- 2002) Nilgiris-Wayanad (From 01-01- 2002) 1 Basic Wage + Dearness Allowance 77.26 60.70 76.85 70.00 71.00 2 Incentive Wage (Average) 4.44 3.22 3.68 1.75 2.00 3 TOTAL 81.70 63.92 80.53 71.75 73.00 4 Wage Related Statutory Benefits 5 Provident Fund (12 percent) 9.81 7.29 9.67 8.61 8.76 6 Deposit-Linked Insurance 0.41 0.31 0.41 0.36 0.37 7 Gratuity (15 day's wage/year) 4.38 3.26 4.32 3.85 3.91 8 Bonus 15 percent (Average) 12.26 9.11 12.08 10.77 10.95 9 Leave with Wages (Average 14 Days) 4.09 3.20 4.03 3.59 3.65 10 Paid Holidays (Kerala 13 days, Karnataka and Tamil Nadu 9 days) 3.80 1.96 2.59 2.31 2.35 11 Sick Leave with Benefit (14 days at 2/3rd of wages) 2.58 2.03 2.57 2.34 2.37 12 Maternity Benefit for Women workers (Average) 2.46 1.83 2.42 2.16 2.19 13 Statutory benefits unrelated to wages such as free housing, medical care, protective clothing, sanitation & conservancy, water supply, education, crche & child care, LTA etc., constitute another 20 percent of wage 16.34 12.79 16.11 14.35 14.6 TOTAL 137.83 105.70 134.73 120.09 122.18 Source : UPASI, 2003 38 crisis in indian tea industry Thirdly, CTPA holds that the fall in exports in India has contributed to the crisis in the tea industry. South India exported 100 million kg. of the 200 million kg. of tea produced. Currently the export has come down to 70 million kg., resulting in an over supply of tea in the market. We lost the export market, because of the export policies of the government. Kenya, Sri Lanka, China, Vietnam, Indonesia and Turkey have captured Indias export market. Fourthly, the auction system has failed completely. Auction is an adjustment. It has not stabilized domestic prices of tea. The Ferguson Committee was highly critical of the present auction sys- tem. But, nothing substantial has come out of it. Hindustan Lever in India is both a trader and a distributor. They are powerful and cannot compete with them. On a specific question, why plantations have closed down in Peermade, the planters represen- tatives gave various reasons: i. Land productivity is very low; ii. Tea bushes are very old, around 100 years iii. Tea is affected by pests, mosquitoes and diseases iv. Only those plantations that encourage multi-cropping are surviving. Pepper, carda- mom, coffee and rubber are allowed. Medicinal plants, cashew and vanilla could also be planted but, these come under the Land Ceiling Act, therefore, we cannot diversify. v. Labour is organized and powerful. All benefits for the permanent workers are also given to the temporary workers. Labour is not agreeable to a reduction in wages. If trade unions in Tamil Nadu have agreed to bring down wages, why not in Kerala? vi. Absenteeism is high among workers. Drinking habit is high; Pentecostal Churches influence workers away from work. Sometimes workers go to work in another fac- tory for fear of moneylenders. Meeting with Gram Panchayat, Vagamon On 23 January 2003, the Fact Finding Team met with Gram Panchayat members in Vagamon. Among those who attended the meeting were M. P. Jayadevan, Member, Vazhutha Bl ock Panchayat and O. V. Kuttan Nair, Member Trithala Panchayat. They said the Gram Panchayat does not have any funds to provide relief or employment to the jobless workers in closed down/abandoned plantations.The Gram Panchayat does not have rights over the plan- 39 crisis in the tea industry crisis in indian tea industry tation land , it only has a right over the buildings The revenue goes to the government and the plantations are not paying building tax, using the crisis as an excuse. Gram Panchayat has the right only over the buildings. In the name of crisis, plantations are not paying building tax.Currently, the Gram Panchayat is under severe pressure, because the planta- tions have stopped taking care of the basic needs of the workers and their families such as food, water, health and education. Central Government schemes like SGRY are not very practical, because most of the roads and open spaces belong to the plantations. Only 25 percent of the land is agricultural land. About 75 percent of roads are within plantations, over which the Gram Panchayat does not have any right. The Gram Panchayat has the right to collect cess from the planters and has initiated recovery procedures. Notices were sent to the management without any effect. In some cases, workers did not allow recovery procedures from plantations, because the managements had not given them their dues. Closure of the plantations has affected the economy of the region, business has been badly hit. Children are not going to school. In Peermade taluk 14 people have died due to illness, starvation and the absence of medical help. Meeting with a Team of Trade Unions in Peermade The FFT met with local leaders of AITUC, CITU, INTUC, HMS, BMS, UTUC on 24 January 2003 in Peermade. Among those who attended the meeting were Bhaskaran, Cyril Thomas, P R Gopalakrishnan, Ayyadurai, Soman and Rajan. They said that no new workers were being employed in any of the plantations. No super-annuation benefits were being given to workers who retire. Only two major companies AVT and Harrison Malayalam were functioning in the region. They have cited mismanagement as the most obvious reason for the crisis, closure and aban- donment of tea plantations in Peermade and Vandiperiyar region. Plantation owners do not have any interest or tradition in managing tea plantations. They have looted plantations and diverted profits to other enterprises to the detriment of the tea plantations. They said that 80 percent of the plantation area in Peermade is covered with bushes aged more than 75 years. The manage- ments have not taken steps for re-plantation. They have also not bothered to engage in neces- sary agricultural activities in the plantations, which have adversely affected the productivity in the area. Loans taken from public financial institutions have not been invested in the plantations by the 40 crisis in indian tea industry management. Trade unions wonder where the provident fund and gratuity of workers has gone. Managements of the crisis-ridden companies are not paying the workers their dues. Trade unions pointed out the misuse of auction system by traders and brokers as an important reason for the present crisis in tea plantations. The big buyers form cartels and bring down the auction prices. In this context, trade unions demanded the implementation of the recommenda- tions of the Ferguson committee to strengthen the auction system. However, they also said that the producers should be free to sell their products wherever they fetch remunerative prices. Trade unions felt that the import policies of the government are adding to the tea crisis. Tea is imported from many countries consequent to the removal of quantitative restrictions as man- dated by the WTO. The South Asia free trade agreement allows import of 15 million kg of low priced tea from Sri Lanka. Import of tea is allowed into the Export Processing Zones for re- export. Tea is also allowed to be imported duty-free for re-export. This has brought down prices in the domestic market. Trade unions strongly felt that Tea Board 6 should have acted promptly to address the problems of tea gardens by procuring tea under remunerative prices, facilitating cooperativisation of aban- doned gardens and by encouraging timely re-plantation of tea plants. Trade unions did not agree with the proposition of the planters that low productivity is a reason for the crisis. They argued that at 2.01 labour per hectare and 894 kg of production per labour, productivity in Kerala plantations is higher than in other tea growing regions except in Tamil Nadu. AITUC quoted their submission on the issue of productivity before the Parliamentary Committee on Commerce, which visited Peermade on November 14, 2002, All the crops tea, coffee, rubber and cardamom made substantial increase in yield de- spite huge cut in manpower. The Association of Planters of Kerala in their presentation dated 9-9-2002 to the Parliamentary Committee agreed that average yield during 2000- 2001 is increased to 114% in rubber and 116% in coffee and 266% in cardamom and 26% in tea, compared to the crop position of 1980-81. The production per labour is substan- tially increased in major crops of plantation in Kerala which kindly note. Take the specific case of Tea plantation. 6 Tea Board Constituted by the Government of India has vast powers and many functions for promoting and develop- ing the tea industry. A few of them are as under :- i. Improving the quality of tea ii. Promoting co-operative efforts among the gardens, and manufacturers. iii. Increasing the consumption of tea in India or elsewhere. iv. Improving the market of tea in India and elsewhere. v. Collecting statistics from growers, manufacturers, dealers. vi. Securing better working conditions and improvements and incentive to workers etc. 41 crisis in the tea industry crisis in indian tea industry Table 13 Productivity and Labour per Hectare (Tea) Labour Per Hectare Production per Labour in kg Assam 2.34 772 West Bengal 2.34 783 North India 2.30 786 Tamil Nadu 1.80 1152 Kerala 2.01 894 Source : Tea Statistics 98-99 page 154-155 The Honourable members may kindly note that tea production per labour in kgs. in Kerala plan- tations is comparatively much higher than other tea growing areas except Tamil Nadu. Therefore, the accusation against productivity of Kerala labour in tea estates is proved baseless. According to the above authentic data, Kerala stands second in the productivity per labour. In regard to the area of tea plantation and yield of tea in Kerala, the latest annual reports of many leading companies show that their yield per hectare has increased further to an average level of 2000 to 2500 kg. per hectare. 3) We would like to point out certain negative features of tea cultivation in Kerala in this connec- tion. In regard to production per hectare, Kerala is lagging behind Tamil Nadu because of rea- sons beyond the control of workers. Kindly note that out of 36775 hectares of tea area in Kerala, approximately 70 percent area (25720 hectare) came under bushes having age of 50 years or above where as in Tamil Nadu out of 55590 hectares approximately 33 percent area came under such aged plants. 42 crisis in indian tea industry Table 14 Age Group of Bushes in Kerala
Ag e Gr o u p Ar e a Cov e r e d ( I n He c t a r e s ) Bel ow 5 year s 4 3 3 2 6 t o 10 year s 5 5 0 11 t o 20 year s 4 5 1 21 t o 30 year s 7 5 2 31 t o 40 year s 1 3 5 9 41 t o 50 year s 3611 Above 50 year s 2 5 7 2 0 Al l Gr oups 3 6 7 7 5 Source : Tea St at i st i cs 98-99 Page 28, 29 The fact that productivity of tea bush is adversely affected by age related deteriorations more than anything else. Bush potentiality is generally observed to be at optimum up to 40 years of age beyond which depending on climatic condition and management practices gradually declines. According to experts, productivity of tea bush in Kerala reached to a saturation level because of the above stated reasons. This position could be changed only through replacement of dead or aged tea plants and replantation. In the absence of such steps, yield per hectare and productivity or workers could not be increased further sub- stantially. 7 The trade unions contested the planters contention that in Kerala, the wage is not linked to productivity. They said that the planters demanded, in the Plantation Labour Committee, an in- crease in the standard output from the current 14-16 kg per worker. This was not accepted. However, planters have illegally withheld payment of DA. The wage structure in Kerala is linked with production and productivity. The productivity and production thereby only registered upward increase. Generally, majorities of workers in tea estates are females. More than 75% of workers are employed in plucking in estates and rest in other works and they are doing hard work also. The period of wage settlement of plantation workers in Kerala is over by the end of 31-3-2002 and a new increased wage should have been made with effect from 1-4-2002. The workers Dearness Allowance due from 1-4-2002 is also withheld. The employers are trying for a wage cut while employees are demanding for an increased wage. The employers are exploiting the present unfortu- nate situation in tea estates at Peermade are for their narrow gains 8 7 Before the Honourable Parliamentary Committee on Commerce at its camp at Peermade on 14-11-2002, submission by C A Kurien, President AITUC, Kerala State Council, Thiruvananthapuram, P. S. Bhaskaran, Working President, HEL Union, AITUC, Peermade, Vazhoor Soman, HEL Union, AITUC, Peermade. 5 ibid 43 crisis in the tea industry crisis in indian tea industry The trade unions unanimously demanded that the government takes over the plantations. In Kerala, the Plantation Corporation of Kerala runs plantations profitably. The government should also take steps to intervene in the market to stabilize prices, by purchas- ing tea directly. Trade unions further demanded that the government should facilitate the formation of workers cooperatives to manage and run the crisis ridden and abandoned tea plantations. Mr. Hariharan P.S., Iduki District Secretary, UTUC, in a separate meeting with the FFT, attributed mismanagement as the main cause of the closure of tea plantations in Peermade and Vandiperiyar. He recalled that in some plantations in the region, which are functioning well, the management has introduced harvester machines. He said that a harvester machine that plucks 1500 kg of green leaves in four hours consuming 300ml of petrol employs only three people. Every machine displaces 15 people. . Status of Crisis Ridden or Abandoned Tea Plan- tations in a Nut-shell A note prepared by the Central Travancore Planters Association gives the following details regarding the extent of the crisis in the estates in the region. Details are provided for the following: 1. Estates not functioning, 2. Estates being run by workers and staff, 3. Estates on the brink of closure, 4. Estates struggling to survive because of the crisis and labour unrest and 5. Estates Struggling to Survive. 44 crisis in indian tea industry Table 15 Status of Tea Plantations in Central Travancore Name of t he Company & Area (hectares) Name of Estates No. of Permane- nt Workers Date of Cl osure Status Estates Not Functioing 1. Peer made Tea Co. 1. Pi r med 2. Lone Tree 1200 Oct . 2002 Workers are plucking the leaf and selling it to bought leaf factories illegally with the support of union leaders. 1. MMJ ( M. M. Joseph) Pl antati ons 3. Kottamal ai 4. Bonami 5. Vagamon 1650 Oct.2002 Sal ary not pai d si nce August, September & July 2001 respectively, Green leaf being plucked and sol d to bought l eaf factories illegally. 2. Pul l i kanam Estate 6. Pullikanam 400 Sept.200- 2 P.F. not remitted for one year. Wages not pai d for 8 months. 3. Hai l eyburi a Est at es 7. Hai l ey buri a 8. Chi nnar 9. Semi ni val l ey 1200 Dec. 2002 One month. Estates Being Run by Workers and Staffs 4. RBT (Rai Bahadur Thakur) Group II 10. Tungamullay, 11. Pasumullay, 12. Granby 13. Mount 14. Kol i ekanam 2500 Wages due for 19 months & P.F. for 4 years. Bonus due for 2 years. No executives in the 5 estates. Workers & Staffs have organi sed pl ucki ng and selling the leaf outside and paying store-cash to the workers and staff with the money. Estates on the Brink of Closure 15. RBT Group I 15. Munjamullay 16. Pambanar, 17. Nellikai 18. Thengakal 1650 12 month' s wages & 1 year's bonus are due. P.F. not paid for 4 yrs. 16. Hope Plantations 19. Glenmary 20. Ladrum 21. Koduvakaranam 2000 - Wages due for 6 months and bonus for 1 year. P.F. not pai d si nce Apri l 2001. 17. A.V. George 22. Stag Brook Ashl ey 500 - Wages not pai d si nce March 2002 & 1 year' s bonus yet to be pai d. 45 crisis in the tea industry crisis in indian tea industry 18. Mlamallay Estate 23. Mlamallay 400 - Wages not paid since February 2002. 19. Churakulam Estate (MMJ) 24. Churakulam 400 - Wages not paid for 3 months. 20. The Karimtharuvi Tea Estate Ltd. 25. Karimtharuvi 26. Penshurst 600 - Wages not paid for 5 months. Estates Struggling to Survive due to Crisis and Labour Unrest 21. HML Ltd. 27. Moongalar 28. Wallardi 2500 - Wages due for 1 month. Lot of unrest like assault of Manager, gheraos, go- slow etc. 22. ABAN LOYD Ltd. 29. Tyford 30. Rohit 1200 - Wages not paid since August 2002. Only 60 percent bonus has been paid so far for the year 2001/01. Workers are indulging in go-slow, lightning strike etc. & demanding that the management abandon the estate so that they can run it. Estates Struggling to Survive 23. AVT 31. Arnakal 32. Carady Goody 33. Pasuparai 1700 - Despite of the crisis all labour amenities and welfare measures are being continued. Though they have made loses on tea, they manage to pay all wages, bonus, P.F. and gratuity with the other crops. 24. Alampally Estates 34. Alampally 270 - Despite the crisis all labour amenities and welfare measures are being continued. Though they have made losses on tea they manage to pay all wages, bonus, P.F. and gratuity with the other crops. 25. Periyar Connemara Estate 35. Periyar Connemara 400 - Functioning normally as above. 26. Chidambaram Estate 36. Chidambaram 100 Functioning normally as above. Source : Compiled from a note prepared by the Central Travancore Planters' Association, January 2003 and supplied to us through Vazhoor Soman. 46 crisis in indian tea industry Name of the Company & Area (hectares) Name of Estates No. of Permane- nt Workers Date of Closure Status 1. Mahavir Plantations 1. Bonacadu Tea Estate 460 October 1999 Workers are plucking the leaf and selling it to bought leaf factories illegally with the support of union leaders. Wages and bonus not paid since October 1999. Provident Fund not deposited since October 1977. Gratuity not paid to 180 workers who left the plantation. 2. Jayashree Tea & Industries Ltd. 3. Ponmudi Tea Estate 300 Not closed Seven month lock out in 2002. Workers being compelled to accept reduction in wages. All the tea plantations in Central Travancore are reported to be going through the crisis, though at various stages of intensity (Table 2). Except for six estates belonging to AVT (Arnakal, Carady Goody, Pasuparai), Alampally Estates, Periyar Connemara Estates and Chidambaram Estates, all the other estates in the region have defaulted on payment of wages and Provident Fund. Even these companies are reported to be on the brink of closure. All the four major tea plantations in Trivandrum district namely, Bonacadu, Ponmudi, Barmore and Invarcode Tea Estates were reported to be going through a crisis. The Fact-Finding Team visited Ponmudi and Bonacadu Tea Estates on January 22, 2003. 47 crisis in the tea industry crisis in indian tea industry Table 16 Status of Tea Plantations in Ponmudi Region, Trivandrum District 1973 1985 1998 Size of Estate (ha) No. Average area per estate Yield per ha. No. Average area per estate Yield per ha. No. Averag- e area per estate Yield per ha. < 8.09 6069 1 _ 6353 1.3 _ 50571 0.6 1898 8.09 -50 347 11.4 427 131 17.5 547 109 20.2 1352 50 -100 23 73 1404 20 75.8 1483 27 71.3 1227 100 -200 26 156 1830 25 151.1 1632 23 152.5 1502 200 -400 41 300 2309 46 294.3 2663 54 297.9 2696 > 400 15 481 2241 16 480.6 2086 16 534.1 2192 All 6521 5.4 1599 6791 5.5 1670 50800 1.3 2079 Source : V.N. Reddy, Analysis of Tea Industry, presented at IUF India Tea workers Meet, December 2002. Planters and their organizations justified closure and non-payment of workers dues citing the crisis as the reason and insisted on governmental intervention and workers acceptance of their line of thought. Employers argue that the cost of production (COP) of tea is higher than the price the commodity fetches, making plantation uneconomical. Many factors push up the cost of production and pull down the commodity prices. Among the factors that push up COP, they say, are increasing input costs and some of the taxation policies of the government. Nevertheless, they tend to over- emphasise labour productivity, wages and social welfare cost. The misuse of the auction system by brokers and traders and the excess supply of tea in the market because of export and import policies are listed among factors that pull down prices. Workers and their organizations do not entirely accept these arguments. For them, joblessness and hunger are the immediate realities. They put forward mismanagement by the planters as the primary reason for the crisis in the tea plantations. They disagree with the planters that the increase in COP is a reason for the crisis and emphasise structural and geographical reasons. There are similarities in perspectives between the planters and the workers on the misuse of auction system by brokers and traders, taxation and export-import policies of the government. 48 crisis in indian tea industry Chapter V Major Findings and Observations 1. Closure of Estates and Abandonment by the Management 1.1. Fourteen tea estates in Peermade taluk, Idukki district belonging to the Peermade Tea Company (Pirmed, Lone Tree), MMJ Plantations (Kottamalai, Bonami, Vagamon ), Pullikanam Estate, Haileyburia Estates (Hailey buria, Chinnar, Seminivalley), RBT Group II (Tungamullay, Pasumullay, Granby, Mount, Koliekanam) have been closed down com- pletely. Top managers have left their respective plantations. 1.2. Four tea estates in Ponmudi region, Trivandrum district namely, Bonacadu, Ponmudi, Barmore and Invarcode Tea Estates have been closed down completely. Top manag- ers have left these plantations. 1.3. Nine estates belonging to Peermade Tea Company, MMJ Plantations, Pullikanam Es- tate, Haileyburia Estate are not functioning at all. Plucking in these plantations is carried out illegally, which means that it is done without the formal approval from the respec- tive managements. 1.4. In five estates belonging to the, RBT Group II, under a tacit understanding with the management although the management has deserted the plantations, staff and work- ers are plucking tea and dividing the proceeds. This is also true in the case of Bonacadu Estate. 2. Non-Payment of Wages 2.1. Besides the fourteen estates listed above, seventeen more estates report non-payment of wages to workers. At the time of investigation, the duration of non-payment of wages varied from one month to nineteen months. The two estates of Peermadu Tea Com- pany have not paid wages to the workers since October, 2000. Vagamon, Kottamalai and Bonami Tea estates of MMJ Plantations have not paid wages since July, 2001, August, 2001 and September, 2001 respectively. Workers in Bonacadu Tea Estate have not received wages since October, 1999. 2.2. Workers have not received their wages since July, 2000, in the five estates of the RBT Group II and since December, 2000, in the four estates of the RBT Group I. In the three estates belonging to Hope plantations, workers have not received wages since June, 2002 and in two estates of Karimtharuvi Tea Estate Limited workers have not received wages since July, 2002. 3. Non-Deposit of Provident Fund 3.1. Most of the crisis ridden plantations have reported non-remittance of Provident Fund.The worst case of default, non-remittance for four years, has been reported from the nine estates of the RBT Group I & II companies and Mahavir Plantation. 49 crisis in the tea industry crisis in indian tea industry 4. Job-loss and Absence of Alternative Source of Income 4.1. The closure, abandonment or lock out of tea plantations in Ponmudi and Peermade region has rendered 60,000 workers jobless creating a catastrophic situation for them and their families. The situation has been made worse due to the non-availability of alternative sources of income in the plantation enclaves. 5. Absence of Drinking Water 5.1. The supply of potable water has stopped completely. People have no other option but to fetch water from available sources kilometres away, usually down hill, and in most cases, from scanty and contaminated sources. 6. Health Seriously Affected 6.1. Hospitals are not functioning in the closed down/abandoned plantations and the supply of medicines has stopped. Doctors are not attending to patients. Nurses and health assistants remain moot/silent witnesses to the unfolding tragedy. 7. Starvation and malnutrition 7.1. The closure of plantations has effectively curtailed the workers ability to access food, pushing them and their families to the brink of starvation or acute malnutrition. Since, the absence of food over a long period of time means death, people go for any food which is available and cheap, resulting in chronic under nourishment or food poisoning and slow death. 8. Added Burden on Women 8.1. Closure/abandonment puts tremendous pressure on women workers, the main wage earners in tea plantations. They are constrained by the lack of skills, absence of alter- nate employment opportunities, unfavourable conditions for migrating long distances in search of alternate opportunities of work. They have to live through the experiences of seeing their husbands commit suicide, children starving and discontinuing their educa- tion, seeing daughters leave for far away places, insecure job conditions and the voluntary or involuntary sale of their bodies. 9. Children Stop Schooling, Look for Avenues of Income 9.1. Children have stopped their education in large numbers because they have no money to commute to the nearest functional school (if any), no provision for food, no means to purchase books or other educational materials and in most cases no money to purchase the essential school uniforms. School children also reported feeling humili- ated and have preferred discontinuing their studies. It has also been seen that chil- dren discontinue their studies to augment their parents income and they look for alternative sources of income which are elusive. 10. No Right to Housing, No Right to Land 10.1 Workers do not have any right over the houses in which they live. They do not have the right to use the land for subsistence cultivation or rearing of cattle, denying them any chance for alternative income generation. 50 crisis in indian tea industry 11. Peermade & Ponmudi Contradicts Keralas Claim on BPL 11.1 In the early 90s, a break-through was made in the assessment of poverty. 1 The analy- sis of the survey led to the development of nine criteria for identifying the most vulner- able families, who were classified as risk families. The risk index or poverty index was formulated consisting of the following nine, non-monetary factors each reflecting a kind of deprivation: 1. Kutcha house, 2. No access to safe drinking water, 3. No ac- cess to a sanitary latrine, 4. Illiterate adult in the family, 5. Family having not more than one earning member, 6. Family getting barely two meals a day or less, 7. Presence of children below 5 years in the family, 8. An alcoholic or drug addict in the family, 9. Scheduled caste or Scheduled tribe family. A family, which had four or more of the above risk factors, was classified as high risk poor. 11.2 About 26,000 tea estate workers in Peermade Taluk fall under the category of high risk poor, since these families have all the nine risk factors. This is a wake up call for the people and the government of Kerala and contradicts its claim on people below poverty line. 12 Overall Degeneration of Plantation Areas 12.1 The closure of plantations has resulted in the overall economic and cultural degenera- tion of the respective panchayats and talukas. 13 Planters Justify Closure 13.1 Planters have overtly and covertly justified closure or abandonment of tea plantations pointing out the unprecedented and continuous fall in tea prices and increase in the cost of production. The cost of production has been higher than the price realization from bulk tea resulting in continuous losses. 14 Planters allege Wage-cost increases Cost of Production 14.1 Planters hold that in a labour intensive sector like tea, an increase in wages is the most important factor that pushes up costs. Moreover, statutory compulsions from the Plantations Labour Act to provide social welfare to workers further pushes up the total labour cost. 15 Planters Demand Reduction in Negotiated Wages 15.1 To reduce wage cost, the planters have demanded from the workers a reduction in wages from the negotiated wage of Rs.77.26. They have denied the increase in DA due from January, 2002. They also wanted an immediate stop put to the practice of the government of Kerala declaring the negotiated wage as the minimum wage in plantations. 1 The pilot project on Urban Basic Services Programme in Alleppey Town, was supported by UNICEF. It was felt that the conventional head count system was much too remote from the people and that a transparent index based on well- recognised features of poverty would be more acceptable. A survey of 5728 families was conducted by trained Com- munity Volunteers and ICDS Volunteers in seven Wards of Alleppey. (Source: Economic Review, website, and Gov- ernment of Kerala.) 51 crisis in the tea industry crisis in indian tea industry 16 Planters Demand Productivity Linked Wages 16.1 Planters want workers to agree to productivity linked wages and to increase the standard output norms. 17 Workers Assert Mismanagement 17.1 Workers point out that mismanagement is the main reason for the present crisis in the plantations in Peermade and Ponmudi. They allege that the managements of the closed or abandoned tea plantations have not nurtured the plants for a long time. No efforts were made to replant bushes over 50 years. 18 Workers Point out Structural Factors for Cost of Production 18.1 Workers blame structural problems such as the age of the tea bushes for low produc- tivity in the Peermade and Ponmudi region.The productivity of tea plants deteriorates after 50 years. About 70 percent of the tea bushes in the crisis-ridden region are more than 50 years old. 19 Workers Reject Call for Wage Reduction 19.1 Workers have rejected the call for a reduction in wages as a method of reducing the cost of production and the suggestion to notify reduced wages as the minimum wage. 20 Workers Consider Wages Linked to Productivity 20.1 Workers consider wages in Kerala are already linked to productivity. 21 Planters & Workers Blame the Export and Import Policies of the Government 21.1 Planters, workers and trade unions agree on the point that the government has not done anything to promote market access after the collapse of the easy market in the Soviet Union. On the other hand, duty free imports of tea to Export Processing Zones, under the import for export scheme or under SAFTA are pushing down domestic prices. 22 Planters and Workers agree on the Misuse of Auction System 22.1 Planters and workers also agree on the fact that brokers and traders are misusing the auction system to bring down the prices of tea. However, while workers forcefully argue about the formation of cartels in auctions by powerful traders and multinational corporations, the planters do not accept this phenomenon. 23 Inactive Government 23.1 No evidence has been found to establish any creative or concerted effort by the gov- ernment either to revive the crisis-ridden plantations or to give succour to the suffering workers. 52 crisis in indian tea industry Chapter VI Tea Plantations in Tamil Nadu In Tamil Nadu most of the tea plantations are situated in the Coonoor and Gudulur areas of the Nilgiris along with the Valparai region of Coimbatore district. The Nilgiri district alone produces around 80 million kgs. of tea, which is roughly 50 percent of the total tea produced through out South India. The total acreage under tea in Tamil Nadu is 1.25 lakh acres and the tea industry of Tamil Nadu gives employment directly or indirectly to 1,50,000 workers. The Valparai region has the highest concentration of tea plantations in the Annamalai hills. Between 1985 and 1998, the number of small tea growers (tea produced in less than 10.1 hec- tares of land) has gone up significantly from 6353 to 50,571. The biggest estates (>400 hectares) have also gained marginally but the medium tea plantations (<200 hectares) have either shown very little or a negative growth. Table 17 General Profile of Tea Plantations in Tamil Nadu The 1991 data shows that Tamil Nadus human poverty index is 29.28 in com- parison to national average of 39.36. In terms of human development index, using the National Human Development Report (Government of India) Tamil Nadu is in the 14 th position vis--vis other Indian states. Per Capita Net State Domestic Product (at 1993-94 prices in Rs) during 1998-99 is Rs. 11,775 compared to national average of Rs. 9,647. The Literacy Rate in 2001 was 73 percent compared to the national average of 65 percent. Life Expectancy at Birth during 1992-96 (yrs.) was 64 com- pared to the national average of 61. Maternal Mortality Rate - 1998 (per 100,000 live births) is 79 compared to the national average of 407. The percentage of houses with access to safe drinking water in Tamil Nadu during 1991 was 67 compared to national average of 62. 1973 1985 1998 Size of Estate (ha) Number Average area per estate Yield per ha. Number Average area per estate Yield per ha. No. Averag- e area per estate Yield per ha. < 8.09 6069 1 _ 6353 1.3 _ 50571 0.6 1898 8.09 -50 347 11.4 427 131 17.5 547 109 20.2 1352 50 -100 23 73 1404 20 75.8 1483 27 71.3 1227 100 -200 26 156 1830 25 151.1 1632 23 152.5 1502 200 -400 41 300 2309 46 294.3 2663 54 297.9 2696 > 400 15 481 2241 16 480.6 2086 16 534.1 2192 All 6521 5.4 1599 6791 5.5 1670 50800 1.3 2079 Source : V.No. Reddy, Analysis of Tea Industry, presented at IUF India Tea workers Meet, December 2002. 53 crisis in the tea industry crisis in indian tea industry There are a total of 89 big and medium tea estates in Tamil Nadu. The Nilgiri region has around 58 tea estates which are affiliated to two major planters associations-Planters Association of Tamil Nadu and Nilgiri Wayanadu Planters Association. Some of the major companies operating in the region are the following: Staines Company Ltd. United Nilgiris Tea Estates Company Ltd. Coonoor Tea Company Ltd. Craigmore Planters India Pvt. Ltd. Hindustan Liver Ltd. Mahavir Plantations Ltd. Kotagiri Tea and Coffee Estates Company Ltd Warwick Estates Syndicate Company Ltd. Nilgiri Tea Estates Ltd. Kodanad Tea Estates Ltd. Harrison Malayalam Ltd. Manjushree Plantations Ltd. Rousdonmullai Tea Estates Pvt. Ltd. Silver Cloud Estates Pvt. Ltd. Glenrock Estate Pvt. Ltd. Parry Agro Industries Ltd. TAN Tea Ltd. There are in total 31 big and medium tea estates in the Valparai region in the Annamallai Hills. Some of the major tea plantations are: Hindustan Lever Ltd. Tata Tea Ltd. Bombay Burma Tea Company Ltd. Parry Agro Ltd. Jayashree Plantations Ltd. National Energy Processing Company Ltd. Mahavir Plantations Ltd. 54 crisis in indian tea industry Observations from Visits to the Large and Medium Tea Plantations The Fact Finding Team along with the regional trade union leaders visited some of the major tea plantations in the Gudulur and the Valparai region from the 22 nd of March 2003 to 25 th of March 2003. Given below are some of the observations made during the visit. Liddellsdale Tea Estate, Mahavir Tea Plantations (Gudulur) The Mahavir Plantations (3000 workers) are in very bad shape. The company has not paid gratuity to approximately 135 workers who have retired. Most of these workers have been wait- ing for their gratuity for the last five years and some of them have died without receiving a penny. The daily wages were initially reduced and are now only being given in an irregular manner. The company has withdrawn more than Rs. 2 crore from the provident fund deposits of the workers and has invested it in other sister concerns. The workers are now plucking tea themselves and selling it with the help of trade unions. An interesting aspect of these estates is that the workers are paying wages to the managers, who help them sell tea. The owner has abandoned these estates and the workers on an average get around Rs.30 per day by plucking leaves themselves. However, the amount earned depends upon the amount of tea plucked by a worker, as the flat rate is Rs. 2 per kilogram of plucked tea. If for any reason the worker is not to able pluck tea s/he does not get any payment. Moreover, this facility is only available to the permanent employees. The condition of the casual workers is the worst, as they are not allowed to do any plucking. The Fact Finding Team visited the Liddlesdale Tea Estate of Mahavir Tea Plantations on 23.1.03 and found that most of the line rooms visited were in bad shape and needed urgent repairs. There is no electricity and the sanitary conditions are appalling. Right in front of the workers houses there are open drains and heaps of garbage, which have become a breeding ground for many diseases. There are no toilet facilities in the estates and the workers have to go to the jungle, where many of them have become victims of snakebite. The crche, in Liddellsdale tea estate, which used to take care of 40 children, has been closed down since October 2002. There are primary schools in the tea plantations but these are situated very far, at least 6-7 kms away from the line rooms of the workers and there is no proper trans- port facility available in the tea plantation. The estate hospital has closed down and there are hardly any medicines available for the injured or indisposed workers. The workers are either starving or taking meals on alternative days. It was reported that they do not even have any money to cremate the dead. This situation is slowly spreading to many other tea gardens of Tamil Nadu. 55 crisis in the tea industry crisis in indian tea industry The condition of the workers in the closed Liddellsdale Estate CHEINBASUAVA, 55 Cheinbasuva of Liddellsdale Estate, Mahavir Plantations Ltd. is suffering from nerve problems for the last few years. After the closure of the estate hospital, his health has further deteriorated. He went to the hospital in Gudulur, but it cost him Rs. 250, which he raised with a lot of difficulty. However, he could not go to the doctor after that. Since he is unable to work, the whole family is dependent on his wife, Puttubasuvi, 45, a frail woman, who manages to get an average income of Rs. 36 per day. She has to work everyday, so that she can feed the family. The line room is dark and resembles a cave with mud walls. Cheinbasuva has four children, two boys and two girls. The boys Siddharaj, 26 and Kempraj, 23 were studying in Chennai but had to discontinue their stud- ies because of the crisis. They have come back to the estate and have nothing to do, as they are not allowed to pluck tea. His daughter, Mahalaxmi (18) is a ma- triculate and wanted to become a teacher, but now helps her mother in cooking. Her father doesnt have enough money to marry her off. Cheinbasuava is already under a debt of over Rs.15,000, which he thinks he will never be able to repay. THAYAMMA (55) Thayammas husband, Varadha was a worker of Liddellsdale estate taking care of pruning and weeding, who died last year from tuberculosis. Though he used to visit the estate hospital daily he was given medicines for common cold and cough. Soon that also stopped as the hospital was closed due to the crisis and slowly he died. After his death, his children left his wife, Thayamma (55) as they suspected her of having acquired tuberculosis. She was the only person who was taking care of Varadha during his last days. Thayamma stays all-alone in one small hut, with no visitors. Fortunately she was not stopped from plucking but, on a rainy day, an already ill Thayamma, car- rying a heavy load on her back slipped and broke her foot. No treatment was given to her, as the estate hospital was not functioning. She could only apply some oil to the in- jured foot. Presently she is earning around Rs. 21 and leading a miserable life. 56 crisis in indian tea industry Nulkcathu Division, Sirikundara Estates, Hindustan Lever Ltd. (Valparai) A visit to the line rooms revealed that most of them are in bad condition and require immediate repairs. Maintenance work was last done 15 years back. Hence, when it rains the room gets flooded. In one line room, there are more than 7-8 people living with great difficulty. There is a group hospital but most often there are no medicines available here. Hence, often the workers have to go to hospitals in Valparai town which leads to huge expenses for the workers. The workers engaged in sprinkling pesticides are not provided protective clothing. The crche is functioning properly in the estate and the workers are getting piped water for drinking purposes. Sholyar Estates, J ayashree Plantations (Valparai) The Fact Finding Team visited Sholyar estates on 24. 1. 2003 and found that the estate is not in very good condition and the workers facing a lot of difficulties in their day-to-day life. The task work has been increased many folds. For example, each worker used to prune 200 bushes which has been increased to 500 bushes. The ratio of weeding was 1 acre per worker earlier and now it has been increased to 2 acres per worker. Chemical spraying, which used to be 2 acres per worker has been increased to 5 acres per worker. It was reported that task work is assigned at the managers discretion and whatever the manager says becomes the task work. The work- ers reported that though the task work has increased the wages have come down. The hospitals are not functioning properly and store only some basic medicines. Sushila, Age- 38 years, C.R. No: 1592 Sushila was a permanent worker in Birla owned Sholyar Tea Estate. One evening (May 2000) while carrying a weight of around 30 kgs on her head she slipped and fell down from a height. She was severely injured with multiple fractures. Her right leg was broken at two places. The company refused to give any compensation. However, the trade unions took up her case under the Workmans Compensation Act. The company settled the case by paying some paltry amount to Sushila. The company however, refused to give her any employment after the accident. She is the sole bread earner in the family. She has to support four daughters. One of her daughters, Gandhimadi, (19 year old) has got a job as a temporary worker with a flat wage rate of Rs. 2 per kg of plucked tea. Unfortunately she has developed tuberculosis. The family is surviving because of the loan they have taken from the moneylenders with an interest rate of 8 per cent per month. Sushila does not know how she will pay back the loan. The sanitary conditions in the Sholyar estate are also pathetic. There is no drainage facility, and the line room blocks stink because of accumulated garbage. Most of the line room roofs leak during rains. No maintenance work has been done for years and some of the line rooms are on the verge of collapsing. The workers who are engaged in spraying pesticides are not given any protective clothing. Many such workers complained that they are affected by allergies and skin diseases. The workers are not even provided with a raincoat. The condition of the temporary workers is worst, as they are not given any medical facilities or provident fund and gratuity. The temporary workers are given a kitchen of 11 by 5, where they stay with their families. 57 crisis in the tea industry crisis in indian tea industry Pannimade Tea Estate, Tata Tea The line rooms were constructed in 1950 and have rarely been repaired so their condition is very bad. The roofs leak when it rains. There is no water in the bathrooms and toilets are situated in the jungle where wild animals like cheetahs and wild bears are regularly seen. There are open and over flowing drains. More than 9 people are living in one line room. The hospital is located 4 km away from the line rooms. There are hardly any medicines available in the hospital. There is no doctor in the hospital and the pharmacist is taking care of the day-to-day health problems of the workers. The Point of View of the Planters Association of Tamil Nadu 1 1. The present crisis is not of the making of the industry, but was brought about by the policies of the Central Government, who in turn have declared that the policies are dictated by the larger national interest. All State Governments, including Tamil Nadu, have supported and endorsed central policies. 2. The financial viability of every plantation has been eroded. 3. What we have today is the implementation of a policy of globalisation of trade - in other words, global free trade. This has brought a sea change in the market place from larger supplies of plantation products through imports, resulting in a steep crash in prices. 4. When the Industrial Policy Resolution and the Labour Policy Resolution were drafted and adopted in 1948 in free India our planners, political parties or the Government of India could never have imagined a scenario of global free trade. Nor did any distant possibility of global free trade influence the making of the Constitution of India, and the passing of the plethora of labour and welfare legislation under the Constitution. 5. There is a delicate balance built into the Constitution between the fundamental right of the employer to carry on his trade or business, and the right of the employees to decent wages and humane conditions of work, which are referred to in the directive principles. 6. Part XIII of the Constitution declares that trade and commerce throughout the territory of India shall be free only for Indian citizens and also to non-citizens when they are permitted to carry on trade and business in India. Hence, the entire scheme of our Constitution has looked at industry, trade and commerce only in the national perspective and not in global terms. 7. The fundamental right to carry on any occupation, trade or business is the right to carry on such activities profitably and not at ever-incurring losses. 8. At present due to globalisation the traders, foreign and Indian could bring in cheaper tea and other plantation products. Thus the guarantee of the fundamental right to the Indian citizens to carry on trade or business and to equality has been made in to a dead letter. 9. In many competing tea producing countries, labour laws are far less developed than India. The workers are not well organised, wages are lower, and the range of welfare and social security benefits are very meagre. Apart from Provident Fund, there are no other burdens on 1 As mentioned in a letter to the trade unions by C. Shankaranarayanan, Adviser, PAT, Coonoor, Tamil Nadu, 2001. 58 crisis in indian tea industry the employers in those countries. The other benefits, if any, are provided by the government themselves. These competing countries dont have to pay Dearness Allowance, and the income taxes do not exceed 15 percent to 30 percent, against our Agricultural Income Tax rates of 65 percent. Our competitors are therefore able to export their products to India at a far cheaper price, thereby forcing Indian products to be sold at distress prices. Thus the Indian producers lack a Level Playing Field (Emphasis in original) vis--vis our competitors from abroad, even within the domestic market. 10. South Indian tea had a monopoly in the former USSR under the rupee-rouble bilateral trade agreement, but that market was lost after the disintegration of the USSR. The present posi- tion is that except for the orthodox Nilgiris tea, South Indian teas because of their lower quality arising from location and climatic disadvantages are available and are used as fill- ers in the packaged teas. A similar variety of tea from other countries is available at Rs. 20 per kg, which is cheaper than the South Indian tea, even after paying 100 percent import duty. 11. Direct retail marketing is not possible for individual plantations as the volume of production of the majority of the companies is too low to justify a marketing setup at the retail level which will be capable of competing with well entrenched giants in the blending and packaging trade. Moreover, unless tea of different regions and of different growth seasons is bought, blended and packaged, it would not be possible for a tea producer to offer a standard prod- uct. 12. In the new situation, the only option available to the employer is the freedom to discontinue the working of his plantation. If a plantation is closed down, it will not be regarded as a violation of the wage settlement. A dispute on whether that closure is justified or legal would be raised, but that is an altogether different issue. Apart from these written points of view, more than one planter in Tamil Nadu has called for land reform restrictions to be waived and other agricultural commodities like pineapple should be allowed to be cultivated in the tea plantations. Meeting with a Team of Trade Unions and Workers at Gudalur The Fact Finding Team met a team of trade union leaders and workers at Gudalur on 23rd January, 2003. The trade union leaders present in the meeting included: 1. K.P. Moohammed, President and S. Balan, General Secretary, Nilgiri District Estate Workers Union (INTUC), Coonoor. 2. G. Suresh, General Secretary, Nilgiri Estate Workers Union (CITU) 3. T. Balakrishnan, President, Plantation Labour Association, (AITUC) The workers from Devershola Factory and Devershola Plantation, Manjushree Plantation, Parry Agro Plantation, Sussex Plantation, Wood Briar Pla2ntation, Harrison Malayalam Plantation and Silver Cloud Plantation were also present. 59 crisis in the tea industry crisis in indian tea industry The trade union leaders and the workers pointed out that the present crisis is due to the opening of the tea market because of pressure from WTO. This has led to a fall in tea auction prices. However, they stressed that mismanagement by local companies is also a factor responsible for the present crisis. They felt that there is an attempt by the planters to change the labour laws under the pretext of the crisis and stressed that the hard earned rights under the present labour rules and regulations should not be changed at any cost. This is being done by the management in spite of the fact that the workers have cooperated with the management in dealing with the present crisis. They felt that all the trade unions and other support organisations should build up adequate pressure on the government by raising this issue in parliament. The problem of the workers needs to be adequately highlighted. The workers and the trade unions want the industry to survive but at the same time say that their conditions are gradually worsening and hence, are willing to support any agitation planned by the trade unions. A Profile of Government Owned -Tamil Nadu Tea Plantation Corporation Ltd. (TAN Tea) 2 Under the Indo-Sri Lanka agreement signed in the year of 1964, some repatriates, numbering 6926, were settled on Tamil Nadu government plantations. Only large families were selected for permanent employment, the husband and wife were provided employment and the rest of the family continued to be treated as dependents. The project was initiated with financial assistance from the central government and the state government leased out the land. Tan Tea plantations are situated in Gudalur, Coonoor, Kotagiri, Naduvattam in Nilgiris district and Valparai in Coimbatore district. Apart from permanent workers, there are around 10, 000 casual workers in Tan Tea. After the steep fall in tea prices most of these casual workers were denied employment, in spite of the fact that they had been working in Tan Tea for years. The shortfall in family income is affecting many families. One of the major reasons behind Tan Tea making losses is the government levy of Rs. 12,500 as lease amount per hectare, whereas private tea plantations pay only a pittance of Rs. 25 per hectare. Moreover, most of the income goes in providing salaries and other emoluments to the deputation staff from the forest department. It was alleged that Tan Tea is spending the income from plantations to maintain Forest Department guesthouses and vehicles. All the department staff claims LTC and other benefits from Tan Tea. Many government employees who are on the verge of retirement come to Tan Tea to claim their retirement benefits, which causes significant losses to Tan Tea. 2 As per the memorandum submitted to the Fact-Finding Team by the Plantation Labour Association, (AITUC), Gudalur, Tamil Nadu, 2003. 60 crisis in indian tea industry Observations on the Workers Conditions in the Large and Medium Tea Estates Wages The employers view the high wage rate as one of the major reasons for the crisis in the tea industry. Hence they have resorted to major wage cuts in Tamil Nadu. Table 18 Break-up of workers wages (per day) in Tamil Nadu Heading Wage as on 31.3.2002 Basic Wages+ Dearness Allowance 76.85 Incentive Wages (Avg.) 3.68 Total 80.53 Wage-related statutory benefits Provident Fund (12 percent) 9.67 Deposit- Linked Insurance 0.41 Gratuity (15 days' wage/ year) 4.32 Bonus 15 percent (Average) 12.08 Leave with wages (Avg. 14 days) 4.03 Paid Holidays (9 days) 2.59 Sick leave with benefit (14 days at 2/3 of wage 2.57 Maternity Benefits for Women Workers (Avg.) 2.42 Statutory benefits unrelated to wages, such as free housing, medical care, protective clothing, sanitation and conservancy, water supply, education, crche and child care, LTA, etc. constitutes another 20 percent) 16.11 Grand Total 134.73 Source: Data provided by UPASI to the Fact Finding Team, January 2003. 61 crisis in the tea industry crisis in indian tea industry The wage reduction: A case of Sirikundra Estate, (Hindustan Lever Ltd.), Nilgiris The Sirikundra Estate of HLL served notice reducing the workers wages to Rs. 60 per day as fixed rate. They also fixed the base for tea, which has to be plucked by the workers as (average) 27.5 kgs. for hand plucking, 41.5 kgs. for shear plucking and 110 kgs. for mechanical harvesting. It was decided to reduce 28 paise per kg. for every kg. of output falling below the base kg. Table 19 Movement of Wage, Price and Overall COP at Sirikundra TE (HLL) Year Wage Rate Avg. Auction Prices All inclusive COP 1998 57.18 68.8 53.06 1999 70.42 57.1 57 2000 74.22 44.6 60 2001 76.02 48.48 64 Source : Data collected by the Fact Finding Team, January 2003. Year The logic behind such arrangement a) The COP has increased by Rs. 10 per kg between 1998 to 2000 because of increase in wages and because of imposition of excise duty of Rs. 2 per kg. b) Increase in the cost of fertilisers and petroleum products and all other inputs. c) High agricultural income tax in Tamil Nadu (65 percent) and central income tax (35.7 percent), which makes the average corporate tax 53.28 percent. This is much higher than the taxes of other producing countries, where corporate tax rates are below 30 percent. d) Productivity is much lower than in other tea producing countries. e) Wage rates are much higher than in other producing countries. Moreover, they dont have to spend too much on the welfare of the workers. f) The current crisis is due to the governments economic liberalisation policies and also due to globalisation. g) The fall in exports to Russia and other CIS countries. h) Import of cheaper tea from countries like Vietnam and Indonesia, which remains profit- able even after paying 100 percent import duty. 62 crisis in indian tea industry The FFT feels that the cost of producing tea needs further examination. It is however apparent that many of the provisions mentioned in the break up of labour wages did not exist in the tea plantations when the crisis began. At present the daily wages in most of the tea plantations have been reduced from Rs. 76 per day to Rs. 72 per day in consultation with the plantation trade unions. However, some major trade unions like CITU and HMS were not part of it. The wage reduction has created lot of hardship for the workers. Productivity Factor The companies are saying that productivity of the workers has gone down. However, the trade unions reported that the volume of plucking per-worker has actually gone up due to the introduc- tion of shear plucking. Moreover, unlike northern tea plantations, most of the men are also in- volved in tea plucking. Earlier there used to be only six to seven months of plucking, but the companies are now plucking through out the year. This has lead to an increase in the volume of tea production. Increase in Workload While the daily wages have come down, the workload in all the tea plantations has increased in a major way. The managers are setting tasks in an arbitrary manner. The number of permanent and casual workers has also decreased. In tea plantations of Harrison Malayalam the workload has been increased by about 20 percent. Moreover, working days have been reduced as well, from 6 days a week to 5 days a week. It was reported that it would be further reduced to 4 days a week. The Condition of the Women Workers Many cases of sexual harassment of women were reported by the trade unions. Exploitation of the women workers by the field officers, supervisors and some times even by the management regularly takes place. One of the cases of sexual harassment was reported from Nadumallai Division of Periakara Malai tea estates. The field officer was regularly harassing a woman worker. Due to this kind of perpetual harassment, the woman committed suicide. The problem of com- plaining against management usually leads to harsher work schedules for them. They would be given work in the jungle or in difficult terrains. So, many women decide against complaining. Workers health The estate hospitals are not adequately equipped with medicines. Due to the present crisis many hospitals have closed down or are functioning without essential medicines. As a result many workers have to buy medicines from the Valparai private hospitals. Many workers are suffering from malnutrition, acute anaemia, frequent colds and even cardiovascular diseases. It was re- ported that the government sponsored nutritional program in the Valparai tea plantations only benefits the cook and their favoured staff. 63 crisis in the tea industry crisis in indian tea industry Occupational safety and hazards There are many cases of workers meeting with accidents while on duty. There are incidents of attacks by wild animals and also snakebites. However, it is very difficult for the workers to get compensation as the tea management cites the present crisis as the rationale behind their inabil- ity to compensate the workers. The workers involved in hazardous jobs like spraying pesticides and insecticides are not provided with any protective clothing. They spray dangerous pesticides without any protection. This has led to many cases of diseases. RAJU, 40 (Sholyar Estate, Valparai) Raju sprays insecticides in Sholyar TE from eight in the morning to two in the after- noon spraying around 25 acres each day. He was not given any protective clothing and the dangerous chemicals have affected his eyesight. He asked for compensa- tion from the management who summarily rejected it. He continued to work despite his damaged eyesight and one day, while working, fell down from a height and broke his shoulders, but he was not given any compensation. The doctors have advised him not to carry heavy weights but the manager has forced him to continue his spray- ing job that involves lifting the heavy spraying machine on his shoulders. 64 crisis in indian tea industry Observation of the Fact Finding Team on the Con- dition of Small Tea Growers The majority of the tea plantations in the Nilgiris are owned by small holders having a total area of less than 5 hectares. There are around 60, 000 small tea grower families owning between 5 to 10 acres of land and wholly dependent on tea production and overall there are around 3 lakh people who are directly or indirectly involved or dependent on tea cultivation. The majority of these small growers are indigenous people called Badagas. These people were engaged in potato and vegetable cultivation, but slowly they took up tea planting as tea growing became profitable. Now the fortune of the entire region depends on the price of tea. Since, the fall of tea auction prices, these small holders are facing severe hardship. Moreover, there is a significant number of casual workers in these smallholdings, who are essen- tially Sri Lankan repatriates. These Sri Lankan repatriates came to India under the October 1964 accord between Prime Ministers Lal Bahadur Shastri and Sirimavo Bandaranaike. They were settled in the Nilgiri region by the government. The condition of this community is the worst, as most of them dont own any land. With the consistent fall in tea prices, these workers in the smallholdings are receiving practically nothing. All of them are under the burden of heavy debt and their children, unable to bear the expense of education, have dropped out of schools. These small growers are not protected by the Plantation Labour Act, which asks the employer to provide basic minimum facilities for the workers. This is because the smallholdings below 8 hectares do not come under the ambit of the Plantation Labour Act. These small holders are completely dependent on the tea auctions, as they dont have access to any other method of selling tea. 65 crisis in the tea industry crisis in indian tea industry
Retail Market @ Rs. 140/ Kg Bulk Buyers (Big Companies) Value addition Blending and packaging Auctions @ 50/ Kg Brokers BLFs @ Rs. 32/ Kg Retail Market @ Rs. 140/ Kg Bulk Buyers (Big Companies) Value addition Blending and packaging Auctions @ 50/ Kg Brokers Government Sales Cooperative Factory Retail Market @ Rs. 140/ Kg Bulk Buyers (Big Companies) Value addition Blending and packaging Auctions @ 50/Kg Brokers Ex-Factory Sales Packet Tea Big Plantation's Factory Small Tea Holding Sells @ Rs. 4.50/ Kg Figure 1: The movement of tea: Smallholdings to the retail market 66 crisis in indian tea industry A Meeting with the Small Growers, Coonoor The Fact Finding Team members attended a meeting with the small growers at Coonoor on 22 January 2003. The meeting was organised by Parmasivam, from NDEW Union (INTUC). The small growers were mainly from the Badaga community 3 , where as the workers in the small plantations were essentially Sri Lankan repatriates. The small growers reported that they are going through an unprecedented crisis and hardship for the past two years, because of the fall in tea auction prices. The situation is such that even the school fees for children has not been paid for months together, putting both the children and schools to great difficulty. The Chief Minister of Tamil Nadu had promised an increase in procurement prices for green leaf from the small grow- ers but that promise has not been fulfilled till date. The small growers stressed that they can produce quality tea if they are given subsidies for pruning the tea fields. They also suggested that the government should fix a minimum support price of Rs. 55 per kg of tea, so that the small growers can get a price of Rs. 10 per kg of green leaf. The small growers feel that the crisis is essentially because of the cheap import of tea and its re-export as Indian tea, which affects the image of quality Indian tea. The condition of Sri Lankan repatriates who work in these tea plantations is even worse. These workers work in plantations as well as agricultural lands for Rs. 50 per day. However, since the prices have come down they are not getting any work in the tea plantations. These workers reported to the Fact Finding Team that they are facing a situation of starvation. Their children have stopped going to schools and they survive by selling off household items. Tea Prices The small growers are in great distress because of the continuous fall in tea prices. They used to get around Rs. 18 for each kilogram of green leaf in 1998 but are now being offered Rs. 4 for the same quantity. Due to the hardship faced by them the small growers have organised massive strikes. These strikes sometimes become violent as well. Though the ruling party during elec- tions promised that the small growers would be given a price of around Rs. 15 per kg, nothing has materialised till date. However, the government has announced a reduction of sales tax from 4 percent to 2 percent. This helped the small growers to get an additional 50 paise per kg. Bought Leaf Factories ( BLFs ) There are about 20 BLFs in the Gudulur area and about 65 in the Kotagiri area of Nilgiris. There are some BLFs in the Kundah area as well. These BLFs buy tea from the small tea growers. In total there are around 150 BLFs in the Nilgiri region producing 81million kgs. of tea. These BLFs employ leaf agents to procure leaves from the growers. 3 Badagas are the indigenous people of Nilgiri district of Tamil Nadu. 67 crisis in the tea industry crisis in indian tea industry However, the BLFs have no control over the maintenance of green leaf standards in respect of their procurement from small growers. This is one of the reasons for the poor quality of tea manufactured by BLFs. Moreover, the output is often not in conformity with the PFA 4 standards and is being dumped at low prices; therefore, adversely affecting the tea market as a whole. The BLFs sourcing of green leaf is currently not accounted for by any agency leading to serious quality issues involving the final output. Tea Waste generation by BLFs, as incidental to manufac- ture, is not appropriately accounted for by way of statutory declaration under the Tea Waste (Control) Order. It is important to examine in great detail the role of these bought leaf factories. However, the most interesting aspect of the tea processing factories is that they sell the tea to brokers for auction purposes. This tea is essentially bought by big tea companies in the auctions and hence it again benefits big companies. Similarly, the small growers also sell the tea leaf to the big plantation factories. Thus it is a vicious cycle where the big tea companies always benefit from the cheaper tea. The small growers of Tamil Nadu feel that some of the BLFs are benefiting from the crisis at their cost. Earlier this has led to major agitations in the Kotagiri area. The state government has appointed a high-level committee to enquire in to the crisis and the role of the BLFs. However, the committees report has not been made public as yet. Cooperative Factories A majority of the small farmers sell their tea to the Industrial Development Cooperative Society (Indcoserve), the premier cooperative of the tea growers in the region. About 21,000 small grow- ers, growing tea on 34,000 acres are members of Indcoserve. Its members supply green leaf to the 16 Indcoserve factories in the Nilgiris. The Indcoserve factories produce about 14 million kg. of black tea per annum. The small growers supply their leaf through leaf collection centres on a regular basis and receive payment on a weekly basis. The growers are paid on the basis of the sale realisation of the factories. The small growers have alleged that they dont have access to the profit and loss statement of the cooperative factories as Indcoserve follows a non-transparent method. The growers feel they should not be penalised for the inefficiency of the Incoserve factories. Quality of Tea The leaf produced by the small growers is of poor quality because large numbers of small grower fields have not been pruned for the last 8 -10 years, where as the recommended time is once in 4-5 years. Pruning expenses, costs of burial of pruning and loss of crop for a period of three months have been the main reasons discouraging the small growers from undertaking this im- portant agricultural practice. Moreover, due to a steady fall in prices and accumulating losses, the small growers are not in a position to plough back any money in the upkeep of the tea gardens. 68 crisis in indian tea industry CHAPTER VII The Crisis in the Tea Industry: Analysis of Vari- ous Factors After the assessment of the situation in the tea plantations of Kerala and Tamil Nadu we came to the conclusion that the Indian tea industry is in crisis. It is manifested in the region specific closure and abandonment of tea plantations, non-payment of wages and statutory dues to the workers and starvation induced deaths in affected tea plantations. We will briefly examine the factors that led to the crisis, whether the crisis is global in its sweep, considering the fact that tea is a commodity traded in the global market. If it is an Indian phenomenon, the specificities of Indian tea need to be looked into that make it vulnerable. However, it can be said that the most important reason for the present crisis is the consistent and unprecedented fall in tea auction prices to the extent that it is below the cost of production. The average auction prices fetched by the tea producers of South India fell from Rs. 68.79 per kg. in 1998 to Rs. 57.10 per kg in 1999, and further nose-dived to Rs. 44.64 in 2000. In 2001, the price level hovered around Rs. 46.02 per kg. There are no clear signs of improvement in the prices for the year 2002/3 as well. In the first three sales for the current year, the auction price slipped by 20 percent to Rs. 40.29 per kg. 1 The northern tea gardens have not remained immune to this trend of fall in tea prices. From Rs. 80.22 per kg in 1998 it drastically came down to Rs. 69.80/ kg in the year 2001. In the year 2002, the average tea prices have further come down to Rs. 57.25/ kg (See Table). The decline in tea prices has led to a decline in farmers incomes and labourers working conditions. Table 20 Average Auction Prices in South and North India 1998-2002 (In Rs. )
Auction Centres 2002 2001 2000 1999 1998 Difference +/- (2002-2001) Kolkata 61.22 76.36 81.09 88.60 87.83 -15.14 Guwahati 55.09 68.68 68.80 80.54 78.76 -13.59 Siliguri 54.13 63.41 61.16 72.56 74.66 - 9.28 North India 57.25 69.80 70.34 80.58 80.22 - 12.55 Cochin 48.13 52.21 51.33 62.03 73.31 - 4.08 Coonoor 36.85 41.47 38.98 53.34 65.06 - 4.62 Coimbatore 41.2 44.98 43.35 57.26 68.74 - 3.78 South India 42.13 46.02 44.64 57.10 68.79 - 3.89 All India 51.6 61.66 61.71 72.80 76.43 - 10.06 Source : Indian Tea Association. "Indian Tea Scenario 2002: A Status Paper." Kolkata: ITA,2002, p.13. 1 L. N. Revathy, Dipping prices worry Southern tea trade, Business Line, 30 January 2002. 69 crisis in the tea industry crisis in indian tea industry 1. Is it a Global Crisis? Tea is a global commodity. Though it is produced in a few countries it is traded and consumed all over the world. To understand whether the present crisis is global in its sweep, let us look at (a) global supply of tea and (b) global tea prices 1.1 Global Supply of Tea When there is a shortage of tea in the international market, the price tends to go up and when there is excess tea the prices come down. An examination of global tea production and exports reveals that almost all the tea producing countries production and exports are directly related. Although, the production is increasing in all the tea producing countries, whenever, there has been excess production, the exports have also gone up to balance the excess production. How- ever, in the case of India, between 1997 to 1998, the production went up by 60 million kgs. but the exports went up by only 7 million kgs. Table 21 World production and export of tea (in million. ) Country 1995 1996 1997 1998 1999 2000 2001 Pr Exp Pr Exp Pr Exp Pr Exp Pr Exp Pr Exp Pr Exp India 756 164 780 162 810 203 870 210 805 192 823 207 854 180 Banglades- h 48 25 53 26 51 25 56 22 47 15 54 18 57 13 Sri Lanka 246 235 259 234 277 257 281 265 284 263 306 280 295 289 Indonesia 144 79 166 102 154 67 167 67 165 98 169 106 169 100 China 588 167 593 170 613 202 665 217 676 200 680 228 695 250 Taiwan 21 3 23 3 24 3 23 2 22 3 20 3 20 2 Iran 55 2 58 2 60 3 60 3 60 4 50 4 50 4 Japan 85 1 89 1 91 1 83 1 88 1 90 1 90 1 Turkey 104 2 115 4 140 19 178 18 171 5 170 6 138 5 Vietnam 40 14 42 15 45 27 47 33 49 36 59 56 80 68 Kenya 244 237 257 244 221 199 294 263 249 242 236 217 295 258 Malawi 34 33 38 37 44 49 40 41 39 43 42 39 37 41 Tanzania 24 21 20 18 22 19 24 22 23 21 24 22 25 22 Uganda 13 11 17 15 21 18 26 23 25 22 29 26 33 30 Argentina 42 41 43 41 55 56 50 59 50 52 47 50 55 52 Others 87 41 90 40 90 55 98 57 99 64 104 70 115 74 Total 2531 1076 2643 1114 2718 1203 2962 1303 2852 1261 2903 1333 3008 1389 Source: Compiled from various issues of Indian Tea Association. "Indian Tea Scenario" Kolkata ITA. Pr: Productivity; Exp: Exports 70 crisis in indian tea industry 1.2 Global Tea Prices The price indices based on the auction prices in US Dollars with the year 1995 taken as the base, show that the fall in tea prices is essentially restricted to India and Bangladesh. The position of South Indian tea prices is the lowest among all regions. Sri Lanka, Kenya, Uganda, Malawi and Tazania in particular have shown appreciable increase in price indices in 2001compared to that of 1995. Table 22 Global tea price indices (Based on auction prices in US $ terms)
Countries 1995 1996 1997 1998 1999 2000 2001 North India 100 93 124 124 119 98 94 South India 100 92 128 132 105 78 77 India 100 93 124 125 114 91 89 Sri Lanka 100 133 143 148 116 126 110 Kenya 100 108 152 147 139 158 114 Indonesia 100 109 155 159 99 113 92 Bangladesh 100 95 140 127 103 93 90 Malawi 100 103 162 155 122 152 113 Uganda 100 145 225 170 161 199 140 Tanzania 100 119 175 126 122 163 126 Source: The Survey of Indian Industry (The Hindu, 2003), p. 381. It is beyond the scope of the present fact finding exercise to look at how in a global commoditlike tea, the fall in tea prices has not spilled over to the rest of the world. However, we will be examining the possible factors that led to the fall in tea auction prices in the Indian market. 2. Over Supply Situation Most of the planters and trade unions have cited the over supply situation as the main reason behind the fall in tea prices. Since a large number of countries are into tea production and there is no clear monopolistic leader, it allows for fierce competition. The plantation management in both Kerala and Tamil Nadu has contended that the over supply situation exists because of 71 crisis in the tea industry crisis in indian tea industry falling exports, growing imports, falling tea consumption in India and rising labour costs. 2.1 Exports 1997-98, the tea import saw a four times increase that has continued since then. There was a major fall in tea exports in the year 1999 (shortfall of 18 million kgs.) and again in the year 2001 (shortfall of 25 million kgs.). As a result every year there has been an accumulation of tea stockswhich could not be sold. Between 1995- 2001 the accumulated net tea stock has been calculated to be around 165.09 kgs. The availability of this surplus tea in the Indian market may have affected the auction prices in a major way. Table 23 Production and Import of Tea (in millions of kg) Year 1995 1996 1997 1998 1999 2000 2001 Production 754 780 810 874 824 846 854 Import 1 1.25 2.61 8.93 9.99 13.43 16.58 Total Supply 755 781.25 812.61 882.93 833.99 859.43 870.58 Domestic Consumption 562 580 597 615 633 653 673 Export 163.7 160 203 210 192 207 182 Total Demand 725.7 740 800 825 825 860 855 Accumulated Net Tea Stock 29.3 70.55 83.16 141.09 150.08 149.51 165.09 Source: Calculated from Indian Tea Association. "Indian Tea Scenario" Kolkata: ITA, various issues. While all the major tea-producing countries have witnessed an increase in exports, the Indian tea industry has continued to be left far behind them. One interesting aspect to be observed from the graph below is that the rapid growth of Chinese tea exports from 168.5 million kgs. in 1995 to 250 million kgs.. China is slowly emerging as the biggest player in the international tea export market. It is crucial to examine the markets in which Chinese green tea is rapidly becoming popular and which tea-producing countries are losing out in that market. 72 crisis in indian tea industry Figure 1: The volume of tea exports by major tea producing countries in the world ( In Million Kgs. ) Source: Compiled from Statistical Bulletin, Sri Lankan Tea Board, Colombo, 2000 and Indian Tea Associa- tion. Indian Tea Scenario Kolkata: ITA, 2002. 2.2 Basic factors behind fall in tea exports In a large number of estates of South India, there is very little importance given to the quality of the tea produced. The tea from Kerala and Tamil Nadu had a ready market in Soviet Union till 1991 and it continued even after the fall of the Soviet Union as the Government of India entered into a rupee-rouble agreement. For example, in many tea estates of Kerala normal plucking, which is for 10 days, is being extended to 15 to 22 days. As a result, the green leaf becomes 0 50 100 150 200 250 300 350 India SL China Kenya India 163.7 160 203 210 192 207 180 SL 235.8 233.6 257 265 263 280 289 China 168.5 166.5 202 217 200 228 250 Kenya 237.5 244.2 199 263 242 217 258 1995 1996 1997 1998 1999 2000 2001
73 crisis in the tea industry crisis in indian tea industry coarse and unsuitable for quality tea manufacture. Table 24 Major importers of Indian tea Destination 1995 1996 1997 1998 1999 2000 2001 United Kingdom 21.1 24.5 26 21.3 18 20.1 15.90 C.I.S 81.5 51 95.6 94.6 102.8 95.43 83.41 U.A.E 13.4 21.6 20.9 23 17.3 21.2 21.65 Source : Tea Statistics, 11 Sep. 2001 <www.teauction.com/statistics/expcountry.asp> The CIS countries have increasingly become quality conscious and are demanding better quality tea. There is also a major shift visible in Russian buying from CTC to Orthodox teas. Although the tea exports to CIS were growing slowly during the period 1999-2000 but, in 2001 exports fell to 83.41 million kgs. in 2001 from over 95.43 million kgs. in 2000. The Russian tea importers have begun to buy tea from other tea producing countries like Sri Lanka. Sri Lankas major export market has become the C.I.S and the countries in Middle East. Moreover, every year their exports to these countries are growing) and it is felt that this growth is at the cost of Indian exports. Tables 25 Sri Lankan Direction of Exports (In million/ kg.)
Destination 1995 1996 1997 1998 1999 2000 United Kingdom 12.88 7.93 9.19 9.81 10.60 10.17 C.I.S. 40.37 38.22 50.47 41.09 47.74 56.64 Iran 5.89 10.02 6.18 5.48 9.67 12.48 Saudi Arabia 2.45 8.80 8.64 11.12 9.81 11.42 Middle East (other) 36.33 6.16 28.18 31.88 62.89 67.62 Source : Tea Statistics,11 Sep. 2001 <www.teauction.com/statistics/expcountry.asp> estin 74 crisis in indian tea industry 2.3 Imports The planters have regularly contended that the tea prices are going down because of cheaper tea imports. The Coordinative Committee of Planters Associations (CCPA) sent a detailed memo- randum to the Commerce Minister setting out its objections on the following considerations: i. The tea at a cheaper price would be highly fibrous and stalky which was not being gen- erated by the Indian industry. ii. The Dooars, Cachar, South Indian tea were good blending materials and imports would militate against the interests of those vulnerable segments. iii. Imports would end up merely replacing the Indian tea component in exports conferring no benefit by way of additional export volume. iv. The proposal to dilute the value-addition norm would not be in Indias overall interest. v. It was apprehended that the restriction on sales in Domestic Tariff Area (DTA) could be diluted, in time, to allow dumping of low priced teas in the domestic market to the detri- ment of the Indian tea industrys growth and development. 2 Table 26 Year-wise import of tea into India Year M. kg Rs Crore Rs/ kg 1996-97 1.25 6.21 49.68 1997-98 2.61 17.79 68.16 1998-99 8.93 64.73 72.47 1999-00 10.36 61.97 59.80 2000-01 15.23 95.47 62.70 1999 (Jan-Dec) 9.99 57.40 57.49 2000 (Jan-Dec) 13.43 84.55 62.96 2001 (Jan-Dec) 16.58 92.48 55.78 Source: Indian Tea Association. "Indian Tea Scenario 2002: A Status Paper." Kolkata: ITA, 2002, p.15. It has to be noted that the sale of imported tea in the domestic tariff area by 100 percent EOU/ EPZ units is not allowed. In fact, in the year 2001, out of a total import of 16.58 million kgs., almost all (16.24 million kgs.) was re-exported (Table 8). However, the excess tea imported (even if it is only for re-exporting purpose) along with rising tea production also means that much more tea would be available in the market. This availability of excess tea again brings down the 2 Indian Tea Association, Annual Report (Kolkata, 1994) pp. 74-75. 75 crisis in the tea industry crisis in indian tea industry tea auction prices. The other interesting aspect is the price paid by the importers for the tea bought from outside the country. From the year 1997 the price of imported tea has remained much higher than the average auction prices. Hence, it is crucial to examine the nature of tea imports in India, who are importing this tea and where is this tea going and at what price? Table 27 Import through routes (million kg.)
Import by 2001 2000 EOU 12.69 10.05 EPZ/SEZ 2.02 0.64 Domestic units under Duty Exemption Scheme 0.53 2.13 Total Import for re-exports 16.24 12.82 Import for domestic market 0.34 0.61 Total Import 16.58 13.43 Source: Indian Tea Association. "Indian Tea Scenario 2002: A Status Paper." Kolkata: ITA, 2002, p.16. mport The data shows that Indonesia and Vietnam have become the biggest tea exporters to India. Sri Lanka has not been able to penetrate Indian markets in spite of a concessional import duty of 7.5 percent with a quantitative barrier of 15 million kg. 76 crisis in indian tea industry Table 28 Country wise tea imports into India
Country 1998 1999 2000 2001 China 0.12 0.26 0.24 _ Indonesia 4.22 3.14 4.39 7.46 Kenya 0.44 1.25 1.33 2.21 Iran n.a. 0.48 0.93 0.06 Sri Lanka 0.31 2.77 2.09 0.8 UAE n.a. 0.09 0.42 _ Vietnam n.a. 0.36 2.72 5.29 Source: Compiled from Indian Tea Association. "Indian Tea Scenario 2002: A Status Paper." Calcutta: ITA, 2002, p.16 and Indian Tea Association. "Indian Tea Scenario 2001: A Status Paper." Kolkata: ITA, 2001, p. 20. 2.4 Tea imports and domestic consumption The excess tea argument however needs to be further examined in the context of growth in production and domestic consumption. The domestic consumption of tea in India has been grow- ing. When the global tea market is shrinking due to competition from other beverages, the Indian annual tea consumption has been increasing by an average of 2.75 percent per annum during 1986-2000. However, during the same period, the average annual growth of Indian tea produc- tion has been only 1.68 percent. The consumption rates are going up regularly and this has been substantiated by a study con- ducted by IIM-Calcutta in1999, on behalf of the Tea Board of India. The IIM -C study, using the state level data of National Sample Survey Organisation (NSSO) for the year 1987-88 and 1993- 94 revealed that tea consumption is growing by 3.1 percent per year. The study also revealed that packaged tea constitutes about 40 percent of the total tea market and is estimated to grow at a cumulative annualised growth rate of 5 percent. However, there is another study by ORG-MARG conducted on behalf of CCPA, which estimates that the domestic consumption growth is only 1.8 percent annually. There is lot of confusion about the exact consumption rates and has hampered the formulation of any meaningful long- 3 Please refer to Chapter 4 pp 33- 34. 4 Please refer to the complete break-up of labour wages in Chapter 4 p. 37 77 crisis in the tea industry crisis in indian tea industry term action plan on production, consumption and exports of tea. It is strongly felt by all the stakeholders that extensive mapping of production and consumption levels needs to be done as soon as possible. 3. High Labour Costs The employers have cited increasing labour costs in the face of falling tea auction prices as one of the major reasons for high production costs and the subsequent closure of many tea estates. The Chairman of the Central Travancore Planters Association (CTPA) 3 in a letter provided to the Fact Finding Team mentioned that wages and other benefits constitute 50 to 60 percent of the cost of production. Particularly in the case of Kerala it has been mentioned that the tea plantation wages are the highest in the world. The wages and other fringe benefits given to a worker in Kerala is Rs. 137.83 per day and in Tamil Nadu it is Rs. 120.9 (From 1 January, 2002). However, during the Fact Finding Teams visit to Kerala and Tamil Nadu, it was observed that many benefits, which are cited as part of the wages on paper, 4 are not provided to the workers. For example, in Kerala, none of the estate hospitals are functional and in Tamil Nadu very few estate hospitals have the requisite medicines. In Kerala, there are many instances of the non- remittance of provident fund for years. In most of the tea estates of Tamil Nadu and Kerala there is hardly any amount spent on statutory benefits like sanitation and conservancy, education and crches. The workers doing the job of spraying pesticides and insecticides are not provided any sort of protective clothing. Hence, there are lot of discrepancies between the employers calcula- tion of wages and what is actually given to the workers. 3.1 Cost of Production A look at the cost of producing a kilogram of tea in South India shows that the cost of production has gone up only marginally. Moreover, the manufacturing costs have actually come down. Only the plucking costs have gone up marginally. 5 For an detailed analysis on employers perspective on wage and productivity linkage in the context of Kerala please refer to Chapter 5 pp.33-35. 78 crisis in indian tea industry Table 29 Cost of Production of tea (per kg) in South India in 2000-01
Details of COP Cost of Production (Rs/ kg) 1998-99 1999-00 2000-01 Cultivation 7.72 7.76 6.97 Plucking 10.64 12.17 13.92 Manufacturing 7.04 7.06 6.96 Packing 3.79 3.8 2.75 Upkeep 3.23 2.97 3.08 Selling/distribution 0.86 1.35 1.41 Welfare 7.47 8.41 9.28 Bonus 3.15 3.41 3.66 Head Office 4.85 4.35 4.19 Interest 1.71 1.9 2.46 Depreciation 1.96 1.96 2.28 Others 6.31 5.82 6.1 Source: Data collected from UPASI during CEC Organised Fact Finding visit to southern tea plantations, January 2003. Details The Chairman of CTPA has mentioned that while the tea plantation wages in Kerala are the highest in the world, these tea plantations have the lowest tea productivity. Moreover, most of the employers both in Tamil Nadu and Kerala argue for a productivity linked wage hike. The employers contend that the Minimum Wage Report of 1952 has taken an annual plucking average based on the crop from the years 1950-51. The yield levels have since increased manifold but were not reflected in the standard output. 5 6 Indian Tea Association Status Paper, Kolkata, 1997. 79 crisis in the tea industry crisis in indian tea industry 0% 20% 40% 60% 80% 100% Assam West Bengal Tamil Nadu Kerala India Over 50 yrs Yield/ Hectare (000 Kg)
4. Productivity of Tea Bushes Increased labour efficiency is not the only factor that may lead to increase in productivity. Factors like age distribution of tea bushes, improper usage of fertilizers, shear plucking etc. are also equally important. The productivity of tea plants deteriorates after 50 years. Hence, it is essential that at least 2 percent of the bushes need to be re-planted every year. 6 Given below is the age of tea bushes in the various tea-producing states of India. Figure 2 Age and yield ratio in 1997 Source: Tea Board of India, Tea Statistics, Kolkata, 2000, pp. 26-27. 80 crisis in indian tea industry Table 30 Age of tea bushes (in percent) 1997 State State Below 10 Yrs 11 to 30 yrs 31 to 40 yrs Over 50 yrs Assam 18 29 22 31 West Bengal 15 19 20 46 Tamil Nadu 29 18 16 37 Kerala 12 04 13 71 India 19 23 20 38 Source: Tea Board of India, Tea Statistics, Kolkata, 2000, pp. 26-27. Kerala and West Bengal have the largest percentage of old tea bushes and hence it is not surprising that the productivity has come down significantly. The trade unions and workers in Kerala told the Fact Finding Team that the management in the closed or abandoned tea planta- tions have not nurtured the plants for a long time. No effort has been made to replant bushes over 50 years. If we try to compare the age of tea bushes and the productivity linkages (Figure 2), it will be seen that Kerala and West Bengal have the largest numbers of old tea bushes and the productivity is also one of the lowest. At the same time, Tamil Nadu has the largest number of young tea plants and hence the productivity is also the highest in the country. Therefore, it would be wrong to attribute the present crisis only to increasing labour wages. 5. High Agricultural Income Tax Sixty percent of the profits from growth, manufacture, and sale of tea are counted as agricultural income and taxed by the states. The rest of the forty percent is considered as non-agricultural income and is taxed by the union government. The planters have pointed out that to increase the volume of exports, production needs to be augmented. The pace of production growth has to be sustained by a consistent and adequate level of resource generation. However, resource gen- eration has been very difficult under the prevailing agricultural taxation structure. 7 The planters, 7 Indian Tea Association, Annual Report, Kolkata, 1992. pp. 167-68. 81 crisis in the tea industry crisis in indian tea industry particularly in Tamil Nadu, have blamed the state governments of tea producing states for ruining the tea industry by imposing unrealistic agricultural taxes. They have pointed out that planning and policy making at the state level rarely displayed any concern towards a realistic taxation policy. Table 31 Tax Incidence on the Tea Industry of India in 2001 Tax Headings Assam West Bengal Kerala Tamil Nadu Income 100 100 100 100 Deduction u/s 33 AB 8 20 20 20 20 Taxable Income 80 80 80 80 Central Corporate Tax @ 35 percent on 40 percent) 11 11 11 11 State Agricultural Taxes @ * on 60 percent (48) 21.6 24 28.8 31.2 Total Tax Incidence 32.6 35 39.8 42.2 *Note: Maximum State AIT rates in: Assam (1997)- 45 percent; West Bengal- 50 percent; Tamil Nadu- 65 percent; Kerala- 60 percent Tax The planters in Tamil Nadu have particularly stressed that they are paying the highest over all tax (42.2 percent) in the tea industry and this high rate is seriously affecting the capacity of internal resource generation by the plantations. This needs to be ratified immediately by the government. It is felt that the assessment of income tax payable by a planter should be brought under the purview of the central income tax act and then subsequent allocations can be made to the states. 5.1 High Excise Duties Excise is an indirect tax levied on goods manufactured or produced in India. Central Excise duties are the single largest source of revenue for the Central Government of India. The excise duty was prevalent in India from the time of the British rule. In 1944, 11 different excise related acts were combined into one act and this was then named as The Central Excise and Salt Act, 1944. Initially, when the Central Excise Act was passed in 1944, the rates of duties for different 8 Under Section 33AB, assesses carrying on the business of growing and manufacture of tea became eligible for deduction up to 20 percent of income. This deducted amount has to be deposited with National Bank for Agricultural and Rural Development (NABARD) and utilised for specified purposes, which are extension planting, replanting of old tea bushes, infilling, rejuvenation pruning, modernisation and up-gradation of manufacturing facilities and labour wel- fare schemes, such as, housing and sanitation. 82 crisis in indian tea industry goods were given in that Act itself. However, with the increase in the types of goods being manu- factured in India, the need for a separate Act for classifying the goods and prescribing the rate of excise duty for each was felt. Therefore, in 1985, the Central Excise Tariff Act was passed classifying goods under 96 chapters. They were further divided, into groups and sub-groups with the rate of duty prescribed for each sub-group. In 1996, it was renamed as The Central Excise Act, 1944. The government has often given excise concessions on one category of tea, only to compensate it by raising the excise duty on some other category. Ashok Alampally, President of AKPA re- ported to the Fact Finding Team that the Government of India imposed an export duty of Rs. 5 per kg but it was removed in 1979. However, the Finance Ministry re-imposed 8 percent excise duty on packaged tea in the 1998 union budget. This led to wide scale protests from the planters and the tea traders. In 1999, the government removed the excise duty on packaged tea but introduced an excise duty of Rs 2 per kg. on bulk tea in February ,1999. However, the planters contended that levy on bulk tea is a direct charge on a product which remains the cheapest mass consumption beverage for the entire population. On the basis of various representations from the planters the Finance Minister reduced the excise duty on bulk tea from Rs. 2 per kg. to Rs. 1 per kg. in February, 2002. The planters told the Fact Finding Team that since the production costs have gone up and the prices are declining the excise duty is eroding the estates profitabil- ity. They also contended that tea is an essential commodity as it is an item of mass consumption - hence it should be freed from excise duty. 6. Small Growers and the Bought Leaf Factories In the last 10 years there has been phenomenal growth in the small growing sector as compared to the traditional organised tea sector in terms of area (from 25,108 hectares in 1991 to 1,01,000 hectares in 2001) and production (from 52 milion kgs. in 1991 to 12.6 million kgs. in 2001). At present there are around 2,30,000 small growers engaged in tea production. The increase in small growers has also led to an increase in the number of privately owned Bought Leaf Facto- ries (BLFs), processing tea bought from the small growers. However, the BLFs still account for less that 20 percent of the total tea production. India is perhaps the only producer of black tea in the world, which is still dominated by the estate sector. Much of the success in both Kenya and Sri Lanka is linked to the growth of the small grower- BLF sector over the past few decades. At present there are more than 135 tea factories in Assam producing 50 million. Kg. of tea, 42 tea factories in West Bengal producing 30 million kg. of tea, 173 factories in Tamil Nadu produc- ing 81 million kg. of tea and 13 tea factories in Kerala producing 2 million kg. of tea. However, unlike Kenya and Sri Lanka where small growers - BLF are regulated by a strong supporting institutional framework, there is no supporting institutional framework for Indian small growers - BLFs. In Sri Lanka all the tea growers are organised into a government run cooperative called 83 crisis in the tea industry crisis in indian tea industry Tea Small Holders Development Authority (TSHDA) in which all the small growers are sharehold- ers. The TSHDA also has 12 BLF factories, under the name Tea Shakti and are also planning to package tea produced from these factories. Additionally, the green tea prices paid to small grow- ers in Sri Lanka is based on a formula under which 32 percent of the average monthly sales proceeds are given to the factory owners and 68 percent of the average monthly sales price was given to the green leaf suppliers. 9 For example, if the monthly sales proceed is Rs. 100 then Rs. 32 goes to the factory owners. Whereas, the green leaf suppliers received Rs. 75 divided by 4.5 of the sales proceed. 10 This formula was based on the relative estimated average costs of the production of green leaf and made tea. Similarly in Kenya, the small growers are organised by the state controlled Kenya Tea Development Authority (KTDA) which also has a large number of BLFs processing tea. In India, with the exception of Industrial Cooperative Factories Federation Ltd (Incoserve) in Tamil Nadu, the small growers are highly fragmented. The price paid by the BLFs to the small growers is based on the auction price of some representative factories in the area. However, there is no formal list of these representative factories and there are no disclosures made on how the green tea price for the period was arrived at. The small growers do not have any control over the green leaf prices and the price fluctuation in the auctions directly and immediately affect the price realised by the small growers. Since the small growers have not been able to control the green leaf prices, they tend to compromise on quality and emphasise on increasing the volume of tea. The BLFs also have no control over the maintenance of green leaf standards in respect of their procurement from small growers. The payment to the small growers is residual in nature so most of the BLFs recover their margin and have no major interest in procuring quality tea leaves from the small growers. This is one of the reasons for the poor quality of tea manufactured by BLFs. Moreover, the output is often not in conformity with the PFA 11 standards and is being dumped at low prices, adversely affecting the tea market as a whole. The BLFs sourcing of green leaf is 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 under the Tea Waste (Control) Order. The small growers and the BLFs are 9 Sri Lanka. Report of the Presidential Commission on the Tea industry and Trade. Colombo: 1995, p. 92. 10 One kg of manufactured tea is equivalent to 4.5 kg of green leaf. 11 Prevention of Food Adulteration Act, 1954. 84 crisis in indian tea industry increasing at a very rapid pace hence, this sector needs further research in great detail. Source: Compiled from Tea Market: A background Study (Oxfam, U.K. 2002) 7. The Tea Auctions The auction system has been the primary marketing mechanism for tea from the time of the first auction in 1891. The auction system received strong regulatory support in 1984 when the Tea Marketing Control Order (TMCO) came into existence. The TMCO stipulated that 75 percent of producers tea, except the packaged tea, has to be sold through auctions. However, in India not more than 60 percent of tea was sold through auctions as most of the big companies preferred selling packaged tea. The auctions are costlier for the producers as compared to private sales because of the transaction costs. However, the payment is assured in auctions and there are hardly any defaults. 7.1 Problems with the Tea Auction Rules The report by international management consultant, A.F. Ferguson & Co about tea auctions prepared on behalf of the Tea Board of India in 2002, severely criticised the existing rules. The report mentions two major problems with the tea auction system, i.e. Divisibility of lots and Proxy bidding. 7.1.1 Divisibility of lots From the fundamental auction principles point of view, all buyers in any auction system must put 12 Fair Trade Organisations, Report of Dutch India Working Group on Tea Industry, 1994 < www.transfair.ca/fairtrade/fair667.html> 6 Oct 2001. 13 Fair Trade Organisations, Report of Dutch India Working Group on Tea Industry, 1994 < www.transfair.ca/fairtrade/fair667.html> 6 Oct 2001. Figure 3: Dominance of big companies in Guwahati Auctions in 1999
33% 13% 18% 6% 3% 27% Hindustan Lever Tata Tea Western India Other packteers Bazar Exporters 85 crisis in the tea industry crisis in indian tea industry the winning bid to buy tea. However, the divisibility rule permits a buyer to buy his entire tea requirement without ever placing the final bid, through sharing with the winning bidder. Thus, the divisibility rule contradicts the basic principle of auctions as it permits some buyers to buy tea without bidding. The divisibility rule exists in order to help the small buyers participate in the bidding, but in effect it is utilised by the numerous agents buying tea on behalf of big companies 7.1.2 Proxy Buying Again the fundamental principle of auction mentions that the original bidders should be present in the auction room to buy tea but, in practice one buyer is allowed to bid for other buyers as well. This system again goes against the spirit of competition that an auction centre should witness. 7.2 Role of the Tea Brokers During the Fact Finding Teams visits many trade unions complained that the bigger players, operating on behalf of the corporate entities, keep away smaller brokers from the auction floors in order to reduce competition. It was pointed out that the big brokers not only do the valuation of tea but also fix the tea prices even before the auctions because of the existence of the divisibility rule. For example five brokers decide a price beforehand and then bid and get the tea at a mutually agreed price, and share it among themselves. There is also a system of proxy buying, by which the brokers can buy tea on behalf of the bidders not physically present in the auctions. By these methods, the brokers have been able to keep the prices low and then sell at higher prices to the foreign buyers. J. Thomas & Co. Pvt. Ltd., the largest tea broker in the world, handles over 155 million kg. of tea a year, i.e., one-third of all tea auctioned in India. Carritt Moran and Co. Ltd., the worlds second largest tea broker, handles 24 percent of auctioned teas in India. Carritt Moran, has also been doing the blending and packaging operations on behalf of Hindustan Levers. The dominance of big corporations in Indian auctions is visible from the figure below. There are regular complaints from the small growers about cartels operating on the auction floors. It is alleged that the bigger players, operating on behalf of the corporate entities, keep away smaller brokers from the auction floors in order to reduce competition. That is one of the reasons that the tea price in the retail market is around Rs. 160 per kg. while in the auctions it is less than Rs. 50 per kg. 14 Financial Express, 21 June 2001. 86 crisis in indian tea industry 8. The Big Tea Corporates are Still Making Profits According to a report by the World Bank (1997), the processing and distribution of tea in 1990 was controlled by four major UK corporations all of which have vertically integrated to a great degree; Unilever/Brooke Bond, Cadbury Schweppes, Allied-Lyons (now Tata Tea, an Indian com- pany) and Associated British Foods/Twining. Together these controlled 80 percent of the tea market in many countries. 12 The present crisis has remained confined to the small and medium tea plantations. The big tea corporations remain mostly unaffected by the present crisis and have shown consistent profits. These big tea companies are showing profits because of their high degree of flexibility, their buffer stocks, and their speculative transactions. 13 For example, Tata Teas profit has declined only 3 percent from Rs 128.75 crore in 1998-1999 to Rs 124.63 crore in 2000. Sales from operations increased by 5.4 percent from Rs 874.23 crore to Rs 922.12 crore in 1999-2000. The main reason behind the profits shown by Tata Tea is because it is one of the largest integrated tea manufacturers in the world. Integrated in the sense that it is involved in all phases of the value-chain. 14 Since the company owns gardens, it has control over both the quality and the quantity of the tea, without having to depend on the open market. The falling auction prices have, in fact led to an increase in the operating margins as the com- pany has left its retail prices unchanged. Therefore, its packaged tea division has acted as an efficient buffer on profitability. Other big players like Hindustan Lever, which is the largest player in the packaged tea segment, have also benefited from the fall in tea auction prices. The fall in tea auction prices have also led to multinational companies entering the made tea business in a major way. The soft drink giant Coca Cola has begun selling tea with the brand name Georgia Tea. Similarly, the Godrej Group have entered the tea business in the year 2002, under the name of Godrej Tea Ltd. It aims to have retail networks in 25 cities and is targeting the premium varieties of tea. The smaller and medium tea plantations dont have access to the retail market and are completely dependent on tea auctions for the sale of their tea. These tea planta- tions are slowly closing down or being abandoned because of the fall in tea auction prices. This has led to severe hardship for the workers, who are living in pathetic conditions. They are com- pletely dependent on the plantation management for basic human amenities, including food, water, electricity, education and health facilities. The workers are not even able to buy food, as the wages have not been paid for years. 87 crisis in the tea industry crisis in indian tea industry CHAPTER VIII RECOMMENDATIONS OF THE FACT FINDING TEAM A. Recommendations for Kerala 1. Relief 1.1 The crisis in the tea industry has lead to calamity in the tea gardens of Peermade Taluk of Idukki district. The distress faced by the workers and their families cannot be mitigated by the workers organisations. Therefore, immediate and continuous relief support should be given to all the tea workers in distress till normalcy returns. The components of the relief should be the following: 1.1.1 free ration of food grains 1.1.2 medical facilities including mobile hospitals 1.1.3 drinking water 1.1.4 assistance to the school going children 1.2 The Government of Kerala, the Planters Associations, and the Tea Board should assume moral responsibility and initiate concrete relief measures to mitigate the suffering of the tea garden workers. 2. Accountability and Liability of Planters 2.1. The criminal liability of the planters in not respecting the statutory provisions of pay- ment of wages, Provident Fund and Gratuity should be established. Recovery proce- dures should be initiated against the planters to ensure payment of these statutory dues. 3. Mismanagement 3.1. Stringent action should be initiated against those planters who have mismanaged the gardens by siphoning off funds and not carrying out essential agricultural tasks. Planta- tions cannot be seen as private fiefdoms but entities accountable to the public. 4. Cost of Production and Productivity 4.1. Considering the fact, that diminishing productivity is due to the increasing age of bushes in Kerala and careless agricultural practices, the Fact Finding Team proposes that the Government of Kerala and the Tea Board should take immediate steps for the replant- ing of tea bushes. The Tea Board should launch quality and productivity upgradation schemes for tea plantations. The Fact Finding Team rejects the argument of the em- ployers that increase in the labour cost is primarily responsible for the increase in the cost of production. 5. Preventing Cartels in Auctions 5.1. Bring appropriate changes, including computerization, in the tea auction system to make it transparent, competitive and accountable, with the objective of preventing for- mation of cartels in tea auctions by big players that forestall natural price realization. 88 crisis in indian tea industry 6. Floor Price for Tea 6.1. Tea being a product of mass consumption under the Essential Commodities Act, the government should fix a minimum floor price for tea and if the prices still fall, the gov- ernment should support them. 7. Export of Tea 7.1. The government and the Tea Board should take immediate steps to increase the quan- tum of exports of tea from India after value addition. 8. Workers Cooperatives 8.1. All the abandoned and closed plantations should be handed over to the workers coop- eratives. B. Recommendations for Tamil Nadu 1. The tea workers are living under very difficult conditions and hence any deduction in their wages in Tamil Nadu on the pretext of the present crisis is unjustifiable. This kind of wage reduction may lead to unrest, social instability and an enormous increase in ad- ministrative expenditure to cope with it. 2. A minimum floor price for the tea from small growers should be fixed by the government and if the price still falls it should be supported by the government. 3. Modern technology like mechanical harvesters and shears should not be introduced to reduce the labour force. 4. The Tea Board should launch quality and productivity up gradation schemes for tea plantations, in particular for the small growers. 5. The government should bring appropriate changes, including computerisation, in the tea auction system to make it transparent, competitive and accountable. 6. Some of the tea plantations, which have been closed or partially closed in Tamil Nadu, should immediately restart and in case they fail to do so, the tea plantations should be handed over to the workers cooperatives. 89 crisis in the tea industry crisis in indian tea industry List of Abbreviations AIAWU All India Agricultural Workers Union AIT Agricultural Income Tax AKPA All Kerala Planters Association AITUC All India Trade Union Congress BLF Bought Leaf Factories BMS- Bhartiya Mazdoor Sangh BPL Below Poverty Line CEC Centre for Education and Communication CCPA Consultative Committee of Plantation Associations CITU Centre of Indian Trade Unions CPI Consumer Price Index CTC Curled, Turned, and Cut CTPA Central Travancore Planters Association CTTA Calcutta Tea Traders Association EOU Export Oriented Units EPZ Export Processing Zone GDP Gross Domestic Product HDI Human Development Index HLL Hindustan Lever Limited HMS Hind Mazdoor Sabha HPI Human Poverty Index HRELU High Range Estate Labour Union Indcoserve Industrial Cooperative Factories Federation Limited ITA Indian Tea Association INTUC Indian National Trade Union Congress IUF International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers Association KTDA Kenya Tea Development Authority LTC Leave Travel Concession MMJP Michael Manarcadu Joseph Plantation NABARD National Bank for Agricultural and Rural Development PAT Planters Association of Tamil Nadu PFA Prevention of Food Adulteration Act PLA Plantation Labour Act RBT Rai Bahadur Thakur UPASI United Planters Association of Southern India TMCO Tea Marketing Control Order TSHDA Tea Small Holders Development Authority