Welfare responsibilities making organized sector production costly, says Tea Association of India
The Tea Association of India (TAI) has said that small tea growers are threatening to put estates in the organized sector out of competition because they are not burdened with welfare responsibilities.
In its paper “Sustainability of Tea Industry in India”, TAI stated that small tea growers or STGs are no longer small or minority as they produce more than 50% of India’s green leaf production.
STG is a person who cultivates tea in an area of up to 25 acres. Assam and West Bengal have more than 2 lakh STGs.
dichotomy in industry
The TAI paper said STGs are not burdened by the welfare activities that organized estates provide to their labor force. “This creates a dichotomy in the industry, with estates and small producers having different costs of production, with different welfare responsibilities, yet they compete with each other,” it pointed out.
“The low-cost tea available from small producers undercuts tea from organized estates that have higher production costs and more stringent requirements to comply with regulations. In such a scenario, the organized sector cannot be sustainable. This would lead to continued hardship for workers, and the closure of estates in the organized sector, eventually leading to widespread conflict and unemployment.
“The emergence of STG as a major player has also affected the tea economy.”
The paper said production has increased from 945 million kg in 2005 to 1,255 million kg in 2020, a 33% increase over 15 years.
It said production exceeded consumption, thereby stagnating the selling price for the plantations.
Inputs on labor cost, which accounts for 60% of production cost for organized estates, have put them at a disadvantage, it said.
kind of benefits
Organized estates, in addition to cash wages, provide a variety of benefits to their workers: free housing, subsidized food, free medical facilities, primary education for workers’ children, cooking fuel, retirement funds and other benefits, TAI said.
“These were regulated under various laws including the Plantation Labor Act, 1951 and rules framed by different states. While the Plantation Labor Act 1951 is being replaced by the Occupational Safety, Health and Working Conditions Code, 2020, the same responsibilities will remain with the management of the tea gardens,” it said.
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