Chapter I INTRODUCTION
4. Finance: The next serious problem that the small tea growers are facing is related to finance. Due to lack of finance small tea growers cannot afford to extend the area under tea
Since tea processing plants are highly capital intensive and require external borrowing, small tea growers even cannot afford to produce made tea of their own. Bhuyan et al. (1993) have reported that green tea leaf production requires considerable amount of fund for its establishment, as well as operation and maintenance cost every year during its entire economic life. Financing of this crop wholly from small growers’ own saving seems to be quite impossible. Many small growers at one time had been the farmers dealing with seasonal annual field crops. The savings of these farmers were hardly enough either to start the business like small tea cultivation or to expand the existing plantation to new area. Hence, the growers had no other alternative than to take recourse to external borrowing both institutional as well as non-institutional. The main sources of institutional borrowings are commercial banks, Government, Co-operatives and others, while non-institutional sources may include money lenders, friends, relatives and others. He has shown in his study that the intensity of the problem increased with the decrease in farm size. The investment was more profitable in the larger farm size in comparison to the lower size groups of farm because of lower cost of cultivation in the larger farm sizes. The sources of term finance for development of Tea Industry are the Tea Board, Industrial Development Bank of India, State Financial Corporations, and National Bank for Agriculture and Rural Development (NABARD).
Lack of finance, particularly term finance for investment stands as a problem for the growers of small tea cultivation. He recommended the setting up of a separate finance corporation and also suggested the amalgamation of the various Small Financial Institutions under the co-operative management for helping the tea industry.
Bhuyan et al.(2004) observed that most of the problems of small tea growers arose from the fact that they are too small in size and their resources are also meagre. Because of the smallness, most of the small growers are indebted to bought-leaf factories. He also pointed out that the small growers because of lack of finance did not follow the standard practices. External finance although available is not always adequate in quantity and is not received at the right time.
Banerjee and Banerji (2008) underlined the trouble of small growers when they metioned that due to unscientific cultivation, price fluctuations, etc. small tea growers are facing difficulty in repayment of loans.
Ganguli (2013) observed that tea cultivation requires finance right from the purchase of land, leveling of land, drainage, planting, weeding, providing fertilizers, pesticides, insecticides, purchasing small equipments, fencing etc. Tea cultivation requires both fixed and working capital finances. But the facilities which are usually made available by the Tea Board and financial institutions (including NABARD refinance) to big growers are not available to the small growers since the annual patta land on which the tea cultivation is carried on by the small growers is not eligible for institutional finance. In fact, they are unable to use subsidies and other welfare schemes from the Tea Board effectively. Thus the small growers are compelled to find alternative ways. There are instances where at the beginning of the plucking season, some bought leaf factories and agents offer money in advance to the small growers on the basis of their previous year’s production of green leaves. The author has also shown various policies, such as Special Area Development Scheme, District Rural Development Agency, Prime Minister Rojgar Yojana, etc. which are available to promote the small growers, but due to non availability of land documents, they are unable to avail the facilities. The small growers therefore prefer to arrange their own finance through other means. The author has also commented that the small growers are not attracted by the incentives made available by the Tea Board to its registered gardens.
They prefer to make their own arrangements rather than depend upon institutional finance.
Borah (2013) mentioned that due to lack of financial availability small tea growers are unable to increase their area under cultivation and cannot open up their own factories. Most of the growers are cultivating tea on Government lands without having formal ownership. The land regulation of Assam restricts the transfer of ownership right to the growers. This restricts the growers to qualify for registration under the Tea Board, and consequently they are unable to avail the advantages of various schemes of Government and other financial intermediaries.
Earlier the Tea Board had the provision of supporting small tea growers by providing a subsidy of Rs. 60,000 per bigha of land-holding. However, such provisions failed to address the issues of a number of small growers, since only those farmers having permanent land patta were entitled to avail the subsidy. Due to non-availability of land documents most of the small tea growers are
not registered with the Tea Board, which further restricts their options (The Assam Tribune, 2014).
Borah (2016) likewise found that most of the small tea growers have not got any financial help from the Tea Board and other financial institution. The factors identified are lack of registration, poor communication link, lack of having periodic patta, lack of education etc. In such a situation most of the small tea gardeners raised plantation with own funds or they borrowed from relatives.
Dutta Saikia (2016) mentioned that the State Government is yet to formulate and implement suitable financial scheme for catering the financial needs of the small tea growers. Although various financial institutions are available for disbursement of agricultural finance to the cultivators, only the Tea Board of India and the commercial banks have shown some initiatives in this respect in case of cultivation of tea in small holdings.
5. Quality: Singh (2006) points out that shade provided to the tea bushes is one of the important aspects which determine the quality of tea. Shade trees act as the life blood to the tea leaves. It is the shade which ensures natural resistance against pests and infections and also reduces transpiration and evaporation rate. The quality of tea is the summation of the desirable attributes comprising of internal and external things like aroma, flavour, strength, colour and briskness and character of infused leaf. The quality of tea varies from garden to garden and time to time.
Although, the quality of second flush (after first rainfall) is still the best quality, however, it cannot be made or maintained overnight. The deciding factors of high quality tea are the fine plucking, quick spread in the withering trough, proper rolling, fermentation and firing carefully under controlled temperature. Tea quality is also determined by the genetic properties of the plant coupled with climate and soil condition (presence of pH value to the desired extent). Field operations like plucking standard, pruning, use of fertilizer dose and shading are also deciding factors.
As Kadavil (2008) mentions, the term ‘quality’ in its broadest sense is used as a description of all the characters of tea by which it is judged on its market value. So quality means the summation of the desirable attributes comprising internal and external characters like aroma/flavor, strength,
colour, briskness and character of infused leaf. According to him the quality of tea is a highly variable attribute. It plays a major role in determining the price. The factors affecting the quality of tea can be distinguished into three groups, viz; genetic, environmental and cultural:
(i) Tea quality is primarily determined by the genetic properties of the tea planted and those of the tea bush in particular.
(ii) Both soil and climate influence the quality of tea. Climatic condition including temperature, humidity, sunshine duration, rainfall, north-south facing gardens are important in determining quality.
(iii) Field operation like pruning, fertilizing, shading, plucking round and plucking standard also play a major role in determining the quality of tea.
According to the author there are no measures to maintain high quality leaf in small tea segments. Leaf agents still play a major role in determining the acceptable quality of green leaves. It has been observed that the leaf agents often mix various quality leaves together before selling it to the BLFs. This is mainly to maintain minimum quality of leaves because it contains a high share of low quality leaves. The price fixation is based on overall leaf quality though some of BLFs have their own grading system based on quality. Lack of quality reduces the price of leaves. In many regions, especially in Dibrugarh, lack of transport facilities and long distance from gardens to factory are also deciding factors in determining the quality of leaves.
Sen (2008), while studying the impact of oversupply and low quality on tea prices opined that in northeast India, by and large the quality of raw material is very poor and so is the quality of finished product. Most factories have been built with second-hand or old machinery, with the objective of churning out black CTC teas to join the herd at the domestic markets. He also mentioned that fine plucking enhances the quality of tea.
Another problem of low quality tea as mentioned by Mansingh and Johnson (2012) is the time interval between plucking and processing of leaf. It should be ideally about three hours to produce good quality made tea as tea leaf cannot be stored for more than six hours without damaging its quality. But in most of the cases it is seen that the transit of tea leaves from one district to another takes more than three hours, which directly degrades the quality of tea.
Ganguli (2013) mentions that the age of tea bushes also plays an important role in determining the production of good quality green leaves. Generally tea bushes in the age group below 50 years are considered to be economically viable, yield rate normally declines after 50 years. Tea bushes usually attain maturity after five years.
Mature tea bushes have a stable productivity, which continues till 50 years. The small tea growers of Assam are of a more recent origin, they are facing the problem of maintaining the quality of tea. The BLFs, estate owners, leaf agents generally refuse to purchase such poor quality green leaves which have led to conflict between the buyers and sellers. While being transported to factories, the tea leaves from small tea gardens are subjected to multiple handling, leading to inferior quality. The ideal distance from the factory to the carrying point should not exceed 10 km to ensure that the leaves do not get fermented. In case of 17,277 small growers the distance exceeds 10 km. During the hot summer days the leaves lose their moisture content very fast. The resultant loss of weight of the leaves adds to the disadvantage of the growers.
One of the reasons for the low quality as mentioned by Batabyal (2014) is the indiscriminate use of pesticides, which even though has helped in the growth of the product but its use threatens to devalue Assam tea as a brand.