crisis in indian tea industry kerala tamilnadu 2003

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crisis in the tea industry

crisis in indian tea industry

Introduction

Centre for Education and Communication (CEC) initiated a ‘Fact Finding Visit’ basedon reports of deaths of workers on tea plantations and the consequent closure of teaplantations 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 theteam would visit Kerala and Tamil Nadu as two independent functional sub-teams andthe reports would be integrated for publication. The India office of the InternationalUnion of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers(IUF) was later contacted to join the fact-finding exercise considering the work alreadyundertaken 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 inthe 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) andShatadru Chattopadhayay (CEC).

Both the Teams met in Coimbatore on January 21, 2003 for mutual introduction, toidentify major concerns and work out the logistics. The field visits were carried out fromJanuary 22-26, 2003 in the respective areas.

Plantation Areas Visited

The Fact Finding Team visited Pon Modi in the Trivandrum district and Peermade inIdukki the district of Kerala. In Tamil Nadu, the Fact Finding Team visited Coonoor andGudulur in the Nilgiris and Valparai in the Coimbatore district.

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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 teaand consumed 673 million kg. in the year 2001. Since independence, tea production in India hasgrown 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 anaverage 180 million kg. of tea every year. The total net foreign exchange earned by the Indian teaindustry 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 andKerala. 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 onpermanent rolls. The number goes up significantly if the casual workers are also included. Mostof 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 notjust offer employment; they are also responsible for providing housing, water, welfare and manyother 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 tobe 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 solelyon the production of tea, to benefit from the economies of scale. These big plantations are oftenpart 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 than10.12 hectares. Technically the growers holding up to 10.12 hectares under tea are consideredsmall growers. However, they only account for 14.5 percent of the total area under tea and 11.1percent of the total tea production. The bigger size estates (>400 hectares) account for about48.3 percent of the total tea area and 53 percent of the total tea production. The estates that arebetween 200 to 400 hectares account for about 0.5 percent of the total number of estates buthave 24.1 percent of the tea area and 25.2 percent of the total tea production. These big plantersare 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 2002.1V.N. Reddy, Analysis of Tea Industry, presented at IUF-India Tea Workers Meet, December 2002.2 Ibid.

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Large Plantations

The Section 1 (4) of the Plantation Labour Act (PLA) 19513 provides a legal definition for theplantations. 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 ormore 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 notbeen previously grown. The plantation workers are usually immigrants. These labourers areoften provided housing in the estates itself along with shops, basic services and recreation andcultural facilities.4 These labourers are incorporated into a new form of society, the pattern ofwhich is dictated by the management of the plantation and designed solely to suit the needs ofthe 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 inwardlooking and cut off from all links with the surrounding people and economy.6 The labour is hiredfrom outside and given housing and incorporated into a new form of society, the pattern of whichwas dictated by the management of plantations. The owners of tea plantations were also therulers of his principality.7

Profiles of Some Big Tea Companies

Hindustan Lever

Hindustan Lever Limited (HLL) is India’s largest foods and beverages company. It also holds aleadership position in consumer goods, personal care products and speciality chemicals. It hasaround 36,000 employees, including 1300 managers all over India. HLL is a subsidiary of themultinational 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. Unileverdominates 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 world’s largestbuyer and distributor of tea.9 At present, it handles 19 percent of the world tea production andhas 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 plantedarea 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 ofplantation 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: OxfordUniversity 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.

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in tea production after a few years of low productivity. In the year 2000, the tea production in

HLL’s 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 teaproduced at these plantations is now being used to support HLL’s 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 otherbrands 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 Tea’s Curl Turned and Cut (CTC) factory atKakajan 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 isthe 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 unitat 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 Finlayand Mcleod Russell in December 1982. Consequently, in 1983, the Company’s name was changed

to Tata Tea Ltd.

Tata Tea on March 31, 2000 acquired the entire shareholding of the world’s 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. 812 India Infoline Sector Report on Tea, www.indiainfoline.com13 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).

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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. in1998 to 78.7 million kg. in 2000 to comedown at 73.4 million kg. in 2001. Most of the tea is sold inthe packet form under various brand names. Tata Tea’s flagship brand has a 12 percent market

share. Other Tata Tea brands are Kannan Devan, Chakra Gold, Gemini, Agni, and Lucky Cup.The Tata Tea’s 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. InIndia, the small growers are mainly located in Nilgiris, Tamil Nadu but the numbers of smallgrowers 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 CumulativeGrowth Rate (%)

Area (Hectare)

Small Growing Sector 25108 10100014.9%

Organised Sector 395362 4061960.3%

All India 420470 5071961.9%

Production (M Kg)

Small Growing Sector 52 17012.6%

Organised Sector 702 684-0.2%

All India 754 8541.3%

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

%)

During the course of the 8th & 9th Plan periods, a substantial number of agricultural farmers inAssam and North Bengal switched over to tea cultivation. During the mid 1990s, many small

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farmers started taking up tea cultivation on a large scale due to good prices prevailing in themarket during 1996-98. The contribution of this sector is now about 20 percent of all the teaproduction in India.

Table 3: The profile of small growers

Headings 1991 2001CumulativeGrowthRate (%)

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 (MKg)

52 170 12.53 6.92 19.91

LabourEmployed

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 Indiaduring the 1990’s. At present there are more than 135 tea factories in Assam producing 50million kg. of tea, 42 factories in West Bengal producing 30 million kg. of tea, 173 factories inTamil Nadu producing 81 million kg of tea and 13 factories in Kerala producing 2 million kg. oftea. Most of the small tea farmers sell their green leaves to these factories, and the factories afterprocessing 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 P r o d u c t i o n ( M K g )

A s s a m 1 3 5 5 0

West Benga l 4 2 3 0

Tripura 2 0.2

Himacha l Pradesh 4 0.1

Tamilnadu 1 7 3 8 1

Kerala 1 3 2

Total 3 6 9 163.3

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

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Tea Auctions

The tea auction system brings the buyers and sellers together, to determine the price throughinteractive 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 respectiveTea 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’ andsubsequent 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 variouscentres 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 auctionhall, 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 isknocked 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, thebuyers 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 broker’s account sales are taken as sufficient proof by thesales 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 hasbecome 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 AsianSurvey, 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.

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Chapter II

General Observations on Vulnerability of TeaGarden 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, atboth 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 orfood 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 starvingand 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 travelmore 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 theyhave 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 mostcases no money to purchase the essential school uniforms. School children experience

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humiliation and prefer discontinuation of studies. Children may also stop going to schoolto 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 ofdependence on plantations and their incapability to respond to injustice.

8. Moreover, the plantation workers do not have access to any land, which could be utilisedfor 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 ortemporary work in the plantations. Once the plantations stop providing wages, workersface a sudden and dramatic loss of income. This pushes them to the brink of starvationand a feeling of helplessness in meeting the essential requirements of living, like buyingessential 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 thetransportation expenses of their school going children, providing for the health require-

ments for themselves and their family members and providing for even the basic needsof 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 ofworkers in one plantation, it could still be thought as manageable; when it happens toone plantation, workers may still explore possibilities of work in other plantations. But,when it happens in plantations one after another, affecting thousands of workers andtheir 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 calamitoussituation.

11. Fourteen plantations in the Peermadu and Vandiperiyaar regions of Idukki district, Keralahave closed down, rendering about twenty thousand plantation workers jobless and theirfamily members are at the brink of starvation. Five plantations have closed down in thePonmudi 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? Whocould be responsible? What are the crisis affecting tea plantations and what are thefactors that brought about this crisis? How have various stakeholders, the planters, thegovernment, the trade unions and the public responded to this crisis? What should bedone immediately to mitigate the sufferings of the people dependent on tea gardens fortheir 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.

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Chapter III

Tea Plantations in Kerala

The plantation sector plays an important role in the economy of the State contributing aroundRs.2911/- crores to the State’s GDP, which comprises 44.72 percent of the total agriculturalincome and 10.38 percent of the State’s income. ‘Kerala is the only State with a substantial stakein all the major plantation crops of tea, rubber, coffee and cardamom. It accounts for 45 percentof 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 backwardareas 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 inthis sector. In other words, a total number of 49.42 lakh persons or 17 percent of Kerala’spopulation are dependent on the plantation industry in Kerala. Plantations are the mainstay ofKerala’s economy, particularly in the rural sector.’1

The 1999-2000 data shows that Kerala’s 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 Kerala’s 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 foronly 0.37 lakh hectares. In respect of production, Kerala retains its share of eight per cent. Teaplantations owned by big companies employ a labour force of over 84,000 in the organisedsector. Of late, small plantations of tea have started emerging in Idukki and Wayanad districts.

Tea has a prominent place in Kerala’s Plantation Sector; in 2001, Kerala produced 69355 tonnesof tea from 36762 hectares of tea plantations in 154 estates. The State accounts for about 34percent 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, inthat order, according to the production figures in 1998-99.

1 Draft of the White Paper, The Association of Planters of Kerala, 2003

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Table 5 Area Under Tea in Kerala - Districtwise

District 1994-95 1995-96 1996-97 1997-98 1998-99

1Thiruvananthapura-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 34690Source: 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 Idukkidistrict. 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 startedbefore the formation of Kerala at the end of 19th 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 Kerala3 , 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.htm3 The Association of Planters of Kerala is a Company incorporated principally to look after the interests of the Member PlantationCompanies who grow tea, coffee, cardamom and rubber in the State of Kerala.The primary objective of the Association is to represent producers’ interests at various forums and strive for the promotion ofplantation commodities. (petition submitted before the Standing Committee of the Ministry of Commerce, 2002)

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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 26000Source: Petition submitted before the Standing Committee of the Ministry of Commerce bythe Association of Planters of Kerala, 2002

The 36 estates in the Central Travancore are located in the Peermade4 and Vandiperiyar5 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 ofthe erstwhile royal family of Travancore. The tomb of Peer Muhammed is situated at Kuttikkanam about 6 km fromPeermade.5 This town situated 18 km from Thekkady, lies on the Kottayam Kumily road. The river Periyar flowing through thecentre of this town nourishes its vast area. This is an important commercial centre in high ranges.

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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/hectaresProduction fromEstates in MillionKgs

Total Productionincluding SmallGrowers in MillionKgs

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 MahavirPlantations and Jay Shree Tea & Industries Ltd. In Wayanadu, Assam Brooke Company is themajor planter.

6 CTPA Office, Glenmary Estate, Glenmary P.O., Idukki District, Kerala

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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 workingout 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 district1 on January 22, 2003 and Peermade Tea Co., Pasumalai, Vagamon, Alampally

and AVT in Peermade Taluk of Idukki district2 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 onthe 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 theVithura Panchayat of the Nedumangadu Taluk,

Trivandrum district, in the foothills of the

Agasthya Mountain range and surrounded byParuthippally-Peppara Game Sanctuary. The

company, which has a history of more than 100

years, is presently owned by Shailesh Bansaliand Brothers of Mahavir Plantations3 . 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 tothe 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-FindingTeam’s visit to the plantations, meetings with employers at CTPA office, the President of CTPA, Panchayat officials inVagamon and various trade union leaders.3 (Mahavir Plantations Limited (Tea and Spices Exports and Steamer Agents) Mahavir House, Milne Road, WellingtonIsland, Cochin – 682003)

23



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 estateschool 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 andstarvation 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 thefactory 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 andalso 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 companyhouses given to the workers are dingy one room sets in a very dilapidated condition. There areno 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 thecompany 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 arestill 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 5th 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 comeup with the idea of co-operatives, but no concrete steps have been taken in that direction.

24


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 governmentand 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 inthe 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 unionshave contributed to the sustained loss.

Labour cost is 70 percentof the cost of

production. Land labour ratio is oneworker per one acre. The Ponmudi Es-

tate pays workers Rs.77.26 per day as

wages, though in Tamil Nadu, there hasbeen 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 busesfrom the estate is one per hour.

erved that no maintenance had been done since decades. Not only that there were no sanitaryblocks as required. The workers seemed to be very worried because the factory had almost

closed down.


Padmini is a plucker in the Jayashree Tea Plantation in Ponmudi and she has been a permanentworker 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 10th of every month is a wage at

the rate of Rs. 70.00.

Padmini’s 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



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 inthe 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 theirown 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 cattlegrazing on the estate property,” she adds.

Padmini quite often falls sick. The most common illnesses are body ache, fever and stomachache. “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 haveto 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 adequatelyand the medicines are provided 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, because he will be totallydrunk,” 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 themedicines 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 forthe 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


Tea Gardens in Peermade Region

Thungamullay Estate

RBT (Rai Bahadur Thakur) group of companies have two divisions, RBT Group I, with fourestates (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 theplantation unattended and the workers, destitute.

No wages have been paid for the last 20 months; the Provident Fund has not been deposited forthe 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. Theestate 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 (Palthankam’s husband) had the money to take

27



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 ½) her grand daughter - all stay in a one room companyquarter. 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 electricityeither, 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 awayfrom 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-cash4 . 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.Jagadamma’s (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 bycontractors 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 notgiven 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 (workingfor 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 theChurakulam 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 fivekilometres 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 theend of the month against monthly wages. Currently, workers were given only store-cash.

28


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 suchcases for the workers in the plantations.

Pasumullay Estate

Pasumullay Estate, part ofRBT 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 theplucked leaves are given outside.


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 girl’s stark poverty –no food to eat, nodress 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, Velankanni’s 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



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 onemeal 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 anddebt 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 daughter’s marriage, which was already fixed, could not take place because there wasno 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. Forthem the estate is the only option for survival. The estate will start functioning again - this is the

expectation that keeps the workers alive.

30


Vagamon Estate

Part of MMJ (Michael

Manarcadu Joseph) Planta-tions, Vagamon Estate is inthe Vagamon Panchayat of

Idukki district. MMJ Planta-tions have two other estates

in the region, namelyKottamalai and Bonami. Allthe 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.


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 startedwith 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 hisneeds 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 apermanent worker with MMJ Vagamon estate. The

31



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 childrequires 24 hours attention, he stays back with the child.

28-year-old Reji committed suicide by consuming poison leaving his mother Kaniyamma at themercy of others. Reji’s 3 month old son and his wife are in Ettuanoor, his wife’s 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 othermeans 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.

David’s polio affected child requires medicines worth Rs.200 a week. She has studied upto the

7th std. but, now the parents are not sending her to school. “She may fall somewhere on the waybecause the medicines are not regular,” says David. David’s 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 andunable 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 acattleshed 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 tosome other city. The Christian Sisters in the nearby Convent adopted one child and another

daughter stays with her.

Vasanthy’s 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


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 Indiaimposes 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 oftea 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, shouldbe free from Excise Duty.

Table 8 Taxes and Duties Levied on a Tea Plantation

C e n t r e State Local Bodies

Income Tax Agricultural Income Tax Professional Tax

Cess under the CommodityAct

Plantation Tax Building Tax

Excise Duty Land Tax Sanitary Tax

Sales Tax/Purchase Tax Water Tax

Central Sales Tax Lighting tax

Factory Licence Fee Drainage Tax

Licence Fee forMachinery

Source: 'Draft of the White Paper ' , The Association of Planters of Kerala

According to Ashok, the Indian tea industry has been ruined by the Russian market, where bulktea was exported without any value addition. Once the Russian market was lost, it was not easyto capture other entrenched markets. This has resulted in an oversupply of tea in the domesticmarket. The crisis in the tea industry can be overcome if the Government of India facilitates theexport 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 ofSri Lankan tea will not make a significant difference in the Indian market.

33



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 highagricultural 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 tomeet the managers of many teaplantations in Vandiperiyaar at theVandiperiyaar 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,Harrisons Malayalam Ltd; B.Ambalatharasu, General Manager(Plantations), RBT and George P.Jacob, Manager, Churakkulam Tea Estates. Besides the Fact-Finding Team members, VazhoorSoman 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 mostimportant 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

YearAuction Pricesper 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


The CTPA alleged that Kerala is the only place where the government declares a negotiatedwage 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 governmenthas 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 pricesand the declared minimum wage is Rs.50.

Besides negotiated wages, the labour cost includes other benefits such as Provident Fund, gra-tuity, medical benefits, crèche, 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, thestandard 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 teaplucked, 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 teaper hectare was 652 kg. Now the yield per hectare of made tea has gone up to 1800-2000 kg inKerala. 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

Depreciation 1.96 1.96 2.28

Total 58.73 60.97 63.08

Source: UPASI, 2003

35



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 dubiousdistinction 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 withotherStates

Kerala TamilNadu 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 adozen plantations have closed in Kerala and many more are on the verge of closure, Tamil Nadu

36


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 nearlytwo 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 workershad the benefit of the recent reduction in the wages. The Government’s 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 intoconsideration 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 asuitable 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 reductionsettlements, 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 andimminent 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 closetheir 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



Table 12 Wage & Fringe Benefits of a Tea Plantation Worker Per

Day

KERALA(WageUnder theexpiredSettlementas on31.03.02)

KARNATAKA(Wage Underthe expiredSettlement ason 31.03.02)

TAMIL NADU

(Wage Underthe expiredSettlement ason 31.03.02)

Nilgiris(From 01-01-2002)

Nilgiris-Wayanad(From 01-01-2002)

1Basic 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 (12percent)

9.81 7.29 9.67 8.61 8.76

6Deposit-LinkedInsurance

0.41 0.31 0.41 0.36 0.37

7 Gratuity (15 day'swage/year)

4.38 3.26 4.32 3.85 3.91

8Bonus 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 (Kerala13 days, Karnatakaand Tamil Nadu 9days)

3.80 1.96 2.59 2.31 2.35

11Sick Leave withBenefit (14 days at2/3rd of wages)

2.58 2.03 2.57 2.34 2.37

12Maternity Benefit forWomen workers(Average)

2.46 1.83 2.42 2.16 2.19

13

Statutory benefitsunrelated to wagessuch as free housing,medical care,protective clothing,sanitation &conservancy, watersupply, education,crèche & child care,LTA etc., constituteanother 20 percent ofwage

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


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 exporthas 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 India’s export market.

Fourthly, the auction system has failed completely. ‘Auction is an adjustment. It has not stabilizeddomestic 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 diseasesiv. 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 cannotdiversify.

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. Iftrade 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 Block

Panchayat and O. V. Kuttan Nair,Member Trithala Panchayat.

They said the Gram Panchayatdoes not have any funds to provide

relief or employment to the joblessworkers in closed down/abandonedplantations.The Gram Panchayat

does not have rights over the plan-

39



tation land , it only has a right over the buildings The revenue goes to the government and theplantations 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, workersdid 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 2003in 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 HarrisonMalayalam 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 divertedprofits 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 thearea.

Loans taken from public financial institutions have not been invested in the plantations by the

40


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 importantreason 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 thatthe 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 isimported 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 Board6 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 teaii. 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



Table 13 Productivity and Labour per Hectare (Tea)

Labour Per Hectare Production perLabour in kg

Assam 2.34772

West Bengal 2.34783

North India 2.30786

Tamil Nadu 1.801152

Kerala 2.01894

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. Accordingto 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 ofmany 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 orabove where as in Tamil Nadu out of 55590 hectares approximately 33 percent area came under

such aged plants.

42


Table 14 Age Group of Bushes in Kerala

A g e G r o u p A r e a C o v e r e d ( I n H e c t a r e s )

B e l o w 5 y e a r s 4 3 3 2

6 t o 10 yea rs 5 5 0

11 t o 20 yea rs 4 5 1

2 1 t o 3 0 y e a r s 7 5 2

3 1 t o 4 0 y e a r s 1 3 5 9

4 1 t o 5 0 y e a r s 3 6 1 1

A b o v e 5 0 y e a r s 2 5 7 2 0

Al l Groups 3 6 7 7 5

Source : Tea Statistics 98-99 Page 28,29

The fact that productivity of tea bush is adversely affected by age related deteriorationsmore than anything else. Bush potentiality is generally observed to be at optimum up to 40years of age beyond which depending on climatic condition and management practicesgradually declines. According to experts, productivity of tea bush in Kerala reached to asaturation 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 suchsteps, 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 toproductivity. 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 productivityand production thereby only registered upward increase. Generally, majorities of workers intea estates are females. More than 75% of workers are employed in plucking in estatesand rest in other works and they are doing hard work also. The period of wage settlementof plantation workers in Kerala is over by the end of 31-3-2002 and a new increased wageshould have been made with effect from 1-4-2002. The workers’ Dearness Allowance duefrom 1-4-2002 is also withheld. The employers are trying for a wage cut while employeesare 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 it’s camp at Peermade on 14-11-2002’,submission by C A Kurien, President AITUC, Kerala State Council, Thiruvananthapuram, P. S. Bhaskaran, WorkingPresident, HEL Union, AITUC, Peermade, Vazhoor Soman, HEL Union, AITUC, Peermade.5 ibid

43



The trade unions unanimously demanded that the government takes over the plantations. InKerala, 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, attributedmismanagement 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 managementhas introduced ‘harvester machines’. He said that a harvester machine that plucks 1500 kg ofgreen 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 thefollowing: 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


Table 15 Status of Tea Plantations in Central Travancore

Name of theCompany &

Area (hectares)Name of Estates

No. ofPermane-

n tWorkers

Date ofClosure Status

Estates Not Functioing

1. PeermadeTea Co.

1. Pi rmed2. Lone Tree

1 2 0 0 Oct. 2002 Workers are plucking theleaf and selling it tobought leaf factoriesillegally with the support ofunion leaders.

1. MMJ (M.M.Joseph)Plantations

3. Kottamalai4. Bonami5. Vagamon

1650 Oct.2002 Salary not paid sinceAugust, September & July2001 respectively, Greenleaf being plucked andsold to bought leaffactories illegally.

2. Pull ikanamEstate

6. Pullikanam 400 Sept.200-2

P.F. not remitted for oneyear. Wages not paid for8 months.

3. HaileyburiaEstates

7. Hailey buria8. Chinnar9. Seminival ley

1 2 0 0 Dec.2002 One month.

Estates Being Run by Workers and Staffs

4. RBT (RaiBahadur Thakur)Group II

10. Tungamullay,11. Pasumullay,12. Granby13. Mount14. Koliekanam

2500 Wages due for 19 months& P.F. for 4 years. Bonusdue for 2 years. Noexecutives in the 5estates.Workers & Staffs haveorganised plucking andselling the leaf outsideand paying store-cash tothe workers and staff withthe money.

Estates on the Brink of Closure

15. RBT Group I 15. Munjamullay16. Pambanar,17. Nellikai18. Thengakal

1650 12 month's wages & 1year's bonus are due. P.F.not paid for 4 yrs.

16. HopePlantations

19. Glenmary20. Ladrum21. Koduvakaranam

2000 - Wages due for 6 monthsand bonus for 1 year. P.F.not paid since April 2001.

17. A.V. George 22. Stag Brook Ashley 500 - Wages not paid sinceMarch 2002 & 1 year'sbonus yet to be paid.

45



18. MlamallayEstate

23. Mlamallay 400 - Wages not paid sinceFebruary 2002.

19. ChurakulamEstate (MMJ)

24. Churakulam 400 - Wages not paid for 3months.

20. TheKarimtharuvi TeaEstate Ltd.

25. Karimtharuvi26. Penshurst

600 - Wages not paid for 5months.

Estates Struggling to Survive due to Crisis and Labour Unrest

21. HML Ltd. 27. Moongalar28. Wallardi

2500 - Wages due for 1 month.Lot of unrest like assaultof Manager, gheraos, go-slow etc.

22. ABAN LOYDLtd.

29. Tyford30. Rohit

1200 - Wages not paid sinceAugust 2002. Only 60percent bonus has beenpaid so far for the year2001/01. Workers areindulging in go-slow,lightning strike etc. &demanding that themanagement abandonthe estate so that they canrun it.

Estates Struggling to Survive

23. AVT 31. Arnakal32. Carady Goody33. Pasuparai

1700 - Despite of the crisis alllabour amenities andwelfare measures arebeing continued. Thoughthey have made loses ontea, they manage to payall wages, bonus, P.F. andgratuity with the othercrops.

24. AlampallyEstates

34. Alampally 270 - Despite the crisis alllabour amenities andwelfare measures arebeing continued. Thoughthey have made losses ontea they manage to payall wages, bonus, P.F. andgratuity with the othercrops.

25. PeriyarConnemaraEstate

35. Periyar Connemara 400 - Functioning normally asabove.

26.ChidambaramEstate

36. Chidambaram 100 Functioning normally asabove.

Source : Compiled from a note prepared by the Central Travancore Planters' Association, January 2003 and supplied to us through VazhoorSoman.

46


Name of theCompany &

Area (hectares)

Name ofEstates

No. ofPermane-

ntWorkers

Date ofClosure

Status

1. MahavirPlantations

1. BonacaduTea Estate

460 October1999

Workers are plucking the leaf andselling it to bought leaf factoriesillegally with the support of unionleaders.

Wages and bonus not paid sinceOctober 1999. Provident Fund notdeposited since October 1977.Gratuity not paid to 180 workerswho left the plantation.

2. JayashreeTea & IndustriesLtd.

3. Ponmudi TeaEstate

300 Not closed Seven month lock out in 2002.Workers being compelled to acceptreduction 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



Table 16 Status of Tea Plantations in Ponmudi Region, Trivandrum District

1973 1985 1998

Size of Estate (ha) No.Averagearea perestate

Yieldper ha. No.

Averagearea per

estate

Yieldper ha. No.

Averag-e area

perestate

Yieldper 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 thecrisis 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 inputcosts 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 importpolicies are listed among factors that pull down prices.

Workers and their organizations do not entirely accept these arguments. For them, joblessnessand 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


Chapter V

Major Findings and Observations

1. Closure of Estates and Abandonment by the Management1.1. 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 GroupII (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 carriedout ‘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 BonacaduEstate.

2. Non-Payment of Wages2.1. 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 havenot received wages since October, 1999.

2.2. Workers have not received their wages since July, 2000, in the five estates of the RBTGroup 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 receivedwages since July, 2002.

3. Non-Deposit of Provident Fund3.1. 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



4. Job-loss and Absence of Alternative Source of Income4.1. 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 Water5.1. 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 Affected6.1. 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 healthassistants remain moot/silent witnesses to the unfolding tragedy.

7. Starvation and malnutrition7.1. 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 foodwhich is available and cheap, resulting in chronic under nourishment or food poisoning

and slow death.

8. Added Burden on Women8.1. 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 Income9.1. 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 topurchase 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 foralternative sources of income which are elusive.

10. No Right to Housing, No Right to Land10.1 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 themany chance for alternative income generation.

50


11. Peermade & Ponmudi Contradicts Kerala’s Claim on BPL11.1 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 belowpoverty line.

12 Overall Degeneration of Plantation Areas12.1 The closure of plantations has resulted in the overall economic and cultural degenera-

tion of the respective panchayats and talukas.

13 Planters Justify Closure13.1 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 thecost 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 Production14.1 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 thePlantations Labour Act to provide social welfare to workers further pushes up the total

labour cost.

15 Planters Demand Reduction in Negotiated Wages15.1 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 DAdue 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 thatthe 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.)

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16 Planters Demand Productivity Linked Wages16.1 Planters want workers to agree to productivity linked wages and to increase the standard

output norms.

17 Workers Assert Mismanagement17.1 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 Production18.1 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 Reduction19.1 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 Productivity20.1 Workers consider wages in Kerala are already linked to productivity.

21 Planters & Workers Blame the Export and Import Policies of the Government21.1 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 System22.1 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 forcefullyargue about the formation of cartels in auctions by powerful traders and multinational

corporations, the planters do not accept this phenomenon.

23 Inactive Government23.1 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 sufferingworkers.

52


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 outSouth 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 Nadu’s 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) TamilNadu is in the 14th position vis-à-vis other Indian states. Per Capita Net StateDomestic Product (at 1993-94 prices in Rs) during 1998-99 is Rs. 11,775compared to national average of Rs. 9,647.

The Literacy Rate in 2001 was 73 percent compared to the national averageof 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 100,000live births) is 79 compared to the national average of 407. The percentage ofhouses with access to safe drinking water in Tamil Nadu during 1991 was 67compared to national average of 62.

1973 1985 1998

Size of Estate (ha) NumberAveragearea perestate

Yieldper ha. Number

Averagearea perestate

Yieldper ha. No.

Averag-e area

perestate

Yieldper 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



There are a total of 89 big and medium tea estates in Tamil Nadu. The Nilgiri region has around58 tea estates which are affiliated to two major planters’ associations-Planter’s 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


Observations from Visits to the Large andMedium Tea Plantations

The Fact Finding Team along with the regional trade union leaders visited some of the major teaplantations in the Gudulur and the Valparai region from the 22nd of March 2003 to 25th 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. Thecompany 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 workersare 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 flatrate 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 TeaPlantations 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 areappalling. 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 toiletfacilities in the estates and the workers have to go to the jungle, where many of them

have become victims of snakebite.

The crèche, in Liddellsdale tea estate, which used to take care of 40 children, has been closeddown 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 arehardly 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 TamilNadu.

55



The condition of the workers in the closed Liddellsdale Estate

CHEINBASUAVA, 55

Cheinbasuva of Liddellsdale Estate, Mahavir Plantations Ltd. is suffering from nerve problemsfor 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 isdependent 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 mudwalls. Cheinbasuva has four children, two

boys and two girls. The boys Siddharaj,

26 and Kempraj, 23 were studying inChennai but had to discontinue their stud-

ies because of the crisis. They have come

back to the estate and have nothing todo, 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 doesn’t have enough money to

marry her off. Cheinbasuava is already under a debt of over Rs.15,000, which he thinks he willnever be able to repay.

THAYAMMA (55)

Thayamma’s 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 thehospital 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 fromplucking 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 wasnot 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


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 agroup 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 crèche isfunctioning properly in the estate and the workers are getting piped water for drinking purposes.

Sholyar Estates, Jayashree 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 busheswhich 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 assignedat the manager’s 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 (May2000) while carrying a weight of around 30 kgs on her head she slipped and fell downfrom a height. She was severely injured with multiple fractures. Her right leg was brokenat two places. The company refused to give any compensation. However, the tradeunions took up her case under the Workman’s Compensation Act. The company settledthe case by paying some paltry amount to Sushila. The company however, refused togive 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 theloan they have taken from the moneylenders with an interest rate of 8 per cent permonth. 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 leakduring 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 skindiseases. 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



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 openand 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 ofthe workers.

The Point of View of the Planters’ Association of Tamil Nadu1

1. The present crisis is not of the making of the industry, but was brought about by the policiesof 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 largersupplies 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 couldnever 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 lookedat 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


the employers in those countries. The other benefits, if any, are provided by the government

themselves. These competing countries don’t have to pay Dearness Allowance, and theincome 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 theIndian producers lack a Level Playing Field (Emphasis in original) vis-à-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 tradeagreement, 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 packagingtrade. 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 wouldbe 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 landreform 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 EstateWorkers 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 andSilver Cloud Plantation were also present.

59



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 labourrules 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 thepresent 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 theworkers needs to be adequately highlighted. The workers and the trade unions want the industryto 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 PlantationCorporation Ltd. (TAN Tea)2

Under the Indo-Sri Lanka agreement signed in the year of 1964, some repatriates, numbering6926, were settled on Tamil Nadu government plantations. Only large families were selected forpermanent 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 assistancefrom the central government and the state government leased out the land.

Tan Tea plantations are situated in Gudalur, Coonoor, Kotagiri, Naduvattam in Nilgiris district andValparai in Coimbatore district. Apart from permanent workers, there are around 10, 000 casualworkers 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 perhectare. 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 departmentstaff 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


Observations on the Workers Conditions in the Large andMedium Tea Estates

WagesThe 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 freehousing, medical care, protective clothing,sanitation and conservancy, water supply,education, crèche 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



The wage reduction: A case of Sirikundra Estate, (HindustanLever 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 RateAvg. AuctionPrices 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 30percent.

d) Productivity is much lower than in other tea producing countries.

e) Wage rates are much higher than in other producing countries. Moreover, they don’thave to spend too much on the welfare of the workers.

f) The current crisis is due to the government’s 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


The FFT feels that the cost of producing tea needs further examination. It is however apparentthat 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 tradeunions. 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 permanentand 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 daysa 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 managementregularly 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.

Worker’s 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 sufferingfrom 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



Occupational safety and hazards

There are many cases of workers meeting with accidents while on duty. There are incidents ofattacks 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 pesticidesand 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 clothingand 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 brokehis 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


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 10acres 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 fallof 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, asmost of them don’t 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. Thesesmall 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 completelydependent on the tea auctions, as they don’t have access to any other method of selling tea.

65



Retail Market@ Rs. 140/ Kg

Bulk Buyers (Big Companies)Value addition

Blending and packaging

Auctions@ 50/Kg

Brokers

BLFs@ Rs. 32/ Kg




Auctions@ 50/Kg

Brokers

Government Sales

Cooperative Factory




Auctions@ 50/Kg

Brokers

Ex-Factory Sales

Packet Tea

Big Plantation's Factory

Small Tea HoldingSells @ Rs. 4.50/ Kg

Figure 1: The movement of tea: Smallholdings to the retail market

66


A Meeting with the Small Growers, Coonoor

The Fact Finding Team members attended a meeting with the small growers at Coonoor on 22January 2003. The meeting was organised by Parmasivam, from NDEW Union (INTUC). The

small growers were mainly from the Badaga community3 , where as the workers in the small

plantations were essentially Sri Lankan repatriates. The small growers reported that they aregoing 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 ofTamil 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 greenleaf. 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 workersreported 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 toget 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 BLFsemploy leaf agents to procure leaves from the growers.

3 Badaga’s are the indigenous people of Nilgiri district of Tamil Nadu.

67



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 teamanufactured by BLFs. Moreover, the output is often not in conformity with the PFA4 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 seriousquality 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 thebig 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, thecommittee’s 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 aregular 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 don’t have access to

the profit and loss statement of the cooperative factories as Indcoserve follows a non-transparentmethod. 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 growerfields 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


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 theworkers 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 ofIndian 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, theprice 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 immuneto 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 andlabourers’ working conditions .

Table 20 Average Auction Prices in South and North India 1998-2002 (In Rs. )

AuctionCentres 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



1. Is it a Global Crisis?Tea is a global commodity. Though it is produced in a few countries it is traded and consumed allover 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 TeaWhen there is a shortage of tea in the international market, the price tends to go up and whenthere is excess tea the prices come down. An examination of global tea production and exportsreveals 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 hasbeen 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 theexports 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


1.2 Global Tea PricesThe 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 thatof 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 reasonbehind 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



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 teastockswhich 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

DomesticConsumption

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 TeaStock

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 250million 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


Figure 1: The volume of tea exports by major tea producing countries in the world ( InMillion 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 till1991 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



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. Althoughthe 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 Lanka’s majorexport 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


2.3 ImportsThe planters have regularly contended that the tea prices are going down because of cheapertea 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 India’s 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 industry’s 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 55.78Source: Indian Tea Association. "Indian Tea Scenario 2002: A StatusPaper." 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 muchmore 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



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 remainedmuch 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 ExemptionScheme

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 13.43Source: 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 7.5percent with a quantitative barrier of 15 million kg.

76


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 5.29Source: Compiled from Indian Tea Association. "Indian Tea Scenario 2002: A StatusPaper." Calcutta: ITA, 2002, p.16 and Indian Tea Association. "Indian Tea Scenario2001: 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 Indianannual 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 thestate 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 growat a cumulative annualised growth rate of 5 percent.

However, there is another study by ORG-MARG conducted on behalf of CCPA, which estimatesthat 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



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 assoon 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 plantationwages 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 fewestate 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 andcrèches. 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 pleaserefer to Chapter 5 pp.33-35.

78


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 6.1Source: Data collected from UPASI during CEC Organised Fact Finding visit tosouthern 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. Theemployers 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



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 essentialthat 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


Table 30 Age of tea bushes (in percent) 1997

State

State Below 10Yrs

11 to 30yrs

31 to 40yrs

Over 50yrs

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 notsurprising 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 bushesover 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 isalso 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-agriculturalincome 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



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 planningand 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 WestBengal 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 @ 35percent on 40 percent)

11 11 11 11

State Agricultural Taxes @ * on60 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 internalresource 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 exciseduty 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 fordeduction up to 20 percent of income. This deducted amount has to be deposited with National Bank for Agriculturaland Rural Development (NABARD) and utilised for specified purposes, which are extension planting, replanting of oldtea bushes, infilling, rejuvenation pruning, modernisation and up-gradation of manufacturing facilities and labour wel-fare schemes, such as, housing and sanitation.

82


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 ofexcise 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 ExciseAct, 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 plantersand 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 massconsumption 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 productioncosts 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). Atpresent 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 forless 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

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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 topackage 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 wasgiven 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 theproduction 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 inthe 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 fromthe 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 PFA11 standards and is being dumped at

low prices, adversely affecting the tea market as a whole. The BLFs sourcing of green leaf iscurrently 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.

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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 firstauction 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 notmore 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 arehardly any defaults.

7.1 Problems with the Tea Auction RulesThe 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 Proxybidding.

7.1.1 Divisibility of lotsFrom 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%HindustanLeverTata Tea

WesternIndiaOtherpackteersBazar

Exporters

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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, thedivisibility 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 Team’s 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 teabut 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 whichthe 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 world’s secondlargest 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, keepaway 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.

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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 1990was 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 teamarket in many countries.12

The present crisis has remained confined to the small and medium tea plantations. The big teacorporations 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 Tea’s 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 becauseit 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 anefficient 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 teabusiness 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 thepremium varieties of tea. The smaller and medium tea plantations don’t 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. Thishas 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, asthe wages have not been paid for years.

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CHAPTER VIII

RECOMMENDATIONS OF THE FACTFINDING TEAM

A. Recommendations for Kerala

1. Relief1.1 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 bythe 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 water1.1.4 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 teagarden workers.

2. Accountability and Liability of Planters2.1. 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 statutorydues.

3. Mismanagement3.1. 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 Productivity4.1. 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 upgradationschemes 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 Auctions5.1. 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.

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6. Floor Price for Tea6.1. 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 Tea7.1. 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. Worker’s Cooperatives8.1. 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 ofwage 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 governmentand 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 teaauction 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.

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List of Abbreviations

AIAWU – All India Agricultural Workers UnionAIT – Agricultural Income Tax

AKPA – All Kerala Planters AssociationAITUC – All India Trade Union CongressBLF – Bought Leaf FactoriesBMS- Bhartiya Mazdoor SanghBPL – Below Poverty LineCEC – Centre for Education and CommunicationCCPA – Consultative Committee of Plantation AssociationsCITU – Centre of Indian Trade UnionsCPI – Consumer Price IndexCTC – Curled, Turned, and CutCTPA – Central Travancore Planters AssociationCTTA – Calcutta Tea Traders AssociationEOU – Export Oriented UnitsEPZ – Export Processing ZoneGDP – Gross Domestic Product

HDI – Human Development IndexHLL – Hindustan Lever LimitedHMS – Hind Mazdoor SabhaHPI – Human Poverty IndexHRELU – High Range Estate Labour UnionIndcoserve – Industrial Cooperative Factories Federation LimitedITA – Indian Tea AssociationINTUC –Indian National Trade Union CongressIUF – International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobaccoand Allied Workers AssociationKTDA – Kenya Tea Development AuthorityLTC – Leave Travel ConcessionMMJP – Michael Manarcadu Joseph PlantationNABARD – National Bank for Agricultural and Rural DevelopmentPAT – Planters Association of Tamil Nadu

PFA – Prevention of Food Adulteration ActPLA – Plantation Labour ActRBT – Rai Bahadur ThakurUPASI – United Planters Association of Southern IndiaTMCO – Tea Marketing Control OrderTSHDA – Tea Small Holders Development Authority

crisis in indian tea industry kerala tamilnadu 2003

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