Why In News: Small tea growers in the Nilgiris continue to face a cost-price crisis of green tea leaves (GTL) due to low auction prices, high production costs, and weak institutional support, despite decades of deliberations and reforms.
Introduction
- The Nilgiris, known as the “champagne of teas,” has historically been one of India’s most celebrated tea-growing regions.
- However, small growers—who form the backbone of this sector—continue to face a persistent cost-price crisis.
- The problems of declining green tea leaf (GTL) prices, structural inefficiencies in auction systems, high production costs, and weak institutional support have compounded into a socio-economic and agricultural crisis.
- Despite repeated interventions, reforms remain elusive.
Background: Evolution of the Crisis
Boom Period (1970s–1990s):
- Overwhelming dependence on Soviet Union as primary market.
- Tea plantation land cover rose by 36% (1985–1995).
- Small growers experienced unprecedented prosperity.
Crisis Onset (Post-1991):
- Collapse of USSR and 30% rouble devaluation.
- Overcapacity in tea factories → decline in GTL quality.
- Auction system manipulation and “advance payments” to brokers led to suppressed prices.
Social Unrest (2000s):
- Violent protests by Badaga community farmers.
- Ooty Flower Show cancelled in 1999 due to resentment.
- Seminar “Future of Tea in Nilgiris” (2000) highlighted systemic issues.
Current Status of Nilgiris Tea Industry
- Scale: 46,481 small growers; ~34,408 hectares under tea.
- Institutions: Tea Board of India, INDCOSERVE (largest tea cooperative in Asia), TANTEA (government-managed).
Demands of Growers:
1. Minimum Support Price (MSP) for GTL.
2. Base auction price mechanism.
3. Recognition of tea as an essential agricultural commodity (currently under Commerce Ministry).
Key Issues
1. Economic and Market Challenges
Price Volatility:
- Lowest average auction prices despite high sales in Coonoor.
- Over-reliance on CIS markets; lack of diversification.
High Production Costs:
- Labour-intensive plucking and pruning.
- Quality-linked costs not reflected in sale price.
Overcapacity of Factories:
- Factories exceed leaf supply → compromised quality.
2. Governance and Institutional Issues
Commerce vs. Agriculture Debate:
- Tea is treated as a commercial good, not as an agricultural livelihood issue.
- Limited scope for subsidies, MSP-type interventions.
Ineffective Schemes/Subsidies:
- Government interventions often poorly implemented.
- Auction reforms and marketing boards remain weak.
3. Social Dimensions
Labour Costs and Scarcity:
- Outmigration of youth into IT and service sector.
- Next generation reluctant to continue tea farming.
Decline of Collective Trust:
- Protests, violence, and disillusionment among growers.
- Weakening of cooperative spirit.
4. Environmental and Sustainability Issues
Monoculture Dependency:
- Lack of intercropping → ecological vulnerability.
- Neglect of Value-Addition:
- Reliance on bulk exports, limited branding and premiumisation.
Constitutional, Legal, and Policy Dimensions
- Article 43 & 43B (DPSP): Promotion of cottage industries and cooperative societies.
- Essential Commodities Act: Non-inclusion of tea denies protective measures.
- Cooperative Movement: INDCOSERVE and TANTEA can lead price stabilization.
- WTO and Trade Policy: Impact of global competition on Indian tea exports.
Ethical and Governance Dimensions
- Justice for Small Growers: Market structures favour brokers and large planters.
- Economic Dignity: Persistent low prices undermine livelihoods and intergenerational continuity.
- Trust Deficit: Between government, institutions, and local growers.
Way Forward
1. Economic & Market Reforms
Price Stabilisation:
- Introduce MSP for GTL linked to cost of production.
- Base price mechanism at auction centres.
Diversification of Markets:
- Renew CIS outreach, target ASEAN, Middle East, and premium domestic markets.
- Leverage India’s G20 trade platforms.
2. Institutional Strengthening
Shift Ministry Oversight:
- Move tea under Agriculture Ministry for welfare-oriented approach.
Cooperatives as Price Leaders:
- Empower INDCOSERVE & TANTEA to set benchmark prices.
- Strengthen cooperative procurement and marketing models.
3. Technological & Production Reforms
Mechanisation:
- Promote affordable plucking/pruning machines.
Innovation:
- Focus on value-added teas (orthodox, organic, flavoured, herbal blends).
- Branding Nilgiri tea as “Geographical Indication” premium product globally.
4. Social and Labour Strategies
Skilling & Retention of Youth:
- Incentives for second-generation growers to stay in agriculture.
Self-Employment Models:
- Encourage direct-to-consumer sales via e-commerce platforms.
5. Sustainability and Environment
Intercropping Models:
- Encourage spices/fruit with tea for risk diversification.
Organic and Climate-Resilient Practices:
- Position Nilgiris as a hub of eco-friendly tea.
Conclusion
By restructuring governance, stabilising prices, diversifying markets, and promoting value-added sustainable practices, the Nilgiris can reclaim its status as a world leader in quality tea. The issue must be treated not merely as commerce, but as an agrarian livelihood crisis requiring urgent structural reforms.
UPSC Relevance
GS Paper III (Indian Economy & Agriculture):
- Agrarian distress due to cost-price imbalance.
Mains Practice Question
Q. “The Nilgiris tea crisis reflects the vulnerabilities of small growers caught between high production costs, weak market mechanisms, and policy neglect.” Examine the key factors behind the persistent cost-price issue of Green Tea Leaves (GTL) and suggest measures to create a sustainable and equitable tea economy. (250 words)