Govt may scrap price-sharing formula for tea

SILIGURI: No regulation can make things better unless it is enforced. Failure of price-sharing formula, implemented two years ago to reduce the tussle between small tea growers and the bought leaf factories on the green leaf price issue, is another example. The Centre is likely to scrap it soon.

“The formula of price sharing in the 60:40 ratio between the small tea growers and bought leaf factories did not work well, especially in North Bengal. We need to rethink the whole issue,” the Union minister of state for commerce and industry, Jairam Ramesh, said in Siliguri recently. According to concerned officials, the government may direct the Tea Board to scrap the formula soon.

As statistics goes, around 25% of the total tea production in North Bengal comes from the nearly 70 bought leaf factories supplied by around 1,200 small tea growers. While bought leaf factories complain of the poor quality of green leaf, small tea growers always protest about the poor payment system, which is sometimes as low as Rs 3.5 a kg.

To streamline the trouble, the Tea Board issued a directive clarifying the price-sharing formula. According to this, each bought leaf factory was expected to share 60% of the price realised from the market (against a specific batch of made tea) with the specific small tea grower that had supplied green leaf for the same batch of made tea.

It also said that in case of the realisation of a higher-than-average ‘auction price’ from the open market, the excess amount would be shared between bought leaf factory and small tea grower on a 50:50 basis.

All bought leaf factories were expected to keep a detailed database of their sale and purchases to determine the price of green leaf. Any non-compliance from any one of the two sides was to be considered a ‘punishable offence.’ However, market experts opined: “The regulation that was working perfectly in Sri Lanka failed here because lack of enforcement.”