Deregulated tea plantation

The withdrawal of the requirement of permit from Tea Board of India for tea plantation has opened up a plethora of possibilities adding to oversupply and price realisation worries of the industry. Its impact on tea gardens in Assam will also have bearings on life and livelihoods of over a million garden workers in both organized and unorganised sectors. The circular issued by the Tea Board states that henceforth no permission from the Board will be required to plant tea anywhere in India. The circular follows suspension of seven sections of the Tea Act, 1953 by the Central Government which were meant to regulate growing tea on non-tea land without legal permit from Tea Board but have been breached by small as well as large growers. Lakhs of small tea growers will be immediately benefitted in the state as most of them do not possess land certificates which prevented them from obtaining permit for plantations from the Tea Board. The liberalized tea plantation regime will encourage many more to undertake tea plantation in unorganized sectors. Oversupply of green leaf will be a worry for large gardens and tea manufactures in organized sectors as well as existing small tea growers. Oversupply may add to price volatility grappling the industry and lead to further decline in prices of green leaf adding to worries of stressed small growers of getting a remunerative price from bought leaf factories. The liberalized regime also opens up the possibility undertaking tea plantations in non-tea areas and if such experiments are proved to be successful then existing growers will have to compete with new players for the same domestic and export markets. Currently four major tea growing states – Assam, West Bengal, Kerala, and Tamil Nadu – account for nearly 98% of country's total tea production. Assam is expected to witness the largest impact of de-regulation with the State accounting for more than 50% of the country's tea production. Non-requirement of planting permit may also attract large cooperate players to enter tea plantation sectors making the competition tougher for existing small as well as large growers. Industry bodies are sceptical that expansion of tea areas without regulatory mechanism may lead to oversupply. In Assam, consensus between small tea growers and manufactures on determining on quantum of fine leaf in green leaf supplied to bought-leaf factories still eludes. De-regulation on tea cultivation is a step towards diluting role of the Tea Board as a regulatory body to limit its role to promotion and marketing of tea. This coupled with oversupply from due to deregulation could further reduce the negotiation capacity of the small growers in fixation of the benchmark price of green leaf. The large tea gardens and manufacturers in the state also facing similar competition from large corporate entities starting commercial tea plantation as well as manufacturing in non-tea states cannot be ruled out. While deregulation of tea plantation is poised to attract new investment and new ideas, the tea industry addressing the challenges of oversupply and price volatility will be critical to sustainability of existing growers and manufacturers. Quality of Assam tea which always stands out in the competition will provide the stakeholders in the state an edge over new players. All tea growers and manufacturers reaching consensus on strict quality control of green leaf produced in the state, small as well as big gardens, will be crucial for their sustainability in the deregulated regime.