CHAPTER III

TEA INDUSTRY - AN OVERVIEW

3.1 Introduction

3.2 Tea Plant Varieties

3.3 Types of Made Tea

3.4 Tea at the Global Level

3.5 Production and Export of Major Tea Producing Countries

3.6 Brief History of Tea Cultivation in India

3.7 Tea in South India

3.8 Tea in Kerala

3.9 Tea Plantation Labourers

3.10 The Promotional Agencies of Tea Plantations

3.11 Abandonment and/or Closure in the Tea Plantations

3.12 Rehabilitation Packages

3.13 Conclusion

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3.1 Introduction

Tea is made from the young leaves and leaf buds of the tea bush

‘camellia sinensis’. The introduction of tea as a beverage is often attributed to

the Chinese emperor Shen Nung in or about 2737 BC. Existing records credit

the Chinese with originating tea cultivation. Till the early 1800s, china was the

world’s predominant supplier of tea. The word ‘tea’ comes from a Chinese

ideogram pronounced ‘tay’ and came into English with that pronunciation,

changing to its present form in the 18th century (Wikipedia, 2013).

3.2 Tea – Plant varieties

There are mainly three tea plant varieties according to geographical

distinction such as China, Assam and Cambodia. These three varieties have a

number of hybrids.

The Chinese variety is a multi- stemmed bush growing as high as 9 feet

and is a hardy plant, able to with stand cold winters and has an economic life of

at least 100 years. The Assam variety is a single stem tree ranging from 20-60

feet in height and includes several sub varieties, having an economic life of 40

years with regular pruning and plucking. The Cambodian variety is a single

stem tree growing to about 16 feet in height and is not cultivated but has been

naturally crossed with other varieties (ICRA, 2006).

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3.3 Types of made tea

Tea is traditionally classified based on the degree of fermentation

(oxidation) the leaves have undergone. The quality of the final product depends

upon the quality of leaves plucked and preservation during processing. Two

leaves and a bud are the raw material for all types of made tea but the difference

lies in the method of processing as explained below:

White tea: made from young leaves that have undergone no oxidation. White

tea is produced in lesser quantities and is more expensive than tea from the

same plant processed by other methods. It is not so well-known in countries

outside China.

Green tea: the oxidation process is stopped after a minimal amount of

oxidation by application of heat. The tea is processed within one to two days of

harvesting. The fresh green appearance of made tea can be procured only if pure

China jat leaf is used. The manufacturing process involves heat treatment of the

freshly plucked leaves through rolling and drying in stages to inactivate the

enzymes responsible for fermentation and every care is taken to retain the

colour and the chemical make-up of the tea leaf (UPASI, 2003).

Oolong: Oolong is semi fermented tea where the oxidation process takes

2-3 days.

Black tea: in back tea production, the tea leaves are completely allowed to

oxidize. In the manufacture black tea, conditions are regulated to encourage the

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change of colour of tea leaf to blackish brown. Orthodox and CTC are the two

methods of manufacturing of black tea.

Orthodox is the older method of producing tea with enhanced flavor and

emphasis of briskness, rather than colour, thicknesses and strength. Preservation

of tips lends an attractive look to orthodox tea. Tea leafs in the CTC method are

subjected to more vigorous and harder processing, leading to more rapid and

intensive oxidation and fermentation. The liquor is thick, strong and more

intensive in colour. Higher ‘cuppage’ of per unit weight of made tea is the plus

point of CTC (ICRA, 2006).

3.4 Tea at global level

Tea is the world’s most popular beverage. Its versatility makes it the

perfect drink, adaptable to every climate and culture. The wide variety of world

teas tends to disguise the fact that they all come from the same plant, Camellia

Sinensis. The tea plant flourishes with plentiful rain, acid soils, and quite

specific seasonal variations in temperature. Despite the need for such

conditions, along with regional and climatic differences it can still produce

hundreds of subtle variations of flavor and aroma.

3.4.1 Major tea producers

The major tea producing countries in the world are China, India, Sri

Lanka, Kenya, and Indonesia.

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3.4.1.1 China

The methods of tea production practiced elsewhere in the world derive

from the 5000 year Chinese lead. A total of 18 provinces are involved in

growing tea and there are no tea auctions in China. Tea is purchased through

direct negotiation between international tea buyers and individual Chinese

export companies. China produces the world’s largest variety of fine quality

teas, many of which are still processed by hand. There are literally thousands of

types, of which only a small proportions are available outside China. China

manufactures a variety of teas such as green, oolong, black, scented,

compressed and white (UPASI-TRF, 2012).

3.4.1.2 India

Indian tea comes from three main areas such as Assam valleys,

Darjeeling and the Nilgiris or blue hills. Assam is the largest tea producing

region and it produces almost 45 percent of the Indian tea. Tea from Assam is

strong and heavy – liquoring with a malty taste. Darjeeling has a huge range of

subtle variations. It is the golden coloured with good clarity and has a grapey,

muscatel character. About 80 percent of Indian tea is consumed in the home

market (Paul S., 2004).

3.4.1.3 Kenya

Kenya’s equatorial location provides the country with the capacity to

produce large amounts of tea. Kenya is the UK’s second largest supplier of tea.

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Kenyan tea, is coloury and brisk, and is an excellent blending compliment to

Assam. The majority of tea is produced via CTC and comes in three main

grades. This is largely destined for use in tea bags, where it contributes a strong

flavor and reddish colour.

3.4.1.4 Sri Lanka

The country may be small geographically, yet it ranks third in terms of

the world’s tea products. Tea from Sri Lanka is still known by the country’s

former name Ceylon. All Sri Lankan tea is plucked by hand and 90 percent of

the Sri Lankan tea is sold through the auctions in Colombo. It has two types of

tea such as black tea and green tea (UPASI-TRF, 2012).

3.4.1.5 Indonesia

Picking is typically done manually, with the main growing area to the

west of the island around Bandung. The majority of Indonesian tea is sold via

auctions held every Wednesday in Jakarta. This is the only tea auction in the

world that is not conducted in English. It specializes in black and green tea and

the green tea accounts for nearly 60 percent of the Indonesian tea production.

Current black tea production is based on tea plants originally imported from

Assam, and are mostly exported for blending (World Tea- Production and

culture, 2013).

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3.4.1.6 Other major tea producing countries

The other major tea producing countries are Argentina (Argentinian tea

has the unusual property of retaining its clarity when poured over ice), Malawi

(Tea from Malawi give coloury and reddish liquor), Tanzania (Strong and fruity

flavours characterize Tanzanian teas which are produced by CTC method),

Zimbabwe, Taiwan (Taiwan’s specialty teas fetch a high price in the

international market), Tibet (the traditional way of preparing tea in the

mountains of Tibet is to churn it), USA, South Africa, Russia, Malaysia, Brazil,

Great Britain and Australia (World Tea- Production and culture, 2013).

3.5 Production and export of major tea producing countries

The following table shows the production and export of the major tea

producing countries.

Table 3.1

Production and export of major tea producing countries 2011-2012

Particulars India Kenya Sri Lanka China Indonesia

Tea Production (M.Kg) 980 346 318 1160 148

Production market share 26 % 9.23% 8.48% 31% 3.95%

Production ranking 2 3 4 1 6

Tea export (M.Kg) 196 383 299 297 95

Export market share 11.91% 23.27% 18.17% 18.04% 5.77%

Export ranking 4 1 2 3 6

Percentage exported 20% 110% 94% 25.60% 64.19%

Source: www.globalteabrokers.com

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3.6 Brief history of Tea cultivation in India

Tea was discovered in India in 1823. Robert Bruce, a British military

officer, while travelling through the hilly regions of Frontier Assam was

informed by a Shingpho chief that some wild plants which resembled tea where

growing on the hill sides. Samples of these bushes were taken to Calcutta where

they were confirmed by Botanists as tea, though different to the species found in

China. This type of tea has subsequently come to known as the “Assam variety”

of tea, which currently dominates the world tea market.

Mr. G J Gordon went to China in 1835 and brought tea seeds, tea plants

and tea manufacturing experts from there. These tea plants were first planted in

Upper Assam at the confluence of the Dibru and Brahmaputra rivers,

somewhere between Sadia and Saikhowa. Because of the unfavourable soil

conditions on the river sides and the inundation of these areas by flood waters,

the plants did not do well and most died. The plants survived were ten shifted

and planted at Chubwa in 1836. The plants grew well and Chubwa became the

first successfully tea planted area in India. (Tata Tea Limited, 1991).

3.6.1 Tea industry and Indian economy

Tea is a major cash crop in India and is one of the oldest industries in the

country. Tea plantation in India is mainly located in rural hills and backward

areas of north eastern and southern states. Some of the major tea growing

regions of India are Assam, West Bengal, Tamil Nadu, and Kerala. The other

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regions where tea is grown in small quantities are Karnataka, Tripura, Himachal

Pradesh, Uttaranchal, Arunachal Pradesh, Manipur, Sikkim, Nagaland,

Meghalaya, Mizoram, Bihar and Orissa. Major plantation district in South India

are Nilgiris, Coimbatore, Salem, Dindigal and the high ranges.

Tea is the second biggest foreign exchange earner and is exported to 80

countries and contributes a sizeable amount to the national income (KSPB,

2011). Further certain varieties of tea are grown only in India and are in great

demand across the world. Darjeeling teas possess the lightness of flavor and the

fine coloring that set them apart from all other teas. Tea industry provides direct

gainful employment to a large number of people and helps in providing indirect

employment in various sectors associated with it. Apart from its contribution to

the economy of India, tea today provides to the common man a planned and

stimulating non-alcoholic beverage. Tea is the country’s primary beverage, with

at least 85% of total households in the country consuming tea. India’s

expenditure on beverages and processed foods accounts for 8% of food

expenditure in rural areas and 15% in urban areas (ICRA, 2006). As one of the

major traditional industries at the time of independence, this industry by its

economic contributions has played a major role and provided the platform for

the economic development of the country after independence. The following

table shows the production, export and auction prices of tea for the last five

years:

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Table 3.2

Production, export and auction price of tea in India

Year Production

(m.kgs) Export (m.kgs)

Auction price (unit price per kg)

2008 980.8 203.1 86.99

2009 979.0 197.9 105.60

2010 966.4 222.0 104.66

2011 1115.7 215.4 103.39

2012 1126.3 205.4 121.81

Source: www.upasi.org/statistics.html

3.6.2 Production economics

Tea plant takes about 15 years to develop fully and the most productive

period is in between the 15th and the 35th year. The major part of capital

expenditure is incurred in the first five years. This then yields return over the

next couple of decades. The yield from bush drops when the plant attains 50

years of age. Pruning is important for maintaining the tea bush in the right form

and height for growing and plucking (Jayanta & Kaushik, 2009).

In South India the pruning cycle extends over a period of 4-6 years

depending on the elevation and growth. Annual pruning is a practice in

Northern India (Assam) but even there the present trend is toward an extended

pruning cycle. After a series of pruning cycles, the bushes are rejuvenated by

hard pruning, removing all cankered and diseased portions of the stem. In

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northern India, the economic life of the tea bush is generally 40-50 years and

around 2-3% of the area is uprooted and replanted every year.

3.6.3 Planting frequency and seasonal nature of production

India’s tea production is seasonal in nature. In north India, the tea bush

is plucked at weekly intervals from April to December and there is a dormant

season during winter. In southern India, the crop is harvested during the cold

and dry months. In north India, crop peak is reached during June –August. In

south India, there are two distinct peak crop periods pre- monsoon and post-

monsoon.

3.6.4 Regulation, production, marketing and distribution of Tea

Under the Tea Act, 1953, the Tea Board has been constituted by the

government of India to regulate the production and export of tea. Permission

has to be obtained from the tea board for planting of tea on any land not planted

with tea or replacement of tea area. The tea board also regulates and controls the

total area of land under tea cultivation.

The Tea (Marketing) Control Order, 2003 (TMCO) regulates the tea

sales and stipulates that a defined percentage of tea produced from each garden

be sold through the auction system. The Tea (Distribution and Export) Control

Order, 2005 (TDCO) provides that no distributer shall carry on the business of

distributing imported tea and no exporter shall export tea or import tea except

under a business license obtained in accordance with the provisions of the order.

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In order to ensure the supply of genuine Darjeeling tea and check

labeling of other teas as ‘Darjeeling Teas’ the government has incorporated a

compulsory system of certifying the authenticity of exported Darjeeling tea into

the Tea Act. This system makes it compulsory for the entire dealers in

Darjeeling teas to enter into a license agreement with the tea board of India on

payment of an annual license fee. The Tea Board is thus able to compute and

compile the total volume of Darjeeling tea produced and sold in the given

period (ICRA, 2006).

3.6.5 FDI in Tea

As part of the ongoing FDI regime, the government of India has recently

decided to allow FDI up to 100% in tea sector, including tea plantations.

Proposals for FDI in tea sector will require prior approval of the central

government and would be subject to the following conditions:

- Compulsory divestment of 26% equity of the company in favour of an

Indian partner/public within a period of five year and

- Prior approval of the state government concerned in case of any future

land use change.

The above dispensation would be applicable to all fresh investments

(FDI) made in this sector. In view of the existing policy, while Indian investors

could invest in any of the plantations, overseas investors could plan for direct

investment in tea plantation activities. While large chunk of virgin land for fresh

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planting may not be available, the investors could plan for joint collaboration

with existing plantation units. The intending investors could make use of the

expertise and professionalism available with the existing plantation units

(Dharmaraj, Showcasing Kerala Plantation Sector, 2003).

3.7 Tea in South India

South India is a land of plantation crops. Amongst these crops, tea

occupies a pre-dominant position in view of its popularity, high productivity,

employment generation and exports. South India is the fifth largest tea

producing belt next only to North India, China, Sri Lanka and Kenya. With an

area of 1,14,749 hectares south India accounts for 22.5 percent of the national

acreage (Kapur, 2002). Tea cultivation in South India was considered to be a

large estate enterprise till the 1970s. The picture changed in the 1980s with

large number of farmers cultivating vegetables switching over to tea cultivation

in Nilgiris. Presently there are about 60000 small growers in Nilgiris cultivating

tea in nearly 42000 hectares. Idukki district in Kerala also has about 4900

growers cultivating tea in about 3800 hectares. The following table shows the

production, export and auction prices of tea for the last five years in South

India:

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Table 3.3

Production, export and auction prices of tea

Year Production (M.Kgs)

Export (M.Kgs)

Auction prices (unit price per kg)

2008 246.9 86.9 66.27

2009 244.1 57.4 81.03

2010 243.4 102.9 67.69

2011 240.2 93.4 70.03

2012 239.4 81.6 87.55

Source: www.upasi.org/statisitcs.tml

3.8 Tea in Kerala

Tea in Kerala has the unique advantage of being grown in a wide variety

of agro climatic zones, gives rise to a range of distinct teas, each with a unique

quality attribute such as strength and black leaf appearance, brightness of cup,

aroma and flavor. Kerala produces both CTC and orthodox variety of tea and

such varieties are eminently suited to blend components for both national and

international blends. There is also vast scope for going in for organic and bio-

dynamic tea cultivation. Kerala has the unique advantage of being highly

suitable for ready to drink teas (RDT), such as ice tea and flavored teas. Kerala

produce tea round the year, enabling year round consistency in quality and

avoiding the need to hold up stocks. It is estimated that 1100 tonnes of tea per

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month goes for packaging which is around 38% of the tea consumed in Kerala

(Dharmaraj, 2003).

3.8.1 Brief history of tea cultivation in Kerala

The first Plantation crop came in Kerala was coffee. Decline in coffee

economy due to diseases in 1870's, the coming of Brazil coffee and consequent

fall in the price of coffee in international market etc. forced coffee cultivators in

India and Cylone to prefer to tea cultivation. Thus British citizens, especially

missionaries and retired persons, came to hilly areas of Peermade for tea

cultivation (Lovatt, 1972).The earliest record of commercial planting of Tea in

Kerala was in the year1875 (in Peermade). The development of Kannan Devan

Hills by James Finlay & Co in 1878 with tea as an exclusive crop was a

landmark in the history of tea plantation in this part of the country. Soon, tea

cultivation caught on in Wayanad in 1889 and planting was taken up on a large

scale in the district (2003).

3.8.2 Role of tea industry in Kerala’s economy

Kerala exports annually 35 million kilograms of tea valued at Rs. 2200

million, particularly to the Middle East, and Russia. The plantation sector is

important to the economy of Kerala, contributing about Rs.29.11 billion to its

GDP. Kerala produces 34% of the tea produced in the country. Kerala has

approximately 37000 hectares of tea plantations, constituting 8% of the area

under tea cultivation in the country (KSPB, 2011). The importance of the

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plantation industry lay in its employment potential. It employs 5 million people,

of which 60% are from the financially backward sections and about 50% are

women workers (2007).

Table: 3.4

Area, Production and Productivity of tea in Kerala

Particulars 2009-10 2010-11 2011-12 2012-13

Area (ha) 36845 36965 37028 30205

Production (MT) 57810 57107 57904 62963

Productivity (Kg per ha) 1569 1545 1564 2085

Price (Rs per Kg) 107.8 103.55 93.68 111.49

Source: Economic review 2012 and 2013 (KSPB)

3.8.3 Tea planting districts in Kerala

There are seven districts in Kerala which are cultivating tea. These

districts are Idukki, Wayanad, Palakkad, Pathanamthitta, Thiruvananthapuram,

Thrichur and Malappuram. The important tea producing regions in Kerala are

the high ranges, the Central Travancore, Pathanamthitta, Vilangakunnu and

Ponmudi (Menon, 1967). The history of plantation industry in the high ranges

goes back over one hundred and thirty five years. High range has 11250

hectares of tea and the total tea production in the high ranges is about 28 million

kilograms. The central Travancore is one of the oldest planting regions in South

India. The region owes its existence and growth to the pioneer planters headed

by Rev. Henry Baker. Three of the Baker sons acquired land in Peermade and

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opened up plantations in 1862. The total area under tea is about 15000 hectare

with an annual production of about 23 million kilograms (2005). The following

figure shows the various tea growing regions in Kerala.

Source: Department of Licensing, Tea Board of India.

Figure 3.1 Tea growing regions in Kerala

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3.8.4 Major tea producers and tea brands in Kerala

The major tea producers operating in Kerala are Ram Bahadur Thakur

(RBT) group, MM J group, Mahavir Plantations, Heiliyburia tea, Tata Tea and

Harrisons Malayalam. Brooke bond and Harrison Malayalam are two brands

available in Kerala. The share of South Indian tea to the total tea production in

the country is only 200 million kilograms (2009). The popular forms of tea

available in Kerala are CTC and leaf tea.

3.8.5 Production, productivity, export and marketing of tea in Kerala

3.8.5.1 Production

In the field of production India commands a dominant position as the

second largest tea producer in the world. South India contributes about 24

percent of the national output. From a level of 101 million kilogram in the year

1970, South India achieved a record production of 239.4 million kilograms in

the year 2012. The relative share of production of Tamil Nadu was 170.6

million kilogram and that of Kerala was 63.1 million kilograms (UPASI, 2013).

3.8.5.2 Productivity

The tea industry in Kerala has made significant hike on the productivity

front. As compared to the production in 1960s the output had gone up by around

165 percent by the turn of the century. Much of the increase could be attributed

to improvement in productivity as the land under tea cultivation has shown an

increase of 53 percent only. The average productivity has risen from 1050

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kilogram per hectare during 1960 to 1800 kilogram per hectare by 2010. The

productivity of fields in the high ranges is considered to be one of the highest in

the world (Hudson & Muraleedaran, 2011).

3.8.5.3 Tea manufacturing

Both orthodox and CTC methods of manufacture are prevalent in south

India and Kerala. There had been significant shift from orthodox to CTC type of

manufacture in south India. Presently about 165 million kilogram of CTC tea

and 35 million kilogram of orthodox tea are produced in south India. Green tea

and instant tea are produced on a small scale.

3.8.5.4 Tea exports

India is one of the leading exporters of tea accounting for about 12

percent of the world export. Despite the significant increase in internal

consumption, the exports have remained around 200 million kilogram during

the last five decades. Presently 50 percentage of the south Indian production is

exported as against 15 percent from the north India (Parliament of India Rajya

Sahba, 2012).

3.8.5.5 Marketing

Tea is marketed through the different channels like i) sale by auction, ii)

sale by mutual treaty iii) by forward sales through selling or buying agents, iv)

packaging and retailing the produce directly. Of these, public auctions are the

most popular channel of marketing. There are three auction centers in south

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India and Kerala has one auction center in Kochi. Tea trade is highly sensitive

and the domestic demand and the unexported surplus tea remaining within the

country dictate the price levels (Hudson & Muraleedaran, 2004).

3.9 Tea plantation labourers

In the discussion on tea, its production, consumption and trade those

who remain least attended are the tea plantation workers. The labour force that

keeps the tea industry alive is not local. Almost three million people are directly

or indirectly associated with the tea industry in India for their livelihood. Tea

industry is the second largest employer in the country, giving employment to

more than 1.2 million workers on a permanent basis, one million labourers on a

casual basis and another one million for ancillary services (Bhowmik & Xaxa).

More than 50 percent of the workers are women, who are engaged in the

harvesting or plucking of tea leaves. Tea plantations provide family

employment, thus increasing social and job security. This system also enables

the retired worker to stay on in his house which may be allotted to his

wife or son.

3.9.1 Brief history of tea plantation labourers

Tea plantations in our country have been historically characterised by

the absence of local labour. These plantations largely depended on a system of

indentured labour comprising mainly the marginalised and socially excluded

communities, to suit 'plantation requirements'. The British companies brought

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them from Bihar, Madras, Orissa, Andhra Pradesh, Madhya Pradesh, West

Bengal, Uttar Pradesh and other places in India to work in the tea gardens. In

north India, these labourers were mainly the adivasis from Chotanagpur Plateau

and were recruited to work in the tea plantations of Assam because they

adjusted to the work conditions and 'labour process' (Chatterjee & Gupta,

1981). In South India, the labour force hailed mainly from the marginalised and

socially excluded communities/tribes such as Dongas, Dasaris (a tribe of

gypsies) and lower-caste Hindus from the districts of Madras Presidency. In the

Nilgiris Hills, especially since 1960, the labour force comprised Sri Lankan

repatriated Tamils. Labourers were turned into the property of the tea

companies and generally called coolies. These coolies cleared jungles, planted

and tended tea seedlings and saplings, planted shade trees, and built luxurious

bungalows for tea planters (Sen, reprinted 1979).

When they came first, they got into four-year contracts with the

companies. Their lives and livelihoods remain tied to the labour lines ever since.

More than a century and half or four generations have passed since they settled

in the labour lines. They are people without choice and entitlement to property.

In addition to the wages, which is miserably low, they get some fringe benefits

and the most common of which is the labour lines (houses). One worker gets

one house that is supposed to be maintained by the employer. However,

generally the workers themselves do the repair and maintenance (Barbara,

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1995). Living conditions in houses in the labour lines are generally

unsatisfactory and outrageous in many instances.

3.9.2 Legal provisions concerning the tea plantation labourers

There are a number of labour legislations aimed at protecting and

regulating the employment of plantation workers. The plantation workers are,

however unaware of most of these legislative provisions, primarily, due to their

isolation. The legislative provisions are as follows:

3.9.2.1 The Plantation Labour Act, 1951

This is comprehensive labour welfare legislation and stipulates elaborate

provisions relating to health, welfare and social security benefits. The act covers

all plantations with 5 hectares or more in extent of employing 15 or more

persons and applies to workers drawing wages up to Rs. 750 per month. It

covers the benefits of free medical aid to workers and their families, free

housing, wholesome drinking water, latrine and urinals of prescribed type,

crèche with wholesome refreshment for children below 6 years of age,

recreational facilities, educational facilities, protective clothing (blanket,

umbrella or rain coat), leave with wage at the rate of one day for every 20 days

work preferred, sick leave for 14 days per annum with two third of the normal

wages, weekly day of rest in every period of seven days and overtime payment

at twice the rates of ordinary wages for work done in excess of the normal

working hours (Agrawal, 1976).

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3.9.2.2 Maternity Benefit Act, 1961

It is an important Act for women workers. It grants protection to these

workers at the time of their pregnancy and child delivery. The important

provisions of this act is as follows

- Average wage (3 months wages immediately before the leave is taken)

payable during the maternity leave period included both time and piece

wages.

- Maternity leave starts six weeks before the expected due date of delivery

and ends after six weeks of delivery (i.e. total 12 weeks leave with pay).

- Any woman worker who has worked for a minimum period of 80 days

in the year preceding the date of her expected delivery is entitled to

maternity benefits.

- A pregnant worker cannot be engaged in any work involving long

periods standing or carrying of heavy loads etc.

- A nursing mother is entitled to two breaks daily for nursing her child till

the child becomes fifteen months old (Dewett & Varma, 1995).

3.9.2.3 Minimum Wages Act, 1948

In the plantations the minimum wages of the various types of workers is

fixed by an official committee and backed by the state government. The

employers are bound to pay the minimum as fixed by the state government.

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Therefore, wages are not given at the whims of the employer but rather they are

something which the employer has to give under law (Pant, 1980). The major

provisions of this act are as under:

- Employers must pay minimum wage as fixed by the state government.

- Minimum wage does not include the cost of providing house, water,

medical facilities etc to workers.

- The employer’s contribution to the workers provident fund cannot be

included as minimum wage.

- The employer cannot make any deductions from the notified minimum

wage except in certain cases. These cases are clearly stated in the PLA

and the rules set by the state government.

3.9.2.4 Employee’s Provident Fund and Medical Insurance Act, 1952

This Act seeks to make a provision for the future of the industrial

worker after he/she retires or for his/her dependents in case of early death. The

Act applies to such of the factories and establishments engaged in the notified

industries which employ 50 or more person and extent for a period of 3 years.

As per the Medical Insurance Act, in case of certified sickness, a cash

payment is made to the insured worker for a maximum period of 56 days and

free medical treatment in case of injury and maternity. The worker is paid a full

rate in case of temporary disablement and a cash benefit for life in case of

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partial / permanent disablement as percentage of the full rate but he/she is paid

at full rate in case of permanent total disability due to accident or injury

(Tandon & Tandon, 1997).

3.9.2.5 Payment of Gratuity Act, 1972

Payment of Gratuity Act was enacted with an objective to provide a

scheme for payment of gratuity to employees engaged in factories, mines, oil

fields, plantations, ports, railway companies, shops or other establishments, and

for matters connected therewith or incidental thereto. It is welfare legislation

and intended to recognize and reward those workmen who have rendered long

and faithful service to the employer (Pigou, 1962).

3.9.2.6 Workmen’s Compensation Act, 1923

It is provided for compensation to be paid to employee in the case the

accident occurred during work. Employees earning up to Rs 500 per month are

covered by the Act as amended in 1962. An amenity bill passed in April, 1976

raised the wage limit to Rs 1000 per month and maximum compensation from

Rs10000 to 30000.

The Act prescribes separate scales for compensation for death,

permanent total disablement, permanent partial disablement and temporary

disablement. The amount of compensation in case of a fatal accident depends

upon the average monthly wages of the deceased and in case of injury on the

monthly wage and the extent of the injury (Pigou, 1962).

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3.9.2.7 Other provisions of quasi statutory nature

The quasi statutory benefits available to the tea plantation labourers are

actual leave travelling expenses to registered house address and back, fire wood

collection, cattle keeping and grazing facilities, ex-gratia payment in case of

non-occupational chronic diseases, issue of free liquid coffee or tea at the work

site, kitchen garden facilities and provision for food grain and uniform for

certain categories of employees.

3.9.3 Labour requirement in tea plantations

On an average, two permanent workers are required for every hectare of

mature tea and each worker is employed for 300 days in a year. But actual

number of workers will depend on yield, terrain, jat of tea and cultural policies

of individual management. Requirement of labour in the tea factory depends on

the type of manufacture. In orthodox manufacture one man day is required for

every 35 kilograms of made tea and in CTC manufacture it will be about 75

kilograms of the made tea per man day. Thirty percent of the workers are

employed in operations other than plucking (Erik, 1997). The workers are

expected to work for eight hours which will be from 08.00 am to 12.00 noon

and 01.00 pm to 05.00 pm with one hour lunch break.

3.9.4 Payment of wages

Kerala tea estate’s wages have a combination of three elements. A

guaranteed time rate, which is less than the full time rate wage for the day, a

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piece rate for output up to a standard. The two together will give the plucker a

level of earning which is slightly more than the time wage for the day.

Thereafter the plucker will get an incentive known as over kilo wage at so many

paise per kilogram over the standard output (Fair Trade International, 2013).

3.9.5 Trade unions

As per the Trade Union Act, 1926 any seven workers can form and

register a trade union. All trade unions which have been functioning for a year

and with membership strength of about 15 percent of the labour force are

recognized by the managements. The wages of the tea workers are revised once

in three years, after a detailed negotiation between the unions and the

management represented by their association. The union also interacts with the

management in respect of implementing various legal provisions. According to

the Industrial Disputes Act, 1947 each estate having more than 1000 workmen

should constitute a work committee in which the local labour leaders are elected

as members (Tea labour: A manual of Indian Tea). The duty of works

committee is to promote measures for securing and preserving amenity and

good relation between the employer and the workman and to that end to

comment upon matters of their common interest or concern.

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3.10 The promotional agencies of the tea plantations

3.10.1 Tea Board of India (TBI)

Tea Board India, an independent body under the Ministry of Commerce,

Govt. of India, was established by the enactment of the Tea Act, 1953 and head

quartered at Calcutta. The Tea Board is headed by the chairman (appointed by

the government of India) and the constitution of the board represents various

interest groups (stakeholders) of the tea industry. The functions of the board are

defined by the provisions of the Tea Act and are concerned with the

development of tea industry & trade, extension of area under cultivation,

research activities concerned with improvement in the quality of tea production

& cultivation methods, promotion of exports, other licensing activities, and

interception on behalf of workers for adoption of welfare measures

(Paul, 2004).

The tea board has wide functions and responsibilities under the direction

of the central government such as financial assistance for cultivation, manure &

marketing of tea, export promotion, research and development, labour welfare,

small grower welfare, collection, maintenance and publication of statistical

data.

Funds for aforesaid functions are made available to the board by the

government through plan and non- plan budgetary allocations. The plan funds

are being used exclusively for cultivation, manure and marketing of tea. Funds

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for all other activities are met from non- plan budget allocation for which cess

levied on tea is the major source.

3.10.2 National Tea Research Foundation (NTRF)

It was set up in 1988 and is an independent interactive functional body,

funded and set up by Indian tea industry and NABARD. In liaison with the Tea

Board of India, NTRF supports innovative research on all aspects of tea,

particularly of non-conventional approach. Rather than traditional research, in

such areas as plant physiology, plant protection and pesticide management,

quality improvement, biotechnology, human health aspects of tea and socio-

economic management of tea (TBI, 2007-08).

NTRF has been recognized as research body by the department of

scientific & industrial research and science and technology, govt. of India

(DSIR) under the scheme on recognition of scientific and industrial research

organizations (SIROs). Its functions are laid out by the body of NTRF, manned

by seven members, representing tea industry, NABARD and tea board. This

body formulates the administrative and technical activities of NTRF.

3.10.3 United Planter’s Association of South India (UPASI)

The United Planter’s Association of South India (UPASI) is an apex

body of planter’s of Tea, Coffee, Rubber, Pepper and Cardamom in the southern

states of India Viz. Tamil Nadu, Kerala and Karnataka which is in existence

since 1893. There are 3 State Planter’s Association and 13 district Planter’s

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Association affiliated to UPASI. It is the premier representative body of buyers,

sellers, processors, exporters, co-operatives and all other market intermediaries

of tea, coffee, rubber and spices. The association’s operations cover economic

research, market intelligence, industrial relations, liaison, public relations,

scientific research and publication (UPASI, 2010).

3.10.4 UPASI - Tea Research Foundation (UPASI - TRF)

The United Planters' Association of Southern India (UPASI) established

a Tea Experimental Station at Devarshola in the Nilgiris in 1926 with Dr. W. S.

Shaw as its first Chief Scientific Officer. From 1964 to 1966, all the Research

Divisions were shifted to the Anamallais and by then 30 acres were planted

mostly with Clonal material selected by the Scientific Department. The UPASI

Tea Research Institute (TRI) is now located near the Nirar Dam in Valparai,

Coimbatore District of Tamilnadu. It has four research sub centers located at

Vandiperiyar, Munnar, Wayanad and Nilgiris (UPASI-TRF, 2012).

3.10.5 Labour officer (Inspector of plantations)

Functions of the state labour department are divided into three such as

industrial relations, enforcement and quasi- judicial functions.

3.10.5.1 Industrial relations

The industrial disputes are settled mainly through the process of

conciliation. If conciliation fails, the dispute is referred to adjudication by

Labour Courts or Industrial Tribunals. The Industrial Relations Committees

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(IRCs) after discussions arrive at decisions regarding wage revision, bonus, and

service conditions of the workers of the respective industry. Although the

decisions or settlements of the IRCs are not enforceable by law, the settlement

or decision taken by the IRCs are considered as a general agreement in the State

as a whole (Department of labour, 2008).

3.10.5.2 Enforcement

Enforcement of the various labour legislations is mainly carried out

through 100 Assistant Labour Officers (Grade II) and 10 Inspectors of

Plantations. For effective functioning of the enforcement wing, the inspections

in establishments are streamlined in such a way that the establishments

employing 50 to 250 employees are being inspected by the District Labour

Officers (Enforcement) while establishments employing more than 250

employees are put in charge inspected by the Regional Joint Labour

Commissioners (Department of Labour, 2008).

3.10.5.3 Quasi- Judicial Functions

All the deputy labour commissioners except deputy labour

commissioner (IR), Ernakulam and deputy labour commissioner (HQ) are

acting as authorities exclusively dealing quasi-judicial functions under various

labour enactments.

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3.11 Abandonment and/or closure in the tea plantations

Tea has been an internationally traded commodity since its very

inception. With globalization, trade liberalization and interplay of various

factors both global and local was leading to a restructuring of the Indian tea

industry. Low-productivity of workers, increasing social costs of production and

fall in tea prices are some of the reasons given by the management for the

overall crisis. In India, this crisis has been manifested through the closure and

abandonment of tea estates mainly in the states of West Bengal and Kerala since

year 2000.

3.11.1 Tea crisis

As far as the plantation activities are concerned they are highly labour

intensive. Wages and other labour costs account for more than 50 percent of the

cost of production. An extra 70 percent of the direct wages are to be added to

the cost of production due to the burden of free housing and estate hospital with

medical dispensaries. The plantations are unable to transfer their costs into the

prices of their products as they are the primary producers (Jain, 2008). The

inability of Indian tea, particularly south Indian tea to match price

competitiveness in the export market and consequent fall in exports has led to a

glut in the domestic market. This glut is accentuated by the import of tea

through various permitted channels, under the trade liberalization policies and

the WTO –dictated trade regime, including import for re-export. Resistance of

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organized labour to link wages to productivity leads to mounting costs as

against falling prices (Hudson & Muraleedaran, 2002). This was the dilemma

faced by the tea plantations particularly South India.

3.11.2 Abandonment and/or closure of tea plantations in Kerala

In Idukki district, 25 estates including 6 factories, in

Thiruvananthapuram district, three estates including two factories and in

Wayanad district four estates were abandoned or closed. In many of the tea

gardens, owners do not declare the tea garden as closed but ‘conveniently’

abandon them (Bose, 2007). The company has to apply for closure in order to

close a garden. These companies owe huge dues not just to the workers in terms

of Provident Fund and Gratuity dues but also to the respective state

governments and concerned banks.

Contrary to the general mood of calamity, two plantations run by

Harrison Malayalam Limited (H.M.L.) and A.V. Thomas and Company

(A.V.T.) have been paying their employees on time and this has been possible

because the company also has a packet tea division (not depend on the auction)

and their tea goes into the internal markets in South India, whereas those who

look at auction aimed at export have suffered from the huge variance of prices

(Nair, 2013). In some of the remaining estates, while plucking was carried out,

no wage was paid but Rs. 200 was given as weekly store cash in these

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plantations. In some other plantations which are not active, workers, in

connivance with the trade unions, plucked the leaves and sold them outside.

3.11.3 Labourers in the closed tea plantations

Among the tea producing states, Kerala is the worst affected and 32

plantations have been closed down or abandoned throwing several thousands of

workers out of their jobs. This has meant hardship for the workers in many

ways. Electricity has been cut off and as a result workers receive no drinking

water since it is dependent on electricity. In some cases they were forced to

depend on river water that is unfit for drinking purposes. Children in school and

college have been forced to stop their education due to the unemployment in

their families and the plantation’s tractor was no longer available to take them

to go to the schools or colleges. More over workers and their families have been

suffering from malnutrition, anaemia and other nutrition related problems due to

the loss of employment and the non-availability of alternatives (Advisor to the

Commissioners of the Supreme Court, 2001).

3.12 Rehabilitation packages

The special rehabilitation package for closed tea gardens in the country,

has been cleared by the Empowered Finance Committee after due consultations

with the various Ministries including the Finance Ministry. The Tea Board is

the nodal office for implementing the package.

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3.12.1 Consolidated package for reviving the tea plantations

In a bid to revive the closed tea estates in India extending over a

geographic area of 11500 hectares, the union government came out with a

consolidated package. The package includes restructuring of loans to banks,

waiver of dues to the Tea Board, waiver of penalties on provident fund, interest

subsidy on loans from banks for the next seven years and a creation of a SPTF.

Kerala has closed 32 tea estates with an area of 4330 hectares, West Bengal has

14 closed estates with 5500 hectares and Assam has two with 660 hectares.

Dues to the banks from these estates are Rs. 184 crore, to provident fund Rs.49

crore and to tea board Rs.5 crore (UPASI, 2007).The ‘closure package’ had the

following four key elements, and involved a total outgo of Rs 38.65 crores.

- Restructured the existing outstanding bank loans of closed tea gardens as

on April 1, 2007, amounted to Rs 184.05 crores by converting these into

term loans with a moratorium period of 5 years. Recovery of outstanding

converted loans would begin from the sixth year onwards. Accumulated

penal interest would be waived.

- Tea Board loans to the tune of Rs 3.92 crores are waived. This consisted

of principal of Rs 2.55 crores and interest of Rs 1.37 crores.

- Payments have to start after five years and completed in 60 monthly

instalments. Tea garden owners, however, will make regular payments

of their current liability on account of the EPF.

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- The last element of the package is the extension of facility of term loans

for garden improvement. It is learnt that once the accounts of the closed

tea gardens are regularised in the manner stated above, the gardens will

become eligible for loan and subsidy from the SPTF scheme for

rejuvenation and re-plantation.

3.12.2 Special Purpose Tea Fund (SPTF)

Tea in South India, especially in central Travancore of Kerala is

stagnating around 2000 Kilograms of made tea per hectare. Age of the tea

bushes and low yielding moribund seedling population are the main reason for

stagnation in yield. Improvement in quality and reduction in cost of production

are essential for the rejuvenation of the tea industry in central Travancore

(Mathew, 2007). The government of India had drawn up the Special Purpose

Tea Fund, a new credit linked subsidy scheme, for the 11th five year plan period

to rejuvenate the industry and to make our tea globally competitive. Therefore

the SPTF is aimed at the progressive rejuvenation of our 100 year old industry

similar to that of our competitors in a phased manner.

The estimated area for replanting or rejuvenation pruning during phase-I

was 85000 hectares, comprising of replanting in 68000 hectares and

rejuvenation pruning at 16500 hectares. The pace of replanting had to be 11400

hectare per year and rejuvenation pruning at 2815 hectare every year. The first

phase of SPTF had run during the 11th five year plan (2007-2012). The 75

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percent of the assessed unit cost had to be provided to the garden by way of

term loans (50 percent) and subsidy (25 percent). The borrower was required to

bear the balance of 25 percent of the cost. The period of loan is 13 years

inclusive of five years moratorium on the principal. The loan has to be repaid in

installments over 8 years starting from 6th year after the 5 years moratorium

period. The interest on loan will be charged at 1.5 percent above prevailing 10

years government security rate (Maharaj, 2007). The minimum area had to be

brought under developmental work (i.e. re-planting, replacement planting or

rejuvenation pruning) per year is 2.5 percent of the estate. There was a

relaxation to the minimum if 35 percent of the area of the estate is younger (ie

less than 50 years). The maximum height prescribed for rejuvenation pruning

for Assam or Assam hybrid tea is twelve inches or thirty centimeters from the

ground level. The rate of financial assistance is to be renewed from time to time

as and when the unit cost is reviewed by SPTF.

3.13 Conclusion

This chapter has given an overview of the tea industry. The next chapter

makes a detailed analysis of the primary data concerning the causes and

consequences of the abandonment and/or closure and an evaluation of the

special purpose tea fund as a scheme of re-plantation and rejuvenation.