PROBLEMS AND PROSPECTS OF TEA INDUSTRY IN HIMACHAL PRADESH

Transcription

1 PROBLEMS AND PROSPECTS OF TEA INDUSTRY IN HIMACHAL PRADESH A THESIS SUBMITTED TO THE HIMACHAL PRADESH UNIVERSITY, SHIMLA FOR THE AWARD OF DEGREE OF DOCTOR OF PHILOSOPHY IN COMMERCE 2015 Supervised By: Prof. Usha Sharma Himachal Pradesh University Centre for Evening Studies Shimla Submitted By: Rajni Devi DEPARTMENT OF COMMERCE HIMACHAL PRADESH UNIVERSITY SUMMER HILL, SHIMLA

2 DEPARTMENT OF COMMERCE HIMACHAL PRADESH UNIVERSITY SUMMER HILL, SHIMLA Prof. Usha Sharma CERTIFICATE It gives me immense pleasure to certify that the thesis entitled Problems and Prospects of Tea Industry in Himachal Pradesh is a record of bonafide research work done by Rajni Devi under my guidance and supervision. The data reported in the thesis are genuine to the best of my knowledge. It represents her original work and the thesis is worth submitting in fulfilment of the requirement for the award of degree of Doctor of Philosophy in Commerce from Himachal Pradesh University, Shimla. Date: (Prof. Usha Sharma) Place: Shimla

3 Dedicated to My Loving Parents

4 DECLARATION I hereby declare that the thesis entitled Problems and Prospects of Tea Industry in Himachal Pradesh to Himachal Pradesh University, Shimla in partial fulfilment of the requirements for the award of the degree of Doctor of Philosophy in Commerce is a record of the original research work done by me under the supervision and guidance of Professor Usha Sharma, Department of Commerce, Himachal Pradesh University, Centre for Evening Studies, Shimla and this work has not been submitted anywhere previously for any other degree. Rajni Devi

5 PREFACE Indian society is known for its moral, spiritual values and need of austerity is greatly emphasized in the society. From medieval times India has been primarily and predominantly an agricultural country with land as the chief source of production. The industrial growth in India corresponding with Indian politics right from Maura's or the great Mugal s, and Britisher s who brought accelerated growth. The tea crop involves both agricultural and industrial operations. The word tea infect has been derived from te of the Chinese Fukien dialect. Initially, Dutch introduced it into Europe. Amongst tea producing countries the principal producers are India, China, Sri Lanka, Kenya and Indonesia. In India tea industry is one of the oldest agro-based well organized industries. It provides direct employment to more than one million permanent and temporary workers both men and women. India is one of the largest producer of tea as well as the large consumer of tea in the world. Currently India produces 24% of total world production and export about 12% of total world export of tea. Himachal Pradesh is primarily a hilly region which is situated in the lap of western Himalayan. The state is bestowed with varied climate, complex geological structure and a rich flora. The climatic condition of parts of Kangra and Mandi districts of the state provide scope for cultivation of highly rainfall sensitive crop tea. Out of these two districts again, Kangra district accounts for the major proportion of the total area under tea in the state. In 2001 total number of 3679 tea growers representing an area of 2312 hectares spread over four tehsil viz., Palampur, Baijnath, Kangra and Dharamshala in the district Kangra and Jogindernagar and Bhatiyat in districts Mandi & Chamba respectively. Tehsil Palampur covers the maximum area 1256 hectares of tea followed by Baijnath hectares Dharamshala hectares, Jogindernagar hectare Kangra hectare and lastly Bhatiyat with 0.98 hectare. In Palampur, disaster struck the industry in 1905 and destroying the organized tea industry. All tea factories raised to the ground. Many plantations, residential buildings destroyed and killed a number of tea planters and skilled labors. The panic stricken Britishers sold their plantation to the local buyers who were new to the

6 business and this led both production and quality of tea to decline. Local buyers failed to maintain the same profitability due to lack of technical knowhow, poor processing technology and fragmentation of land holdings and the absentee owner of the estates. The present study has been undertaken to find the problems and prospects of tea industry in Himachal Pradesh and divided into seven chapters. The chapter first makes a detailed analysis of tea industry in world, in India and in Himachal Pradesh. The chapter two has divided in two parts. Part A deals with the foreign studies whereas Part B deals with the Indian studies. The third chapter Research Methodology deals with the need, scope, objectives and tools analysis of the study. The chapter fourth deals with the complete analysis of the tea industry in respect of progress of tea industry from the date of its installation to till date. The chapter fifth has been devoted to describe the results emerging out of the present investigation in a logical and conducive manner regarding manufacturing units mentioned that nonavailability of labor, raw material, lack of knowledge of technical knowhow. The analysis in respect of socio-economic profile of tea growers and problems faced by them has been discussed in chapter 6. The last chapter brings out the conclusion of the study, thereby giving summary, findings, recommendation and area of future research.

7 Acknowledgement At the outset, I send my humble prayers to The Lord Almighty for giving me strength, courage and determination in pursuance of this task and also in the entire walk of my life. It gives me immense felicity reiterating my eternal gratitude to my respected and erudite supervisor Mrs. Usha Sharma, Professor, Himachal Pradesh University, Centre for Evening Studies, Shimla. Her unassuming critical, intellectual insight and noble generosity have been a source of deep and heartfelt inspiration, enthusiasm and enlightenment for me. It is not a mere sense of obedience but a real appreciation for her judicious and valuable guidance, keen interest, constant encouragement and loving care which enabled me to execute the present work successfully. I express my deep sense of grateful to Professor Kulbhushan Chandel, Chairman, Department of Commerce, Himachal Pradesh University, Shimla for his guidance, cooperation and cordial behavior. I am grateful to Professor O.P. Verma, Dr. Ravinder Kumar for their help and guidance for successful completion of work. I owe my special thanks to Dr. Gagnesh Sharma, Dy. Director Tea Board Palampur, Dr. Neerv Vashisth, Development officer Tea Board Palampur, for their valuable help and guidance for successful completion of work. I am grateful thankful to Mr. Prakesh Chand Vadhan Principal GSSS Tambol for allowing me to pursue my research work. I am extremely privileged in expressing my deep sense of gratitude to all Colleague, Er. Vipin Sharma and Mr. Ashok Gautam Superintendent Dy. Director of Higher Education, Bilaspur for their cooperation and support while pursuing this research work. I am thankful to the staff members of Libraries Himachal Pradesh University Shimla, University of CSKHPKV Palampur, IHBT Palampur TOT,

8 Palampur tea cooperative factories, for supplying me the needed material and information. I am thankful to the respondents who spared their time to fill up the questionnaire. It is impossible me to express in words my gratitude to the inspiration and every possible support of my father Shri Jagan Nath Sharma and blessing care of my mother Smt. Bimla Sharma, brother Er. Umesh Sharma, Sisters Chanchal Di, Anju Di, Poonam for their internal encouragement and boost. I would like to thanks my in-laws for their co-operation and valuable help. I would like to thank Mausa Mr. Sanjeev and Massi Kanta Sharma, Section Officer, Secretariat, Shimla for their encourage and motivation. I can never forget love and affection and emotional support; I have received from my beloved husband Dr. Rajeev Sharma, who has always stood by me all through the present study and life. I owe spread indebtedness to my loving little son Reyansh for bearing with me while working on the present thesis. I would like to place on record my sincere thanks to all my family members Ashok Jiju, nephew Abhinav and Anubhav, well-wishers and all those who have extended their whole hearted support in completion of this research. I also acknowledge my debt to all researchers, authors and editors whose work has helped directly or indirectly in carrying out the present study. I also express my sincere thanks to those all who have instrumental in providing assistance in collection, tabulation and analysis of data. (Rajni Devi)

9 CONTENTS CHAPTER TITLE PAGE NO. 1 INTRODUCTION HISTORY OF TEA ORIGIN OF TEA ORIGIN OF TEA INDUSTRY IN INDIA TEA IN HIMACHAL PRADESH 19 2 REVIEW OF LITERATURE RESEARCH METHODOLOGY NEED STATEMENT OF THE PROBLEM OBJECTIVES SCOPE OF THE STUDY SAMPLING SAMPLE DESCRIPTION RESEARCH DESIGN TOOLS OF ANALYSIS LIMITATIONS OF THE STUDY 48 4 OVERVIEW OF THE PROGRESS OF TEA INDUSTRY WORKING OF MANUFACTURING UNITS CLASSIFICATION OF TEA MANUFACTURING UNITS ON THE BASIS OF TEHSILS 5.2 CLASSIFICATION ON THE BASIS OF TYPE OF TEA MANUFACTURING 5.3 DESCRIPTIVE ANALYSIS OF PROBLEM FACED BY TEA MANUFACTURING UNITS EVALUATION OF PROSPECTS 96

10 6 SOCIO-ECONOMIC PROFILE OF TEA GROWERS 6.1 CLASSIFICATION OF TEA GROWERS ON THE BASIS OF DIFFERENT AGE GROUPS 6.2 CLASSIFICATION OF TEA GROWERS ON THE BASIS OF THEIR QUALIFICATION 6.3 CATEGORY WISE CLASSIFICATION OF TEA GROWERS AN ANALYSIS 6.4 CLASSIFICATION OF TEA GROWERS ON THE BASIS OF OCCUPATION 6.5 CLASSIFICATION OF TEA GROWERS ACCORDING TO AREA OCCUPIED BY THEM 6.6 DESCRIPTIVE STATISTICAL ANALYSIS OF PROBLEM FACED BY TEA GROWERS 6.7 EVALUATION OF ROLE OF DEVELOPING AGENCIES IN REGARD OF PROSPER AND ENHANCEMENT OF TEA INDUSTRY 7 SUMMARY, FINDINGS, SUGGESTIONS AND AREAS OF FUTURE RESEARCH SUMMARY FINDINGS SUGGESTIONS AREAS OF FUTURE RESEARCH 166 BIBLIOGRAPHY ANNEXURE i-xvii

11 LIST OF TABLES TABLE NO. TITLE PAGE NO. 1.1 Area under Tea Cultivation in World Production of Tea in World during Productions and Export of Tea from Major Tea Producing Country Productions and Export of Tea from Major Tea Producing Country from Comparative Position of Indian Tea Industry in and Comparative Position of Indian Tea Industry in to and Exports of Indian Tea in and Cultivation Areas under Tea in Major Tea Growing States of India 1.9 Production Domestic Consumption and Exports in India during to and Present Status of Indian Tea in Global (2010 and 2013) 1.11 Tehsil wise No. of Growers and Area Occupied (as per hectare) Average Yield of Tea in India and H.P Installed Capacities of Co-operative Tea Factories Status of Co-operative Tea Factories in Himachal Pradesh 1.15 Total of Manufacture Unit of Tea in H.P. from 2005 and Installed Capacity of Tea-Co-operative Factories Area under Tea in Himachal Pradesh (in hectare) ( ) 4.3 Area wise Distribution of Tea in Himachal Pradesh in

12 4.4 Comparative Position of Area under Tea Cultivation in Himachal Pradesh Production of Tea in Himachal Pradesh Production and Productivity of Tea in Himachal Pradesh 4.7 Production of Made Tea in Different Co-operative Tea Factories 4.8 Percentage Share of Each Factory in Total Quantity Produced by Co-operative Factories 4.9 Capacity Utilization by Each Co-operative Factory of the Total Installation Capacity (Percent) 4.10 The Growth Rates for the Total Quality of Processed Tea 4.11 Average Tea Prices and Total Income from Tea in Himachal Pradesh 4.12 Average No. of Labour Employed in Tea Plantation in Himachal Pradesh Productivity and Labour per Hectare during Tehsil wise Distribution of Tea Manufacturing Units with Regard to Status of Ownership of Tea Garden Tehsil wise Distribution of Manufacturing Units with Regard to Supply of Tea Leaves Tehsil wise Distribution of Tea Manufacturing Units Getting Subsidy from Various Agencies Associated with Tea Industry Tehsil wise Distribution of Tea Manufacturing Units Regarding Labour Employment Status of Different Type of Tea Manufacturing Units with Respect to Ownership to Tea Gardens Status of Different Type of Tea Manufacturing Units with Respect to Availability of Tea Leaves Status of Different Type of Tea Manufacturing Units with Respect of Employment of Labour Statistical Analysis of Production Problems Faced by Tea Manufacturers

13 5.3.2 Statistical Analysis of Financial Problems Faced by Tea Manufacturers Descriptive Statistical Analysis of Problems Regarding Storage and Packing Material Faced by Manufacturing Unit Descriptive Statistical Analysis Regarding Delay in Payment to Green Tea Leaves Suppliers Descriptive Statistical Analysis of Problems Related to Promotion of Tea Industry of Himachal Pradesh Descriptive Statistical Analysis of Various Factors of Marketing Zero Order Correlation Matrix- Factors of Responsible for Production and Financial Problems Factors Influencing Promotion of Tea Industry (Analysis is based on Zero-Order Correlation Matrix) Descriptive Statistical Analysis Regarding Planning and Implementation of Subsidies Schemes Descriptive Statistical Analysis of Various Factors Regarding Sustainability of Tea Industry Descriptive Statistical Analysis of Various Factors Relating to Promotion of Tea Industry Descriptive Statistical Analysis of Various Factors of Marketing Strategy for Promotion of Tea Industry in Himachal Pradesh Descriptive Statistical Analysis of Various Factors Relating to Facilities and Infrastructure Required Classification of Membership According to Different Age Groups Classification According to Different Age Groups of Tea Growers and Awareness for Incentives/Facilities Provided by Different Organization Classification According to Age Groups Regarding Getting Subsidies from Government Classification of Respondents According to Age Groups Who Attend the Training and Demonstration Camps

14 6.1.5 Classification of Respondent According to Different Age Group Regarding Labourer Employed Classification of Tea Growers According to Different Age Groups Getting Fair Returns for Tea Leaves Classification of Age Group of Tea Growers and their Returns with Respect to Time Classification of Tea Growers on the Basis of Educational Qualification and Membership with Different Organization Classification According to Educational Qualification of Tea Growers and Awareness Regarding Incentives/ Facilities Provided by Different Organization Classification of Educational Qualification of Respondents who Attend the Training and Demonstration Camps Classification of Educational Qualification of Tea Growers Regarding Fair Returns Classification of Educational Qualification of Tea Growers Regarding Payment in Time Category-wise Classification along with their Membership of either Manufacturing Unit or Tea Board Categories wise Classification of Tea Growers Regarding Incentives/Facilities Provided by Different Organisations Categories wise Classification of Tea Growers and Getting Subsidies from Government Agencies Categories wise Classification of Tea Growers and Attend the Demonstration Camp Categories wise Classification of Tea Growers regarding Labour Employed Categories wise Classification of Tea Growers and Getting Fair Returns in Time Occupation wise Classification of Tea Growers and their Membership

15 6.4.2 Occupation wise Classification of Tea Growers and Awareness Regarding Incentives Provided by Different Organisation Occupation wise Classification of Tea Growers and Getting Subsidy from Various Governmental Organization Occupation wise Classification of tea Growers and their Presence in Demonstration and Trainings Camp Occupation wise Classification of Tea Growers and Labour Employed Occupation wise Classification of Tea Growers and Getting Fair Returns in Time Classification of Respondents According to Occupied Tea Cultivation Area and their Membership with Tea Board Classification of Tea Growers According to Occupied Tea Cultivated Area and Awareness Regarding Incentives/Facilities Provided by Different Organization Classification of Tea Growers According to Tea Area Occupied and Subsidies they get from Government Organization Classification of Tea Growers According to Tea Area Occupied and Attendance in Training and Demonstration Camp Classification of Tea Growers According to Tea Cultivation Area Occupied and Employed Labour Classification of Tea Growers According to Tea Area Occupied and Getting Fair Return in Time Descriptive Statistical Analysis of Production Problems Faced by Tea Growers Descriptive Statistical Analysis of Financial Problems Faced by Tea Growers Descriptive Statistical Analysis of Marketing Problems Faced by Tea Growers Descriptive Analysis of Role of Different Developing Agencies Involving Planning and Implementation of Different Schemes for Tea Industry

16 6.7.2 Analysis of Impact of Re-plantation of New Tea Bushes under Government Scheme Analysis of Facilities Related to Infrastructure has Helped in Developing Tea Industry

17 LIST OF FIGURES FIGURE NO. TITLE PAGE NO. 1.1 Global Area under Tea ( ) Percentage Share of Area under Tea in Major Tea Producing Countries of the World (Avg. of ) Global Production of Million kg of Tea ( ) Production Share of Major Tea Producing Countries During Export Share of Major Tea Producing Countries during Production Domestic Consumption and Exports in India during to and Percentage of Landholding and Utilisation of Tea Area in Himachal Pradesh Pattern of Land holding by Tea Growers Trend Value of Green, Black and Total Production of Tea Production of Green Tea, Black Tea and Total Production of Productivity Production of Made Tea in Different Co-operative Tea Factories 4.7 Average Prices of Green and Black Tea in Himachal Pradesh 60 66

18 LIST OF ABBREVIATIONS AGR CGR CSIR H.P HPKV i.e. IHBT ITA KG KG/H OBC SC ST TOT UPASI w.e.f. Annual growth rate Compound growth rate Council of Scientific and Industrial Research Himachal Pradesh Himachal Pradesh Krishi Vishvadidlaloya, Palampur That is Institute of Himalyan Bio-Resource Technology Indian Tea Association Kilograms Kilogram Per Hectare Other Backward Classes Schedule Caste Schedule Tribe Technical officer Tea United Planters Association of South India With effect from

19 CHAPTER-1 INTRODUCTION 1.1 HISTORY OF TEA Indian society is known for its moral, spiritual values and need of austerity is greatly emphasized in the society. However, these principles have not always been the way of life. Most of the times higher importance was attached to sound economic conditions and the wealth was considered desirable for an ordinary man, for society and ultimately for the nation. That is why all round development of agriculture and industry was the most outstanding feature of the economic life in ancient India. From medieval times. India has been primarily and predominantly an agricultural country with land as and main contributor to its economy. To meet their requirement people produced sufficiently, but with the passage of time industrialization also established its roots in the country. The industrial growth in India corresponding with Indian politics after the Britisher s who brought accelerated growth. The evaluation of modern Indian industry dates back to the year 1833 when the charter Act, 1833 was passed and which divested the East India Company of its commercial character. To win the confidence of Indian people British capitalists permitted to invest capital for expansion of trade in India and took concrete steps to boost the poor economic conditions of the Indian economy. The industrial development in India, Charter Act 1833 inaugurated a policy in two forms namely plantation and factory industry. Plantation industry was the first to attract Europeans which largely consisted of production of tea, coffee and indigo as financially viable activities. This industry could provide jobs at large scale, but in reality it could meet the increasing demand of tea; coffee and indigo of the prosperous countries. Plantation industry is governed by both agricultural as well industrial rules and regulations which are mandatory in agricultural as well as industry operation. The agricultural operations consist of cultivation, plucking, manuring, irrigation, weed control and transportation of green leaves to the manufacturing units. The final product comes through various processing and manufacturing stages, like withering, 1

20 rolling, fermenting, drying, weighing, sorting and packing which come under industrial activity. 1.2 ORIGIN OF TEA Nothing is known with certainly about the early history of tea in world. The word tea in fact has been derived from te of the Chinese Fukien dialect. Initially, Dutch introduced it into Europe. In Contonese, tea is known as Cha in this from the name reached Japan, India, Russia, Iran and Middle East. Tea drinking originated in China, but the origin is obscured. Tea drinking has a very old and fascinating history also, dating back to 2007B.C. According to legend, Chinese emperor Shin Nong had accidently discovered the stimulant property of tea 4000 years ago. One fine summer days, while on a field military exercise towards distant region of his kingdom, he and his courtiers stopped for rest. In accordance with his ruling, the drinking water needed to be boiled as a precaution for hygiene; the attendant began to boil water for the courtiers to drink. Some leaves from a nearby bush fell into the boiling water and it become a brown liquid infusion. The emperor was fascinated by the drink. He found it refreshing. This is how the birth of this light refreshing beverage said to have taken place Gradually tea consumption spread throughout the Chinese culture reaching into every aspect of the society. According to Ukers (1935) the first authentic reference to tea is found in an ancient Chinese dictionary, revision of which was undertaken during 350 A.D. by Kuo PO, a celebrated scholar (Barwa, 1989). At that time a medicinal decoction was made by boiling tea leaves. In 1800 A.D Luau, a Buddhist monk wrote the first definite book on tea, the Cha a Ching and confined the various methods of tea cultivation and preparation in ancient China. Later on, the Zen Buddhist missionaries introduced his work on tea to Imperial Japan. Yenissei, a Buddhist monk who had seen the value of tea in China is enhancing religious meditation, brought the first seeds to Japan. As a result, he is known as Father of Tea in Japan. While tea was at this high level of development in both Japan and china, information concerning this unknown beverage began to filter back to Europe. The Portuguese who were the pioneered of eastern commercial expansion with technological advanced brought tea to Europe in the first half of the 2 nd millennium. Lin Schoten who served in Goa as secretary to the Portuguese Arc 2

21 Bishop from 1583 to 1589 was of the view that Portuguese had developed a trade route by which they shipped their tea to Lisbon and then Dutch ships transported it to France, Holland and Baltic countries. By 1650 the Duchy was actively involved in track throughout the western world. Peter Stuyvesant was the first to bring tea to America to the colonists in the Dutch settlement of New Amsterdam (later renamed Newyork by the English). Botanically cultivated seedling teas are classified into certain species, Camellia Sinesis i.e. small leaved china plant and Camellia Assamica i.e. the large leaved Assam plant. Black, green and oolong are three broad type of tea. Black tea is by far the most popular and accounts for 83 percent of the world tea trade. Based on manufacturing method black tea is of two types orthodox Black tea and CTC tea. Orthodox tea accounts for 44 percent of the world market and CTC (which is crush, tear and curl) cater to 39 percent of the world market (planter chronic ate March 2009 P.No.22) Green tea has a more delicate taste and is light green or golden in color. In recent studies green tea specially has been found associated with protection of cancer such as lungs cancer and liver cancer. Oolong tea, popular in china lies between black tea and green tea both in color and taste. Herbal and medicinal tea is extract of many plant as such in real term is not tea. Today cultivations of tea are spread over the entire continent except North America; more than 30 countries grow tea. Amongst tea producing countries the principal producers are India, China, Sri Lanka, Kenya and Indonesia. These five countries account for 76 per cent of world tea production. During the last decade the Vietnam and China have made rapid strides and emerged as the prominent forces to reckon with in the international market. During the last decade 2001 to 2010 many significant changes have taken place in global production. Global production of green tea had gone up from 23 percent to 39 percent and the black tea share declined from 77 percent to 61 percent. The share of orthodox tea remained stagnant at 34 percent and CTC tea declined from 43 percent to 27 percent. China became the leading producer of tea in 2006 which surpassed the record of 111 years of India to be largest producers of tea in the world and Kenya was become the leading exporting country in 2010 in the world. Sri-Lank was relegated from first to third position in ranking of exporting countries of tea in the world. Small grower sector in India became a force to reckon with and made a significant contribution to total production by increasing its 3

22 share from 11 percent to 26 percent between 2001 &2010. Global tea prices which were sluggish from the beginning of the decade started firming up and remained stable since The buoyancy in the tea price over the last three years helped the tea industry particularly in India in consolidation of the financial losses sustained over the previous seven years. The average per head consumption of tea varies widely from country to country. While it is more than 2 kg in Ireland and around 1kg in Sri-Lanka and Pakistan, it is only 800 grams in India. Despite per head consumption in India being one of the lowest in the world, its total consumption due to its population size is the largest and almost 80 percent of the total production is consumed within the country. The domestic consumption volume account for 22 percent of the global consumption. This distinct position is in sharp contract with other producing countries particularly Kenya and Sri-Lanka which hardly have any strong domestic demand and export 90 to 95 percent of their production. The area under tea in world during the year 1991 to 2013 is exhibited in Table which shows that in the last decade of 20 th century saw a sluggish rate of increase in total area under tea. During 1991 tea was cultivated globally in thousand hectare which increased to thousand hectares with a compound growth rate of 0.42 percent during that period upto With the advent of 21 st century the world tea Industry saw a steady increase in the overall area under tea. During 2001 the area under tea was thousand hectors which increased to thousand hectares in 2010 with a compound growth rate of 3.42 percent during the said period (fig 1.1). The additional area brought under cultivation during the last decade was around one million hectare and in 2013 area raised up to 3.69 million hectare and global production increase between 2001 and 2010 was around 1100 million kg. Out of this increased production nearly 900 million kg was of green tea and 200 million Kg of Black Tea (57 Annual report of Tea Board). In terms of area under tea plantation on an average during the last two decades ( ) China leads (45%) the world followed by India 21%, Sri-Lanka 7%, Kenya 5%, Vietnan 3% and other countries (fig.1.2). But from 2010 to 2013 it is stagnent and no significant growth recorded. 4

23 Table 1.1 Area under Tea Cultivation in World Years Area in the hectares (E) C.G.R From C.G.R. From C.G.R. From Source: Tea statistics Directorate of Research, Tea Board of India Figure 1.1 Global Area under Tea ( ) (E) 2013 Source: Tea statistic and 2013 Directorate of Research, Tea Board of India. 5

24 Figure 1.2 Percentage Share of Area under Tea in Major Tea Producing Countries of the World (Avg. of ) India China Shrilanka Kenya vietnam Other Japan 45 Source: Department of Statistics, Tea Board of India. Table (1.2) shows that world tea production was almost having the same trend as in case of area. The production in 1991 was million kg which remained almost same till However in 1998 world tea production touched a new height of million kg. But in 2000 it dropped to million kg with a compound growth rate of 1.20% during the period 1991 to Again from 2001 onward production of tea increased steadily and reached million kg with a compound growth rate of 3.48% during the period (as shown in fig-3). Thus over the two decades tea production has shown as increasing trend due to various reasons like increase in area for tea plantation, improved plantation material, advanced technology including integrated package and practices for tea cultivation etc. further analysis for three year from 2010 onward has depicted same trend of growth with compound growth rate at 5 percent for the same factors explained supra. 6

25 Table 1.2 Production of Tea in World during Years Production (Million Kg) (E) C.G.R From % C.G.R. From % C.G.R. From % Source: Tea Statistics ITC Annual Bullet in Figure 1.3 Global Production of Million kg of Tea ( ) Production (Million Kg) 7

26 Table 1.3 shows that share of India in tea export has declined during the last ten years. Whereas Kenya, Uganda, Malawi have gained in international tea exports. In 2000 India s share in export of tea was 13.04% which stand 12.50% in 2010; thus registering a fall of percent during the last 10 years. Main reason for fall of India share in the international market has been due to loss of Russian market and increased domestic consumption. Due to disintegration of the Soviet Union and the absence of a trade protocol between India and Russia, however its share of exports has increased to General Currency Areas (GCA) particularly United Kingdom which made it possible to compensate the 80 million Kg shortfall. However fact remain changed, China s share of production percent in 2000 whereas it is percent in 2010 which is increased by percent whereas India s share increase by percent only. Thus India position as largest producers of the tea in the world shifted to second rank. Share of tea production and export both increased in case of Kenya, Uganda and Malawi. Table 1.3 Production and Export of Tea from Major Tea Producing Country PRODUCTION EXPORT Country % age Change % age Change India (28.14) (26.58) ( Sri Lanka (9.76) (9.12) (20.54) Indonesia (5.50) (4.15) (7.12) 4.90 China (23.12) (40.58) (17.84) Vietnam (2.64) (4.68) (4.87) (7.20) Kenya (9.71) (10.98) (18.44) (24.82) Uganda (1.10) (1.63) (2.17) (2.99) Tanzania (0.82) (0.87) (1.58) (1.47) Malawi (1.21) (1.42) (2.73) (2.73) Jimbabwe (0.74) (1.23) (0.48) Argentina (1.94) (4.04) (4.80) Others (15.33) (6.39) (4.39) Total Source: Tea Board Statistics and ITC Annual bulletin 2010 (Parenthesis denotes the Percentage of Total. 8

27 The table 1.4 Shows that the estimated global production and export during 2013 was 4907 million kg and 1863 million kg respectively. Kenya, China, Sri Lanka and India retained their loading positing in the same order and they account for 79% and 73% of world production and exports respectively. Any how the trend of Indian tea registry overall growth in these three years from significant but the export share of its on decline mainly due to higher domestic consumption in the country with was also the trend during last decade from During the year 2013 in the production and export front, India contribute 24% and 12% respectively of world tea production; China 39% and 18% respectively; Sri Lanka 7% and 17% respectively being green tea producer and Kenya 9% and 26% respectively CTC producer and 21% and 27% respectively world tea is produced exported by other countries (Fig. 1.4 and 1.5). Table 1.4 Productions and Export of Tea from Major Tea Producing Country from PRODUCTION EXPORT Country %age Change % age Change India (26.58) (24) (12.50) (12) Sri Lanka (9.12) (7) (16.68) (17) China (40.58) (39) (17.03) (18) Kenya (10.98) (9) (24.82) (26) Others (21) (29.01) (27) Total 4192 (100) 4907 (100) Source: Tea Board Statistics and ITC Annual bulletin th Annual Report Kenya s export include the neighboruing African Countries produce Parenthesis shows approximate value of respective column. 9

28 Figure 1.4 Production Share of Major Tea Producing Countries During India China Shri Lanka Kenya other Source: Tea Statistics of India Figure 1.5 Export Share of Major Tea Producing Countries during India China Shri Lanka Kenya other Source: Tea Statistics of India

29 1.3 ORIGIN OF TEA INDUSTRY IN INDIA The history of tea in India has a glorious record of continuous development of one of our foremost industries and a valuable national asset accorded by Sanjiva Reddy. The tea industry occupies on vital position in the economy of India during the nineteenth century. The credit for creating India s vast tea empire goes to the Britisher s who discovered viability of tea plants in India and consumed in enormous quantities from third decade of 1800 till their presence in India up till The First commercial production of tea started in India in Assam in 1839 and then it extends to other parts of the country between fifties and sixties of the 19 th century. Some historian believed that tea plants growing wild in the jungles of northeast Assam were collected first by Robert Bruce (1823) and later on by his younger brother Charles Alexander Bruce. Till this time no one thought that tea was existing in India and it took some time to convince the pioneers that the native plant was real tea plant. This discovery virtually laid the foundation of tea in India. The real development for cultivation in India started only after 1833 when Lord Benthic appointed tea committee to explore the possibility of tea cultivation. By the end of 1837, tea has been successfully planted/ cultivated in upper Assam and first tea company known as the Assam Tea Company in 1839 came into existence with the capital invested by adventurous investors of London. This was the first commercial tea company in India. On witnessing the success of the Assam Company several other companies were formed to take up the cultivation of tea. After a successful story of tea in Assam Brahmaputra valley, the feasibility of growing tea in entire range of foot hills of the Himalayas and other parts of India were explored. By 1863, 78 plantations were established in Kumoan, Dehradun, Garhwal, Kangra valley, Shimla, and Kullu. After the transfer of the present Darjeeling district to the East India Company in 1835 and initial trial in the 1840s, large scale plantations were started in Darjeeling in 1850 and by 1874 A.D., 113 gardens covering 18,888 acres of tea were commercial explored opened and production touches 3.9 million pounds. In 1881, the Indians Tea Association formed the United Planters Association of Southern Indian (UPASI) in Tea as a beverage is known to the consumers of 140 countries of the world. Out of such numerous world tea markets, Indian tea reaches to consumers of around 11

30 80 countries. It is one of the oldest and best organized industries and it holds a pride of place in industrial and trade structure of Indian economy. In 1853, India exported tons of tea. By 1870 that figure has increased to 6700 tons and by 1885, tons (Planters Chronicle March 2009). Today Indian Tea Industry enjoys multitude of first India s largest organized agro-industry and India s second largest organized employer, providing direct and indirect employment to about two million people. It contribute around 1500 million US dollor to GNP of Indian including 480 million US $ (US dollor) by way of export earnings. Out of which 75 percent comes from manufacturing unit alone. Table 1.4 depicts that comparative position of Indian Tea Industry from 1950 to Till 1951, India enjoyed monopoly both in production as well as export of Tea. However, during the period of these 50 years in the wake of increasing domestic consumption, Indian tea export and production share in world has drastically declined from 45 percent to percent, respectively in Further stiff competition from trade rivals like Sri-Lanka, China, Kenya, Indonesia etc. and high growth in domestic consumption ultimately led to declining trends in tea export. Table 1.5 Comparative Position of Indian Tea Industry in and Particulars % age change Area in (hec million) Share in area in world (%age) Production in (Kg) Share in production in world (in %age) (24.81) Yield (Productivity) Domestic Consumption in Kg Export in (millon Kg) (8.71) India Share in World Tea Export Source: Tea Board Statistics figures in (Parenthesis Denotes the Decrease Percentage of Total). 12

31 Table (1.5) shows that during the last 10 years from 2000 to 2010, tea cultivation area has increased by percent, production by percent whereas productivity and export decreased by 0.65 percent and percent respectively and share of Indian tea export in worlds declined by 8.33 percent but domestics consumption increased by percent which does not depict a health state of affairs for Indian tea industry. From area under tea cultivation and export decreased by 3.4 and percent respectively. Whereas, production increased by percent. Table 1.6 Comparative Position of Indian Tea Industry in to and S. No Description % Increase / Decrease from % Increase / Decrease from Areal in hec million hoc Share in area in world (in % age) Production (in kg.) Share in production in world (in %age) Yield (productivity) (0.65) - 6 Domestic consumption (in kg) Export (in million kg) (6.673) India s share in world tea export (in %age) (2) Source: Tea Board Statistics The major tea importing countries from Indian tea are C.I.S. (Common Wealth of Independent States), U.S.S.R. USA, etc. Table 1.7 shows that Indian Tea export is made to U.S.S.R and Pakistan etc. In India, tea is growing in about 14 states, i.e. Assam, west Bengal, Tripura, Bihar, Uttrakhand, Himachal Pradesh, Sikkim, Orissa, Arunachal, Manipur, Nagaland, Tamil Naidu, Kerla and Karnataka of which Assam and West Bengal in North India and Tamil Naidu, Kerla and Karnataka in South India are five most important states producing tea. Together these states account for 97 percent of total area under tea and 99 percent of total production in India. Among 13

32 these tea states the district of Darang, Lakhimpur, Sibsagar, Cacher from Assam, Darjeeling, Door and Terai from West Bengal, Coimbatore and Nilgeri from Tamil Naidu, Iddukki from Kerala account for 90 percent of area under tea cultivation and 93 percent of total tea production in India. There is no other tea producing country that can offer such a geographical variance in quality to that discerning consumers and as such justifies the preference of consumer all over the world. Assam Teas are famous for their strong, brisk and full bodies liquor, Nilgeri teas are well known for delicate flavor and brightness. The distinct features of each region set them apart from each other in many different ways. Table 1.7 Exports of Indian Tea in and Country Qty in million Kg ( ) %age in Share Value in Rs. Value per K.G. Qty in million Kg (2010) %age in Share Value in Rs. Value per Kg. UNITED KINGDOM USSR USA CANADA IRAQ UAE JAPAN PAKISTAN AUSTRALIA POLAND OTHERS TOTAL Source: Tea Company Reports , Tea Statistics and Tea annual Reports Other includes: - Netherland, Germany, Ireland, Iran, Saudi Arabia, A.R.E., Turkey, Afghanistan, Singapore, Sri Lanka and Kenya etc. Table 1.8 depicts that total area under tea cultivation in India has increased by percent. As area under tea cultivation was thousand hectare in 2001 and thousands hectare in It is also evident from table that area in tea 14

33 cultivation in Himachal Pradesh has shown a fall of percent during 10 years i.e to Assam and West Bengal occupied major share in tea cultivation area of India. Whereas in overall area under tea cultivation in India from has decreased by Table 1.8 Cultivation Areas under Tea in Major Tea Growing States of India States %age Inc/Dec from %age Inc/Dec from Area in hec.) 2001 %age in All India Area (in The hec) 2011 %age All India Area in hec %age in all India Assam West Bengal Himachal Pradesh Other North India Total N.I Tamil Nadu Kerala Kearnatka Total South Indian Total India Source: Tea board of India statics , and other different issues. Other North India: includes Mannipur, Sikkim, Arunachal, Nagaland, Orisa, Meghalya, Mizoram, Bihar, Uttrakhand, Tripura and Himachal Pradesh. In India tea industry is one of the oldest agro-based well organized industries. It provides direct employment to more than one million permanent and temporary workers both men and women. In total cost of production of Indian tea industry labour cost accounts for 60% because tea plantations are not just economic production units but also they are social institutions which controls the lives of their resident work force to a larger extent. Plantation of tea provides not only employment but also responsible for providing house, water, welfare and many other facilities that caters to 15

34 the daily life of the workers. The reason is that the most of the employees comes from the socially and economically weaker sections of the society and majority of employees are women who work and reside in an ideal rural community and their livelihood is directly linked with the prosperity of the tea industry. Resultantly, tea industry need to grow not only to fulfill requirement of producing a wholesome beverage for domestic and overseas consumers but also to fulfill its social obligations and responsibilities in sustaining and improving the well-being of all those who are dependent on its fortunes. India has been a dominant player in the global tea industry. Despite its fluctuating situation in the share of world exports India is still a key source for tea as well as the largest market. Table 1.9 and fig. 1.6 reveals that production, consumption and exports increased by 2.56 percent, 2.58 percent,.424 percent respectively during the period with annually growth 1.31 percent, 1.56 percent and 0.49 percent respectively. Table also shows that growth rate of domestic consumption is more than production as such tea export getting affected. In recent years some quantity of tea is also imported for blending and re-exported to avoid the problem of high cost of production and stagnant productivity. Mostly imports from Sri-Lanka are made because of trade regulations and also because of fact that of cost of production is also less in Sri-Lanka (as labour is cheaper and pre hectare productivity is good.) The problem of high cost of production and low average prices and stagnant productivity needs to the addressed on the urgent basis apart from above the problem of ageing and senile bushes is a major problem for Indian tea industry. Around 130 gardens were closed, abandoned or suspended their operation for some time due to this recession. But onward from 2008, these gardeners have reopened with the gradual improvement in tea industry prices. The root cause for the closure of tea gardens in several parts of country as reported by experts are that these gardens were inherently weak and suffered from low productivity and lack of investment on development activities. Further the table 1.9 shows increasing trend of growth for production, consumption and export from to Therefore it becomes very important that suitable packages for raising the productivity with cost effectiveness suiting to the condition of under developed sectors are devised and put into place quickly. 16

35 Table 1.9 Production Domestic Consumption and Exports in India during to and Years Production in million kg Domestic Retention Export Compound Growth Rate from to Annual Growth Rate Annual Growth Rate Source: Tea annual reports Tea board statistics 2010 Tea digest and Note: Denotes annual increase and figure in parenthesis denotes decrease. 17

36 Figure 1.6 Production Domestic Consumption and Exports in India during to and Production in million kg Domestic Retention Export Renovation of field assets, research and development are expected to continuously develop the appropriate technology suiting to the demand of the industry. Adequate technical knowhow is not available to the small and medium size producers. That ask for the necessary for the research institute to set up a dedicated extension services specially arranged for the benefit of small and medium producers. The size of production from small sector of produces in Sri-Lanka and Kenya are interestingly at par with the size of production of tea produced by the small growers in India. Due to scattered nature of land holding, the major problem faced by the small grower in India is the inadequacy of the technical guidance. During the financial year international prices of tea bouncing back despite attaining high level in 2008 which was due to unfavorable weather conditions in India, Sri-Lanka and Kenya. As the domestic demand has been sluggish and the international supply has been outstripping the demand resulting in the decline of prices of tea around the world. Relatively higher cost of production and consistently lower return on made tea have only add to worse of tea industry. So Indian tea industry must face the market realities as they exist and come together to redefine its business strategies and accordingly reposition its produces. 18

37 S. No. Table 1.10 Present Status of Indian Tea in Global (2010 and 2013) Description World India Rank in World %Share of India Area Under Tea (Million Hectares) nd 2 nd Production(Million Kgs) nd 2nd Yield(kg/hectares) Export(Million kgs) th 4th Consumption(million kgs) nd 2nd = Data Not Available. Table (1.10) shows that India is the 2 nd largest producer of tea as well in the world market with production as the large consumer of tea in the world. Currently India produces 26% of total world production and consumes about 21% of total world consumption of tea, nearly 80% of the tea produced is consumed within India. Over the last 20 years, India s world ranking as an exporter has come down from number one to number four due to stiff competition from Sri-Lanka, Kenya and China. Since 2001, China s production has grown by 464m.kg. i.e. 8.8% cumulative annual growth and because of this steady growth, India s position has been pushed to 2 nd place. To trap the non-conventional area of tea in the world for an expansion in the consumption value addition and diversification for a wide range of tea products need to be developed for balancing the supply demand chain. Through these ways the global tea industry can think of sustainability in future by keeping in mind the climate changes across the global. 1.4 TEA IN HIMACHAL PRADESH Himachal Pradesh is primarily a hilly region which is situated in the lap of western Himalay. The state is bestowed with varied climate, complex geological structure and a rich flora. This situation has allowed the state to have the advantage of growing different agricultural and horticultural crops. The climatic condition of parts of Kangra and Mandi districts of the state provide scope for cultivation of highly rainfall sensitive crop tea. Out of these two districts again, Kangra district accounts for the major proportion of the total area under tea in the state. 19

38 Tea industry of H.P. is about 150 years old. Its cultivation in Kangra valley started far back in 1849 when Dr. Jameson superintendent of botanical Garden for north-west Provinces visited Kangra district of Himachal Pradesh erstwhile Punjab to ascertain its suitability to grow tea and recommended that the lower slopes of the Dhauladhar range lying between 900 to 1400 meters with an average rainfall of above150cm. After observing preliminary success of tea plants at nursery stage, the first commercial tea plantation was established as Hailey Nagar Tea Estate at Holta near Palampur in 1852 at an elevation of 1260 meters above sea level. Thereafter, the tea industry flourished and expanded its area in Kangra and Mandi district. It encouraged many private entrepreneurs and state Britishers had started a number of tea garden in mid 1850 s. About 4183 hectares of area was brought under tea cultivation extending from Jogindernagar in Mandi district to Shahpur in Kangra district. Tea is an area specific crop and land is the principal investment source for Tea Industry which is becoming scare day by day due to growing pressure and alternate demands. The green variety of Kangra Tea became known for its outstanding flavor and earned several honors as is evidenced by the Gold and Silver medal won in the Amsterdam and London markets from It is not too much to say that a very large portion of the government revenue of Palampur is paid from money derived directly or indirectly from tea plantation and now that dark days have over shadowed the industry. However disaster struck the industry in 1905 by destroying the organized tea industry. All tea factories raised to ground. Many plantations, residential buildings destroyed and killed a number of tea planters and skilled labors. The panic stricken Britishers sold their plantation to the local buyers who were new to the business and this led both production and quality of tea to decline. Local buyers failed to maintain the same profitability due to lack of technical knowhow, poor processing technology and fragmentation of land holdings, casual approach of new owner of the estates. Sale of quota to Assam business during the World war-2 proved as further disincentive to produce tea as India Tea licensing Committee allotted quota for exporting Himachal Tea in The collective efforts by planters and different organization succeeded to some extent in reviving of the tea industry of Himachal Pradesh, As Kangra Tea planters association was as formed in 1924 and a proposal from Co-operative Department of Himachal Pradesh made to organize tea industry on co-operative basis 20

39 but that time Kangra Planters Association did not agree with proposal. To resurge the Himachal Tea industry, a strong step taken by Tea Board India by opening a regional office of the Tea Board in Palampur in 1952 one (timing) only in 1962, three very important events took place simultaneously, Kangra Tea Marking co-operative industrial Social was establish in Amritsar to promote Himachal tea, 2 nd in direction to improve the quality of tea, a tea Experiment station was opened to test tea verities with two Toclai trainees at Palampur (now part of Chaudhary Sarwan Kumar Himachal Pradesh Krishi Vishvavidyalya) and 3 rd most important plan to set up a cooperative factory at Bir. Before the co-operative factories entered into tea manufacturing in Himachal Pradesh, the production of tea was used to be carried out by the small and large tea estate holder at their own manufacturing units but with increasing cost of production and inability to tackle these problems, they fail to manage their individual units as such agreed to form the co-operatives with objective of providing scientific processing facilities to the tea planters having small and uneconomic holding. The tea grown in Kangra valley in general and Palampur in particular is of the rare China hybrid leaf variety. The local tea reportedly acquires unique characteristics unmatched by any other orthodox tea in the country. The high aroma of tea is fast gaining popularity in India and abroad. Kangra Tea is now being exported to Germany, Japan, Iran and Middle East countries. Beautiful packs named after various ragas like Darbari, Malhar, Bahar and Baageshwari have found eager- taker everywhere. In 2001 Table 1.11 shows that a total number of 3679 tea growers representing an area of 2312 hectares spread over four tehsil viz. Palampur, Baijnath, Kangra and Dharamshala in the district Kangra and Jogindernagr and Bhatiyat in districts Mandi & Chamba respectively. Tea Board of India has identified about 7700 hectares of land as non- traditional area for tea plantation in the state. Only 53 percent of total area under plantation is well managed while 20% is neglected and about 27 percent is in abandoned state. Tehsil Palampur covers the maximum area of 1256 hectares followed by Baijnath hectares, Dharamshala hectares, Jogindernagar hect., Kangra hectare and lastly Bhatiyat with 0.98 hectare. ( 96% of 3679 tea growers occupy about 47 % of the total area (2312 hectare). Average yield of made tea in Himachal Pradesh is very low as compared to national average made tea per hectare ( ) Table (1.12). 21

40 Table 1.11 Tehsil wise No. of Growers and Area Occupied (as per hectare) Baijnath Bhatiyat Dharmshala J/Nager Kangra Palampur Total Area (in hec.) No. of growers Source: Tea Board of India, Palampur. Table 1.12 Average Yield of Tea in India and H.P. Sr. No. Year India (Kg/hec.) H.P. (Kg/hec.) Source: TOT of Himachal Pradesh Tea Statistics. About 621 kilograms average of tea is produced in the state per annum. The four tea co-operative factories run by the growers produce about 55 percent and private manufacturing units produce 45 percent. Both green and orthodox types of tea is produced in Himachal Pradesh and auctioned in Amritsar and Kolkata auction centers, respectively. Earnings of Himachal Pradesh Tea Industry are about 9.41 crores per annum and industry provides employment to about 10,000 people directly and indirectly (TOT, Palampur). 22

41 Setting UP Tea Factories and Present Scenario in Himachal Pradesh State Government established four co-operative tea factories on long awaited demand of tea growers of Kangra at four different locations of the valley. Table (1.13) These are as follow: Table 1.13 Installed Capacities of Co-operative Tea Factories S. No. Co-operative Factory Year of Established Installed Capacity (kg annual) 1 BIR Co-Operative Palampur Baijnath Sidhbari Total Source: Tea Board of India, Palampur. Bir Co-operative Factory The first Co-operative tea factory was established in 1964 at Bir with a capacity of one lakh kilogram made Tea. The area of operation of the factory extended over Baijnath Block. It is situated on the top of the Baijnath Tehsil of the Kangra district and on the boundary line of Mandi district. This Factory had every facility to manufacture quality orthodox tea but due to lack of quality leaf and proper expertise the factory switched over to green manufacture. Location this Co-operative factory at a high altitude makes leaf delivery difficult. No packing material is used for auction sales. Palampur Co-operative Factory In 1980, second oldest tea factory was established at Maranda one kilometer from Palampur town on Dharamshala road in Kangra district. This factory was designed to produce five lakh kilograms of made tea per annum, exclusively orthodox Black Tea. This factory was registered with only eleven members but later on number of members increased to 279 and Himachal Pradesh Govt. too became a shareholder in It was a most modern and up to date co-operative factory but with the passage of time, it requires another line of sorting equipment and withering area to be redesigned to get proper withers. 23

42 Baijnath Co-operative Factory Baijnath Tea Co-operative factory was third oldest tea factory, registered in 1975 and started operating in It is situated in two k.m. from Baijnath town on Chadiyar Road in Kangra district. This factory has been better designed than Bir factory with higher capacity of production of 2 lakh kg/ annum. made tea. This factory started with dual manufacture initially but later on adopted green tea manufacture exclusively. Due to lack of manufacturing knowledge, capacity utilization of this factory is very poor. Sidhbari Co-operative Factory Sidhbari Tea Co-operative factory registered in 1974 and started functioning in It is situated at the place 2k.m. away from Dharamshala on Dharamshala- Mandi Road. This factory started manufacturing black orthodox tea but in between it switched over partly to green tea manufacture also. It is the second largest tea factory in Kangra district with production capacity of two Lakh Kg/annum made tea per annum. But later on it continued to manufacture only Black tea. But from March 22, 2004, it was leased out to private party due to continuous loss persisted in the factory. The Co-operative tea factories provided remunerative price to the growers but as much of the leaf quality was inferior and unsuitable for quality tea manufacture, the losses of the growers had been transferred to these factories which resulted into huge accumulated losses. In the absence of quality produce the Kangra tea industry fail to capture and niche market at Calcutta, Amritsar and elsewhere. The supply and availability of raw- material is extremely poor quality and insufficient in quantity by the grower have led to enormous accumulated losses for the factories. Amongst the co-operative factories Palampur co-operative is the major contributor (52-100%) to the total production. In year it was only Palampur factory which manufactured tea, while other stops the manufacturing. The closure of other tea factories was mainly due to the low average price in market, less capacity utilisation of machinery in factories leads to poor financial condition and low repayment capacity to planters for their green leaf supply. Non repayment of green leaf supply resulted in the financial breakdown of the planters and they left the plantation in neglected state. This situation resulted in the decline of tea production in the state except, Palampur Tea factory other was taken over by the private proprietors on the 24

43 leased basis (Table 1.14). Now some private tycoons have taken them on lease. As far as the cost benefit ratio is concerned the three factories staff do not want disclose the facts including profit and losses due to unknown reasons. During 2000, the production of tea in Kangra was kg. which keeps on declining till 2007 to kg. this was mainly because of the fluctuating weather conditions, poor management and also less price received for both green and black tea. Another reason for this type of fluctuation in production was the trend of leaving more area under neglected and abandoned state and also because of the presence of 47 % holding less than 2 ha. Moreover due to low productivity per hectare of tea, the small planters were not in a position to sustain and take this venture as a primary business and they were shifting toward government and private jobs and have started taking tea as a secondary business. Planters are highly dependent on subsidies and supplies in one form or the other from the government (Tech. officer Tea and Tea Board of India). Most of the planters consider tea cultivation as the secondary source of income because their children are studying and earning outside or doing some business. This situation leads to closer of manufacturing units. As shown in table no many no. of closed unit increased from 13 to 18 in 2015 and there are only 47 out of 65 manufacturing units are in running form. Table 1.14 Status of Co-operative Tea Factories in Himachal Pradesh S. No. Co-operative Tea Factory Status Closed 1 Bir (1964) on lease - 2 Palampur (1980) viable - 3 Baijnath (1981) on lease - 4 Sidhbari (1984) on lease - Source: Co-operative Tea Factories. Apart from above, there are some private factories about forty small planters owned small manufacturing units, producing mostly green tea. As M/s. Chambi private factory manufacturing its own Black tea and sent it for auction. This factory has old manufacturing machinery and medium quality production due to leaf quality and inadequate withering facility. Another private factory is Dharamshala tea Estate, 25

44 manufacturing over one lakh Kg. green tea per annum. Other are small manufacturing units. Despite these uncertainties the industry need to survive as it provide employment opportunities and generating economic activities in the backward region. It need a regeneration and rehabilitation. Obviously the approach should be maintain if not increase the productivity leaves, contain the cost of production and make concerted efforted for better price realisation by way of quality improvement and by adopting appropriate marketing strategy. Table 1.15 Total of Manufacture Unit of Tea in H.P. from 2005 and Closed Running Closed Running Bought leaf tea factories Tea estates Co-operative societies Others Total Source: Tea Board of India, Palampur. The tea of Himachal Pradesh is popularly known as Kangra tea or Kangra valley tea. However, Kangra Tea has distinct flavor and quality parameter amongst all teas of the country. But absence of brand name and logo of Kangra tea and lack of awareness among the consumers about the unique characteristics of Kangra tea seems to have affected its popularity. Its popular brand name and logo of Kangra tea specifying the qualities associated with its origin need to be highlighted. To maintain its identity the Kangra tea has been registered under the Geographical Indication Registry by the Government of India through Science technology and environment vide sr. no. 25 December, Because of the peculiar climate of tea growing regions in Himachal Pradesh, the prevalence of diseases and pest is trivial. The use of synthetic chemical is at its minimum. So this region is most suitable for producing organic tea which becomes a distinct feature of it. 26

45 Role of Agencies Associated with Kangra Tea Industry There has been miraculous development of tea industry in the last decade due to sustained efforts of all the dedicate development agencies viz. tea board, H.P. agriculture university, industries Department of state government, Kangra marketing society, KVSTPA, IHBT and CSIR. They are performing following role. Institute of Himalayan Bio- Resources Technology (IHBT) Institute of Himalayan Bio resource Technology is involved in research towards development of plant material, agro techniques, and process technology & product diversification. The organization is also engaged in transfer of technology through advisory visits, conducting demonstration plots, imparting training & setting up of trial plots in non-traditional areas with the financial assistance of Tea Board. Himachal Pradesh Krishi Vishvavidyalaya Palampur (HPKV) Himachal Agriculture University is primary involved in long term research and fundamental research jointly with CSIR for the development of package of practice. Its role is limited to publication of research paper for the promotion as measure of their program. Department of Industries (Govt. of H.P.) It has large amount of fund and provides financial assistance in the form of Input subsidy & supply of planting materials through Kangra Marketing society. It has infrastructure facility for raising 2 lakh nursery plants. State Tea Federation It acts as modal agency for implementing, coordinating and monitoring the integrated project prepared by the state Govt. and financial support by NCDC. It provided fund for undertaking the survey. It also covers modernization & rehabilitation of the co-operative factories, marketing of packet tea, captive plantation, nursery etc. Kangra Marketing Society Primarily acting as a broker for marketing entire produce of Green Tea at Amritsar auction. Paramount Tea marking Pvt. Ltd. holds the responsibility for marketing entire produce of Black tea at Calcutta auction. 27

46 Kangra Valley Small Tea Planters Association The first tea planters association of Kangra Valley was formed in 1898 All office bearers of the association were Europeans only, native growers had voting right only in matters of green tea and conditions laid down for its membership disfavored many of the native planters to participate. After the departure of most of European planters, Indian growers of Kangra Valley formed planter s association, the name was changed to Kangra Valley small tea Planter s Association. The main purpose of the association were to provide knowledge of tea culture amongst tea growers and to improve the method of tea culture from time to time Association approaches state and central government to reduce in cues and restrictions of green tea supply from Assam to Amritsar, exemption from excise duty and sale tax, exemption from Plantation labour Act1951 etc. Role of Tea Board of India Tea Board of India is a statutory organization established under the Tea Act, 1953 by the Government of India & Board is controlled by Ministry of commerce and Industry. It has an executive chairman and thirty non official members representing the Tea Industry. Tea Board is the major agency for providing financial assistance in the form of subsidies for different operational activities like rejuvenation, pruning, replantation & special area development and grant for demonstration Plots, imparting training etc. It indirectly involved in the supply of nursery plants through other agencies. It also provides financial assistance to co-operative tea factories in the form of loan and subsidies and general guidance as well as co-ordination. The Himachal Pradesh Tea Industry appears to be a sinking ship despite its good quality. Non availability of labour, division of property among owner families and cost escalation of land over the years which fetch the growers more money in selling land than growing tea. Ultimately it have left the Himachal Tea Industry rudderless. Local labour prefers to work with MNERAGA and the migrant labour had also trickling down in numbers and low marketing problem was too a bottle-neck. Black Tea which accounts for 80 percent of Tea production when transported to auction market in Kolkata, makes it costlier in market thus failing to compete in the international market and green tea accounting for 20 percent of the states tea production is auctioned at Amritsar, too faced marketing problem. Assam and West 28

47 Bengal were producing green tea which was gradually replacing Kangra Tea in the national and international market. The worst part was that the tea garden owners find it lucrative to sell the land. Despite the ban on selling tea gardens, politically influential owners managed to sell tea gardens and colonies were replacing them. Land was sold to private companies, Tibetan institutions and private parties also. Abandoned tea garden owners too, were waiting for an opportunity to sell their land. In 1998 the state government withdraw subsidies on fertilizers, input and implements. In 2002, the tea industry was attached to the Agriculture Department from Industries Department. The Agriculture Department Authorities also felt helpless to resuscitate (use synonym) the sinking ship. The Co-operative factories are not able to utilize their capacity to the full due to irregular supply of green tea leaves from its member growers, which led to poor quality of manufactured tea. Reason behind high cost of production is excess prices paid to tea growers for tea leaves to maintain the regular supply of raw-material. Except this, this fall capacity utilization of these factories remain hindered with finance shortage, wages and excise duty and high rate of interest on loan. With a view of bringing back the lost glory of quality Kangra Tea, the state government installed four co-operative tea factories at BIR, Baijnath, Palampur and Sidhbari. But presently ( ), except the one at Palampur, the other three were facing rough weather. Kangra Tea\ Himachal tea industry has the potential to compete in the market because of its unique flavor. The above introductory analysis present that growth of tea industry has suffered in the past due to many problem faced by growers as well as tea manufacturing factories in the past. These problems become severe when seen in reference of the need of faster growth of Himachal tea industry. The situation cannot be removed till adequate concrete measures are taken to improve and monitor every sector of Himachal tea industry. 29

48 CHAPTER-2 REVIEW OF LITERATURE This chapter deals with a brief resume of various studies have been done in abroad and India on production and other aspects of tea. Review of the past researches helps, besides demarking the limitations of work done, in clarifying the concept and formulating the methodology of the study. A brief review of work done on the subject in the past is presented here. Harler, C. R. (1971) conducted study Tea Industry in New Guinea the climatic conditions and soil potentiality for the growth of tea are essential. He concluded that in order to produce tea and enter in the world market on competition basis the area where tea is grown must have the suitable climate and soil. He also suggested to have enough labour to carry out the field work which is mainly the leaf plucking and also found in his study that labour in the new Guinea is not readily available and does not correspond with the requirement for the plucking which results into decline in tea production. Hobeman, F.R, Nimme, R.L. (1972) observed in his article on Economic of Tea Growing that tea industry is still in its infancy in North queens land, Australia. The purpose of their article was to provide guidance regarding return on investment and enterprises for increasing primary industry by providing plants from seeds. The main reasons noted for this practice were initial lower cost and there was yet no proven clonal material which gives substantially higher yields than seed under Australian conditions. Rutherford (1976) in his study The Factory Output observed that the factory output had declined due to the managerial inadequacy and increasing processing cost per unit product in Kenya. The Kenya tea development authority is one of the most successful agricultural development programs in East Africa, having running introduced a new crop among widely scattered small farmers. Steaus, J.S. (1978) observed that the main reason for its success, its ability to generate local enthusiasm among small farmers for growing tea. Improved credit system offering credit in and in terms sufficient to participate in the programme has also ground to favor tea production. 30

49 UNCTAD (1982) published a paper on The Marketing and Processing of Tea explored the possibility of increasing tea export from the countries by making some improvement and changes in the way in which tea is marketed and processing before export. It is suggested mechanisms in small scale tea farm to raise the value added, areas for tea cultivation, processing, marketing and distributing of tea. Wickremansighe, R.L. (1983) in his study on Priorities for Tea Production Sector contributed over 90% of the export earning in Sri Lanka, but since the early seventies the output of tea, rubber and coconut began to fall and in 1982 the export earnings from these crops fall to 47%. The principle reason for this decline were started such as, the age of the plantation crops, the large (more than 20%) vacancies in tea plantation areas and the neglect of the tea estate during the pre-nationalization decade. The major problem which require the attention of the tea production sector were such as the soil improvement and development of new management technique characteristics by innovation, precision, manufacturing and production according the needs of the consumers. S.M.R, Huque (2007) in his study on Strategic Cost Management of Tea Industry found that Tea Industries in the developing countries of Asia are facing huge competition due to inefficiency in the production of raw material (tea leaves) and factory output which further worsened with the casual approach towards quality aspects. WORK DONE IN INDIA NCAER (1961) made a survey on small tea gardens in north eastern India, West Bengal and Tripura to study their problems and their weakness in tea plantation. The main objective of programme was to examine whether the plantation is able to cover cost of production or not. It was revealed that the poor returns to tea planters are due to scarcity of labour, capital etc. Singh, I.J. (1972) in his study on Resource Productivity and Production Trends in India s Tea Industry concluded that tea production in India could be increased by using more land into cultivation and by more capital investment. Further, the study stated that there has been excessive use of labours in India tea industry between

50 Thakur (1976) conducted a study on Kangra Tea reported that Kangra Tea Industry lack in proper processing because of the absence of sophisticated equipments. Tea planters used old and outdated equipments resulting in the poor quality processing of tea which led to poor control on the various ingredients of tea like liquoring, quality, flavors and briskness. The study further stated that due to its poor quality and non-uniform grade standards failed to compete with better quality Tea of Assam, West Bengal and Tamilnaidu. Dhameja, N.L and Rao, C.V. (1977) on the basis of their study on Capital Productivity in Plantation Industries Concluded that output of plantation crop like tea, coffee, rubber in term of productivity of Capital relatively is low as compare to the average return for other industries. The low rate of return may also be due to low investment in these industries resulting in low growth rate employed in the industries. Tanta, N.L. (1978) have studied The Further Needs of the Industries for Development Observed that to increase tea production, improvement in method of cultivation, irrigational facilities and other development works like re-plantation and extension of available area were highly essential. They concluded that these needs would required enormous efforts and financial resources through Tea Board, Agricultural Refinance and Development Corporations etc. Anonymous (1979) published a paper on The Total Production of Kangra Tea in which he describe that in the lakh kg of total tea production, green tea was about 7.50 lakh kg. The small and medium plantation owners were finding it unremunerative to maintain farms. Some of them have started uprooting tea bushes and cultivating cereals. Further, lack of packing and blending was another hurdle in the growth of industry and also reported that Kangra tea growers were not in position to avail the benefits of various schemes regarding rejuvenation of tea bushes, extension, replacement etc. sponsored by the Tea Board of India. Sharma, D. (1983) analyzed in his article on Giving Kangra Tea a Break getting the information regarding Co-Operative Tea factories in Himachal Pradesh. The languishing tea industry of Kangra district, was elaborated with the remarks that most of the tea estates in the state were small ones with holding size as small as half an acre. No serious attention has been paid towards the planting cost which tends very 32

51 high (40,000rs per hectare) to improve upon the situation; he suggested that the quality of tea leaves should be improved by the rejuvenation of existing tea gardens. Pathania, M.S. (1984) studied the role of Co-operative societies in promoting tea industries in Kangra and found that tea co-operative societies were more helpful to the planter members. Societies were rendering help in marketing, providing loans and also helping in supply of inputs. Bhargava, A.K. (1985) has studied Problems and Prospects of Tea in Himachal Pradesh stated that average yield of tea in Himachal Pradesh Which was 1/4 th of all India average in 1963 dropped to 1/12th in The green tea manufactured by the growers were not yielding adequate returns, hence the area under tea got shrunk due to uneconomical returns. Some Attempts have been made in recent years to recover lost yielding area of tea in Himachal Pradesh by setting up four Cooperative factories with the assistance of the national Co-operative Development Corporation (The biggest Co-operative Organization in India), the regional Tea Board centre at Palampur and state Government. He also mentioned that Tea estates which were not visible due to weeds etc. a few years back are now functionally well with the improved field management practices which yielding approximately ten to fifteen quintal of made Tea per hectare. The council of scientific and industrial Research Centre, has made various efforts to improve tea by conducting various field experiments directly in the concerned factory. Sharma R., Moorti, T.V. and Chauhan, S.K. (1988) in their study Cost Benefit Analysis of Tea Co-Operative- A Case Study of Bir Tea Co-Operative Factory District Kangra, Himachal Pradesh observed and concluded that Bir Tea Co- Operative Tea Factory is the oldest tea processing Co-Operative factory in the region. This factory in spite of covering variable cost incurs a loss in its total cost during periods. Sharma, R. and Moorty, T.V. (1990) in their study on Economics of Technical Change in Tea Farming in Himachal Pradesh analysed the economic efficiently of small tea farms and comparison between small tea farms (less than 20 Acre) with large Tea farms (more than 20 Acre under Tea cultivation). The study indicated that both type of tea farm i.e. small tea farm and large tea farms in Himachal Pradesh are equally efficient in terms of allocating resources. But technically, they are 33

52 not equally efficient whereas present technology seems to be in favor of small tea farms. Jain, N. K. (1991) in his study Transfer of Tea Agro Technology to the Small Producer of Kangra Valley in India found that during the new transfer agro technology, the yield becomes double and the prices reached 239% totally a fivefold increased. Hence, the impact of new agro technology become the beneficial. It also demonstrated that a dedicated team of knowledgeable scientists can transform a moribund agro- industry. Sharma, R. and Moorti, T.V. (1994) in his study on Resource use Productivity in Tea Farming in Himachal Pradesh found that resources use efficiency, factor demand and product supply elasticity in tea farming in Kangra and Mandi District of Himachal Pradesh were higher than the optimum input use, which showed that with redistribution of input use, average output can be increased with lower level of inputs. All locative efficiency analysis showed that under utilization of modern inputs (fertilizers and chemicals) and over utilization of land in tea cultivation. Sudarshan, R. and Menon, P.C. (1994) in his study An Analysis of Production, Export and Price Variation in Tea explained that Indian tea Industry faced tea crises in 1992 due to lower production, dwindling export figure, price realization of its produce merely at subsistence level and sudden with drawl of the biggest imports of Indian tea from the pool auctions due to disintegration of the soviet union and the consequent non availability of trade credit. Besides this the boom in tea production in south resulted in a steep fall in prices. And further observed that coefficient of variation of annual average price was very high for all the markets in India, highest for coonoor followed by Cochin, Kolkatta and Amritsar which revealed the uncertainty in prices of tea. Thakur, D.R., Pathania, M.S. and Saini, A.S. in their study on Export Potential of Indian Tea in the chaning Economic Environment concluded that the share of production of tea in the world tea has reduced during However overall area and production has increased. Besides, domestic consumption of the country has also increased at the rate of 1.15 percent per annum which is higher than the growth rate of production (1.10%), further then study suggested to adopt improved 34

53 technology and technical knowhow to earn more foreign exchange with reduce cost of production. Kainth, G.S.(1995) conducted a study on Export of Indian Tea Emerging Pattern and found that the Indian Tea exports has adversely affected by several developments in the worlds markets such as economic crises faced by Iran and Russia and entering of Sri Lanka and Kenya in CIS Markets. Further, the supply of Kangra/Indian inferior tea resulted into price fall. Kumar and Mittal (1995) conducted a study on Liberalization Trade A Note of Caution from India s Experience with Tea Trade. And explained that the factors that determine export of tea from India and observed that tea exports were insensitive to price. Change in world demand and also export decreased with an increased share of domestic consumption. They further suggested that if international trade in tea expanded its domestic prices were expected to rise. They concluded that prior to recommendations to encourage exports of essential commodities being made, the effect of such move should be examined carefully. Misra and Biswasroy (1997) conducted a study on Financial Ratio as Forwarding Indicator in Industrial Sickness. The study found that sick companies have huge inventories in their current assets portfolio, current liabilities exceeded the current assets which put the company for over trading. The study further suggest to examine the various ratio to check the growing mince of industrial sickness. Chhabra (1999) conducted a study on Cash Management an Overview. The study found that cash is an important factor for determination of working capital and the cash factor should not be forgotten. Further study hold that the very basic of introducing any Cash management System should be making all round efforts at how to reduce the cost of funds used by the company, which in turn means how efficiently to utilize the resources of the company. Sharma, A.K. and Bhuyan D.K. (2000) make study on Financing of Small Tea Cultivation in Golaghat District of Assam. The study examines the investment capital and working capital needs and sources of finance for small scale tea cultivation in the Golaghat district of Assam, India. The per farm and per hectare investment capital need for sample tea growers (n= 80, ) was estimated as Rs. 1,00,148 and Rs. 39,629 respectively. The working capital need for the sample 35

54 growers during 1991 was Rs 10753/ha per annum. Small tea growers financed their investment mainly from equity (63.63%) supplemented with non-equity sources such as relatives and money lenders. Institutional finance was negligible. It is recommended that appropriate measures should be taken to channel the flow of funds from the banking sector to this profitable and emerging area of small tea cultivation. Sharma, Shubhash (2000) evaluated Forward Engineering for Strategic Gearing: A conceptual Framework and made an attempt to present a conceptual framework for gearing of organization which undertakes to enable Indian tea Industry to sustain performance in the highly competitive environment. This study suggested analytical tools and techniques such as METRIC Analysis, SWOT Analysis etc. to bounce back Indian tea industry in global tea market. Dutta (2001) conducted a study on Working Capital Management of Horticulture Industry in H.P.. The main objective of this study was to evaluate and compare the inventory receivable and cash management performance of the corporation to identify the problems faced by the corporation in working capital management. The corporation holds cash balances for four months, where the normal standard to holding cash balance is one month which clearly shown the mismanagement of cash balance. The study further found that the corporation has failed to apprehend the generally followed concept of raising long term funds for long term purchase and short term funds to finance the short term assets (current assets) regarding the management of HPMC, the corporation followed the selective credit policy. In the end, it can be said that working capital position is not good in the company. Anonymous (2002) reported that age old plantation in India need modern technology and better methods of cultivation to improve yield. He suggested that entry of foreign players hold out promise of rejuvenating the industry. The positive includes improved methods of cultivation, marketing techniques, besides the churlish to expect that entry of foreign players would put everything in order soon because of falling demand for tea despite lower prices, and 8 percent decline in consumption of packaged tea contraction in exports, as coffee is emerging as favorite beverage among urbanities and upper class. 36

55 Chauhan, P. (2003) in his article on Kangra Tea at its Last Gasp revealed that the tea industry of Himachal Pradesh was no longer viable for the planters who found it difficult to compete due to increased cost of inputs and recession in the market that forced the planters to close down cultivation and production. The author cited Kangra Tea as most glaring example of new WTO regime playing havoc with the local industry as Kangra tea was finding it hard to get buyers in the international market due to low priced forging tea from Sri-Lanka, Vietnam and Kenya flooding the Indian Market. Goddard, Samantha (2005) while studying Tea Break A Crises Brewing in India, concluded that for restructuring of Indian tea industry, redefining the role of various agencies like tea Board and producer organization to gain a competitive edge over its competitors in global market need to develop a healthy partnership with labour. This study also revealed that major global tea companies such as Unilever and Tata tea are reaping large profits but are facing to take sufficient responsibilities to safeguard the rights and livelihood of millions of tea growers and workers who contribute to their profit. Asopa, V.N. (2007) revealed in their study on Tea Industry of India: The Cup that Cheers has Tear that virtually India tea has lost all global markets since it continue to be treated as commodity as besides the value addition is limited or it can be said, that Indian tea industry need to redefine its business strategies and reposition its products to gain a competitive edge over its competitors in the global market. Nagar B.H. (2009) studying Performance of India s Tea Exports; A Comparative Study of Major Tea Countries of the World and figured out that tea which is a foreign exchequer commodity in Indian agricultural exports is declining steadily. The export performance over the last there decades shows that percentage share of India s tea exports in total world tea exports has declined drastically. Hussain, M.M. Hazarika, S.D. (2010) in their study on Assam Tea Industry and Its Crises, revealed that in concern exports, Indian Tea Industry still faces diminishing trend. In 2009 tea exports decreased by 11.6 million kg, that is by 5.7 percent as compared to In 2009, India exported million kg of tea where as it exported203.1 million kg in This study also found that Indian tea Industry has 37

56 experienced shift in the proportion of exports to domestic consumption of the total tea produced in the country, with domestic consumption for more than exports. Jain, Shweta, (2011) conducted a study on Indian Tea Industry- An Analysis Using Concept of Forward Engineering. He found that factors responsible for low productivity, high price, declining share of Indian Tea in the world market are high input costs, the old age of the business, unskilled labour, lack of infrastructure, poor price realization, legal problems, outdated machinery, high fixed labour cost, inefficient Tea Board, inability to complete with other tea producing countries in term of price quality, packaging etc. Dihinigia and Devangan (2012) reviewed that tea plucking is a time consuming process and it creates strain among farmer and worker physically, which introducing musculoskeletal issues in the hand of wrist from repetitive motion. Suzuki, (2012) emphasized that the orthodox tea method for black tea includes withering, rolling, fermentation and drying. The lack of fermentation in green tea preserves the polyphenols, increasing the health benefits and market price. UPASI (2014) has conducted a survey in which they displayed that factory which used machinery for process of tea can made a large amount of tea. Whereas small tea estate struggle to produce a fraction of that production. They suggested using of machinery for plucking and other processing activities at small scale tea farming. Devang Bacharwar et al., (2015) reported in his study that they have designed a mechanical harvester to improve efficiency and reduce the need for labour and they also stated some recommendation to revitalize the Kangra tea regarding marketing and the govt. policies. Emilia, K., and Vishal, M. (2015) on the basis of their project report that the Palampur region has vast potential and is currently extremely under utilized. This disclosed that small tea grower are facing many challenges with their gardens but many remain stead fast in their cultivation of tea and suggested to develop low and technological solution for different process involved in tea processing. 38

57 CONCLUSION In the conclusion we find out that most of the researchers revealed that tea industry of Himachal Pradesh was no longer viable for the planters. As they found it difficult to compete in the market due to enhanced cost of inputs because of old age plantation, labour rate, lack of mechanization. Most of the studies have focused on various factors such as lack of promotion activities, lack of funds to rehabilitate tea industry, low proportion of subsidy by the Govt. sector, lack of technology, low investment by the investors, and recession in the market that forced the planters to close down cultivation and production. 39

58 CHAPTER-3 RESEARCH METHODOLOGY Since scientific enquiry is based on the systematized body of knowledge, therefore selection and adoption of an appropriate scientific methodology is a vital component of conducting a research investigation, because it adds to clarity, precision reliability and validity of findings relating to research problem. In view of the above background this chapter has been planned to elucidate the sampling plan and various analytical tools that were employed to achieve the specific objectives of the present study. 3.1 NEED Tea is one of the main foreign exchange earners and export commodities of India. It has covers an area of 5.11 lac hectares with a total production of 830 million Kg made tea (2005). Tea in Himachal Pradesh which had once been vanguard of tea cultivation in India today stands reduced to a vary minor position in the tea map of India. In Himachal Pradesh, out of the total area of 2312 ha under tea cultivation, 1100 ha. of additional area has been identified as non-traditional area suitable for cultivation of tea. The marketing system of the tea has not kept the pace as expected by the producers causing slow progress of commercialization. Moreover, the existing infrastructures and institutional facilities which are requisites for the development of marketing system, are inadequate in Himachal Pradesh. Resultantly, such type of operational and organizational inefficiencies not only worked against the interest of both the producers and consumers but also thwarted the commercialisation of the cultivation to the desired extent. The tea gardens in Kangra are spread over a strip of about 50k.m. from Shahpur in Kangra to Bir in tehsil Palampur. However, Palampur tehsil is the major tea growing area accounting for about 69 percent of total area under tea in the state. The tea in Palampur is cultivated on individual holdings, on terraced fields which affects the pattern of capital investment and labour utilisation in tea cultivation. The investment in tea has the additional risk of long gestation period before production. The tea gardens in the state are old and tea bushes have mostly degenerated. Further, no significant 40

59 efforts to rejuvenate the gardens have been made. Most of the gardens have been denuded of fertile soil through a constant process of soil erosion. The adverse affect of this is amply reflected in the lower yield of tea in state. Added to this is the problem of lower rates offered for the tea produced. Further the channeling of marketing involves the burden of additional cost at each stage. The scarcity of both unskilled as well as skilled labour was one of the most important problems faced by the tea growers. About 78 percent tea growers on the large tea farm faced the problem of unskilled labour as one of the major constraints for the tea development (Pathania 2005). Low wage rate responsible for this problem. Similarly, next to scarcity of labour, untimely available of fertilizers and chemicals was the serious constraint faced by small as well as the large size of farmers. Thus scarcity of labour and untimely availability of fertilizers and chemicals were among the major hardles for the development of tea in the study area. It is observed that many studies have been conducted in Himachal Pradesh regarding this but these are not sufficient as to growing needs of the tea cultivation and tea industry in Himachal Pradesh. Keeping in view this research gap, the present study has been undertaken. 3.2 STATEMENT OF THE PROBLEM The study is focused to evaluate the problems faced by tea manufacturing units and growers. The problem is titled as below: PROBLEMS AND PROSPECTS OF TEA INDUSTRY IN HIMACHAL PRADESH 3.3 OBJECTIVES Objectives are the main and important component of the study which provide a way to complete the research work. With the background this study has been undertaken with the following objectives. 1. To study the social-economic profile of tea growers in Himachal Pradesh. 2. To over view the growth of the tea industry in Himachal Pradesh. 3. To study and examine the various problems of tea growers and manufacturing units of tea industry in Himachal Pradesh. 41

60 4. To examine the prospects for tea industry in Himachal Pradesh and suggest the ways and means to ensure the global competitiveness. 3.4 SCOPE OF THE STUDY Present study is an attempt to look into the problems faced by tea industry and scope for its prosperity. Himachal Pradesh being a model of hill states of the country was selected purposely for the present study. In this state after apple and vegetables, tea is the next maim exportable cash crops. There are six major tea growing pockets viz. Palampur, Dharamshala, Kangra, Baijnath of the Kangra district, Bhatiyat of the Chamba District and Joginernagar of Mandi district in Himachal Pradesh. Palampur Tehsil and Baijnath Tehsil of Kangra district covered more than 70 percent area under tea of the state. Keeping this in view, the present study is confined of Palampur, Baijnath and Dharamshala tehsil of Kangra district in Himachal Pradesh. In order to find the problems of tea growers and manufacturing units a specific period from to has been undertaken. 3.5 SAMPLING Sample for the present study include the manufacturing units having own tea process unite either bought leaves factory/tea estate or co-operative tea factory. The process of selecting the sample is multi stage in nature. At the first state four tehsils namely Palampur, Baijnath, Kangra, Dharamshala purposively have been selected. At the second stage 40 running manufacturing units have been selected in the selected tehsil. Finally after selecting the manufacturing units judgement cum convenience sampling have been used to select respondent from manufacturing units. A comprehensive list of villages of the selected tehsil where commercial tea is carried out has been prepared with the help of staff posted in Tea Board of Himachal Pradesh and Co-operative tea factories. From this list random sample of villages has been selected. The selected villages were Tanda, Holta, Banuri, Aima, Rajpur, utrala, Dharer, Sansal, Ustehar, Chobeen, Bir, Dharamshala. A sample of tea planters / growers has been chosen from the list of tea growers registered with manufacturing units or Tea Board from selected villages. While selecting the respondent special care have been taken that the families belongs to different cast education and land holding are included. 42

61 3.6 SAMPLE DESCRIPTION (1) Sampling Method (a) (b) Purposive sample method for selecting four tehsil out of 15 tehsils have been taken. Proportional sampling is used for selecting 40 manufacturing units out of 65 units lying in selected tehsil. (2) Sample Size (a) (b) 40 Tea manufacturing units out of total 65 units in number. Sample size for the present study consists of 450 tea growers who were either member of manufacturing units or Tea Board. 3.7 RESEARCH DESIGN Research design is a plan under which observations are made and data is collected. To accomplish the objective of the present study both primary and secondary data have been used. Primary Data Collection (I) Questionnaire The primary data were collected by specially prepared questionnaire and personal interview method from the sampled planters and manufacturing units in the study area regarding the problems faced by them. Two questionnaire have been prepared one for manufacturing unite and other for tea growers. (II) Observation While obtaining the information through questionnaire the same has been collected by means of direct personal observation from government officials, department heads who are involved directly or indirectly with tea industry of Himachal Pradesh. Secondary Data The secondary data an area, production, sale and other aspects are collected from the statistics brought out by the Tea Board of India at Palampur, tea manufacturing units, Office of the Registrar of Co-operative societies at Dharamshala, Kangra Tea Planters, Supply and Marketing Industrial Societies through my personal visit to the respective offices and various published / unpublished reports. 43

62 3.8 TOOLS OF ANALYSIS After collection of data through various sources, different techniques have been used for the analysis of data. The data have been presented through tables, diagrams and figures and simple statistical techniques of analysis i.e. average, percentage, factor analysis and trend percentage have been applied. (A) Statistical Techniques A brief description of the various statistical techniques being used for the present study is as follows: (1) Compound growth rate (2) Mean (3) Standard deviation (4) Skewness (5) Kurtosis (6) Trend Analysis (7) Co-efficient of Variance (8) Chi-square test (9) Contingency co-efficient (10) Zero-order correlation (B) Diagrammatic and Graphic Presentation of Data Diagram and graphs exhibit the data in simple comprehensive and understandable form. Keeping in view the importance of the charts, pie charts and histogram have also been used for better presentation of information. Accounting Tool (1) Compound Growth Rate To examine the growth rate of area production and productivity of tea following formula is of used; R = (T P 1) x100 K Where R = Stands for growth rate T = Time period (i.e. 10 years) 44

63 (2) Mean P = Present area, Production & Productivity K = Area, Production & Productivity at base year. To find out the average of the production and responses of respondent etc. mean have been used. It is worked out as under: X x N X = Arithmetic Mean X = Sum of all the values of variables N = Number of Observations (3) Standard Deviation Standard deviation is better than the other measures because of its units in mathematically representing the variability which is very crucial for interpreting and analysis the statistical data. It is worked out as under: x 2 N = Standard Deviation x = X- X N = Number of observation (4) Skewness The coefficient of skewness has been used in studying the concentration of responses of the respondents either on the lower side or on the higher side of the mean score with respect to their opinion on different statements. It has been calculated with the help of following formula. SKp X Z Where Skp = Kari Pearson s coefficient of skewness. X = Mean Z = Mode = Standard deviation 45

64 (5) Kurtosis In statistics, kurtosis refers to the degree of flatness or peakedness in the region about the mode of a frequency curve. The measurement of kurtosis tell us the extent to which a distribution is more peaked then the normal curve, it is called leptokurtic. If a curve is called flat-topped then the normal curve, it is called platykurtic, the normal itself is known as mesokuritc. platykurtic. 2 B 3 For normal distribution 2 0 If 2 is positive, the curve is leptokurtic and if 2 is negative, the curve is (6) Trend Analysis To analyse the trends in production and prices of tea at national level and in Himachal Pradesh, method of least square of the time series is used with the help of which trend line is fitted to the data to obtain the straight line curve. The line obtained by this method is called line of best fit as trend values can be obtained for all the given time period in the series. Equation used is Y = a + bx Which is further expanded to find the values of a and b variable to fit the straight line trend values. The two equations are as under: y = Na + b x (i) xy = a x + b x 2 (ii) (7) Co-efficient of Variance It is a relative measure of dispersion. It is used to compare the consistency in total quantity of tea processed by the different co-operative societies. It is defined by the formula; Co-efficient of variation (c.v.) = X100 X = Standard Deviation = Mean value of the Series 46

65 That Co-operative tea factory for which the Co-efficient of variation is greater is said to be more variable or less uniform, and less stability in processed quantity tea on the other hand, the Co-operative tea factory for which Co-efficient of variation is less is said to be less variable or more consistent, or more stability in processed quantity of tea. (8) Chi-Square ( x 2 ) Test Chi-Square test is a non-parametric test which was first used by Karl Pearson in the year To study whether the problems faced by different categories of tea grower are the same or different, Chi-Square test was applied between small and large situation. The quantity x 2 describes the magnitude of the discrepancy between theory and observation. It is defined as: x 2 O E E O = O refers to the observed frequencies E = E refers to the expected frequencies E = Expected frequency E = RTXCT N RT = The Row Total for the row containing the cell CT = The column total for the column containing the cell N = The total number of observation This test is used to know that problems faced by small and large tea planters are same or different. (9) Contingency co-efficient The chi-square test measure only the association between the elements, whereas contingency coefficient has been applied to measure strength of association in a table of any size. The contingency-coefficient has been calculated as under: C 2 x x² m The value of contingency coefficient varies between 0 to 1. The 0 value occurs in case of no association i.e. the variable under study are statistically independent, but 47

66 the maximum value of one is never achieved i.e. the variables are strongly associate with each other. (10) Zero-order correlation The simple correlation coefficient, r is zero order as it does not control for any additional variables when measuring the association between two variables. Its value is between -1 to +1, it is expressed as r = xy x 2 X y² Where, X = (x x) Y = (Y Y) 3.9 LIMITATIONS OF THE STUDY (i) (ii) (iii) (iv) (v) The study is also based on secondary data taken from official website, annual reports of the federation published, others reports, magazines, journals and as such findings depends entirely on the accuracy of such data. The evaluation is based on the primary data generated through questionnaire and collected from the concern person and because of these finding entirely depends on the accuracy of such data. The study restricted to a period from to and the study is confined to the one district of Himachal Pradesh. Planters are not aware to maintain the financial record of production of tea leaves and they are also hesitant to give the information. Thus, the chance of wrong information can be ruled out. Private manufacturing units are not ready to give their financial and other record information of their units. Despite of these limitations, all precautions have been made in order to make its impact negligible on the research results and findings. 48

67 CHAPTER-4 OVERVIEW OF THE PROGRESS OF TEA INDUSTRY OVERVIEW THE PROGRESS In this chapter attempt has been made to overview the progress made by the tea industry from the time 1852 of installation in Himachal Pradesh. Various aspects like area, manpower price, organization support, productivity etc. have been studies with respect to Kangra tea in Himachal Pradesh. Except for the above an attempt is made to analysis growth of area, production and productivity of tea over a study period of time for India and productivity have been worked out for the period by calculating the annual compound growth rates for India and Himachal Pradesh. The first tea plantation came up in Himachal Pradesh introduced 1852 by the Britisher with Chinery seeds brought from Dehradun. Tea Industry of Himachal Pradesh which have been started by the government in 1852 has completely changed the economic aspect of Kangra valley of Himachal Pradesh. But in 1905 Great Earthquake took its toll on Himachal Tea Industry as revealed that majority of factories were raised to the ground. Some tea growing area were ruined, a large number of planters lost their lives and most of those who survived migrated to Darjeeling and Assam. The progress in tea sector halted as there was acute shortage of manpower and tea manufacturing expertise. The new owners were lacked in expertise in tea cultivation due to which manufacturing units became shambles. Consequently quality of tea deteriorated and prices were un-remunerative, many bushes were uprooted and the area under tea shrank and Himachal Tea Industry went into hibernation. Finally in 1964 the first Co-operative tea factory was established at Bir (Distt. Mandi Himachal Pradesh) with one lakh kg made tea production capacity. Three other co-operative factories were established with a cumulative manufacturing capacity of Ten thousand kg black or green tea. At present the production in Himachal Pradesh is standardized through four co-operative factories viz. at Bir, Baijnath, Palampur and Dharmshala (Sidhbari), with total installed capacity of ten lakh Kg. of made tea (Table 4.1). The management of these factories is controlled by the duly constituted Board of directors with 14 directors out of which nine are elected directors and five are nominated one each from co-operative bank, Department of Industries, 49

68 Agricultural co-operative and one nominee from the Tea Board of India who meet twice or thrice a year for policy formation and deciding about the prices of the tea leaves to be paid to the suppliers. Table 4.1 Installed Capacity of Tea-Co-operative Factories Sr. No. Factories Years of Establishment No. of Members Installed Capacity(in Kg) 1 Bir Co-operative Tea Factory Palampur Co-operative Tea Factory Baijnath Co-operative Tea Factory Sidhbari Co-operative Tea Factory Source: Co-operative Tea Factories. Tea cultivation in Himachal Pradesh is spread over four Tehsil viz. Palampur, Baijnath, Kangra and Dharamshala of Kangra district one in district Mandi (Jogindernagar) and Bhatiyat of Chamba district representing a total number of 3679 tea growers with total area of 2312 hectares under tea culivation,1096 hectares (47 percent) under the neglected and abandoned area(table-4.2). Apart from this 7700 hectares of additional area has been identified as non-traditional area suitable for cultivation of tea. Tehsil Palampur, the tea capital of Himachal Pradesh, covers the maximum area of 1256 (54 percent) hectares followed by Baijnath 564 (24.05 percent) hectares, Dharamshala 232(10 percent) hectares, Jogindernagar 193 hectare (8 percent), Kangra 66 hectare (3 percent) and Bhatiyat 1 hectare (0.05 percent) Table 4.2 shows that maximum neglected area (48.71 percent) is in Jogindernagar and abandoned area in Baijnath Tehsil (55.49 Percent) but total maximum abandoned and neglected area is in Jogindernagar (Mandi District) (86.53 Percent) followed by Baijnath i.e. is Percent. 50

69 Figure 4.1 Percentage of Landholding and Utilisation of Tea Area in Himachal Pradesh Neglected Area 20% Fig-1 Percentage of landholding and utilisation of Tea area in himachal Pradesh Abandoned Area 27% maintain Area 53% Source: Tea Directory of H.P. Tea Board of India 1998/2007 Table 4.2 Area under Tea in Himachal Pradesh (in hectare) ( ) District Tehsil Total Area In 2001 Neglect Area Abandoned Area Total Share of Abandoned and Neglected Area (a) Palampur (20.54) 154 (12.26) 412 (32.8) (54.00) (54.89) (24.61) Kangra (b) Baijnath (16.14) 313 (55.49) 404 (71.63) (24.05) (19.36) (50.00) Non Traditional Area for Cultivation (c) Dharamshala (11.21) 42 (18.71) 68 (29.32) 2500 (33) (10.00) (5.53) (6.71) (d) Kangra (1.52) 44 (44.67) 45 (46.19) (3.00) (0.21) (7.03) Mandi Jogindernagar (48.71) 73 (37.82) 167 (86.53) 2000 (26) (8.00) (20.00) (11.66) Chamba Bhatiyat (42) 0.05 Total 2312 (100) 470 (20.00) 626 (27.00) 1096 (47.00) Source: Tea Board of Palampur. Parenthesis shows percentage share of column (100) 51

70 Table 4.3 and fig. 4.2 shows that approximately 96 percent of total tea growers are having an average possession of less than 2 hectares comprising percent of total tea area. The remaining percent of total tea area is shared among 4 percent of large tea growers there are 150 tea growers commanding hectares of tea gardens who are commercial tea planters fully dependent on tea for their livelihood. There are various reasons for area classified under abandoned category like absentee landlords; lack of resources, marketing problems etc. There is also an area of hectares other than tea owned by tea growers. Table 4.3 Area wise Distribution of Tea in Himachal Pradesh in 2001 District Tehsil Area Less than 2 hec. Kangra Mandi No. of growers Area (in hectare) Neglected Area Abandoned Area Area other than tea No.of growers Area (In hac.) No of Growers Area (in hac) No. of growers Palampur Baijnath Dharam Shala Total Area Kangra Joginder Nagar Chamba Bhatiyat Total 3535 (96) (46.97) Source: Tea directory of Himachal Pradesh. Parenthesis shows percentage of total column. Figure 4.2 Pattern of Land holding by Tea Growers Source: Tea Directory of H.P Tea Board of India 1998/

71 In Himachal Pradesh, tea industry today stands reduced to very minor position in the map of India. There has been variety of causes natural as well as those with in preview of management. The total area under tea cultivation, share of Himachal Pradesh today stands reduced to very minor position. It accounts for just 0.05 percent of the total area under tea cultivation in India. In comparison to that during the recent period i.e and , it is evident from table-4.4 that area under tea cultivation has reduced 1.16 percent along with decrease registered in maintained area, neglected area and abandoned area by 5 percent, 4 percent, 8percent respectively but area other tea increased by percent. The main reason for the loss of area under tea cultivation has been loss of interest among the tea growers and tea land has either been sold and is used for other purposes. Some gardens have been abandoned or some gardens have been used for mixed farming. There are other problems associated with area like large vacancies, low bush population per unit area, absence of appropriate tea husbandry and non application of required input which has resulted into loss in area. Table 4.4 Comparative Position of Area under Tea Cultivation in Himachal Pradesh Particulars Percentage Increase/ Decrease from to Total Area under Tea cultivation in Himachal Pradesh. (in hectare) (1.16) Maintained Area(in hectare) %age share of maintained area (5) Neglected area (in hectare) %age share of neglected area (4) Abandoned Area(in hectare) %age share of Abandoned Area (8) Area other than tea Source: Tea directory of Himachal Pradesh Tea board and tea technical office Palampur. Note: figures in parenthesis show the decrease. 53

72 Consequently, the total production of tea showed non-significant or stagnant growth during both decades 1991 to Though scope of increasing the area is limited, much progress can be achieved by speeding up infilling, rejuvenation and replanting and proper training of workers in the correct method of plucking leaves. The area of the tea estates has important bearing on the production of tea in the garden. In Himachal Pradesh, though the number of estates has increased during the study period, it has increased from 3679 in 2001to 5872 in But in actual, there is not increase of estates, it is scattered nature of land holding patterns and ownership as area of tea cultivation in 2001 is 2312 hectare and in us 2285 hectares. Table No 4.5 shows that production trend in Himachal Pradesh. It reflects that there is negative trend in production of tea of Himachal Pradesh. There is fluctuation on year to year basis in production of tea in Himachal Pradesh but the trend in production is showing downward trend as reflected in figure 4.3 and 4.4. Period Green Tea Production Table 4.5 Production of Tea in Himachal Pradesh Trend value of Green Tea Black Tea Production Trend value of Black Tea (Production in 000 kg) Total Tend Value total of Source: Tea Technical Office, Palampur. 54

73 Figure 4.3 Trend Value of Green, Black and Total Production of Tea Source: Tea Technical Office, Palampur. Figure 4.4 Production of Green Tea, Black Tea and Total Source: Tea Technical Office, Palampur. During calendar year 2000, the production of tea in Himachal Pradesh was 1490 thousand Kg. table-4.6 which keeps on declining trend till to 801 thousand Kg. This was mainly because of fluctuating weather conditions, poor management and also less price received for both green and black tea. Another reason 55

74 for this type of fluctuation production was trend of leaving more area under neglected and abandoned state and also because of the presence of 47 percent holding less than 2 hectare, moreover, due to low productivity per hectare of tea, the small planters are not in a position to sustain and take this venture as a primary business and they are shifting toward government and private jobs and have started taking tea as a secondary business Table 4.6 shows that drastic decline in tea production and productivity from 2000 to Although there is increase in production and income, yet lucrative business of tea is dwindling. Year Table 4.6 Production and Productivity of Tea in Himachal Pradesh Production (in thousand/kg) Percentage Change Productivity (Kg/hac) Percentage change (43.40) 217 (43.49) (12.92) 644 (12.97) (31.41) 442 (31.37) (29.75) 311 (29.64) (2.23) 304 (2.25) (7.26) 282 (7.24) (57.71) (19.62) (0.12) (15.11) (2.07) Source: Tea Technical Office, Palampur. Figure in Parenthesis shows decreasing 56

75 Figure 4.5 Production of Productivity Source: Tea Technical Office, Palampur. Table 4.6 showed there is a decline in overall production of tea from year 1999 and three after it never reached to this production level. The productivity of tea declined from 1999 to 2004 and the potential of the golden year (1999) could not be realized again. This was because of the fact that the major suppliers (according to Tea Technical Office H.P Govt.) of inputs, fertilizers and pesticides/hectare could not offer subsidy in large scale as was the case earlier. This also inferred that the planters are highly depended on subsidies and supplies in one form or other from the government (Tea Technical office Department of HP Govt. and Tea Board of India).It was also clear from the above analysis that for most of the planters consider tea cultivation as a secondary source of income because their children are studying and earning livelihood by doing jobs and other business. Until the establishment of co-operative tea factories at Palampur, Baijnath, Bir and Sidhbari in 1980, the estate owners were paying more attention for processing their own produce rather than maintaining their gardens on the proven scientific technology developed by agencies (CSKHPKV, CSIR, State Agriculture Department and Tea Board of India). With the establishment of co-operative tea factories during 1980, planters started paying more attention to the management part of plantation on scientific lines recommended by the Agriculture University of Himachal Pradesh. A tremendous response was observed when the yield in the region increased from

76 Kg per hectare in 1980 to 740 kg per hectare in This industry provides the employment of about 7000 workers directly or indirectly (Anonymous 2002). During the study period, it has been observed that the tea industry has been facing losses and some planters have been stopped manufacturing. there are about 45 small planters owned small processing units, producing mostly green tea and few private factories named Wha Tea Estate factory at Deogran, Dharamshala Tea Factory and some other are functional tea factories in tea industry of Himachal Pradesh, The co-operative tea factories provided remunerative price to the growers for their green leaf from 10.20Rs/kg (55 Percent count of two leaves and a bud) to Rs/kg green leaf (100 percent count of two leaves and a bud). But the planters who are supplying leaves to factories are not getting satisfactory payment and in time. Due to non-payment for the produce in time, planters are not in a position to manage their tea garden properly; those affected are ultimately losing their interest in tea cultivation and becoming a frustrated lot. When great earthquake in 1905 ruined many establishments, then panic stricken Banishers sold their plantation to local buyers who could not maintain the same profitability due to lack of technical knowhow, poor processing technology. Many of the plantations were uprooted and shifted for other agricultural activities with the result that the area reduced to a greater extent. Due to poor management of tea plantation, the yield declined and the quality suffered. The quality of "Kangra Tea of Himachal Pradesh" deteriorated to such an extent that it could not meet the requirement of Prevention of Food Adulteration Act. Many prosecutions were launched by the Food Inspectors in Amritsar, which is the main market for Kangra Tea, especially for the green tea. The production of co-operative factories and private factories is analyses and presented in table 4.7. This table revealed that co-operative factories contribute to the tune of percent of total production of made tea in Himachal Pradesh, it was maximum in the year of Among all the tea co-operative factories, Palampur Co- Operative Factory is the major contributor ( percent) to the total production. In maximum years, it is only Palampur Tea Co-Operative Factory which manufacture maximum tea, while others cooperative factories to stop their production. The period from is full of crises for Kangra Tea as its three cooperative factory remain closed, thus adversely affected overall production of made tea. But now these factories were revived by leasing out to private parties. Sidhbari 58

77 Co-operative Tea Factory have been leased out to private proprietor from West Bengal in March In the year Bir Co-operative Factory is leased out to Halmira Tea Estate from Kolkata. But this venture also failed, so in Bir Cooperative Factory and Baijnath Co-operative factory are leased out to Mr. V.K Aggrwal, private proprietor from West Bengal, who sold made tea from Bir and Baijnath Co-operative factory under the name "SIMLA TEA and "FINE TEA" respectively. Thus, production and productivity got slightly improved. Presently only Palampur co-operative factory is working as co-operative tea factory and rest of three are under the control of private ownership. To revive these factories, Government should establish tea blending units so that the uniform quality of tea could be marketed. Table 4.7 and fig. 4.6 shows that production of tea in co-operative factories is fluctuating on year to year basis till Table 4.7 Production of Made Tea in Different Co-operative Tea Factories (Production in thousand kg ) Year Palampur Bir Baijnath Sidhbari Private Factory Estate/BLF Trend value Trend value Trend value Trend value Percentage contribution of cooperative Production Production Production Production Production Trend value factory to Total production Source: Co-operative Tea Factories, Tea Technical Office Palampur. 59

78 Figure 4.6 Production of Made Tea in Different Co-operative Tea Factories Source: Co-operative Tea Factories, Tea Technical Office Palampur. Further perusal of production under private tea estate and factories revealed that their production fluctuated. In Himachal Pradesh approximately 27 Bought leaf factory and 30 tea Estates registered with tea Board of India which are running and manufacture own tea produce under private ownership.approximately 13 private tea manufactured units are closed. The closure of co-operative factories during some years and other manufacturing units were mainly due to the low average price in the market which leads to poor financial condition and low repayment capacity to planters for their green leaves supply. Non-repayment of green leaves supply resulted in the financial crises. This situation resulted in the decline of tea production in Himachal Pradesh. Except Palampur co-operative Factories other co-operative factories were taken over by the private proprietor on leas bases. It further noted that onward from 2004 there was improvement in average price of tea which resulted improvement and increase in production. Supply of green tea leaves to co-operative tea factories affects the capacity utilization of the tea factories. The one of the reason for unsatisfactory performance of the cooperative and brought leaf factories and estates is payment for higher transportation cost to maintain the regular supply of the tea leaves which 60

79 unnecessarily raises the procurement cost of raw-material.table-8 and 9 shows that percentage share of each factory in total quantity produced by co-operative factories and capacity utilization by each co-operative tea factory of total installation respectively. Tables 4.8 and 4.9 shows the these factories are not able to use their installed capacity fully. There was glaring year to year fluctuations in capacity utilization. No factory was found to achieve full capacity utilization in any year except for Bir Tea co-operative factory in (100 %) once. Sidbhbari cooperative tea factory has never being utilized upto its 50 per cent for three consecutive years from to Table-8 reflects that Palampur Co-operative Tea factory contributes maximum in total production of co-operative factories as during the years, its share in total production in each year is maximum i.e percent in where as rest of three factories remain maximum closed during this period. In the next five years i.e ,again percentage share of Palampur cooperative factory in total quantity produced by cooperative factories is maximum but rest of three factories also make some improvement during this period as Baijnath factory produces percent in total quality produced by Co-operative factories. The analysis of table 4.9 shows that during the Sidhbari Co-operative Factory just achieved 4 percent capacity utilization in the year It was also observed from Table-9 that Palampur factory alone was manufacturing tea in all year and more than 50 percent of total tea manufactured by the Co-operative Factories. Further it is observed from the table 4.9 that main contributor is Palampur tea cooperative factory in total four cooperative factories production The growth rates for the total quantity of processed tea were calculate and presented in table It was observed that during the period the production of Bir and Dharamshala factory shows significant compound growth rate 8.38% and 7.78% respectively where as the Palampur and Baijnath factories followed them. However during the period no co-operative factory registered significant growth rate but overall position of Bir factory shows good and Palampur factory also shows stagnant position. During coefficient of variance of production of palampur factory is more consistent i.e in overall factories in comparison to Bir, Baijnath and Sidhbari co-operative tea factories. 61

80 Table 4.8 Percentage Share of Each Factory in Total Quantity Produced by Co-operative Factories Year Palampur Bir Baijnath Sidhbari Total Source: Co-operative Tea Factories, Tea Technical Office Palampur. - = data not available 62

81 Table 4.9 Capacity Utilization by Each Co-operative Factory of the Total Installation Capacity (Percent) Year Palampur Bir Baijnath Sidhbari Total Source: Co-operative Tea Factories, Tea Technical Office Palampur. 63

82 Table 4.10 The Growth Rates for the Total Quality of Processed Tea Sr. No. Co-operative Factories Mean (1000'kgs.) Coefficient of Variance Compound Growth Rate in (Percentage) 1 Palampur i) ii) (6.89) (6.1) iii) Overall ( ) (0.99) 2 Bir i) ii) (1.21) (10.1) iii) Overall ( ) Sidhbari i) ii) (11.60) (10.37) iii) Overall ( ) (2.42) 4 Baijnath i) ii) iii) Overall ( ) Total i) ii) (6.43) iii) Overall ( ) (0.49) Source: Co-operative Tea Factories, Tea Technical Office Palampur. - = Data not available. Decreasing land holding, poor marketing, unfavorable weather conditions and no minimum support price for Kangra tea of Himachal Pradesh has led to sharp decline in production and reduction in area under tea cultivation. Winter drought in Kangra Valley over past ten years had led to the subsequent failure of first flush - the first tea leaves to be plucked from a plantation. The first flush generally yields the highest price in market up to 30 per Kg, but because of winter drought, the first flush has not been picked and processed. As the tea cultivation become less remunerative, a large number of tea growers are now abandoning its cultivation. Though Kangra Valley is favorable for growing productive quality teas both green and black orthodox-there is little initiative on the part of government to market the produce. Therefore, major problems faced by tea growers in tea production are fragmentation of land, old plantation, poor management of tea garden, diversion of land to other 64

83 areas, shortage of labour in peak season, trade barriers and sluggish export market and lack of incentive prices. Average prices of green tea and black tea and total income from tea in Himachal Pradesh is presented in table-11. This table shows that the net income and average price received per kg was more for manufactures as compared to nonmanufacturers. But the planters were found to be favoring the green leaves supply to the factory instead of using their investment and energy (in terms of mind and manpower) in manufacturing and marketing of tea. However per kg. returns multiply manifold in manufacturing and selling the product. Table 11 shows that the highest price of green tea and black tea in Amritsar and Kolkata markets were Rs /kg and 140/kg respectively during ten years In the case of arrivals of these items in the market it was found that the arrivals of green tea increased up to year but after that its quality started decreasing over the years but the quality was higher than black tea. In the case of black tea the arrivals in market increased up to the year and started decreasing but after that higher than green tea which is clearly reflected downward trend in the production in the Fig, 10 Years Table 4.11 Average Tea Prices and Total Income from Tea in Himachal Pradesh Avg Price Green Tea in Per/Kg. Trend Value of Green Tea Avg Price Per/Kg of Black Tea Trend Value of Black Tea Total Income (Lakh Rs.) Source: Co-operative Tea Factories, Tea Technical Office Palampur. - = Data not available. 65

84 Figure 4.7 Average Prices of Green and Black Tea in Himachal Pradesh Source: Co-operative Tea Factories, Tea Technical Office Palampur. It is well established that quality of made tea is hundred percent dependent on the type of tea leaves and processing techniques followed in the factories which earn good selling prices. The raw material in the form of tea leaves are supplied by both members (registered as members of co-operative factories) and non-members. As the quality of tea leaves is dependent upon bunches and buds, but as such there is no sophisticated standardization in factories for determining the quality of tea leaves. The method adopted by four co-operative tea factories depends upon fine-count. It is observed that co-operative tea factories pay price for green tea leaves on the basis of quality of plucked leaves. The sample from each lot taken and graded for quality to pay prices. As the price was paid on the basis percentage of acceptable leaves i.e. two leaves and a bud, in the sample. If the percentage of acceptable leaves found below 40 percent, lot was rejected and Rs. 5 per kg paid for up to 40 percent in But this range of percentage of acceptance leave increased up to 55 percent in the year to improve the quality of made tea. The maximum price for green tea leaves was Rs per Kg. for and also for at 100 percent acceptable tea leaves which shows no increase in prices paid to planters. There is no percentage increase in prices of green tea leaves at 100 percent acceptable tea leaves till