Tea is more than just a beverage in India; it's a tradition and a livelihood for millions. While big players in the industry garner a lot of attention, Small Tea Growers (STGs) form the backbone of this sector.
This blog delves into the intricacies of Small Tea Growers, the challenges they face and the strategies they employ for sustainable growth.
Who Are Small Tea Growers?
Small Tea Growers (STGs) are not just simple cultivators; they are the backbone of the Indian tea industry. Typically owning plots of land up to 25 acres, these growers contribute significantly to the nation's tea production. While the term "small" might imply limitations, their role is anything but minor. STGs are often organised into societies or cooperatives, making it possible for them to pool resources and knowledge. They predominantly hail from various states like Assam, West Bengal, and the southern regions of Kerala, Tamil Nadu, and Karnataka. What sets them apart is their close-knit relationship with the land and local communities.
Challenges Faced by Small Tea Growers
Over-dependence on Climate
The tea industry is profoundly affected by climate, especially in the context of irrigation. Excessive rainfall or drought can have severe implications for tea yield and quality. This over-dependence on climate makes STGs vulnerable to the whims of weather patterns.
Quality & Yield
For STGs, maintaining the quality of the tea leaves is a constant battle. They have to balance between high yield and high quality, which is not always feasible given the limited resources and expertise available.
Cost of Production
High operational costs, particularly labour expenses, burden STGs. These costs often eat into the already thin profit margins, making it challenging to invest in quality improvement or expansion initiatives.
Scale & Aggregation
The small scale of STG operations makes it difficult for them to have a strong negotiating position in the market. This lack of bargaining power is exacerbated by the absence of collective aggregation, further limiting their market reach.
Financial Solutions for the Tea Industry
Invoice Financing
By converting invoices into immediate cash, this financial solution ensures that STGs have the liquidity to manage daily operations, pay labour, and reinvest in their farms.
Tenure Loans
When it comes to long-term projects like expanding plantation areas or upgrading technology, tenure loans come into play. These loans have long repayment periods and reasonable interest rates, making them feasible for STGs who need time to see returns on their projects.
Machinery Financing
The tea industry is increasingly mechanised, from plucking to processing. Machinery financing provides STGs with the capital to purchase or upgrade machinery. This is particularly crucial for ensuring the quality and quantity of tea production meet market demands.
Rang De X GTC intervention
Grassroots Tea Corporation is one of our Impact Partners embarked on a mission to transform the socio-economic landscape for small tea growers across India.
Currently, GTC collaborates with about 250 Bodo farmers from Assam, hailing from small tea grower collectives. GTC aims to facilitate the creation of more Small Tea Grower (STG) owned Tea Producer Companies (TPCs). In this envisioned model, STGs themselves are shareholders, broadening the impact on STG households and worker households across the country
Rang De's credit intervention plays a pivotal role in making this vision a reality. By providing the necessary working capital, Rang De ensures that TPCs can operate efficiently. This timely financial support allows tea farmers to get immediate payments for their produce, preventing them from resorting to selling their leaves at unfair prices to other agents.
GTC has extended a total of 481 loans, and what's fascinating is that these loans are concentrated among just 83 unique borrowers. This implies that multiple loans are being utilised by individual borrowers for different needs.
A substantial amount of Rs. 51,98,300 has been disbursed funded by 1,861 Rang De social investors.
The average ticket size of a loan at GTC stands at Rs. 10,807. This amount is likely tailored to meet the specific requirements of the borrowers, who mainly belong to the tea industry.
The journey of Small Tea Growers in India is filled with both challenges and opportunities. With the right strategies and support, they can continue to thrive and contribute significantly to the Indian economy.
If this topic intrigues you, consider diving deeper. You might find your next big investment opportunity or simply develop a newfound appreciation for your daily cup of tea. Visit https://rangde.in/ to know more