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| Kathmandu, Monday April 15, 2002 Baishakh 02, 2059. |
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Fall
in tea price hits small farmers hard
Post Report
KATHMANDU, April
14:Decline in the price of tea in the international market has hit the local tea
entrepreneurs, especially the small farmers, as the price they have been getting in the
past for the green leaves has plummeted in recent years.
Experts attribute the
outstanding stock of the tea among the largest tea suppliers including India, Sri Lanka
and Kenya to the cut down in its price in international market. Nonetheless, the small
farmers lament that the current price of the green leaves does not even meet the cost of
production.
"The price of
green leaves when I planted tea was Rs 23 per kg. However, by the time I got the first
harvest, it was as low as Rs 9 per kg," said Badri Prasad Upreti, a small farmer from
Jhapa. As a result, he could not make out even the cost of production and pay back loan
timely, he added.
"The price of the
CTC tea has recorded a whooping decline for the past two years and the small farmers have
not only been unable to pay back loans on time, but their cumulative interest too has gone
up," said Madan Gurung, President of Small Farmers Tea Producers Association, Jhapa.
There are over 5,300
small farmers in tea plantation in the country doing tea farming commercially with loans
from Agricultural Development Bank (ADB/N).
Owing to the dwindling
price of the leaves, there has been frequent conflicts between the processors and small
farmers, said Gurung, adding that they have in understanding with the processors recently
fixed the price of green leaves at Rs 11.5 per kg.
"However, Nepal
Tea and Coffee Development Board (NTCDB) should set floor price of the green leaves to
support the small farmers as well as processors," he stressed.
Even members and
officials of the NTCDB are of the opinion that the board should intervene into the market
and bring in certain measures to promote the small farmers immediately.
So much so that Naresh
Kumar Burma, member of the board views that the government should exempt the interest of
the small farmers if their income from the tea plantation do not meet the cost of
production. "The government needs to implement measures to stabilise the domestic tea
price and relieve the small farmers from the mounting interest," he stressed.
However, in the given
backdrop when the government is planning to boost the Nepali tea in the international
market, setting up the floor price for green leaves would hinder the development of the
tea sector in the long run, views Mukti Raj Sharma, Executive Director of the NTCDB.
Meanwhile, the tea
producers have urged the government to exempt income tax and further slash the interest
rate on loans extended to tea production, especially to attain desired growth envisaged in
the National Tea Policy (NTP).
Going by the NTP, the
government aims to extend tea plantation in over 40.8 thousand hectare of land producing
46.1 million kg of tea within 10 years of tea plantation. For this, investment of over Rs
1.44 billion is required.
The tea policy targets
to meet an estimated annual domestic demand of 9.2 million kg and export the additional
produce. Currently, the yearly domestic production of tea stands at about 6 million kg and
Nepal spent over Rs 99 million during the last fiscal year on tea imports to meet the
deficit supply. Tea plantation is being carried out in 11.99 thousand hectare of land.
Moreover, the domestic
tea entrepreneurs have been criticizing the government for its failure to explore the
international market and protect the domestic tea industry from competitions exerted by
the imported tea.
They have been asking
the government to levy additional duty on tea imports and provide incentives to the
marketers for promoting the consumption of domestic produce. "Regulating the
marketing procedures by enforcing auction system regularly could be the healthy way to
mitigate problems seen in the field," say experts.
Even Sharma said that
the board was thinking in that line and has already prepared an Act to enforce the auction
system in the domestic tea trading. "It will first be discussed with the private
sector prior to ratification," he said.
According to him, the
auction would be conducted through an Auction Committee affiliated with the NTCDB and
carried out through registered brokers. "However, a thorough legislation to govern
the committee, to appoint brokers and procedures and interval of auctioning is yet to be
thrashed out," he adds.
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