Kochi: The commerce ministry’s decision to pay Rs76.54 lakh to 14,928 tea growers across India under the Price Stabilization Fund (PSF) has brought little cheer to small and marginal farmers in distress. That’s because each of them will get a mere Rs512 under the scheme, not enough money to be of much use.
The scheme, which started in 2003, aims at providing financial relief to tea, coffee and rubber growers when prices of these commodities fall below a specified level. The objective is to extend a sustained, long-term support to the growers instead of making ad hoc interventions during a crisis.
Ever since the scheme was launched, tea growers have said that the amount paid to each of them is too little to help. Last year, in a meeting with a planters association, India’s minister of state for commerce Jairam Ramesh had expressed his reservations about the scheme.
The scheme for the three sectors has a corpus of Rs500 crore, which includes contributions by small and marginal farmers owning up to four hectares. More than 95% of farmers that grow coffee and rubber in the southern part of the country fall in the small and marginal category, with holdings less than four hectares.
Small growers are encouraged to enrol under the scheme, depositing Rs500 as an entry fee. The government’s contribution to the Rs500 crore corpus is Rs482.88 crore; the remaining Rs17.12 crore comes from farmers. Overall, 18,744 rubber growers, 14,883 tea growers and 11,561 coffee growers have enrolled under the 10-year scheme that will end on 31 March 2012.
Under the scheme, a price band is created for each commodity using the seven-year average of its international prices as a benchmark. The upper end of the band is 20% higher than the average international price of a commodity and the lower end is 20% lower than the average price. For instance, in 2003, the average international price for robusta coffee was Rs45.37. So, the lower band was fixed at Rs36.30 and the higher band at Rs54.45. Since the average price the growers got that year was Rs33.58, less than the lower band of the price, the year was considered as a distress year for the robusta farmer and they got monetary support from the fund.
If the robusta price was within the band (Rs36.30-54.45), it would have been treated as a normal year. Had the domestic price crossed the upper band of Rs54.45, it would have been a boom year. This year, tea growers are eligible for support as the tea price in 2006, at Rs63.62, is below the lower band of average global prices.
In a distress year, the government is required to deposit Rs1,000 per farmer enrolled in the scheme in PSF. In a normal year, both the farmer and the government deposit Rs500 each. And in a boom year, only the grower deposits Rs1,000.
United Planters Association of South India secretary general Ullas Menon said, “The scheme in the present form is of little help to farmers. The amount of around Rs512 per tea grower for a year means nothing.” According to him, the government should act fast on the report of the Rangachary panel, which was formed in July 2006 to look into the problems of small growers in the plantation sector.
The draft report of the Rangachary committee submitted to the Centre says that the whole price stabilization programme has to be restructured. “The enrolment fee deposited by the government is very little. Further, the real return earned by the corpus in the form of interest has also been negative on account of the rising inflation rate. There is always a time lag notice between assistance available to members of the plantation community and loss suffered due to price decline,” he said.
The panel has recommended a restructured PSF that can provide varied options to producers, processors and financial institutions dealing with plantation and farm products.
As per the commerce ministry’s data for 2006, coffee and rubber had two consecutive years of boom; tea was normal for the fourth year in a row.