Tea factories in the small-scale sector, popularly called bought-leaf factories, in the Nilgiris have closed operations from Thursday. They say the price of green leaf set by the Tea Board is unviable.

“The Tea Board has fixed the price of green leaf we have to pay to the small growers during May at ₹14 a kg. If we pay this for the raw material, we should get ₹86 at the auctions for our manufactured tea.. But 70 per cent of the factories are not getting this price,” Ramesh Bhojarajan, President, The Nilgiri Bought Leaf Tea Manufacturers’ Association, told BusinessLine .

The Association has for long represented to the Tea Board that it should set the price of green leaf at the end of the month based on the price factories get at the auctions. “But, the Board is forcing us to pay the price it fixes at the beginning of the month and penalises factories which are unable to pay,” he disclosed. “While the Board is setting the green leaf price to help the small growers, it does not take care of the small-scale factories by implementing a formula or strategy to arrest the price fall at the auction. We have already lost ₹30/kg in the price over a month now,” he reasoned.

“May is the peak production month with each factory buying on an average four lakh kg of green leaf and manufacturing one lakh kg of black tea sold through the auction. If the factories lose ₹30, it works out to a loss of ₹30 lakh in one month for each factory. So, we have decided to close the factories until the price of green leaf, becomes affordable to us,” he said.

Meanwhile, Tea Board Executive Director C Paulrasu has slashed the green leaf price to ₹14 per kg from ₹14.50 announced at the beginning of May. “This amendment is due to some technical issues”, he said.

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