Majority tea farmers borrow from cooperatives, pay higher interest

Tea farmers prefer local cooperative organisations despite of their higher interest rates, according to a report.
As the villagers do not have access to the commercial banks, majority of tea farmers prefer local cooperative organisations to borrow and also on higher interest rates, according to study conducted by Central Bureau of Statistics (CBS) in association with Nepal Tea and Coffee Development Board (NTCDB).
Among the farmers, who have taken loans, some 48.3 per cent have borrowed from cooperatives, some 23.6 per cent from banks and financial institutions and some 14.6 per cent from Agriculture Development Bank (ADB), the report reads, adding that some 3.9 per cent have taken personal loans whereas 9.6 per cent of tea farmers have taken loan from ‘other’ sources for their business.
Indeed, the data shows only few farmers are taking bank loans,” said executive director of NTCDB Shashikanta Gautam unveiling the report. Loan certainly plays a huge role in expanding business, he added.
Although tea has been considered one of the most competitive products of the country, most of the tea farmers are uninterested in expanding their business. "Only five per cent of tea farmers are taking loans to expand their business," the survey further reads, "more than half of the tea farmers were satisfied with their income and business."
According to the report, there are 9,236 tea gardens in country that produce over 2.2 million tonnes of tea every year. "Tea industry provides direct and indirect employment to more than 300,000 people."
The report also shows that 82 per cent of farmers have been cultivating tea on less than one hectare of land while only 0.8 per cent of farmers are cultivating tea on more than 20 hectares of land. "Commercial tea farming is being carried out on 12,065 hectares of land across the country in 14 districts – Taplejung, Sankhuwasabha, Bhojpur, Dhankuta, Terhathum, Panchthar, Ilam, Jhapa, Morang, Dolkha, Sindhupalchowk, Nuwakot, Lalitpur, and Ramechhap – with a total yield of 100 million tonnes of green leaves annually. Of them Ilam, Jhapa, Panchthar, Dhankuta and Tehrathum are the top five districts in terms of commercial tea production."
Every year, the country exports tea to other countries worth around Rs 3 billion. A total of 18,180 farmers are involved in tea farming directly or indirectly – some 9,374 are male while 8,807 are female. The farmers are collectively earning up to Rs 1.76 billion annually.
The report also revealed that tea farmers have been unable to get reasonable price. The tea farmers across the country are deprived of a reasonable price for their produce due to lack of proper price fixation mechanism, resulting in sluggish growth of the tea industry in the country, it reports.
Currently, tea price is fixed through consensus between farmers and factory owners.
The board has tried to fix minimum price of tea in 2015 but could not be implemented after both farmers and factory owners remained at odds over the rate.
He said that it is necessary to fix the minimum support price for tea every year as the Tea and Coffee Development Board Act, 1993 does not allow it to set base price for tea. "We are authorised only to recommend the support price for tea, while government has been giving less priority to address problems being witnessed in the tea industry," Gautam added.
The report has also highlighted the need to identify and explore potential markets for Nepali tea, subsidise tea farmers in green leaves, fertilisers and machinery, ensure availability of farming technologies at the local level and irrigation facilities and ensure availability of loans to tea farmers at a reasonable interest rate.