Supply Response Of Tea Production In The Non-Estate Sector In The State Of Assam

Journal Name: 
Journal of Banking, Information Technology & Management
Vol. 14 - No. 2
Author Name Designation Organization
Ranjit Kumar Gam

Assam is known for tea production and the state contributes more than 50% of the total tea production in India. The history of tea in Assam is more than 180 years old and it plays an important role in the state's economy. Being a labour intensive industry, tea generates employment in large numbers leading to socio economic development of the state. Prior to 1990s, tea plantation was thought to be an estate sector activity only which required massive initial investment. Introduction of small scale tea plantation in late 1980s altered perception with people realising that tea plantation can also be undertaken profitably with low capital investment. Since then, there is manifold increase in the number of tea growers and area of plantation in the non-estate sector in Assam. Most of the small tea growers are supplier of green leaves only. Tea is a perennial crop with a gestation period of three to five years. Hence, a tea grower has to take the decision of plantation long before the first harvest of the crop. For perennial crops, the supply response to varying price needs to be studied both in the short run and in the long run. It is not possible for the growers to vary the area of cultivation in the short run in response to the change in price. In the long run, the growers in response to changes in price can resort to adjustments of acreage and several other factors like removal, replanting, rejuvenating etc. There is variety of variables in both short run and long run which influence grower's decisions to change yield and acreage. In this paper an attempt has been made to present a supply response model of tea of small tea growers in Assam by considering different variables which might have impact in short run as well as in long run on yield and acreage expansion.