An analysis of the determinants of productivity of Assam tea growers

Amidst low productivity and declining share of the Assam tea sector in All India production, an increasing number of small tea growers (STGs) with a higher yield rate relative to the big growers (BGs) necessitated the present study to empirically study the role of farm size and efficiency (technical efficiency (TE), pure technical efficiency (PTE), and scale efficiency (SE)) along with farm-specific and grower-specific factors in determining the productivity of the STGs and the BGs in Assam- an issue that the empirical literature has given less attention. Through direct interviews using a scheduled questionnaire, tea-leaf production data have been collected from a random sample of 223 tea growers (171 STGs (0.08% of the total STGs) and 52 BGs (20% of the total BGs) chosen from three randomly selected districts of Assam (Udalguri, Sonitpur, and Dibrugarh)). In a total factor productivity framework, the impacts of basic inputs, garden-related factors, along with farm size, TE, PTE, and SE (obtained from Charnes, Cooper, and Rhodes (CCR) and Banker, Charnes, and Cooper (BCC) input-oriented Data Envelopment Analysis (DEA) model) have been evaluated using the regression equation (parameters have been estimated using the ordinary least squares (OLS) method) of the Cobb Douglas production function approach. Again, parameters of the factors of efficiency are estimated using Tobit regression, and coefficients of correlation have been used to study the association between size and productivity, efficiency and productivity, and efficiency and size. The results of the study show that the STGs are more labor-intensive, whereas the BGs are more capital-intensive. Proprietorship BGs are more productive than the STGs due purely to higher PTE, and due to diminishing returns to scale, the BGs do not have the possibility to expand the scale of operation. On the contrary, even though the STGs have huge potential in expanding the scale of operation as most of them are operating in an increasing-returns-to-scale situation, low productivity is purely due to low PTE. More number of plots, excess use of herbicides and pesticides, family labor, and older plants are important factors in reducing the efficiency and productivity of tea growers. To increase the productivity of the STGs, the study recommends training, extension programs on efficient and effective use of the inputs, adaptation of modern farm tools and techniques in farming, introduction of farming education in school and college course curriculum for improving managerial efficiency, pooled/cooperative farming and flexible renting policy for expansion of the scale of production, and public provision of subsidized modern farming tools for better technical and scale efficiency. On the other hand, encouraging the BGs to upgrade the existing technology for shifting scale efficiency and partial shifting of land under tea to other lucrative plantations (teak and sal plantations) would boost overall efficiency and productivity, which will help the Assam tea sector come out of the low productivity phase.