Price Stabilisation Fund Scheme may be modified
The Union Commerce Ministry is trying to modify the Price Stabilisation Fund Scheme so as to lower the price threshold at which the fund gets activated. The Rs.500-crore Fund, which lapsed in 2013, is being re-launched, according to a Union Commerce Ministry official.
Tea Board Chairman Siddharth said that the commodity fund was established in 2003 to help industries engaged in producing four commodities —- tea, coffee, tobacco and natural rubber. “The idea behind setting up the fund was to help the trade stay in business by extending them support if there is a drop in their commodity prices… the idea was to establish India as a reliable supplier in the international markets.”
As per current rules, prices of certain commodities have to drop 20 per cent in international markets for the fund to kick in.
This was considered stringent, and the Commerce Ministry has never had to operate the fund.
Now a move is afoot to revive the fund and lower the threshold to 10 per cent.
Mr. Siddharth was speaking at the 118 annual general meeting of the Calcutta Tea Traders Association (CTTA).
The decision comes at a time when weather uncertainties are affecting tea output. Between January and May 2014, all-India tea production dropped by nearly 30 million kg to 236.5 million kg. The two major tea producing states — Assam and West Bengal — saw a nearly 29 million kg drop.
“The industry is facing big challenge of climate change and crops are fluctuating … climate change is also triggering growth of pests,” Arun Singh, Chairman of apex industry organisation, the Indian Tea Association, said.
L. N. Gupta, Chairman of CTTA, said that between January and mid-June 2014, tea prices averaged Rs.132.4 against Rs.138 a kg in the same period in 2013.
At the meeting, the Tea Board chairman also told the industry that there was no alternative to following international conditions on food safety.
“I cannot overemphasise need for (following) international food safety laws,” he said while asking the industry to produce tea in an economically viable and environment-friendly manner.