Do the Quantity of Output Produced by Small Tea Growers and Auction Prices of Made Tea Influence the Price of Green Tea Leaf in Assam, India?

Small tea cultivation is vibrant employment generating sector of rural Assam and has contributed a lion's share to the total state tea production. The issue of unfair low price realization is a core challenge to the sustainability of small tea growers. Price fixing process of green tea leaf produced by Small Tea Growers is a complex matter impacted by several factors.

In current study, two factors, i.e., auction price of made tea and production done by small tea growers, are considered to assess their impact on price of green tea leaf. Direction of causality among real green tea leavesprice, real auction price at Guwahati tea auction center and tea production done by small tea growers in Assam is examined by using VAR (Vector Autoregressive) model.

Results show that two factors, that are said to have influence on real green tea leaves price are statistically insignificant and price decision is completely control by the cartel of Bought leaf Factories and big tea estates.