ABSTRACT
Cooperative tea factories in the Nilgiri hills help small tea growers by competing with the private factories which formerly controlled the market. The growers now get fairer treatment and better prices, even when they sell to the private factories. However, the co-ops are controlled by the state government: it appoints the board of directors for the first 18 years; and it also appoints the managing director, giving him more authority than the board. The managing director is often an official on temporary assignment, with no previous experience in tea manufacturing. Thus the co-ops produce tea which is lower in quality, and less profitable, than it might be. Moreover, the shareholders have no control over prices and services provided by the co-ops.
Government control is rationalized as protecting the interests of the members and of the government itself as an investor in the co-ops. However, these arguments are refuted by comparison with tea cooperatives in Himachal Pradesh. The latter are managed by technically trained managers, who are hired and supervised by the elected boards of directors. In Tamil Nadu, the state seeks to perpetuate its control over cooperatives for political reasons. This has not only stifled the democratic functioning of the cooperatives but has made them less competitive with private enterprises.
