The tea industry in Nepal has not been able to compete in the global market and find itself in a position to achieve economies of scale despite its checkered history of over 150 years. Even today, a myriad of lingering issues continue to plague our tea industry, ranging from certification, labor shortages and the high cost of organic farming to branding, inability to identify new export markets, lack of updated technology and expertise.
The history of tea production in Nepal dates back to the establishment of Ilam Tea Estate in 1863. However, the country has not been able to increase the production of orthodox tea or organic tea due to several factors . Lack of certification and appropriate modern technology, price intervention, market access, brand image and lack of skilled labor can be cited as some of the reasons. Farmers continue to struggle with inputs for organic tea, even though demand is rising and it has the potential to fetch higher prices. Key informant interviews conducted by the author with tea entrepreneurs in Barbote, Ilam suggest that farmers do not know whether or not cow manure considered organic in nature provides the necessary nutrients for tea leaves.
Lack of certification
There are no set standards for how many green leaves a plant should produce to be considered healthy production. In order to be able to fix the price of their products, farmers and entrepreneurs do not even receive adequate support from the available state mechanisms. There is a gap between what consumers pay as the final price and what farmers receive on their end. Most farmers employed in tea are smallholders and are therefore deprived of the economies of large-scale production.
The problem of lack of certification is seen by tea entrepreneurs as the main reason for the failure of Nepalese tea to fetch fair prices in the international market. Even the certification that started recently is mostly done through third-party organic certification. But for certification, Orthodox tea could not have entered the international market and demanded high prices. However, research regarding orthodox tea value chain analysis suggests that the income levels of certified tea producers are lower than those of non-certified tea producers. Certified tea producers mainly focused on certifying organic production from small producers who could not command higher prices in the domestic market. The high cost of organic certification also poses a big challenge to tea growers, as well as sourcing organic fertilizers and bio-pesticides in required quantities.
The inability to obtain a remunerative price, among others, is the most discouraging problem for farmers, forcing them to switch to other high-yielding crops such as rubber. In the absence of proper certification and direct access to international markets, farmers are forced to export Orthodox tea to India at low prices. They cannot take advantage of government subsidies and do not have access to the funds necessary to expand their business. In many places, the lack of clarity on the cooperative model of operation and operation of tea estates leads to their failure.
Of course, some sporadic initiatives have been taken and support mechanisms put in place by development partners such as the Netherlands Development Organization (SNV), the Inclusive Growth Program (UNNATI), GIZ, Winrock International and d ‘others. They acted as facilitators and tried to support the industry, particularly focusing on value chain components such as providing reliable access and collection points, storage facilities and small irrigation systems. They also support tea producers in product promotion and marketing. However, the sustainability of such initiatives remains highly questionable.
The lack of adequate and regular training and facilitation has always acted as a brake on the motivation of tea producers. For a long time, due to the lack of independent house brands in Nepal, most of the tea exported to India was sold under other brands. Lately, Nepal has started the production of specialty tea, albeit on a limited scale, but of high value in the international market. The non-availability of qualified human resources hinders the scaling up of these operations. Tea growers are upset because there is no proper recognition and appreciation for producing high quality tea, however modest the volume.
Lately, tea cultivation has started in other districts, especially in the western part of Nepal, on a commercial scale, in addition to the 14 districts where it was traditionally grown. However, feasibility studies need to be conducted to identify the potential for commercial production of organic, orthodox and specialty tea. Thus, carrying out research studies on the evolution of people’s tastes and preferences as well as exploring the possibility of developing new tea flavors in view of ecological and geographical variations become very critical. Likewise, specific research on brand initiatives to identify niche markets and segments becomes imperative. The identification and implementation of cost reduction measures with the aim of increasing productivity should become a priority for the government alongside producers and entrepreneurs.
If there is an urgent need to reduce the cost of organic certification, the state should make additional efforts to put in place effective mechanisms for product validation and credible certification. As certification alone may not be enough, timely initiatives should be taken to obtain a trademark for all varieties of tea. Keeping in mind that smallholder farmers are not able to use the facilities announced by the state, appropriate and alternative mechanisms could be devised to provide technical and financial support to this farming community. particular. To offer them some sort of respite, they can be beneficiaries by granting agricultural loans on the basis of a group guarantee within the framework of a production cooperative model. Recognizing the proven usefulness of the cooperative model of production for products like milk and sugarcane, an additional boost can be given for the production of tea on similar lines. In order to ensure the availability of skilled labor, there should not be too much emphasis on training labor in all stages of tea production, from withering, rolling, fermentation and drying up to sorting and packaging.