Month: March 2017

This post has nothing to do with the famous game “where is Charlie?” where you had to find someone called Charlie in a crowd who sometimes were wearing the same clothes as him. And no, it has nothing to do with Mike + the Mechanics, apart from the last part of the name of this famous band from before (before being different for the different people but I must get back on tracks), so let’s begin with my topic of the day: mechanisation.

Mechanisation is switching from a work done by hand or animals to one done by machines. This is a process that began a long time ago, when a man or a woman decided to use hand tools to perform certain tasks.

The idea was probably first to do a better job, to ease things, to be more productive. One of the first examples of a “modern” tool like this one was the mechanical reaper invented by the Celts (and then forgotten before being reinvented in the 19^th century) and that might originate in a shortage of labour.

This was the main reason behind the increase in the use of mechanical devices in Western Europe since with first, the industrial revolution that led to less people being available in the fields and then the First World War, a big shortage of labourers appeared at the end of the 19^th and beginning of the 20^th century. In the USA, the situation was different because of the sheer size of the country and its “low” density when compared to Western Europe.

What are the main advantages in using mechanical devices to harvest, pluck… different products?

First, in most sectors, machines have become cheaper than man (if you include all the costs). Second, the raw productivity difference/the efficiency (how much hectares can be harvested by each of them in one hour) is clearly an advantage for the machines.

What are the disadvantages? For most fragile crops or for those with specific plucking needs, the problem is that mechanical plucking is destructive since hand work can be more specific and cautious. This is or this is not a problem depending on how the tea is later treated (CTC or whole leaf teas with the tip and two leaves or going into teabags for one of the big companies out there).

Since the main advantage of mechanisation is to replace man, it is no wonder that machines are more used in countries with either a less numerous work force (because fewer people are available for this kind of job or because the population numbers are low), a costly one… A few names? Japan, the United States, some places in India…

Just look at the videos below.

Is this something new? Not really.

“The method was to turn the tea plantations into outdoor factories, to « industrialise » every stage of the process as far as possible and by this method to reduce costs. […] What made tea plantations special was that they took the process from start to finish; from the clearing of the land, through planting and picking”

“The normal solution in such a situation would be to mechanise”

Green Gold by Alan MacFarlane and Iris MacFarlane, Ebury Press 2003

These two quotes describe the situation in Assam in the 1860s when people invested a lot after the boom in the tea industry and faced some problems like the not optimised nature of their estates, the high mortality rate on the plantations, the need to “import” people to work there (with really harsh conditions during the travels).

As I said, mechanisation began a long time ago and will not stop anywhere soon. The only question we need to answer is can engineers design machines that will be able to pluck every kind of tea without breaking it?

This remains to be seen.

Where does tea come from? I don’t mean where exactly but who controls it? Who produces the more?

Believe it or not the answer is not easy to find. Thanks to Internet and the Economic Times, I found out that in 2014, the world’s largest bulk tea company was McLeod Russel India Ltd (a company I had never heard of) and that it was aiming at diversifying its plantation business to mitigate risks and grow in the coming years. I then found out that the second largest company was Tata Beverages Limited.

I began looking all over to see if I could find more info about production, number of estates, locations… and I couldn’t find much. I was able to find some information for McLeod Russel India Ltd but not always consistent with other sources found on the website. One reason could be that merger and acquisitions make things complicated to follow but as you can see below this is probably not the main reason.

Tea estates of McLeod Russel India Ltd (source McLeod Russel Groupe website)

With merger and acquisitions, the area under production would change and increase and except for the last year, for which I found evidence in another place that new estates were added, this is was here obviously not what happened as the areas and even the estates stayed the same over the 6 years period (yes you can find their names if you look for it).

This peculiar company focus has always been in Assam and Dooars, probably for historical reasons. However recently, they acquired estates in other countries (Rwanda, Uganda and Vietnam), bringing their number of estates to 63.

How do this new estates compare to the others? I collected some data, that are not 100% consistent with the ones found earlier but that should be able to give us some insights on this peculiar question.

Tea estates from the McLeod Russel Group (source McLeod Russel Group website)

What can we learn from this table?

That the main activity from the McLeod Russel Group is still made in India, where they have most of their teas estates, the bigger ones and those with the highest production level. However the new “countries” have estates that on average are as big as those from the “old” ones (apart for Vietnam, where they are slightly smaller) and are fare more productive (between 2 and 3 times more). This could be explained by the younger age of the plants, the geographical organisation of each estate and perhaps by more intensive production techniques.

Now that we know a little more about the largest bulk tea company in the world, how does it fare when compared to both the production and the size of the area under production? I will not look at productivity as the list of tea producing countries is so big with countries in different parts of the world that it would be like comparing peaches and apples, they are both fruits but not at all comparable.

Here the obvious source of information is the Food and Agricultural Organisation (FAO), an UN agency that has a database with a lot of data on nearly everything produced. However as always, this kind of data is long to collect, which means that if I can go back to 1961, I can only come back to 2014. But one has to do what he can with what he has.

Regarding this timeframe, I will also have to make one last assumption as McLeod Russel Group publishes data for periods overlapping 2 years (for example 2010-2011) where as the FAO is on a yearly set of data. I will therefore compare 2010-2011 to 2010 and so on.

Worldwide weight of McLeod Russel India (source McLeod Russel Group website and FAO database)

The biggest bulk tea company is worth 1% of the total tea production areas in the world and around 1.5% of the tea produced in the world in any said year.

This brings two comments: the first one is that the productivity of each tea hectare owned by McLeod Russel India must be higher than the average productivity in the world (otherwise both weights calculated above would be the same), which says something about this last one as we saw earlier that the productivity on McLeod Russel India was overshadowed by the one from its newest estates. However as we all know it, productivity in tea isn’t the Alpha and the Omega of everything.

The second comment is that in the tea world, a giant producer is still a small player. Why do I say that? In most industries, the top 20% manage to produce or to sell 80% of the total production (this is a rule of thumb based on the Pareto distribution) while here because of the dispersion of production, it seems rather unlikely that such a level of control can be reached from the production side. The only reason that could lead to a high concentration level would be if the market on the “customer” side was dominated by a few big names that could buy most of the production and be in a situation of monopoly. But this would be another thing to study.