Category: Industry

I don’t know if you see a pattern between the title of this post quoting the Pet Shop Boys, my previous post where I did a little (and probably not that good) Haiku with a reference to map and tea and what you will find in this post but I hope that by the end of your reading you will.

As the idiom goes, a picture is worth a thousand words. This is what had bothered me when I looked at the FAO data, splitting the world of tea into two categories: the Old World and the New one. If you don’t remember this post, its conclusions were that unlike in the wine industry, there was not a big reversal of production in the tea producing countries (but perhaps interesting developments going on in terms of diversity of producers).

But let’s get back to a picture is worth a thousand words. I am lucky to have at work two people working on our Geographical Information System, which for those who don’t know about it is according to Wikipedia “any information system that integrates, stores, edits, analyzes, shares, and displays geographic information. GIS applications are tools that allow users to create interactive queries (user-created searches), analyze spatial information, edit data in maps, and present the results of all these operations.”

Those two people were friendly enough to help me to refine my needs and helped me find a way to present to you a visual representation of these data.

So you will find below a representation by decade from the 1960s to the 2010s (with the data ending in the year 2014) of the tea producing countries in the world and for each an average of the yearly production of each country during these 10 years. Even if it doesn’t always mean much, I thought it was as good as anything else to represent how much each country weights in the tea world. For more details, just click on the link below each map.

Tea producing countries from 1961 to 1969

Tea producing countries in the 1970s

Tea producing countries in the 1980s

Tea producing countries in the 1990s

Tea producing countries in the 2000s

Tea producing countries between 2010 and 2014

What can we learn?

First, that there are over these 50 years only a few new producing countries. I am still undecided whether or not this is true or linked to a problem in the way the FAO collects its data. If you see any country missing on the maps, do tell me and I will look further on.

Second, we can now visually see the rise and decline of some countries in terms of their yearly average production through each decade, something which might be of interest for later investigations.

Third and most important for me, we can now see the 3 main producing blocks in terms of number of countries located on three different continents (the South of Asia, the centre of Africa and South America from North to South) with some more exotic spots around them. It might be obvious to some of you but although I had all the data available, I had no idea that so many countries produced tea until I saw it

And what are your thoughts on these maps? Did they bring anything to you?

I could have gone with The Times They Are a-Changin’ from Bob Dylan but quoting a Nobel Prize is a bit too much out of my league, so I had to get back to a good old classic, Good Morning Vietnam.

I read just a few days ago in The Washington Post (no I don’t read this journal, I just happened to find out about it thanks to the powerful tool that is a collection of blogs on various topics) that scientists were working to adapt coffee plants for climate changes and other woes. Their efforts go mainly towards the creation of new “species” (something that has been done for centuries) to make up for the limited gene pool as only two species of coffee have been used for human consumption. However, some people say that it might be too late for all the places where coffee is being produced.

This article made me think a little about our (I guess so if you are reading my blog or at least my) favourite drink and what might happen with it. I remembered having found some research reports on some really specific or country related problems, like the future for the Kenyan tea industry.

The most obvious effects of climate change are changes in temperatures, changes in rainfall and a certain unpredictability of the weather (with the famous “there are no seasons anymore”).

For now, perhaps because of the high differences between the different producing countries, I couldn’t find any consensus on the main consequences with things ranging from “we will manage to get through it without any problems” (which seems a bit unbelievable) to “it could be a complete disaster and force us to stop or to reallocate the production of tea in other areas or in other countries.”

The main reason behind these differences is that the producing countries are located in a rather wide set of conditions and on different continents, with each one facing different potential weather problems. Just to illustrate, let me remind you that tea grows mainly in tropical and subtropical climates but some varieties tolerate marine climates. The tea plants require at least 127 cm of rainfall a year and prefer acidic soils but this is not absolutely vital. You can find them in elevations up to 1.500 meters above sea level but also on much lower grounds.

There are however some things that are agreed by most.

First, the climate change is likely to be changing the taste of tea because warmer seasons and less water are interacting with the chemical components of the tea leaves, making them react in other ways as they would “normally” do. This has already been documented in China (in the province of Yunnan) and in Japan.

A second impact that makes consensus is that changing weather hurts the production but in the future who knows what might come up and who knows how fast the changes will go on.

On a positive sidenote, tea bushes requires less water than coffee plants (I read from 1 to 10), which might be of some help.

There are other indications that perhaps the geographical locations of some tea gardens are isolating them creating a micro-climate that could mitigate the effects of the climate change, because of the mountain slopes, the winds and the mist are giving on a daily basis water to the bushes and could make it up for the less frequent and abundant rain.

Mist at a tea garden at Darjeeling by Joydeep

Other solutions advocated are to go for organic approaches with natural techniques to mitigate the impacts, things like having the ground covered by natural nutriments…

For me, at this moment in time and with no certitude regarding any potential long impact, there are three ways :

– trying to improve the plants through research,

– trying to mitigate the effects either through specific methods (better irrigation systems when possible) or through more general ones (like covering the ground),

– migrating the production.

The most likely road is a mix of the three depending on the interest of all the people involved in the tea industry, of the readiness of the consumer to pay more and on the progress of these climate changes.

This means that we (tea drinkers) like a lot of people are likely to see a radical change in the way we have to deal with our favourite drink.

We need to know that and be ready to face changes in the tea industry and support them or try to find better ways for The Times They Are a-Changin’.

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.

No I won’t speak about the dollar, the Divine Providence or the Eye of Sauron. Although I think it would be interesting to ponder whether or not the whole history of the Middle Earth or of Arda would have been different if tea had been used from the beginning with Melkor. But writing such an uchronia would be something for another post and with the many pages written by J.R.R. Tolkien, it would be a shame to summarize all of them to a nice afternoon tea in the newly created Arda.

If I get back to my original topic and stay on tracks, I would like to remind all of us that we, human beings always try to solve problems through the use of our intelligence or of the tools we created. Just look at different myths starting with Prometheus or with Mary Shelley’s Frankenstein among others (yes it seems I am in a big literature cycle right now with all kinds of references coming to my mind when I think on a topic).

The problem I am referring to is one that has always been important to any tea drinker, the increase in quality of the tea leaves. Peasants have been working on such problems for centuries and probably since the beginning of human history, selecting the best species to improve the overall quality, productivity of harvests/beasts…

Looking at different things on this trend, I just found out that like in other fields, the newest or latest technology (satellite) is being used to survey tea with a focus on improving its quality.

The idea behind this use is that the chemicals that are contained in the leaves are giving its colour, its taste… Thanks to the satellite views and data analysis, scientists are able to survey the different aspects of tea and predict the quality and quantity of the next harvest. They are also working on ways to improve the next production batches thank to all the data collected.

Normalized Difference Vegetation Index (NDVI) map showing the sections of two particular tea clones on the Tocklai Tea Estate, in Assam, Northeast India. Source: NASA

I knew that they were doing things like that for corns or for big productions like that, combining GPS, satellite views, work in labs to optimise the production, be it in quantity or quality. And even so, a little more rain or sun at the wrong period of time and the results are not that outstanding.

I must confess that I am not a peasant and that I don’t really know how things work but can everything be kept under control or monitored? After all, tea is a product of the land, the sky and of man. There are incidents, changes, things that were not foreseen and that are not always replicable but that can produce unique products.

A further question is do we really want all the teas to taste the same? This is done for some blends that are a mix of different teas and that have to taste the same, whatever the quality/taste/quantities of the different teas that are mixed into it can be in any given year but this is part of the charm of drinking tea, what we drink can change slightly or more between each year.

Call me old fashioned but I like the surprise and the uncertainty of letting Mother Nature do her own work. Of course, we can try to improve things, try to control things but should we really do it all the way along and for everything?

After all, according to some stories, the first tea was made when a dead leaf from a wild tea bush felt into the boiled water from Emperor Shennong. If this is not an unforeseen consequences of a little bit of chaos/luck, I don’t know what it is.

Today, I won’t speak to you the reader but to the companies who sell us tea and I will speak about traceability or the capacity to know where one thing comes from, where it went, how it was changed, how it was transported…
And for doing so, is there any better choice than Hamlet by Shakespeare to guide us on this path? Perhaps at the end, will you all tell me that this is Much Ado about Nothing.

It isn’t that I don’t trust you but there are many middlemen in the business and in the supply chain between the place of production and my cup of tea that one could easily be lost out there and some scandals in the last years in different industries (not only in the food ones) have shown us that big or small companies are not protected against bad behaviours.
I know that some people think that a product has to be good “per se” and that rather than having to write on bio/fair trade/sustainable… products that they are this way, only the bad/non bio/… (put here whatever you dislike) ones should have an indication written down that they are “bad” but I think it is not enough and there should be some traceability added to know more about what we drink.
As I said, I do trust you (to be honest, I do it most of the time but not always) but knowing where my cup of tea comes from is rather important to me for several reasons.

First, I want to be sure that I drink what is supposed to be in the pack. When you know that in spite of becoming a Geographical Indication, there is still year after year, more Darjeeling drank in the world as this area produces…
Second, behind each tea there is a man, a land, a “terroir”, something that makes it unique, that gives it its taste, the little something that set it apart from a generic tea from the same area or from any other area. Knowing where the tea you are drinking comes from and who made it seems logical. After all, tea is produced by land, air and people and we all know that like wine, “terroir” (in the more restricted geographical definition of this word) has a great importance for tea.
Third, behind each tea or each blend (even if it is I think more complex for this category and something else could be created for it (with a further differentiation between a blend of teas and a blend of teas with other things in)), there is a story and I am not talking here about the marketing one but rather about the real one. You know this story that really tells us where the idea from this tea comes from and why it was “created” or did someone decided to go in a certain direction and not in another and let’s be honest, it is far easier to do with some indications rather from ground zero.

I already hear the different companies complaining that it is too costly to look up for this information or to print it down.
I will start with the second one, since nowadays, this is no longer an excuse. Most of us have Internet, smartphones allowing us to scan codes and automatically get the info we need/want/think we need… Why not do that? And there are simple ways to do that at a rather low cost (be it in the store, on Internet, on the packages…).
There again, the first complain will be used as an excuse. However, and here I will talk to the “big” companies (big being perhaps a big word in the tea industry) but they should know where the product was bought, where it comes from and how it come to the store. If not, there is a problem.
If “big” companies do it, the information will be available for the smaller ones, for the sellers… and therefore for us, the drinkers.

Nowadays, there is a big word going around in the head of several politicians at different levels: Open Data. Everything has to be “Open Data” but what does it really mean? That those with information open this information and share it with other people, with foreigners, allowing for new products, new ideas to appear.
This is what should happen as today, customers are looking for information, are trying to become more literate, more knowledgeable and this is a way for them to reach this goal and for the companies to guide them on this path, a path that will lead some of the customers to look out for higher quality products with higher prices, giving in the end the tea companies that follow this path a reward for their dedication and creating for them and the customers a win-win situation.

And guess what? William Shakespeare had foreseen this quest for more knowledge:
“And seeing ignorance is the curse of God,
Knowledge the wing wherewith we fly to heaven.”

Following my latest post, I dug a little more into the plantation concept and I received some more information from a couple of people, so here is the follow-up.

According to the Tea Board of India, there are 833 small tea farmers in Darjeeling. I couldn’t get all the information I needed on them to compare them to the data I had but I got something.

For example, 60 of these farmers are gathered in a cooperative with approximatively 23 hectares of tea that aims to produce through its factory 15,000 kilograms of tea per year, which means an average production for the cooperative of 250 kg per tea farmer or 652 kg per ha. I wrote for the cooperative as they might sell it too to others (I have no info on that), which would mean that they could produce more.

When compared to the data available on the Nepalese small farmers (658.27 kg per site, i.e. per tea farmer and 847.43 per ha), the numbers I found for Darjeeling are much lower, meaning either a lower productivity per hectare (and coming back to the “problems” of older trees) or a willingness to produce less for higher quality or because of a more sustainable approach. However, this data is only on a small sample and might not be representative of the overall picture.

So after getting back on track, let’s get back to where we stopped last time and that was speaking about the financial backing needed to go into this business. From there on, I will dig a little more into this financial aspect, go through history/economical politics before trying to see what is specific in the “traditional” model of big estates before checking why would this model fail (if it fails that is).

Tea estates like most of the plantation crops can trace their roots to the 19^th century (even if some were there earlier because of being cultivated during and fuelling the European colonial expansion). And like all of them, tea production was hit by a drop in demand and therefore in price (since they hadn’t foreseen it, there was an overproduction) during the crisis following Black Tuesday (the Wall Street Crash of 1929).

“There have been attempts to restrict tea production in the past. In the world recession of the 1930s, tea prices fell dramatically. This prompted the major producers – India, Ceylon and the Netherlands East Indies – to enter into International Tea Agreements, which restricted production to 85 per cent of normal.ⁱ”

The obvious results of both the crisis and the reduction in production was that only those with cash could go through these years, leading to a further concentration as those without cash were absorbed and the small holders went to other crops that allowed them to eat or to gain more cash, just like in the Netherlands East Indies (http://teaconomics.teatra.de/2014/08/22/rise-and-fall-and/) or simply did not have the cash to withstand the decline in pricesⁱⁱ

Following the independence of India and as in most countries going through the same process, there was a wave of nationalisation of key sectors but the effects on tea were not those that could have been expected.

“Following on independence, the Indian government began to plan extensive nationalization of key industries. Tea featured in some of the recommendations, and many British companies took fright and began to run their estates down. They spent as little as they could on maintenance and renewal […] They also sold some estates to Indians. […] This catalogue of attacks on the British tea interest might have been expected to drive it out of India. However, it proved remarkably resilient. The companies that were sold were, in general, those with the poorer land or less successful management. The yield on the remaining British estates remained consistently higher than on the Indian-owned estates so that, although acreage fell, production was proportionally less affected.ⁱⁱⁱ“

This extract explains why nationalization didn’t mean the end of foreign controlled estates (which were still among the big players) or a rise in the support for small holders since the only known development models were focusing on productivity and heavy industry.

Furthermore, as in most independent countries, India focused on national development with protectionism and a premium to national industries (I don’t forget the Green Revolution but since I didn’t find any evidence that it had an impact on the tea industry I can’t be 100% sure about it).

“In the new tariff regime, investment costs sharply increased in businesses that relied on imported equipment, including tea.^iv”

As you can guess, all this combined meant that more cash was needed to invest in tea, to produce and “manufacture” tea, which meant that small farmers couldn’t efficiently compete.

In the previous lines, I spoke a lot about India and the independence process but not at all about Nepal. You might ask why. Simply because before 1951, Nepal was closed to foreigners and avoided as much as possible any contact with them (this was seen as a way to keep its independence).

After 1951, Nepal undertook a series of Five-Year Plans to develop first its infrastructures and communication and then agriculture (with cash crops being given priority in the Fifth Plan running from 1975 to 1980).

The situation and priority changed later on in both countries in the recent years and small tea farmers now have the support of both governments as can be seen in the most recent position and strategy papers in both countries.

“To attain the above position of tea industry in Nepal in 2020, the following strategies need to be adopted:

[…]

6. Provide support to small tea farmers for preparation of loan scheme and application and assist in the availing of credit from ADB/N and Commercial Banks.^v“

Why this change? The reason is simple. It is thanks to the new trends in consumption (smaller production, more authentic/sustainable/fair products). Small farmers are seen as those able to satisfy this demand; perhaps thanks to a higher motivation? Or to a certain ease to change their production processes?

Does this mean that in the modern consumption world, the small farmers model is more efficient? Once you have left the financing/investment aspect, what is left of the “sheer logistics of the old model” as said by Lazylitteratus in his original post? Does it make the old model inefficient?

We have seen that size, production and productivity set both models apart but the fundamental difference could lie in what makes the tea production system.

What I mean by system is everything needed to produce tea and to sell it. Since a picture is worth a thousand words, here is an oversimplified drawing of what I see as the tea production system.

The tea production system

To again simplify things, there are three main suppliers of these services, the private sector, the public one and a mix of both.

Factories are needed to produce tea and they are linked to an estate or a company like in the “old” model (but smaller farmers can be allowed to have access to it) or linked to a State initiative or to a cooperative (backed or not by an estate).

Schools and infrastructures are something that the State has to provide. They can both benefit from private “help” or sponsorship but the final provider remains the State, which means that everyone, all around the country has to pay for it.

“There are three schools […] they belong to the Indian government. The estate has nothing to pay to keep them operating (apart from a few repairs now and then). Furthermore, the registration is not really free as the family must pay 250 rupees per year. Like the health system, these measures are mandatory by Indian law.^vi”

Health and housing should be provided by the estate but the situation depends on the estate and evidences are not so clear as to who pays what and why (hence why I won’t say anything further on this topic). In theory, the Indian law make a free health system mandatory for the workers of the organised sector^vii. This means that for health and housing the estate should pay something (but according to different sources, on some estates, they don’t pay much).

So we saw that most of the things that makes the tea system are either provided by the State or are not really making a huge difference. The only factor left and the reason why the “logistics of the old model” might be failing (unless someone points me to what is lacking) comes from the only thing that we have not studied yet: people.

On an estate, there are two different kinds of people: those working on a temporary basis and the permanent ones, those last one being paid all year long.

Number of workers in the factories in West Bengal in 2004^viii

Number of workers in the fields in West Bengal in 2004^ix

Number of workers in the tea estates in West Bengal in 2004

As can be seen from the data I found (I know these are official figures and that reality can be different but I had to use some figures), the permanent workers are the most numerous ones, which means that most of the workers are paid the whole year.

To compare those percentages to something, I can tell you that in 1985, the family farms in Gujarat employed 70% of temporary workers^x.

This highlights the real difference between both models. It is not as much the investments or the production capacity but rather the way the people are employed and paid that makes the difference.

“In fact, reliance on family labour is usually the main factor explaining why small family farms are more efficient than large ones relying on hired labour which necessitates costly supervision (Muyanga and Jayne 2014,4).^xi

I guess this conclusion is not really what we expected.