Singbulli Tea Estate

Study on Tea Industry : Singbulli Tea Estate
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Table of Contents
Page
No. Chapter
no.
Introduction
A. A) Singbulli Tea Estate
B. B) Varieties of Darjeeling Tea

available
C. C) Grades of Darjeeling Tea
D)Types of tea produced in

Singbulli Tea Estate
E)Processing of tea
Chapter I. F)How the tea is brought into the

market
G)Economics of Tea Trade
H) Present Tea Industry in

Darjeeling
1.Key markets and export

destinations
2.Zones under tea cultivation
(worldwide)
3.Notable progress in tea industry
I) Sustainability
2
J) Factors affecting yield
K) Government rules and

regulations
1.Tea Board
2.TOCKLAI : Research Centre for
Darjeeling Tea
L)Marketing Environment
1.SWOT analysis of Singbulli tea
estate
M)Reform measures in tea sector
Chapter II. Nature of Problem
Chapter III. Literature Review
Chapter IV. Objective of the project
Chapter V. Research Methodology
Chapter VI. Analysis
Chapter VII. Findings and Observations
Chapter VIII. Recommendations for

improvement
Chapter IX. Conclusion
Chapter X. Scope of further study
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Chapter XI. Limitations of the project
Chapter XII. Bibliography
Chapter XIII. Appendix
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CH 1 : INTRODUCTION
A) Singbulli Tea Estate
Located in the Mirik area in Darjeeling, the Singbulli Tea Estate is spread across 9 rolling hills
over an area of 22 kms with altitude varying between 1200 ft msi to 4100 ft msi. Originally
established in 1924 by British planters, this tea estate was taken over by Jayshree Tea and
Industries Limited in 2003.
The garden has four divisions, namely Singbulli Division, Manja Division, Tingling Division
and Murmah Division. The gross area is 1522 hac. under which 494 hac. is tea cultivation
area. It produces 250 tons of tea per year that includes black, green and specialty tea.
The manifestation of the individual and distinct flavor comes out specifically during its tea
season or commonly known as Darjeeling Flushes. These Darjeeling Flushes start from end of
February to November each year. Each Darjeeling Flush is known by its name which is mainly
according to the chronological order. The First season is known as First Flush which is highly
sought after by tea connoisseurs world wide. The second season is Second Flush then comes
Monsoon Flush which is lesser known and lastly, the Autumn or Autumnal Flush.
Generally speaking, Darjeeling Tea significantly differs from Assam and South Indian teas
since Darjeeling Tea has a presence of higher level of monoterpenes in it. The quality and the
flavor of tea are related significantly with one another. A quantitative alteration in terpenoid
level and the non-terpenoid level also changes the flavor of these teas.The different flushes
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have been defined with the price range they can fetch during the various seasons ( price is taken
on account of the year 2016’s figures):
SEASONS MONTHS PERCENTAGE AVERAGE HIGHEST LOWEST

CONTRIBUTION PRICE PRICE PRICE
( to production) (in Rs./kg) FETCHED FETCHED
(in Rs./kg) (in Rs./kg)
FIRST (Late 20% 800 12000 900
FLUSH February to
DARJEELING mid April)
SECOND (May to 27% 600 6000 600
FLUSH June)
DARJEELING
MONSOON (July to 48% 400 600 300
TEAS September)
AUTUMN (October to 5% 500 1700 400
FLUSH November)
DARJEELING
-Singbulli Tea Estate figures as in 2016
B) Varieties of Darjeeling Tea available
The tea bush is a member of an extensive family which groups together thirty genera of plants
and no less than five hundred species – The Theaceae. It belong to the genus Camellia , of
which there are some eighty -two known species. With such variations available, Darjeeling
Tea provides with this range of teas in general:
1.Darjeeling Black Tea
a. Darjeeling First Flush “Classic”

b. Darjeeling First Flush “Clonal”
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c. Darjeeling Second Flush “Classic”

d. Darjeeling Second Flush “Muscatel”
e. Darjeeling Third Flush
2.Darjeeling Oolong Tea
3.Darjeeling White Tea
4.Darjeeling Green Tea
5.Darjeeling Organic Tea
C) Grades of Darjeeling Tea
When Darjeeling teas are sold, they are graded by size and quality. The grades fall into
four basic groups: whole leaf, broken leaf, fannings, and dust.
Whole leaf : fetches the best prices due to its quality
 SFTGFOP: Super Fine Tippy Golden Flowery Orange Pekoe indicates it contains many
tips and is long and wiry in appearance. The liquors are lighter in colour.
 FTGFOP: Fine Tippy Golden Flowery Orange Pekoe
 TGFOP: Tippy Golden Flowery Orange Pekoe
Broken leaf consists of small tea leaves or pieces of large leaves and generally fetches
less price than whole leaf
 FTGBOP: Fine Tippy Golden Broken Orange Pekoe
 TGBOP: Tippy Golden Broken Orange Pekoe
 FBOP: Flowery Broken Orange Pekoe
 BOP: Broken Orange Pekoe
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Fannings consists of even smaller leaf sizes than the brokens and fetches less price and is
usually used in the market for creating blends .
 GFOF: Golden Flowery Orange Fannings
 GOF: Golden Orange Fannings
Dust: It is the lowest grade, consists of small pieces of tea leaves and tea dust;fetches the
lowest prices and is of low quality and this is also used for creating blends.
 D: Dust
S. Souchong – A twisted leaf picked from the bottom of the tea bush. China produces this
grade used in their smokey teas. Broken Leaf teas produce a darker cup and infuse faster
than whole leaf teas.
P. Pekoe – A wiry, large broken leaf usually without golden tips. Sri Lanka produces
large amounts of Pekoe. B.O.P. Broken Orange Pekoe – A small, flat broken leaf with
medium body.
D) Types of tea produced in Singbulli Tea Estate
 Organic Black tea
 Organic Green Tea
 Exclusive Teas like SFTGFOP1 RUBY
 Clonal Flowery
 Clonal Superb
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E) Processing of tea
“The matter of tea,”wrote the Japanese tea master Sen No Rikyu ,“is really very simple :
heat the water,prepare the tea,and drink it with decorum. That is all there is to know.”1
Yet as many often discover ,the art of less is more is extremely elusive and a little help in
reaching this goal of minimalist perfection may not come amiss. Even today, Darjeeling tea is
processed using the orthodox method of manufacturing and not by following the standard CTC
(Curling, Tearing & Crushing) method which is typically followed in the plains. The process
follows several delicate and intricate steps. Depending on the type of tea to be produced, all or
few of such steps are followed. Darjeeling Black Tea goes through all the stages discussed
below.Process for white and green tea is different from black tea. Few gardens in Darjeeling
today have started growing tea bushes using organic method. The organic method follows
natural way of growing tea keeping complete ecological balance and not using any chemical
pesticides or fertilizers. In order to develop ecological balance, the estates need to preserve
forest and other natural areas apart from just the land under tea.
Plucking tea leaves from the gardens
This is the first step and an art by itself. For Darjeeling tea, there needs to be only selective
plucking of two leaves and the bud that makes a shoot. And one needs some 22,000 shoots to
make one kilogram of tea leaves. On an average a plucker is given a target of 4 to 5kgs per day,
and during the high plucking season the target increases and can get doubled. The target must
be met to get full daily wage.

1Francois-Xavier Delmas,Mathias Minet,Christine Barbaste ; The conditions required for preparation and
drinking ; the tea drinker’s handbook;Abbeville Press , New York ; pg 85
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The problem of plucking is compounded with the cold and damp weather along with difficult
hilly terrain on which the tea is grown. While tea plucking season is from March to November,
bulk of the tea leaves are plucked during the monsoon time. Tea plucking at gardens of
Darjeeling are done mostly by Nepali women.
Withering
The next step is withering which is a way of drying the tea leaves in the factory.The leaves are
placed in a trough (long wooden box) that are usually 70 to 80-foot long, 5-6 feet wide and 3-4
feet in depth and kept till 14-16 hours till the moisture content is removed partially or wholly.
Rolling
After withering is completed, the tea leaves are taken to the next stage of rolling which
tentatively takes around 40 minutes or more (for one round of rolling). Here mechanical rollers
twist and press the leaves. The idea is to take any left over juice and moisture out of the leaves
and then flatten the leaves. In between the rolling, shifting takes place where the coarse leaves
are separated from the finer leaves with the help of machines. The step is carefully monitored
so that leaves do not break and overheating does not take place.
Fermentation
The third step is to ferment the leaves. In this stage, the leaves are kept on thin and clean trays
in a cool and humid environment. Through bio-chemical process the fermentation takes place.
Usually the process lasts between 2-4 hours depending on the quality of tea being produced. It
is at this stage when the tea leaves actually start developing their natural aroma and flavor. Any
over or under treatment here can completely spoil the quality of tea. Expertise and experience
comes into play in full swing while this stage is carried out.
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Drying
After fermentation, the tea leaves are once again dried in large mechanical dryers. They are fed
in through conveyor belts from one end. The belts continuously vibrate and then take the tea
through a temperature range of 115-120°C and bring out ready tea from the other end. The
process lasts for about 20-30 minutes. At the end the tea is almost completely moisture free.
Sorting & Packing
The final stage is to sort or separate the different grades of tea leaves based on their size and
then pack them. There are automatic sorting machines that sort the tea leaves based on their
sizes (full leaves, broken, fanning and dust).
F) How the tea is brought into the market
Parties to the industry
 Planters
 Integrated players
 Non-integrated players
 Green leaf Growers
 BLFs (bought leaf factories)
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Distribution Channels :
 Private Sales
 Auction Sales
 Direct Exports
After the sorting process is completed, samples are taken out of the bulk production .It is upon
the garden executives discretion if he/she wants to taste the tea before dispatching it. If they
feel, there is a need to alter the tea(fermenting or drying or sorting), it is thereby done. These
samples are then send to the tea auctioneer (mainly J.Thomas & Co Pvt Ltd,Kolkata
branch);few samples may be send to the local buyers in the market for private sale . Bulk tea is
then taken to the warehouse in Kolkata.Jayshree Tea gardens are mainly linked with J.Thomas.
J.Thomas & Co Pvt Ltd : It is the largest and oldest existing tea auctioneers in the world,
handling about 200 million kgs of tea annually,with a lion’s share of about 40% of the total
market.They have their branches located in Kolkata, Siliguri, Guwahati, Dibrugarh, Kochi,
Coonoor, Coimbatore and Bangalore.They have the largest number of trained tea tasters and
auctioneers, many of whom are the leading experts in their field. They also have an expert tea
consultancy division.It is a private limited company, it is uniquely structured where only
current employees are the shareholders. This ensures independence and professionalism while
empowering employees .It acts as a facilitator between the tea producing units and the buyers.
J.Thomas provides review for samples send by the tea gardens. The tea tasters provide their
valuable feedback regarding any alterations ,if necessary.
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The samples after reaching the auction house are put into catalogues with their respective
invoice numbers . A catalogue is prepared of the Darjeeling Tea Gardens for the sale to take
place in the following weeks . This catalogue incorporates all the tea gardens that are associated
with J.Thomas & Co Pvt Ltd .The catalogue includes the quantity available ,lot
numbers,limits,prices of previous week sale,reserved price,reprints of previous sales,etc. Tea
experts then taste the tea and set the price for the invoice respectively.The evaluation of the tea
cup while tasting is done on the basis of the these features:
 Cup or liquor : appearance (shape,size,color,skill with which they have been
harvested,their preparation) texture(suppleness or otherwise,their degree of
hygrometry),bouquet(dry and infused)
 Tea leaves and infusion : color and clarity, effect on palate, flavours
The tea taster plays a vital role in assessing the price . To remove any kind of biasness towards
a particular tea garden or lot , two or more tea taster evaluate the tea and set the price
separately. The two catalogues are then compared together in the presence of both the tea
tasters and final prices are put down. The prices set are then send to the respective producers
and a feedback is taken if they are satisfied with it or not . Any changes to be made are taken
into account . If a producer has already sold the lot in private or wants to withdraw the lot for
some reason , he /she has to inform the auctioneer before the sale takes place. The prices are
then put up on their website for all the tea gardens to have a look and know what prices prevail
in the market . This creates discrepancy among the tea gardens.
The auction previously used to be manual but from June 2016 e-auctions take place . But with
the introduction of the e-auction the auctioneers have lost that humane touch with the buyers
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which existed during manual auctions . It helped in maintaining a healthy competition during
auctions (in terms of price bidding)which actually benefitted the tea gardens to fetch optimum
price. After the sale is done in the auction , prices of the tea ,buyers name (if asked by the
producer) are informed to the producer immediately .Market reports are prepared for the week
by the team. Post-sale activities include looking into the completion of contracts with the
buyers of the tea , maintaining relationships with buyers as well as the producers(tea gardens)
and providing them with the market scenario . J.Thomas also sends mementos or certificates to
the gardens that fetch exceptional price during seasons.It also publishes annual reports and
books .
WHY IS A BLENDER NECESSARY IN THIS FIELD : The blender’s first aim is to
guarantee a year-round provision of tea each batch of which is identical as far as the customer is
concerned .Given the huge financial investment ,they need to guard against markets being
adversely affected by unforeseen circumstances related ,for instance , to climate or politics.
The blender’s second aim ,therefore,is to cover themselves by blending several teas- up to
seventy in some cases – to make a single product ;in the event of a bad harvest or a savage hike
in prices ,only a small percentage of the final product will be involved and the problem will be
resolved without affecting its price or taste.
THE KOLKATA TEA MARKET : In India ,with the exception of the best teas which are
often purcashed on the OTC (over-the-counter) system,common varieties are sold at auction ,
the principal markets being in Kolkata .These take place on Tuesday.Only brokers are
admitted;accredited guests are allowed to observe the proceedings from behind in a room .Each
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broker receives details of the forth-coming sale ,including the description and evaluation of
each particular lot.
G) The Economics of Tea Trade2
Unlike coffee,tea is not quoted on the commodities future market. There are two good reasons
for this : first,tea ,because of its diversity,is,like,wine,not a strictly homogenous product and
second , it can only be stocked for a limited period before it begins to deteriorate. With no one
hoarding batches of tea in the expectation of price rise, the market is free from
speculation;essentially it is what is known as an over-the-counter market(OTC) operating in the
2
Francois-Xavier Delmas,Mathias Minet,Christine Barbaste ; The Economics of tea trade ;Abbeville Press , New York ; pg 53-57
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two possible ways described below,depending on whether “ grand crus” or inferior quality teas
are involved.
 Direct OTC transactions between producer and buyer are always based on a human
relationship established over the course of years-one that is often cordial and inevitably
based on trust . Producer and distributor know each other very well ,they meet every year
,usually on the plantation. This relationship is absolutely vital:in the case of prestigious
vintages or very rare teas , the buyer will always receive samples .During first flush
many buyers from all over the world visit tea gardens to have a look into what is being
produced ,what quality,what quantity and how well the tea garden adheres to the rules
and regulations and the laid down standards. The producer, for his part, is encouraged to
grow teas of highest quality as the price offered by the buyer is considerably better than
would be offered by an exporter , a wholesaler or even at aution.
There are several steps on OTC transactions . The producer sends a sample of each batch
to different potential buyers , but the price is not always mentioned .Each of these
potential buyers has one to three days to taste the samples and come up with what he
thinks is a fair bid,without knowing what his rivals are offering. The batch goes to the
highest bidder , who receives confirmation from the seller ; the batch now is his .
However ,before dispatching the consignment the seller sends him a second sample so he
can make a final check on the quality of his purchase . The consignment is then loaded
on to a ship or aircraft according to the buyer’s preference . By air, the tea will reach its
point of sale in two or three days , by boat ,it will take around a month .
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 In the case of an OTC transaction between a broker and a buyer ,the broker keeps
the buyer informed of the teas available in his warehouses or to be offered at the auction .
In the latter case,the broker sends the buyer weekly samples of the lots on offer with an
estimate price for each. The buyer indicates his maximum price and the broker informs
him within a few days if he has succeeded in obtaining the desired lot on his behalf .
Most of the time the brokers also double as blenders:they buy up lots that have failed to
find buyers at the auctions ,from them into a blend and then offer them to regular
customers . The blends in question are usually the cheaper ones .
Limited understanding of these procedures in the West means that many distributors in a
particular country claim they are “importers” when in reality they do not import tea from
the country of production but merely purchase it from a wholesaler on their own
continent . In the case of Europe ,for instance,the commercial hub of the tea trade is
Hamburg,in Germany ,home to large scale tea brokers who supply almost all the so
called European “importers “ of any standing. These German importers have gained a
reputation for blending original varieties,but above all for the manufacture of aromatic
teas.
H)Present Tea Industry in Darjeeling
There are 87 tea gardens spread across roughly 19,000 hectares (46,950 acres) of land area,
employing about 52,000 permanent workers. The gardens today collectively produces about 10
million kilograms (i.e. 22 million pounds) of tea every year.
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There are several types of Darjeeling tea that are cultivated in the gardens. From Black Tea
which is most common to green tea, and the ultimate delicacy of White Tea for the real tea
totalers. The price range starts from few hundreds of rupees to several thousands of rupees per
kg depending on the type.Although tourism provides one of the major earnings for Darjeeling,
it is tea which remains as the highest revenue earner for the district even today and provides the
highest employment in the district (to more than half the population).Healthy rivalry between
the gardens, innovation and technology have all pushed the quality of tea only in the higher
direction so far - the best has only become better. So one does have hope for the same trend to
continue in the future as well.
For over 150 years Darjeeling tea has been sold into the world market (mainly US, Europe and
Japan) through the seven auction centers at Kolkata, Siliguri, Guwahati, Jalpaiguri, Cochin,
Coimbatore and Coonoor through manual auctions. It has been kept out of online auction (i.e.
e-Auction) all these years because of the possibility of unpredictable price hikes that may take
place during bidding. It is worth noting that during an auction in 2014, Darjeeling tea was
purchased at a record price of US$1,850 (around Rs. 1.12lakhs) per KG. Public tea auctions
have always played a key role as the main vehicle for primary marketing of tea in India for over
a century ever since the first tea auction centre was set up in Calcutta (now Kolkata) in
1861.Public tea auctions handle more than 500 million kilograms annually.
At last the fate is changing for Darjeeling tea. It has been announced at a press conference in
Kolkata that effective June 2016, Pan India e-auctions would be launched and Darjeeling tea
can also participate in that. All sellers and buyers who are registered with one of the seven
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centers can participate in e-auctions. The sellers can now access various other online auction
centers across the world and get a large base of new buyers.
The newly designed e-Auction system is being used by all the six Auction Centres (Kolkata,
Siliguri, Guwahati, Cochin, Coimbatore and Coonoor). The various users of the system like
Manufacturers, Warehouses, Auctioneers and Buyers have been provided with access to various
functionalities of the system. Each Auction Centre will be entitled to carry out functions like
registration, incorporation of changes in policy and information maintenance.
The e-Auction system integrates the process starting from creation of invoices till the delivery
of tea from the warehouses, enabling better control and avoiding duplication of work thus
reducing time.
Tea industry is an organized agro industry. This implies that labor laws exists and since the
dominant mode of tea trade is through auctions, a large number of small producers get
fair prices.
H.)1.)Key Markets and Export Destinations3
 Tea exports from India stood at 101.04 kg, valued at US$ 306.9 million in April-
September 2016.
 During April-September 2016, major importers of Indian tea were Egypt, Pakistan, UK,
Iraq, Iran and Russia.
 The country is home to a wide variety of teas, including CTC tea, orthodox tea, green tea
and organic tea. Unlike many other tea producing and exporting nations, India has a
manufacturing base for both CTC and orthodox tea, in addition to green tea.
3
Source: Tea Board of India and India Brand Equity Foundation
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 India offers high-quality specialty teas, such as Darjeeling, Assam Orthodox and the
high-range Nilgiri , which have a distinctive aroma, strength, colour and flavour.
With an annual production of 51,73,471 million tons (in the year 2014), India ranks second in
production of tea after China.The export market for tea is vast .Darjeeling tea contributes only a
small percentage in this figure (approximately 12% - 14%) .Though the quantity that is
produced is comparatively less , it still fetches decent prices in the market because of its
demand .
WORLD TEA PRODUCTION

( ITC ANNUAL BULLETIN OF STATISTICS,2015)
H.)2.)Zones Under Tea Cultivation (Worldwide)

(FAO STATISTICS,2006)
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DETAILS CHINA TAIWAN JAPAN NEPAL SRI INDIA

LANKA
Area under 9,52,000 20,000 49,000 16,000 2,10,000 5,00,000
cultivation(hectares)
Production( tons) 10,00,000 25,353 1,10,231 13,779 3,39,512 10,22,945
metric
Yield(kilo/hectare) 982 1,150 2,040 781 1463 1856
The tea as an agricultural output earns more money for the country than as a
manufactured product. But this by no means indicates that tea manufacturing is a
nascent concept in India. The only player that has crossed the seven seas to promote branded
tea in form of Poly-packs etc is Tata Tea. But the fact that there are no other major house which
has promoted itself as a tea manufacturing house provides enough scope to the houses
themselves to improve their status.
Reasons for decline in exports in the past few years:
1) Fall of Soviet Union, main trading partner of India. Tea exports have come down by
70 percent from 44 Mn/Kg in 2000 to 12.5 Mn/Kg in 2003.
2)Exports to trading ally Iraq, Iran and Afghanistan was affected during the same period due to
tension and war in middle-east. Exports came down by roughly 70 percent between 2000 and
2003.
3)Quality has always been the biggest consideration in tea exports. Other emerging countries
like Sri Lanka and Kenya are scoring high due to modern methods of production and branding.
Whereas, India is on continuous slippage in terms of quality and branding thereby giving away
its share of exports.
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4)Concern over quality has resulted in exports of high margins value added tea (Tea Bags and
Branded Tea) come down from 45 percent of total tea exports in 1999 to 33 percent in
2003(value terms). In volume terms, came down from 86.8 Mn/Kg in 1999 to 39.8Mn/Kg in
2003.Global tea industry has witnessed a paradigm shift with emergence of stronger countries
like SriLanka and Kenya. These countries captured large shares in global tea exports at the cost
of older players like India. Infact, these countries are eating away the premium grade tea export
market and value added tea export market on platform of superior quality and aggressive
branding.Impact on India is evident from Sri Lanka’s tea exports which increased from
262.9 Mn/Kg in1999 to 298.8Mn / Kg in 2008whereas India’s reduced from 191.7Mn/Kg to
196 Mn/Kgduring the same period. Sri Lanka and Kenya are able to increase their productivity
at constant pace which helped it divert higher produce in the export markets. Higher exports
were achieved by these economies as a result of persistent efforts towards quality betterment
and brand building. This exercise actually helped economies towards driving high margin
value-added tea exports.
It is witnessed, Indian tea is increasingly been displaced by tea of other Asian and African
countries. Trend indicates that although land under cultivation in India has increased at CAGR
of 1 percent in last 3 years, yield has actually come down from 1679 Kg/Hectare in 2006 to
1614Kg/Hectare in 2009. Sri Lanka witnessed a complete reversal to India with
yield increasing by 40Kg/Hectare between 2006 and 2009 with no increase in land under
cultivation. Even in Kenya yield increased more than 10 percent or 242 Kg/Hectare in the same
time period. Although, India is regarded as ‘Goliath’ of tea industry its position is slipping to
smaller countries like Sri Lanka and Kenya on quality and productivity parameters. Middle-east
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countries like Iran, Iraq, Afghanistan and UAE were India’s main trading ally and contributed
35 percent (volume-based) of total Indian tea exports. But, 9/11 terrorist attacks and war in
Afghanistan and Iraq led to sharp decline in tea exports to these nations.
H.)3.)Notable Progress in the Tea Industry
The National standard on quality of the tea were revised and harmonised the
International standards. Similarly the quality parameters of the International standard ISO 3720
were also revised. The drafts for revised specifications for green tea have been finalized for
publication.With the establishment of pesticide residue testing laboratories in the North
Eastand, South India, scientific data on residue in tea have been generated for developing
national protocol which is now being considered by the Prevention of Food Adulteration
Authorities (PFA) and also Inter Governmental Group on tea of FAO (Food and Agriculture
Organization) towards harmonization of MRL.The standards as stipulated in the European
Commission and other countries are also being circulated to the tea industry from time to time
The project on ‘application of Bio-technological tools in tea breeding’ which has been
coordinated by the Department of Bio Technology and partly funded by TeaBoard is in the final
stages of completion.
I) Sustainability (Singbulli Tea Estate)
Corporate social responsibility (CSR) and sustainability have become a major focus of the
tea industry. Tea suppliers should therefore follow this trend closely, as it is increasing the
demand for sustainability certification. Food safety is a global concern. Not only because of
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the continuing importance for public health, but also because of its impact on international
trade.4 Relevant consumer labels on the European tea market include Rainforest Alliance, UTZ
Certified, organic and Fairtrade. The mainstream market shares for Rainforest Alliance, and to
a lesser extent UTZ, are experiencing a particularly strong increase.Although mainstream
sustainability certification is considered almost a ‘must’ for exporters to Europe,tea
manufacturers will not necessarily receive a premium price for such certification. Such
certification may nevertheless offer several positive financial effects, including the possibility
of offering a competitive advantage to exporters (for providing related services), along with
improved income due to increased efficiency and insight into their positions along the supply
chain.Some of the issues concerning are:
a)Food safety: Traceability, hygiene and control.Food safety and food control are key issues in
European food legislation. The European Union exercises official checks on tea to guarantee
compliance with the European food safety standards.
b)Maximum Residue Levels
c)Contaminants in food: The European Union has set maximum levels for certain
contaminants. Besides pesticide residues, monitoring may take place for Mycotoxin
contamination and foreign matter.
d)Consumer labelling: Pre-packed tea sold to consumers must adhere to
strict requirements from the European Union concerning labelling, presentation and advertising
4.(REQUIREMENTS FOR A HACCP BASED FOOD SAFETY SYSTEM Compiled by the National Board of
Experts – HACCP The Netherlands .Gorinchem, the Netherlands: 5th Version, June 2012)
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of foodstuffs. It prescribes all of the information that must be mentioned on consumer
packaging, including the list of ingredients, net quantity and the possible presence of allergens.
Although tea itself normally does not contain allergens, this may change if you sell mixes of
(for example) herbal tea.
e)Extraction solvents: These can be used for decaffeination of tea. There are maximum residue
limits restrictions for the extraction solvents such as methyl acetate (20 mg/kg) and
dichloromethane (5 mg/kg).
Why Certification?
•Third party assurance from producer to the consumer separated by distance
•For uniform label
•Assurance to the consumers that its concern for healthy food has been addressed.
•Effective marketing tool for Image, credibility, visibility/ Transparency 5
Here are the following certications under which the estate falls:
 Fair Trade certification: The Fairtrade certification initiative was created to form a new
method for economic trade. This method takes an ethical stand point, and considers
the producers first, in an attempt to emphasise equality in the market place. The Fairtrade
organization forms a partnership between the consumer and the producer, and aims to
eliminate other parties within the supply chain. Fairtrade Labelling Organizations
5.Inspection and Certification for Individual Farms, Smallholder Group Certification,A.K.

Yadav,Director,National Centre of Organic FarmingCGO-II, Ghaziabad, UP
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International (FLO) uses fair trade benefits to make certain that the producers who take part
in the initiative are not being exploited by buyers in developed countries, who try to reduce
their own costs to make a bigger profit and/or cover the cost of higher taxes and employee
benefits imposed on companies in developed countries.
The second part of Fairtrade International is the independent certifier, FLOCert. FLOCert
ensures that companies and producers all comply with FLO's standards of trade. Fairtrade
International was initially made up of other national fair trade initiatives from around the
world, who came together to form one international umbrella organisation (FLO).
 Rainforest Alliance: The Rainforest Alliance is a non-governmental organization (NGO)
working to conserve biodiversity and ensure sustainable livelihoods by transforming land-
use practices, business practices and consumer behavior. Based in New York City with
offices throughout North and South America, Asia, Africa and Europe, it operates in more
than 70 countries. The Rainforest Alliance aims to harness market forces to arrest the major
drivers of deforestation and environmental destruction: timber extraction, agricultural
expansion, cattle ranching and tourism. The organization trains farmers, foresters and
tourism operators in sustainable practices that conserve land and waterways, improve
livelihoods, and protect workers and communities. It also helps them access the financing
necessary to implement sustainability changes. Farms and forestry enterprises are audited
against rigorous standards maintained by the Sustainable Agriculture Network and
the Forest Stewardship Council — international NGOs the Rainforest Alliance helped to
found. Those farms and forestry enterprises that pass both annual and surprise audits are
certified by the organization and earn the right to use the Rainforest Alliance Certified seal.
26
The seal helps consumers support responsible farmers, foresters and tourism businesses by
identifying products sourcing ingredients from these farms and services that have
implemented best practices.
According to Consumer Reports, "The Rainforest Alliance Certified label is clear and
meaningful in support of sustainable agriculture, social responsibility and integrated pest
management. The label is consistent in meaning among all certified. In this sense, the
organizations behind these labels are independent from the products they certify.6To cater to the
European countries this certication is required.
 Japanese Agricultural Standards (JAS): The Japanese Agricultural Standards
are standards for the agriculture industry maintained by the Japanese Government. They are
comparable to Japanese Industrial Standards but for food and agricultural products. Once a
product has passed tests conducted by government-backed rating bureaus the JAS seal is
appended to the product. 7
 Hazard Analysis and Critical Control Points (HACCP) certification from SGS: SGS
(Société Générale de Surveillance, a French word) is an international inspection agency
headquartered in Geneva,Switzerland which works all over the world in the field of
improving quality and productivity, reducing risk, verifying compliance and increasing
speed to market.HACCP certification instantly demonstrates to customers your commitment
6.(Consumer Reports: Greener Choices (March 2008). "Resources: Eco-labels Center: Rainforest
Alliance"( Accessed March 24, 2008.)
7 "Farm ministry to review JAS regulations". Japan Economic Newswire. Kyodo News International Inc. 1996-
05-17.
27
to producing or trading in safe food. This evidence-based approach can be particularly
beneficial when we are subject to inspection by regulatory authorities or stakeholders.
Demonstrating a real commitment to food safety through HACCP compliance can also
transform the brand and act as an effective entry-to-market tool, opening up new business
opportunities around the world.The global network of food experts carries out HACCP
audits and helps to focus on the hazards that affect food safety and hygiene. It is then
possible to systematically identify where the hazards are by setting up control limits at
critical points during the food production process.HACCP certification is an international
standard defining the requirements for effective control of food safety.
 100% organic certified by IMO Control : IMO India – organic and sustainable agriculture
IMO Control Private Limited (IMO India) is an independent certification body in India for
organic agriculture that has been carrying out audits and certification since 1995.IMO India
provides cost effective inspection and certification in organic agriculture, processing,
exports, verification of inputs used in organic agriculture, wild collection, apiculture and
aquaculture .They also provide audit and certification in sustainable agriculture schemes
such as Utz Certified, SAN(Sustainable Agriculture Network) /RA Standards etc. IMO India
is duly accredited, from 2001, according to the National Programme for Organic Production
(NPOP) for carrying out inspection and certification of organic agriculture in India. IMO
India is the first Indian organic certifier to obtain international accreditation under ISO 65,in
2004, for its inspection and certification activities.
 National Programme for Organic Production (NPOP) and National Organic
Program(NOP) : NPOP has equivalence agreement with European Union. NPOP has
28
equivalence agreement with Switzerland .USDA(United States Department of Agriculture)
has accepted NOP conformity assessment system.It means product certified by any Indian
certification body can be exported without the need for recertification in above countries.
For USA Indian certification bodies issue certificate based on NOP standards.
The National Organic Program (NOP) is a regulatory program housed within the USDA
Agricultural Marketing Service. They are responsible for developing national standards for
organically-produced agricultural products. These standards assure consumers that products
with the USDA organic seal meet consistent, uniform standards. Their regulations do not
address food safety or nutrition.
Inspection methods
1. Visits of facilities, fields, etc.
2.Review of records and accounts.
3. Calculation of input/output norms, production estimates etc.
4. Assessment of production system
5. Interview with responsible persons
6. Risk assessment
7. Part Conversion and Parallel Production
8. Inspection for Use of Genetically Engineered Products
9. Use of off-farm inputs
10.Analysis for residue testing (if required)
 Universal Trade Zone(UTZ): UTZ Certified is a program and a label for sustainable
farming. The UTZ Certified label is featured on more than 10,000 different product
29
packages in over 116 countries. As of 2014, UTZ Certified is the largest program for
sustainable farming of coffee and cocoa in the world. The UTZ Certified program covers
good agricultural practices, farm management and the environment.
The UTZ Certified program for tea and rooibos was launched in 2007.
 The Ethical Tea Partnership(ETP): ETP is a not-for-profit membership organisation that
has been working with tea producers and tea companies to improve the sustainability of the
tea industry since 1997. This industry-wide initiative, which was originally called the Tea
Sourcing Partnership, was established by a number of large UK tea packing companies who
took the decision to work together to improve the social conditions in their supply
chains. Later on, ETP membership opened up to non UK based-tea packers, and extended
the scheme to include environmental issues as well.
The ETP works in all the main tea producing regions and has a London-based Secretariat,
and 5 Regional Managers based in Kenya, India, Indonesia, Sri Lanka and China. It runs
three coordinated programmes to achieve its vision of a "thriving tea industry that is socially
just and environmentally sustainable''
J) Factors Affecting Yield
1.Organic conversion: In the last fifteen years or so,a growing number of crops have been
appearing on the market that have been produced according to the organic methods and
certified by organizations generally operating in Europe .Made aware of this issue by their
Western clients,some planters have realized that it is in their interests to change their methods
of cultivation.3The tea garden from the year 2003-2010 was producing inorganic tea .After
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growing demand in the international market for the organic tea, the company decided to
convert the tea gardens into organic(in 2011).But this on the other hand affected the production
of the tea garden. After being converted into an organic tea producing unit it is natural for any
tea garden to have a decline in its production. Experience of organic cultivation of tea in India
so far shows while conversion of plantations from non-organic to organic leads to loss of yield
to the tune of 40%. After some forty years of using chemical fertilizers, pesticides and weed
cleaners, it is now clear that such measures could barely sustain the yield or production level of
Darjeeling tea, and have failed to increase the crop. The formula worked in the lower plains to
deliver higher yield, but not in Darjeeling hills.
CROP FIGURE OF SINGBULLI BEFORE AND AFTER

CONVERSION INTO ORGANIC
300000 256300 264000
250000 230000
200000
150000 159469 200000
166700 CROP FIGURE OF SINGBULLI
100000
BEFORE AND AFTER
50000
CONVERSION
0
-Source:Singbulli Tea Estate
2.Climate and weather conditions:The yield of harvestable shoots is affected significantly by
the environmental factors resulting into the loss tea yield. "The erratic weather conditions in the
major tea producing regions of Darjeeling, Dooars and Assam is likely to pull down tea
production this year by 5-10%.Darjeeling and parts of Dooars are witnessing a dry spell. On the
other hand, tea gardens in Assam are facing incessant rains, which may bring down tea
production in April by at least 10% from a year ago. "Darjeeling gardens are the worst hit.
31
There is no rain in the area that produces the finest of Indian teas," said AN Singh, managing
director, Goodricke Group as said in the Economic Times ,April 26, 2016.The continuous dry
spells during the First Flush affect the exports as the tea made during this period is mostly sold
overseas.The weather conditions further affect the Second Flush as well . Global warming has
started taking its toll on Darjeeling Tea as well. Due to continuous rise in temperature over the
past few years, the yield or production of processed Darjeeling tea is under big threat. There is
usually no plucking between December and February (the peak winter time) when Darjeeling
tea bushes require adequate chill and moisture to rejuvenate before the first flush tea leaves are
plucked. However the average January day time temperature has been steadily rising year after
year (13.3°C in 2013 to 13.8°C in 2014 to now 13.9°C in 2015). This is coupled with decrease
in humidity (moisture content in the air) is a cause of great threat.
3.Declining manpower : The highly labour intensive tea industry today employs more than 11
lakh workers engaged in various functions.8At the same time around 2 lakh small tea growers
account for about 30 percent of the total annual tea production .Because of its proximity to
Siliguri town , the laborers of Singbulli are now in constant hurry to shift as it provides more
employment opportunities.
PERMANENT WORKERS AS ON 31.12.2013
Age Profile of Workers Gender Total
8
Statistical Year Book, India 2014 by Ministry of Statistics and Programme Implementation(MSoPI)
32
MALE FEMALE
15-30yrs 37 53 90
31-50yrs 176 417 593
>51 yrs 74 128 202
Total 287 598 885
Source: Singbulli Tea Estate
The youth population in the garden prefers not to indulge in laborious work . They further move
out to different cities for job hunting. Even though incentives have been provided the
glamorous touch of the city attracts huge number of workers .
4.Further expansion: Every piece of land in Darjeeling district has been given away for tea
plantation. The only exception are the town & forests areas. Some areas of Kalimpong and
Mirik were spared from tea plantation because the railway lines did not reach there which was
required for cost effective transportation of tea. Such limited areas have become the only farm
lands in the district. In late 1800s when most of the tea gardens came up, the pioneering
planters used 40% of their land for tea plantation, left about 40% of the land undisturbed, and
the rest for building housing and other facilities for the workers. The undisturbed areas were the
untouched natural jungles that were guarded and protected. This foresight was about retaining
ecological balance in the entire area. However after independence, the state government
brought in a legislation that declared such private jungles as wasteland and not required for tea
plantation. As a result rampant encroachment started taking place in those areas, and they are
now mostly gone. So the question is, where is the area for further expansion of tea gardens in
Darjeeling hills?
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6.Life cycle of the bushes: It is well known that the perennial tea bushes are extremely hardy
plants and can live for long many years. In fact in many of the tea gardens, bushes that are over
100 years old, some are more than 150 years old.Previously,these bushes have been kept alive
and made to deliver with scientific methods such as better pesticides, field husbandry, use of
higher quality chemical fertilizers etc. But eventually the writing is on the wall if the gardens
will have to continue with the same old tea bushes. The fact is the soils keep depleting and the
bushes keep dying. The average age of the total tea area of Singbulli is 100 years
approxmiately. Hence there can be a decline in the yield of crop. Over the last few years the
bushes have been replanted at the rate of only 2%. The main problems have been financial
constraints and lack of proper farm policy. The long gestation period of 6 to 9 years to grow tea
plants from nursery to matured bush in the hills requires substantial continuous investment.
5.Political disturbances: The political narratives rarely take seriously the issues of agro–
industry, and other cash crops, animal husbandry with high potential to change the life of the
people for good. The State Government and the Gorkhaland Territorial Aministration( GTA)
are at loggerheads for their political interest. Political rhetoric of no division of Bengal and
a must Gorkhaland has consumed all the political energies. These disturbances have a great
impact on the production of tea as workers are engaged in the protests . During seasonal times it
can lead to huge losses .
6.Quality of the Soil : Tea bushes grow very well in a variety of different soils .It can adapt
well to its physical environment .Acidity and absorption of the nutrients that plant needs are
two vital factors which influence growth .But with the increasing land pollution,deforestation ,
construction on the sloppy areas ,etc the soil tends to become loose leading to landslides and
34
degrading the quality of the soil . Improper drainage system can lead to contamination of water
which inturn leads to damage to roots . Proper nutrients are required by the bushes . Soil
composition drastically changes when the gardens convert into organic . For once it affects the
quality of soil which can be rejuvenated in few years .
K) Government Rules And Regulations
 Governed by:The Tea Act, 1953
 Apex body:Tea Board of India
 As a food product, tea is governed by:
Essential Commodities Act, 1955
Prevention of Food Adulteration Act, 1972
Packaged Commodity Act, 1980
 As a plantation industry, tea is governed by:
Plantation Labor act, 1951
Land Reforms Act, 1950
Forest Conservation Act, 1980
K.)1.)Tea Board
Constitution of the Board
The Tea Board, set up under section 4 of the Tea Act, 1953, was constituted on 1st April 1954
and works towards overall development of the tea industry in India.
Functions of the Board
35
The functions of the Board are defined in the Tea Act, 1953. The focus of the Board is
directed towards development of the Tea industry and trade especially in the sphere of
production, extension of area under cultivation, improvement in the quality of tea,
promotion of Co-operative efforts of growers, and research and development efforts in
tea, undertaking promotional campaigns for increasing export of tea and regulatory
functions such as issuance of Exporter’s License, Tea Waste Licence, Tea Warehousing
Licence, etc. Tea Board also plays a major role in the collection & dissemination of tea
statistics and in the adoption of a few Welfare measures for workers of tea gardens, which
are not covered under statutory provisions such as the Plantation Labour Act, 1951.
The primary functions of the Tea Board are briefly as under:
a) Rendering financial and technical assistance for cultivation, manufacture and marketing
and Export Promotion of tea.
b) Extending financial support for Research and Development activities for augmentation
of tea production and improvement of tea quality.
c) Extending financial assistance to the plantation workers and their wards through labour
welfare schemes.
d) Assistance to the un-organised small growers sector both financially and technically
e) Collection and dissemination of Statistical information
f) Such other activities as are assigned from time to time by the Central Government.
K)2)TOCKLAI : Research Centre for Darjeeling Tea
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Nowadays there are research centres in all the tea-growing regions – as there are for all
agricultutral or industrial activities involving important socio-economic issues – these include
TOCKLAI in Northern India , UPASI in Southern India ,TTES in Taiwan. These research
facilities study tea plants,develop new cultivars and generally work towards the improvement of
the varieties .
The Tocklai Tea Research Institute was established in 1911, at a site near the
river Tocklai in Jorhat, Assam. The formation of the Tea Research Association (TRA) in 1964
with Tocklai at the centre of all activities further expanded the horizon of tea research to cover
the entire Northeast India. Research on all aspects of tea cultivation and processing is carried
out at Tocklai Tea Research Institute, Jorhat the oldest and the largest research station of its
kind in the world. Transfer of technology to its member estates is carried out through its
advisory network covering 1,076 tea estates occupying 341,049 hectares (1,317 sq mi) of land
spread over The South Bank, North Bank, Upper
Assam, Cachar, Tripura, Dooars, Darjeeling and Terai. Tocklai has its regional R & D Centre
at Nagrakata, West Bengal.
37
L)Marketing Environment of Singbulli Tea Estate
L.)1.)SWOT Analysis of Singbulli Tea Estate
Strength
a)Demand for tea has been growing at some 2% per annum and should accelerate further.
b)It provides its workers with amenities like medical services(hospital, ambulance,medical
bills reimbursement,etc), housing development schemes,etc unlike the other competitor’s
gardens
c)Good Research Support by tea growers has will help garden grow further.
38
d)Projects like Himal have been undertaken by the company for over all development of
gardens.
e)Elevation of cultivation area is different and spread over 9 hills hence allowing varities of tea
to cultivate.
Weaknesses
a)Labor intensive industry: The second generation labors are reluctant to join this industry
hence it poses a problem of skilled labour .
b)No Effective Cost Management system adopted by companies and other regulatory bodies.
c)Supply from more efficient players like Kenya, China, Sri lanka,etc
d)Declining Export of India over the years.
Opportunities
a)Export Potential can be undertaken if India can increase its production capacity
b)Tea can be made more acceptable and fashionable like coffee
c)To come up with new flavors/formulation of the tea, tea houses etc to popularize the concept
of tea in India.
Threats
a)Global competition as well as competition faced by the other gardens which have a stronger
brand image.
b)Low Cost in some countries like China, Sri Lanka and Kenya.
c)Import of Tea from other countries.
d)Cost escalation on account of increase in the cost of production
M) Reform measures in Tea Sector

(2012-2013)
39
A)Tea Plantation Development Scheme
The main objective of the Tea Plantation Development Scheme is to encourage the tea
plantations in undertaking various field oriented developmental measures aimed at increasing
field productivity and decreasing cost of production. In order to achieve these objectives, and
given the high cost of production mainly due to the labour cost accounting for more than 60%
of the total cost of production and high fluctuation in the tea prices, it has become necessary to
continue the scheme during XII Plan period for providing financial incentives in the form of
subsidy for a set of activities to be undertaken by the growers.
1. New Planting: Given in the imbalance in demand and supply, new planting was not
encouraged during the previous two plan periods. It was however allowed on a limited scale for
small growers particularly in NE Region and Hilly area. During the course of last ten years
while the overall supply was around 130 million kgs the domestic demand was in the order of
170 million kgs leading to a gap of 40 million kgs. In order to bridge this gap it is proposed to
extend support for new planting by way of subsidy @25% of the planting cost and interest
subsidy @5% p.a for seven years on the 50% of the planting cost availed as loan from banks.
2. Drainage and Transport facilities:The drainage component under the PD scheme, has
received very low response from the industry. Moreover, the scheme is difficult to monitor as
most of the works undertaken are civil works in nature The performance of the Scheme in terms
of creation of Transportation facilities has been poor. Moreover, this subsidy does not result in
any long term impact on the established estate gardens. In view of these facts, it is proposed to
discontinue the support for these two activities.
40
3. Irrigation :The irregularity in the monsoon (both in terms of lack of adequate rainfall and
prolonged dry period) is forcing the industry to invest on irrigation infrastructure. Moreover,
large scale replanting would bring large area under young bushes. These young sections require
irrigation much more than older sections. Hence, irrigation should be a focus area for the XIIth
Plan period. Currently the irrigation subsidy being offered is 25% of the total expenditure
subject to a maximum of Rs. 10,000 per Ha. Moreover, the total expenditure per garden is also
capped at a maximum of Rs. 10 Lakhs. Considering the current cost of creating conventional
irrigation facility (Estimated to be around Rs. 70,000 per ha), this ceiling is too low. Moreover
many gardens are now willing to go for large scale investments in irrigation covering more than
100 ha of area at one time and such large scale investment in irrigation should be encouraged.
In such situation, a ceiling on total expenditure may not be justified.In addition to subsidy it is
proposed to provideinterest subsidy @5% p.a for seven years on the 50% of the planting cost
availed as loan from banks.
4. Subsidy and Interest Subsidy for Field Mechanization :Due to growing problem of labour
scarcity across the producing regions , the industry needs to explore use of mechanization and
use of new technology for activities that are traditionally undertaken manually. Accordingly, it
is proposed to incentivize use of following field mechanization equipment’s:
 Mechanical harvesting equipment

 Pruning machines
 JCV machines
5.Support to Small growers:The small grower sector has emerged as an important sector
contributing nearly one third of the country’s production of made tea. Current estimation
41
indicates that there are nearly 1,60,000 small growers producing nearly 257 M. kg of tea
accounting for around 26% of the total tea production of the country. Considering growing
contribution of the small grower sector, there is a need to put increased attention to this sector.
Accordingly, various subsidies and supports that are available to the small growers under
various schemes of XI Plan have been clubbed/ consolidated under one umbrella scheme.
6.SPTF : Special Purpose Tea Fund was formulated for assisting the tea gardens in undertaking
replanting, replacement planting and rejuvenation of old aged tea bushes so that the industry
becomes more viable, competitive and financially sustainable.A major deterrent to producers
for undertaking uprooting and replanting on regular basis is the large actual costs involved in
the activity. In addition to the actual costs involved in carrying out uprooting and replanting and
subsequent maintenance is required to nurture the young section, the producers also get
deterred by the resulting crop losses during the initial period of 5-6 years. SPTF tried to address
this issue by extending a loan component in addition to subsidy component. However, the loan
component has not received adequate response and the cost of administering the loan
component hasbecome quite high. The performance of the scheme has been critically reviewed
by the CAG and recommended for adequate compensation of the crop loss due to uprooting.
Keeping this in view it is proposed to modify the existing scheme with additional features as
under:
a. Withdrawal of loan and introduction of interest subsidy
b. Introduction of a Crop Loss Subsidy
c. Encourage gardens to have own nursery
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d. Introduction of a graded subsidy
B)Tea Quality Upgradation and Product Diversification Scheme (QUPDS)
The main objective of QUPDS is to serve as a catalyst for tea factories/ blending/ packaging
units to undertake investments in modern technologies/ processes (either for expansion or for
replacement), which would eventually enable quality improvement, and higher realizations
through the production of better quality/ value added teas. The overall objective of the scheme
is to encourage following activities:
• Factory related activities
- Modernization of the processing factories by replacement of old and worn out machinery
- Value addition by way of creating additional infrastructure for cleaning and blending and
packaging facilities
-Quality assurance certification : ISO/HACCP and Organic Tea Certification
- Product diversification : production of orthodox tea, green tea and specialty teas etc
• Incentive for Orthodox Tea production in order to increase production of exportable tea
1.Small Growers Development Scheme :Giving due considerations to the special needs of the
small growers sector and increasingly important role the sector is playing in the Indian tea
industry, a separated edicated scheme has been proposed for the sector with various sub-
components covering all aspects of development for the sector.
43
Some changes in the ceilings and quantum of subsidy based on the legitimate demands of the
industry and general escalation in cost of equipment and implements.
2. Market Promotion Scheme : There is a continuing need for the Tea Board’s intervention in
promoting the Indian Tea Exports. Also, in the domestic Market, given the competition that tea
faces from other beverages, ‘generic’ promotion of tea is required. Thus, there is a need for
continuance of Market Promotion efforts .Activities proposed to be supported under the Market
Promotion Scheme under this Plan have been highlighted below :
a)Infra structure creation: Designated Tea Parks, fully developed well served and serviced
basic infrastructure meant for tea units engaged in activities of processing, blending, tea
bagging, storing, warehousing etc. for the purpose of exports are proposed. Core infra structure
may include internal road, power facilities, water supply, R & D centre etc.
b)Brand Promotion ( Promotion Scheme for Packaged Tea or Indian Origin ):The Scheme
is intended to promote teas of Indian origin. The Scheme covers all the Indian
companies/exporters marketing Indian brands in packets less than 1 kg and would be applicable
for the categories like showroom, promotional campaign, in store demonstration, website
development, inspection charges, etc.
c)Brand equity, IPR/GI protection and related legal activities :In order to increase the brand
equity and protection of GI/IPR of Indian tea and in particular, the origin teas like Darjeeling,
Assam, Dooars-Terai, Nilgiris, Kangra etc it is essential to administer these marks/logos and
stop misuse of such treasured Indian origin names internationally. Efforts to register these GI’s
44
in various jurisdictions and fight legal battles against infringement of Indian logos/marks need
to be continued.
d)Domestic Promotion:In order to increase domestic consumption of tea and sustain a demand
pull in the domestic scenario it is essential to continue with media campaign, fairs/exhibitions,
advertisement/sponsorship etc.
e)Incentive to Exporters/Associations: The activities like transport subsidy, Export Promotion
Support to the exporters and associations etc are very important for their continuance in
particular the support under transport subsidy (ICD Amingaon) provides an incentive to the
exporters for the loss incurred due to empty haulage of containers from Amingaon to Haldia.
Export Promotion Support by way of providing air travel reimbursement, sharing a part of
overseas Buyer-Seller meets participation in fairs/exhibitions etc by the exporters provide a
positive impact on export activities and to help increasing market share.
f)Overseas Promotion :Activities like membership of Tea Councils, overseas promotion in
Japan etc will continue to have good significance on increasing market shares in the overseas
markets. Joint Overseas Promotion by way of 5-5-5 Project in 5 countries assumes great
importance in the matter of India Brand Promotion in the potential markets in Russia, USA,
Kazakhstan, Iran and Egypt.
g)Trade Related Activities: Trade related activities like Deputation-Delegation both outbound
and inbound, participation in International Fairs/Exhibitions, organizing Semimar/Conference
like India International Tea Festival, conducting market research in various potential countries,
building up tea infra structure by way of Tea Park/Warehouse etc will continue to remain thrust
45
areas in order to have close interaction with the overseas importers and increase market share
and develop new markets abroad as also to facilitate Indian tea industry to improve quality
image and attraction.
h)Publicity Materials: PR activities through various gift materials, tea caddies/carton/chestlets
etc together with releasing advertisements on Indian Tea in printing media/publications have
always been found to be an effective vehicle for promotional publicity, both in domestic market
and abroad. Hence these activities are very well justified to continue in the 12th Plan period.
i)Freight Equalisation Subsidy: Unlike in Sri Lanka Indian tea exporters do not have the
direct shipment from the country itself. They have to incur a huge additional cost due to loading
through feeder vessels to Sri Lankan port first. This has been a long standing grievance from
the Indian tea exporters. In order to increase price competitiveness of Indian tea exports it is
proposed to assist them by providing a subsidy / assistance.
j)Logo administration and quality assurance:Logos of Indian origin tea such as Darjeeling,
Assam, Dooars-Terai, Nilgiris etc together with India Tea are registered as GI /CTM in India
and also overseas under various country regulations. It is proposed to attach some minimum
quality benchmark on organoleptic and chemical parameters of such tea for usage of these
logos and administer the system accordingly. This will involve constant monitoring/checking of
the quality through inspection.
k)Assistance for setting up Tea Boutiques :In order to showcase diversified product range of
Indian tea Tea Boutique is considered an important promotional vehicle where tea on consumer
preference can be spot sampled and sold across to potential buyers and tea connoisseurs. While
46
Tea. Boutiques have been already popular internationally, it is proposed that assistance to set up
such boutiques with the basic infra structure be provided to the exporters and some scheme be
formulated.
l)Tea Campaign : Sustained tea promotions by way of media campaigns aimed at popularizing
the positive aspects of tea and in a manner made specially interesting to the youth, is the need
of the hour, both for the overseas and the domestic market. Apart from extolling the positive
health benefits, the other positive social attributes associated with tea such as camaraderie,
friendship, bonding etc can be explored. The style quotient of tea which is on an upward swing
in the niche markets and in the niche segments of many societies should be exploited while also
popularizing it as a preferential beverage choice of the youth with health and beauty aspects
being stressed on. A 360 degree advertising and media blitzkrieg on a sustained level over the
years would go a long way in popularizing this amazing beverage- India Tea.
m)Product Placement :Product placement, Placement Promotion or embedded marketing is
according to Business Dictionary, "an advertising technique used by companies to subtly
promote their products through a non-traditional advertising technique, usually through
appearances in film, television, or other media."
In April 2006, Broadcasting & Cable reported, "Two thirds of advertisers employ 'branded
entertainment'—product placement, brand integration—with the vast majority of that (80%) in
commercial TV programming." It said, "Reasons for using in-show plugs varied from 'stronger
emotional connection' to better dovetailing with relevant content, to targeting a specific group."
47
For example in the movie BARFI starring Ranbir Kapoor in the main lead, Goodricke Group
Limited promoted its brand by appearance in many places .
3.Plantation workers welfare and Training Scheme(Human Resource Development
Scheme):There are various schemes run by state and central government that cater to the
various labour welfare related activities aka education, drinking water, sanitation, health, etc.,
currently being covered under Tea Board schemes. At the same time, it has also been observed
that it has become financially unviable for the tea industry to continue to bear the social cost
burden in their garden estates. Considering the same, our key recommendation on the proposed
scheme for HRD are as follows:
1.HRD Scheme to cater only human resource development activities and training of Tea
plantation workers
2.Creation of a separate trust or an agency under the aegis of the Tea Board to look after:
a. Housing facilities under Indira AwasYojana
b. Sanitation facility under Total Sanitation Campaign
c. Safe drinking water under Swajaldhara
d. Health under National Rural Health Mission (NRHM),
e. Educational facilities under SarvaSikshaAbhiyan
f. Formation of SHG under SJSY
g. Focus on Training Programmes
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4.Scheme for Monitoring the implementation of Regulatory provisions of Tea Act:There
are certain regulatory and compliance related activities of Tea Board that are not covered under
any scheme. Such activities include the following:
a.Scheme for Monitoring the implementation of Regulatory provisions of Tea Act:There
are certain regulatory and compliance related activities of Tea Board that are not covered under
any scheme. Such activities include the following:
 Mandatory check- mechanism to ensure quality of tea meant for export from
India:Mandatory Checking of each consignment before its shipment from India destined for
selected countries like, Japan, Germany, United Kingdom, Russia, U.S.A., Iraq and Iran.The
standard of quality of tea to be exported from India shall conform to the specifications of
black tea, green tea etc .
 Mandatory check mechanism to ensure supply of quality Green leaf to the manufacturer
and the process of manufacturing quality tea for the consumers.
 To introduce regular monitoring mechanism of checking of Tea Waste generated at the
factory level to ensure maintenance of quality tea at the factory.
 To introduce Region wise / State wise study on the status of the tea estates / tea
manufacturing factories.
 To undertake a Micro level study on the extent of implementation of the different
regulatory provisions of Tea Act and Control Orders.
49
 To undertake a Region wise / State wise assessment of extent of programme
implementation by the beneficiaries under different schemes of Tea Board, its impact &
economic analysis.
 To study the cost of production of tea leaf of the small grower vis-à-vis by estates and
cost of manufacturing of made tea by the Estate Factories / Bought Leaf Factories & Co-
operative factories.
b.Strengthening of e-auction and bringing other allied activities under electronic
platform:Tea Board needs to strengthen following functional areas, in order to become a more
effective development and regulatory agency:
 Cost accounting: Tea Board has to rely extensively on external agencies for undertaking
studies on cost structure, cost competitiveness, etc of tea industry on a regular basis. It needs
to have an in-house cost accounting cell for undertaking such exercises.
 Economics & Policy Research Unit: For effective planning and policy formulation for the
industry, an in-house economics and policy research cell should be part of Tea Board’s
internal structure. This cell should carry out high level policy research, best practice studies
in terms of policies and planning, and provide specific periodic recommendations to the
authorities in terms of suggested policy interventions.
 HRD Cell: Human Resource Development is a crucial function. Tea Board currently does
not have any HRD cell. The same should be created in order to effectively monitor and
implement HRD Scheme related initiatives and activities.
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5. Research and Development Schemes : The activities covered under this scheme includes –
meeting recurring expenditure on some of the identified items of TRA and UPASI-TRF, up-
gradation of DTR&DC, supporting research projects of Tea Research Institutes and other
recognized Institutes on quality upgradation, Integrated Pest and Disease Management, value
addition and product diversification, nutrition management, tea and human health, setting up of
quality control laboratories etc.
(A) Ongoing Research Schemes :The research schemes that have been initiated during the XI
Plan period are under various stages of completion and some of the schemes are to be continued
for one or two years of the XII plan period for their completion.
(B) Justification for continuation: Long term Research is necessary for developing and
improving the techniques for modernization of processing, as well as, for finding answers to
emerging constraints and limitations. Streamlining and strengthening of the research and
creating suitable mechanism to ensure that research remains responsive and in tune with the
time is cardinal for future progress and growth of the industry.
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CH II : NATURE OF PROBLEM
The tea growers are facing many problems related to availability of finance, selling price,
processing of tea leaves,exports etc.
Despite India’s historical success with the tea industry, in recent years, the industry has faced
serious competition in the international and national market which has lead to the present
crisis.Many factors have been cited as causing the crisis in the Indian tea sector-since the late
1990’s.Analysts agree that the dramatic fall in prices is one of the most significant causes of the
crisis.The worst affected are plantation workers and small growers; many estates failed to
withstand the downward slide of price and hence moved out of business leading to the closure
of tea estates that employ thousands of workers and of factories (BLF) to which small growers
might sell their products. Hence taking into consideration the above aspects following
objectives have been formulated..
Problems faced by the industry
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a)Decline in demand for Indian tea in the global market :
The decade of 90’s has been quite depressing for the Tea Industry in India as a whole. The
major cause of depression in the industry was the decline in the international demand of Indian
tea. The traditional markets of Indian tea like USSR and UK have drastically reduced the
import of tea from India. Changed global situations like disintegration of USSR, WTO
agreement, globalization of markets across the nations, etc. have proved to be adverse to
India. In the year 2004, India lost its eminent position of the largest producer of tea to
China. Kenya has already taken over Sri Lanka in export pushing India to third position. There
is a fierce competition abroad. Indian tea has lost its competitive advantage to other countries
on account of high cost and poor quality. However, one new development, i.e., India becoming
the largest consumer of tea next to UK, has provided a lifeline to the tea industry. While tea
production of India grew by about 250 percent since 1947 but the rate of growth of export
remained insignificant .It appears that, India grows tea mainly for Indians. However, the
exports of all other leading tea exporting countries have grown rapidly over the same period.
The fact remains that whatever the size of the domestic demand, there is still sizeable surplus
amounting between 180 and 200 million kg that needs to be sold.
WORLD TEA EXPORTS
53
b)Defects in auction system: India’s tea market is facing yet another paradox which could be
explained in terms of glaring gulf between the price charged by dealers and retailers. A report
for the International Labour Organization (ILO) notes that the large tea companies are
benefiting from fall in auction prices and rise in retail prices for tea. This widening gap between
consumer and auction prices is cutting into the margins realized by the tea producers but is not
being passed on to the consumer in the form of lowered tea prices. Similarly a report by the
Government of Assam found it unfathomable that the retail price of tea has not come down
with the fall of auction price.Certainly, the margins of intermediaries are far too high. Price
paid to plantation and small tea growers has fallen since 1998; retail prices for tea have
increased . Average price for medium quality tea sold in Indian market increased from Rs.85-90
per kg in 1999 to Rs.123.05 in 2009.In 2008, a kg of tea used to fetch Rs 105.12 of tea and it
continues to rise.In India, nearly 55 percent of total tea produce is sold through auction houses,
54
with the rest sold through private sales. Even after the abolition of compulsory auction in 2001,
the auction houses are very important constituent of tea marketing structure. The important
feature of tea auction sale is that the producers/growers do not take part in the selling process
directly. The brokers in the market sell tea on behalf of producers. Brokers generally do not
accept bid from unknown buyers.The large buying companies use their market power (as they
have their own network of sales and marketing all over the country and export tea after
blending) to push down price and take the advantage of depressed market to pay low prices;
they are clearly benefiting from the current situation. Hindustan Lever, Tata Tea, Wagh Bakri
Chai, etc. are such powerful buyers having enormous influence on the market and price of tea
in India in general and Assam tea in particular.These big tea companies which are in
monopolistic competition in consuming countries always try to stabilize prices. The longer
transaction time and higher transaction cost (like warehousing charges, transportation cost,
brokerage charges etc.) are some other problems with the auction system. It takes about 35days
for the entire transaction processes to complete.
It is upon the subjective judgment of the Darjeeling Tea taster or auctioneer to assess the
quality of tea. The tea produced by the manufacturer and the expected price he feels that his tea
might fetch can differ from what value the tea fetches in the market . The taste is subjective
.However, this problem is not faced by other teas such as CTC.
While evaluation is done by the tea auctioneer, they do not take into account the inflation rate
prevailing in the economy . There has been an overall increase in the cost of production due to
raise in wages,certifications cost, farming expenditures,technological advancements,extra
55
amenities for workers,etc .The price fetched in the domestic as well as foreign market is not
sufficient to cover up the above costs.
Since there is a broker in the supply chain , the producer is hardly aware of the regulars who
actually consume their tea . Hence the tea garden is totally unaware of the clients and has to
solely rely on the auctioneer or other private brokers about the players in the market.
c)Poor Price realizations: The price of tea has been on long term decline while production
costs have been rising, putting pressure on tea growers and working condition of laborers. The
decline in prices has been primarily due to growth in production in the face of sluggish demand.
Low prices for tea are generally passed on to the plantation workers in the form of low wages
and withdrawal of basic facilities like food, health, education, etc. given that it is easier to cut
cost by reducing labour cost (as the labour has weak bargaining power) than raising the price of
tea (difficult in the competitive market economy) and in most of the cases producers have to
remain competitive by lowering wages. Major causes of poor price realization are due
to following reason:
 Competition between producing countries for a share of the world market was one of the
major causes of falling price of Indian tea. World production of tea is fairly diversified and
not concentrated in a particular area. Presently 36 countries of the world produce tea and
many of them are big producers. They prevent the establishment of a monopolistic leader in
the world tea market to ultimately allow fair and free competition in the market.
 Demand for tea is rising very slowly (1.5-2 per cent), therefore the only way to increase
market share of export by a country is at the expense of the competitors.
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 Because of the dominance of auction system as a day-to-day intermediary
between producers and buyers, the actual producers have been unable to maintain direct
contact with the ultimate customer of tea and thereby creating a long term relationship
 Tea is a perishable product. Its quality and flavor deteriorates very quickly. Therefore itis
frequently necessary to cut prices to clear stocks.
 Tea producers have to stay in market despite cut in prices of their produces as they have
invested a huge sum of money; many people are dependent on it and lack of alternatives for
them.
 It is forecasted that tea production will increase over next few years, despite a slower growth
in demand, a trend that can only undermine price of tea in the long run. The present decline
in prices was on the back of a 0.6 percent annual increase in production during 1984-2008 is
estimated to be around 2.8%.
 There is a major shift in the consumption and thereby composition of demand for tea in the
developed (importing) countries which has had unfavorable effect on aggregate export
earnings from tea. The increasing use of tea bags and soluble instant tea effectively reduces
the quantity of tea needed per cup and also raise the demand for plain cheaper tea. The tea
bags accounts for 10 percent of the volume of world consumption and it is still increasing.
Factors which help to motivate consumption of instant tea include its ease of use as a cold
dink and introduction of vending machines.These changes in the consumption patterns of tea
have also significantly contributed to the decline in tea prices.
d)Defective market structure: The tea value chain comprises all the stages from green leaf
production from the bushes to finished product and sale to the customers. Value is added to the
57
tea leaves at each stages of the supply chain, each with associated cost. This includes the cost of
plucking and sorting, factory packing, internal transportation, ware housing, sales changes
(auction or direct sale), freight,insurance, interest, blending, packaging and retailers sales cost
etc. In general most of the agricultural produces, value addition is done at the downstream in
the higher processing andretail stages of supply chain this is also true with tea. While tea is
ready to drink item, the downstream stages such as blending, packing and ultimate marketing
are the most profitable one.This part of the value chain is controlled by a handful multinational
tea packers and brokers.Concentration is extremely high in the downstream of tea supply chain
where 90 percent of western tea trade is controlled by7(seven) MNC’s,85 percent of world
production is sold by these MNC’s.As a result, these MNCs can considerably influence world
retail price. These are the indications that big companies have been influential in keeping world
market price low, which affect the sustainability of tea industry.
e)Increase in cost of production: While market prices for tea have been falling, the cost of
production has been on the rise in India, putting downward pressure on profitability and
income. One factor which is closely related to the cost of production is, of course, productivity
in terms of volume per hectare which is affected by change in climate, soil fertility, age of the
tea bush,high over-head cost, poor agricultural practices etc. The stagnation in productivity in
many big estates is compounded by high land labour ratio. Productivity declined in India from
1996 to 2008 in the large garden.Labour cost accounts for around 60% of the unit cost of
production and approximately 55 to 75 percent of that labour cost is on plucking. High fuel
cost, dilapidated infrastructure including transportation and unstable law and order situation in
and around garden area etc. result in high cost of production. Field and factory workers’
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productivity is also considered low in India. The impact of social cost (health, food, housing,
water etc.) in the large estates in percentage terms works out to about 5-8percent of the total
costs. It implies an additional Rs.4.12 per kilo for manufactured tea in NE Region of India and
Rs. 3.44 per kilo in South India. Therefore it is assumed that around 80 percent of the cost of
production goes towards fixed expenses like fuel power and labour .Inflationary pressures are
now pushing up these fixed costs further. Labour unrest is another major problem faced by
planter/estates. Looking into the profitability of the industry at the current price, does not
provide the way to meet these costs. Rising costs and low productivity can have negative
consequences on social and environmental aspects of production(sustainability problem), if
these costs cannot be passed on to the ultimate buyer.
Massive costs have been incurred after being converted into organic gardens . Organic
certification represents a big financial investment for plantations.Since it is more labor
intensive,organic farming means production costs increase in return for yields that are generally
smaller.
Faced by the garden
f)Perishable nature of the product:In theory tea is a dried product(manufactured leaves
contain only 3-4 percent water);however it behaves like a fresh product in that it ages badly
.Proper storage facilities are required since it can absorb moisture,any odor quickly. Exposure
to heat can alter the flavour or color of the tea. Disputes arising between auction houses or
warehouses can lead to storage problem in tea gardens during peak seaons of production .
Dispatching should be done properly to avoid any damage . It requires close supervision.
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g) Yield of processed tea which averages around 10 million kgs from about 50,000 acres of tea
gardens in Darjeeling hills is likely to come down which in turn can threaten the livelihood of
over 2 lakhs garden workers. Garden owners may consider using non-organic methods
(chemicals) to retain the production level, but that will certainly degrade the quality of tea and
its world market price.
h)Marketing strategies :Even though decent prices are fetched by the all the tea gardens of
Jayshree Tea and Company ,it still lies behind in terms of Marketing when compared to other
competitors in the Darjeeling like Goodricke Group Limited,Chamong Tea ,and other private
owners .The Darjeeling tea is mainly positioned in the super premium and premium tea
segment hence the marketing needs to be done accordingly .Though it has a strong packaging
and labelling strategy , it is not well marketed in the domestic market yet when compared to
other companies.
i)Snob value of Darjeeling tea :Out of close to 80 tea estates in Darjeeling district, the buyers
are aware of only few gardens that have created a huge brands for themselves. Many others
although produce very high quality Darjeeling tea remain unheard of. More over, people pay
huge premiums to buy the first and second flush teas that are produced in Spring and summer.
60
Some companies with great brands sell even the first and second flush black teas at
astronomical prices (few thousand rupees a kg) and the consumers merrily buy them. This is the
snob value of tea. The fact is during spring and summer, only about 25% of the total tea
production takes place. The bulk of Darjeeling tea is produced during the monsoon time when
there are hardly any takers other than some traditional buyers. And they get away with throw
away prices, sometimes even at a rate below the cost of production. Over the years, the snob
value of Darjeeling tea has been pampered by the gardens to win the race of highest price
commanded. There are awards and certificates given away at the Tea Auction to the brand that
attracts the highest rate. As a result the balancing act has become a great concern.Hence the
future seems to be muddled.
j) Management and labour issues:Darjeeling tea has been plagued by management-labour
problems for several decades. Frequent lock-outs and low wages have been the chief sources of
discontent among the tea garden workers9.Tea estate managements have claimed that profits
from tea estates have diminished over the years, but have been reluctant to make public their
revenue figures, and there has been severe criticism of the tea garden owners and management
for the exploitation of the tea garden workers by social workers and political activists.10
A problem well stated is a problem half-solved. This project throws light on the tea industry,
specially Darjeeling teas . Singbulli Tea Garden has been kept in focus and the outcomes
hopingly will be beneficial for both the garden and the industry for growth and development .
9 "The brew darkens". The Hindu Business Line. Retrieved 9 June 2015.
10 "Wage hike cry by hill, plains tea unions". The Telegraph. Retrieved 9 June 2015.
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CH III : LITERATURE REVIEW
 Chatterjee (2005) conducted a study on the domestic production, domestic consumption
and exports of Indian tea and examined their inter linkages. The study examines possible
reasons for stagnating export volumes of Indian tea industry by analyzing the inter linkages
between production, consumption and exports of tea and also developing export function.
The production function takes only the acreage and price as important variables in the
model. The three models developed for supply, demand and export are analyzed together
using the SUR (Seemingly Unrelated Regression) technique and the correlation between the
disturbances of the three equations are estimated using generalized least squares method.
The results of the study indicated the actual problem faced by India in the competing
globally highlighting the USSR problem as mentioned in the study.
 Thomas & Ahmad (1970) conducted a study on the factors affecting tea production in
Pakistan. The total domestic absorption of tea in Pakistan is regressed with time as the
independent variable and it has been found that there is a steady increase in absorption at the
expense of declining exports. Acreage has been on the rise but tea production does not show
62
an increasing trend. The short run fluctuations in tea production has been analyzed taking
into account factors like rainfall, temperature, Lang‘s factor (rainfall/temperature) and
number of rainy days in a year. The results indicate that the quantity of rainfall is not closely
related to production. On the other hand, rainfall has significant correlation with production
in the not-so-cool months. The Lang‘s factor is found to be conceptually weak and the
number of rainy days is found to have significant correlation with tea production both on a
month-to-month and annual basis.
 Gupta & Dey (2010) conducted a study on the development of productivity measurement
model for tea industry. This study has made an attempt to address the issue of declining
production and unsatisfactory productivity performance of the Indian tea industry. It
proposes a relatively simple productivity measurement model suited to tea industry.
Productivity accounting model is used and suitably given the form so as to fit to a tea
industry. The performance of the model is assessed by applying it to tea industry in Assam
and it has been found that the model is comprehensive and satisfies all the six criteria of
measurement theory such as validity, comparability, completeness, timelines, inclusiveness
and cost-effectiveness. The model also identifies areas of poor resource (labour, material
and energy) utilization responsible for total productivity decline in the tea industry.
 Baten, Kamil & Haque (2009) conducted a study on modeling technical inefficiencies
effects in a stochastic production function for panel data. The inefficiency effects are
assumed to be independently distributed as truncations of normal distributions with constant
variances but with means which are linear functions of observable variables. Panel data is
used in this study to estimate the production frontier and the technical inefficiency effects of
63
tea production using a Stochastic Frontier Analysis (SFA) methodology. The study observes
that Stochastic Frontier Translog Production Function is more preferable compared to
Stochastic Frontier Cobb-Douglas Production Function. The findings suggest that 49%
technical inefficiency exists in tea yield. The null hypotheses, that inefficiency effects are
not stochastic or do not depend on the labor-specific variables and time of observations, is
rejected for these data. This study also reveals that there is a negative relationship between
size and yield.
 Dutta (2011) conducted a study on impact of age and management factors on tea yield and
modeling the influence of leaf area index on yield variations. The study attempts to analyze
the effects of age, pruning and fertilizer application on tea yield and to derive a relation
between yield and tea leaf area index (LAI). The study is motivated by the fact that tea yield
has stagnated in Northeast India. For the purpose at hand, statistical analysis is applied to the
data set collected at the section level of a tea estate from 1999-2007. Tea yield has been
found to be correlated with age, NPK(Nitrogen,Phosphorous,Potassium(K)) applications,
pruning and also leaf area index. Age shows a significant negative effect. Clear negative
effects of N applications could be observed. A significant positive effect of pruning could
also be observed. Stepwise regression confirms that LAI could play an important role in
predicting tea yield.
 Hicks (2009) conducted a study on the current status and future development of global tea
production and tea products to identify the critical challenges faced by the tea industry
globally. It examines the current situation and medium term prospects for production,
consumption and trade of tea and its impact on the world tea market. The following factors
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are taken to be affecting global tea production: weather conditions, planted areas,
population, age of tea bushes, labor, capital, price of inputs and yield risk. The factors taken
to be affecting global consumption are income of the country, quality of the products and
substitutes and complements available, etc.
 According to the provisions in the Tea Act 1953, Tea Board is conducting and
Supporting tea research. The Board is granting financial support (grant-in-aid) to the
Tea research institutes managed by the private sector, namely - Tea Research Association
(TRA) and United Planters’ Association of Southern India – Tea Research
Foundation (UPASI –TRF). Tea Board is also having its own Darjeeling Tea Research
And Development Centre at Kurseong for which full financial support is provided from
the budget of the Board.The details for this has been mentioned in the reform measures .
 Studies on different irrigation systems and critical evaluation of secondary and
micronutrient status in tea soils of South India : The influence of different irrigation
systems on hydrology are being studied at four different regions in South India like central
Travancore, Karnataka, Nilgiris and Wynaad regions. Similarly, studies on the effects of
fertigation with respect to different sources of NPK fertilizers have also been continued.
Metallic contamination in tea and status of secondary micronutrients in soil and made tea are
being looked into. The equipment have been purchased and installed. The samples of soil
and made tea are collected fromdifferent experiments and these are being analyzed in the
laboratory. The pattern of treatment influence on the variable agro conditions could not be
estimated as yet. The scheme will be completed by the end of the 10th Plan.
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 Biotechnological and Bio-control studies on tea blister blight pathogen: Biotechnology
laboratory has been established with modern scientific equipment for undertaking different
biotechnological studies of tea clones. The equipments have been imported and installed.
Methods of DNA extraction and marker identification have been considered. Protocol for
isolation of genomic DNA from fungus spores has been Standardized. Genetic
transformation studies are also being initiated and once the method is standardized, it will
help in the transfer of beneficial marker gene in future breeding works. Related studies in
the characterization of tea clones are in progress. It is expected that the protocol
development will be completed by the end of the plan period when the markers can be
successfully identified and ready for transfer in future breeding works.The micro flora
present on tea leaves has been studied and several antagonists of the blister blight pathogen
are identified. They are being evaluated in the laboratary and field
 Development of catchments-wise integrated drainage system through remote
sensing towards solving water logging problem at macro level pilot area: The outlay of
the scheme is Rs.70 lakhs for 5 years for undertaking studies in pilot areas in Assam and
North Bengal using satellite pictures for hydrology mapping. Drainage relief map for
different catchments in the tea gardens was the ultimate objective of this project for giving
ready information to the garden management so that drainage action plans can be taken up
by them. Implementation of the scheme is being done in a phase manner after procuring
topo sheets from the survey of India office for a number of digital terrains in Assam. Works
are progressing.
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 MRL (Maximum Residue Limit) issues in tea : Fixation of MRL in tea at the national
level and also at the international level is a matter of great concern at the moment since India
is consuming large quantity of tea as well as exporting tea to many countries in the world.
This issue of MRL has come up as nontariff barrier. The scenario is two fold- (i) fixation of
MRLs at the national level to protect the consumers in the domestic sector; and (ii)
international stipulations /regulations/standards fixed by EU and other countries. India is
trying to cope up with the situation in both the fronts generating field data. TRA, UPASI-
TRF and Institute of Himalayan Bioresource and Technology are involved in field
experimentations supported by Tea Board and funded by National Tea Research Foundation.
Data generated at the tea research institutes have been compiled and submitted to the
Ministry of Health for fixation of MRLs at the national level for commercially used
chemicals in tea crop. Such data are under scrutiny at different levels in the Government.
The list of MRL under the PFA (Prevention of Food Adulteration Act) has expanded by
inclusion of new MRLs. This is a continuous process going on, so that new chemicals can be
considered for fixation of MRL. Indian residue data has been formulated for the Codex
Committee on Pesticide Residue under WTO, and based on its recommendation; such data
have been submittedto the Codex proposing MRL. Data for two chemicals namely
Chlorpyriphos and Paraquat have been accepted at the international level for fixing MRL.
More data are under process for submission to Codex.
The process of finalization of the documents was a hard task since all drafts had to
be framed in line with the requirements of the Joint Meeting on Pesticide Residue
(JMPR). This technical body was looking after the workings of the Codex. Follow up
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actions have also been taken as to how to make calculations after data generation for
formulation of MRL. Actions were also taken to interact with the international
organizations of manufacturers of chemicals so that a message could be transmitted to
them for generating residue data for the products they are manufacturing. All such actions
had to be taken through IGG to the member countries.
Circulars, workshops, discussions and special meetings have been arranged during
the year. The messages on the latest stipulations were issued to the tea industry, research
institutes and chemical manufacturers. A number of lectures/presentations on the subject
have been made in different forums. As a result of all such efforts, MRL issue is being
widely publicized along with stipulations. Number of complaints in respect of pesticide
residue issue has come down since the Board has made awareness at all level.
-According to the press release on 09 May 2002, New Delhi
From the review of this exhaustive literature on tea production, it can be seen that although
tea production has been dealt with by many researchers, there seems to be dearth of research
work related to this in India. Considering the importance of tea industry in India, in terms of
income, foreign exchange earnings and being a significant employment provider, it seems
essential to identify factors that significantly impact tea production and model them with the
objective of providing good forecast.
CH IV : OBJECTIVES OF THE PROJECT
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Tea Growing Industry in Darjeeling has immense potential from the points of
both providing employment as well as generating revenue. It can be a lucrative profession
and can play a vital role in improving the socio-economic condition of the economically
backward state. The objectives of the study are :
1.To identify the constraints faced by tea growers in Darjeeling and the loopholes that exist in
the tea industry so asto formulate initiatives or remedies that can be undertaken.
2.To know the market scenario of Darjeeling tea industry in present times .
3.To understand the contribution of tea industry in Indian Economy.
4.To know the reason for negligible domestic demand of Darjeeling tea and the reason it has
not been able to establish itself in Indian Market.
5.To know the level of dependency the Darjeeling tea has on its exports and its marketing to
International markets.
6.To know the scenario of World’s tea market(in respect to orthodox and other Darjeeling
produced teas) .
7.To suggest measures after considering the drawbacks faced by the garden – Singbulli .
CH V : RESEARCH METHODOLOGY
69
RESEARCH DESIGN
Research design for the project is Descriptive in nature. A descriptive research design is the one
which is description of the state of affairs as it exists at present. It includes survey and fact
finding enquiries of different kinds. The researcher has no control over the variables. In it
detailed study of the awareness of brand among customers, market scenario of Darjeeling tea in
both domestic and international market will be done. The information will be collected with the
help of an unbiased, non-disguised and structured questionnaire.
a) Qualitative Research
 Interaction with the tea tasters while interning at J.Thomas & Co Pvt Ltd.
 Face to face communication with Darjeeling tea garden executives.
b)Quantitative Research
 Questionnaires
 Annual reports and statistics
DATA COLLECTION METHOD AND SOURCES
a)Primary data
 Ethnography
 Observations
 Figures of the garden taken from the tea garden itself
 Statistics and figures collected from J.Thomas & Pvt Co Ltd (collected during internship)
70
 Interaction with the manangement team of J.Thomas & Pvt Co Ltd while doing the
internship.
b)Secondary data
 Books and e-journals
 Data collected from various websites
 Reports published by the various research organizations.
DATA ANALYSIS
After collecting the data, data analysis was done in which use of graph, charts and tables and
many other statistical tools were taken to do the analysis of the present situation.
CH VI : ANALYSIS
CH VII : FINDINGS AND OBSERVATIONS
CH VIII : RECOMMENDATIONS FOR IMPROVEMENT
Along with the reform measures undertaken in the XII plan as published by Tea Board of India
, the tea gardens can improve,develop,strategize and survive in the market .
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A)Proper training and development : An intermediary which is tea professional tea taster is
needed in this field , who uses his /her expertise to evaluate thousand of teas every year . This
skill can only be acquired after a long and absorbing apprenticeship . Proper guidance can be
provided to the amateurs who enter into the tea tasting field but it depends upon the ability of a
person to develop a taste . It has been observed that tasting of Darjeeling teas is the most
difficult task as the opinions are subjective.
In countries like France there are schools that provide proper training .One of the renowned
being Le Palais des Thés . The Tea School was created in 1999, 13 years after the first Le Palais
des Thés shop. François-Xavier Delmas learned the tea business in the gardens and plantations,
while talking to farmers and small producers. His travels took him to increasingly remote tea
producing regions, providing him with exceptional experiences and discoveries, as well as
images and words. Valuable relations were formed with artisan tea producers, and François-
Xavier gradually built up a unique and extensive knowledge derived from many different
sources.
In India this profession seeks to have low demand in the industry . Even if people opt for this
career they lack practical knowledge as the tea tasters are unaware of the garden situations.
B)Unlike its key competitors, India does not have any powerful brand to support its promotion
drive in the international market. To win back the confidence of lost foreign markets, Indian tea
producers have to identify the need to revitalize the image of Indian tea in that international
market. A vigorous campaign which include Indian tea logos and making Indian brands
acceptable in those most major markets.
72
C)There is an urgent need for reducing the unit cost of production through productivity gains,
capacity building of small growers, streamlining marketing channels, improving infrastructure,
tailoring marketing activities to individual country’s demand, propagating health benefits of tea
and promotion of organic tea using the tea mark. This is exactly what the domestic
tea companies should do for their long term survival.
D)International brands like Liptons, Brooke Bond of HUL and Tetley tea of Tata Tea; and
Wagh Bakri Chai etc are the market leaders and have great power in price determination in both
domestic and international market. This needs to be stopped and proper investigation is needed
to curb the wrong practices in the tea market by introducing new laws to regulate the price
movements. Lack of innovation and creativity : Indian tea industry lacks behind in innovation
and creating new ideas on how to sell their product in the market . With the emerging trends
,green tea in India is slowly coming into demand for its health benefits .
E)Improvement of supply chain management inside the country and global tea marketing
network is absolutely essential to compete with countries such as China and Sri Lanka who are
India’s biggest competitors.
F)The tea industry in India has a legacy of corporate farming right from the day of
Britishrule. The current situation in the sector has given ample reason for a rethink on
whether corporate farming can really boost agriculture. Time has come when tea
companiesshould sell out their large estates to farmers for cultivation, for ensuring
morecompetitiveness and make the industry viable. This will reduce production
costs also. Inreturn big companies should enter into contract with tea growers by giving them
technicaland marketing support and all that is needed for backward and forward linkages.
73
Indianfarmers have done wonders by ushering in the green revolution and ensuring
foodsecurity in this country. They will replicate the same in the tea sector also.
G)As it is observed, retail price of tea have not declined when prices at the local auction centers
have fallen so dramatically since 1990’s, noting the larger profit by the packers/retailers who
are mostly at the end of the value chain. The issue here is the role played by these companies in
their own plantation, implications of direct purchases by them from other growers and their
relationship with brokers at the tea auctions, where price manipulation is widely
suspected. These defects at the auction centres should be investigated and remedial measures
like bringing more transparency at the auction market; introduction of online auction practices
for tea, etc. should be taken which will lead to changes in the structure of tea auctions to limit
the manipulation by the big players in the industry.
H)Despite being the largest producer and consumer of tea, the Indian plantation sector lacks
appropriate mapping of production and consumption levels. Due to absence of accurate
estimates the formulation of long term industry wide action plans have been affected.Hence in
order to rectify this an the Tea board of India must set up a committee to keep a check on this
issue.
I) It has been observed that the actual producer of tea has no direct link with the ultimate
consumer. Tea producers sell their products to the bulk purchaser through direct sale or through
auction to big buyers. Therefore, the producers do not understand the market demand choice of
the customer, it is very important in today’s market economy for long term sustainability of the
industry. With the withdrawal of sales restriction, the growers can directly go to the market by
74
building their own brand. As the margin of profit is very high at the present domestic retail
market, Indian tea growers should invest and take this opportunity for the promotion of their
brand at the retail market and also by reducing the prices of tea and passing on this benefit to
the customers.
J)Fresh capital inflow is needed right at this moment for the tea industry of India.Investment in
new plantations and production machineries must come immediately to compete in the
international market. Since tea industry has to compete globally, it is necessary that they should
have access to global capital at competitive rate. This can bring life to the industry and those
who live on it, especially worker.
K)Recognizing the fact that the tea industry’s crisis in India has multiple causes, which require
a variety of solutions-one of the most important steps from the government part shall be to
introduce a stronger competition law to curb the misuse of corporate buying power and promote
social objectives at the garden level. I believe that focusing on the role of the larger tea
companies, which hold a great deal of power in Indian tea market can have a significant
influence over conditions for workers on plantations and small growers.
L)Technological Advancement: Continuous reforms have been made in the field of technology.
With the arising labour shortage problems the garden could go ahead with capital intensive
measures. Some of them are:
1.Quality up-gradation of Black Tea by Online Monitoring of Processing.
2. Application of Sensors for quality Assessment of tea and on-line Monitoring of
Process Volatiles.
75
3. Information Technology (IT) Anchored Solutions for Black Tea Manufacturing and
Quality Assessment.
M) Awareness among the consumers regarding health benefits:People should be made aware of
the health benefits that they can derive after consuming Darjeeling tea. We have heard that tea
is good for our health. Hard to believe that something as simple as tea can actually keep man in
good health. Research suggests that tea drinkers have lower rates of heart disease and cancer. It
may promote healthy bones in mature women. And, tea can give the man the lift that he wants
from caffeine without the negative side-effects .According to the scientists of Human Nutrition
Department of a government research centre at Adelaide in Australia, tea effectively shields
skin from cancer-causing ultraviolet rays. High exposure to sun's ultraviolet rays generates free
radical oxygen atoms that mutate the genetic code of skin cells and makes them cancerous. The
antioxidants present in tea deter this process. These anti-oxidants also help in fighting ageing
.According to studies conducted by UPASI in India, tea helps in controlling diabetes
andhyper cholesterol in humans. On a short-term basis the consumption of tea improves
alertness. Hindustan Lever has set up a tea health information research centre at Bangalore to
gather scientific data from all over the world about the role of tea in improving health
andidentification of components in tea which are good for human health.Following are the
diseases that can be prevent from drinking the cup of tea:
1. Heart Disease
2. Cancer
3. Healthy Bones
Hence these facts should be passed on to the consumers .
76
N)Exploiting the market with new blends of tea :
INSTANT TEA
Indian producers of instant tea have failed to create any market for Darjeeling tea in India.
At present, instant tea is being used in soft drinks in some western countries and is consumed to
some extent in the South Asia Pacific Rim region. In India it is being produced by Tata Tea at
Munnar in Kerala, Nestle in Gudalur in Tamil Nadu, Hindustan Lever at Etah in Uttar Pradesh
and by Goodricke Group at Dooars in West Bengal. Tata Tea has a capacity of 2.27million kg
per annum. The other 2 companies having large capacity in the world are Lipton and Tetley.
The production of instant tea bagan in the world in 1962. Its commercial exports started in 1967
to the US markets.In late 1997, Tata Tea had captured 15-18 per cent of the US instant tea
market. Snapple and Coco-Cola, two beverage companies in the US were major users of Tata’s
instant tea in their iced tea beverage. The company also exports instant tea to Europe, Japan and
to a lesser extent to Australia. At present there are only 12 factories in the world which
manufacture instant tea. Of these 5 are located in India alone (Tata, Nestle, Tetley, Lipton and
Goodricke).In the US iced tea is marketed in some 52 flavor and competes directly with cola.
While the market for iced tea is growing at 8-10 per cent that for cola is growing at the rate of
only 1-2 per cent in the US. The world market for instant tea is estimated at 30 million lb of
which, the US alone accounts for 20 million and the Europe 4 million.
O)Tapping the other potential segments and promoting tea in the market: The young generation
is an untapped market segment which is highly potential .More initiatives should be taken to
market the product .For example,
77
Tea Carnivals – Chai Ho Jaye was organised at Gurgaon and Ahmedabad in August &
September 2014 respectively by the members of Indian Tea Association .While tea production
has not increased from the corporate sector, it has been continuously increasing from the bought
leaf sector. In order to sustain this increase in production, it is imperative for the consumption
to continue to grow well beyond the 730kg per capita currently, which is below some of the
neighbouring countries.Whilst tea consumption in India has grown on the back of the
increasing population it is now vital for us to grow the category by reaching out to the youth
and by tapping into the variety of tea servings that can make the drink as exciting and appealing
as any other beverage.Considering overwhelming response in B2B & B2C, the Association in
consultation with Tea Board had decided to take forward the Tea Carnival to the target section
i.e. Youth through B2Y (Business to Youth). Accordingly some Agencies had been consulted
and decided to participate at certain College Fests in different cities. In the 1st Phase 8 colleges
in Delhi NCR, Chandigarh & Kolkata participated through interaction with the college
students, sampling/showcasing various types of Indian teas, tea mocktails, their preparations,
etc. After scrutinising all proposals the Tea Promotion Technical Committee had finally
selected M/s Entertainment Network (India) Ltd (Brand-RadioMirchi) for execution of this
B2Y Tea Carnival. Radio Mirchi broadcasted about this B2Y Tea Carnival for 4 days prior to
& during each college event in local language.11
11 INDIAN TEA ASSOCIATION,2015; ROAD SHOW : CHAI HO JAYE TEA PROMOTION CAMPAIGN: B2Y
78
CH IX : CONCLUSION
Calcutta,India(Siliguri,Dec 7, 2016)
Tea trade unions today said the Centre and the RBI should first take steps to develop banking infrastructure in
all tea estates of north Bengal and then move ahead to send workers' wages to their bank accounts.Trade union
leaders, who held a meeting here yesterday, said most of the workers will lose a day's earning just because they
will have to go to a bank several kilometres away to withdraw their wages.
"A worker will have to spend six-seven hours to get his money from a bank. This means he cannot do his day's
work in the garden and will lose the wage. The Centre has not spelt anything out on this issue so far and
workers are confused. Also, unless the banks set up infrastructure in tea estates, the rate of absenteeism is likely
to climb, posing a fresh problem for the industry," Mani Kumar Darnal, the joint general secretary of Intuc-
backed National Union of Plantation Workers, said.
"The situation is no different in the Darjeeling hills. Many tea estates are in remote areas and workers will have
to travel at least four to five kilometres uphill to reach a bank," a senior trade union leader based in Siliguri
said.
The RBI had recently issued a directive that tea workers should have bank accounts where their wages would
be transferred. This has complicated the situation, mentioned the trade union leaders.
79
Since the Centre has taken up the task of demonetisation, this is the first time that tea trade unions have openly
started opposing the directives made by the RBI on payment of tea wages.
A meeting among stakeholders of the tea industry along with senior bank officials is imminent, tea planters
said.
This dissertation aims to find out the various factors that influence the Darjeeling tea
production(with the help of an example of tea garden ) like the domestic market consumption,
market size, exports and imports, sales and export price of tea and many other factors. Like
stated in the above extract , the economic reforms can be brought to the industry to revive itself
from the effect of demonetization .
Tea is a major crop which is produced and exported in India. It helps a lot in gaining
foreign exchange. This study has tried to identify the various factors that cause fluctuations in
the tea industry.
CH X : SCOPE OF FURTHER STUDY
The Indian Darjeeling as well as other tea industry is likely to face stagnation in the years to
come. The industry is currently facing export stagnation too. However, the demand for Tea in
the domestic market is growing, hence leading to an increase in imports. The Darjeeling Tea
industry of India, being an export oriented industry, now needs to focus on new and improved
production methods and export oriented production and also cater to the needs of the domestic
market size in the global population can lead to an increase the consumption of Tea. The
production must be increased. The industry can also innovate by adding flavors of Tea to gain
footage in the global markets. A study on how to reduce the cost of production can be done to
80
meet globally competitive prices of Tea. Moreover solutions can be brought up by the
government to promote Darjeelin tea worldwide. Economic stability can be provided by
technological advancements and other economic reforms. The conclusion derived from this
project is of great significance and thus can be used for reference for future projects.
CH XI : LIMITATIONS OF THE PROJECT
 Availability of relevant data was also a slight problem.
 Although an extensive study has been made regarding the production potential of the Indian
Tea. Certain areas have been omitted from the detail study of this project. The reason for the
lack such a detailed study has been omitted due to a scarcity in time and also that the study
of the topic is also limitless. In India Tea is sold either through auctions or privately.
 The figures of the data used are auction houses data. The private sales data is not available.
Every company has to be contacted separately to know at what rate they brought Tea.
81
 Also the quantitative data was not easily found as a result of which justice could not be done
to some of the points. Moreover the data that was found was found in terms of quantity and
not in terms of value
 Detailed research cannot be conducted due to time constraint.
 The scope of the study is limited to a particular area.
 Frequent changes in the market trend and consumer preferences.
 Respondents may not provide full and accurate information during survey.
 Internship was done during the month of November to December which is the off season for
Darjeeling tea , hence the information gathered wasn’t sufficient to understand the whole
functioning of the market .
CH XII : BIBLIOGRAPHY
WEBSITES:
http://jayshreetea.in
https://www.thunderbolttea.com/pages/darjeeling_tea_plucking_season.html
http://www.ibef.org/exports/indian-tea-industry.aspx
https://www.cbi.eu/market-information/tea/buyer-requirements/
www.foodsafetymanagement.info/.../65-HACCP_Certification_Scheme_June_2012.pdf
http://www.imocontrol.in/
https://www.ams.usda.gov/services/organic-certification/benefits
http://www.cybex.in/india-exports-data/Darjeeling-Tea-Exports.aspx
82
http://www.thehindubusinessline.com/blink/cover/the-brew-darkens/article6963043.ece
http://www.business-standard.com
http://economictimes.indiatimes.com
https://www.darjeeling-tourism.com
https://www.cbi.eu
http://apeda.gov.in
http://www.cybex.in
http://www.thehindubusinessline.com
http://timesofindia.indiatimes.com
http://www.teaboard.gov.in
http://www.tocklai.net/
http://dashboard-commerce.gov.in
CH XIII: APPENDIX
83

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Study on Tea Industry : Singbulli Tea Estate

A. A) Singbulli Tea Estate

B. B) Varieties of Darjeeling Tea

C. C) Grades of Darjeeling Tea

D)Types of tea produced in

Chapter I. F)How the tea is brought into the

G)Economics of Tea Trade

H) Present Tea Industry in

1.Key markets and export

J) Factors affecting yield

K) Government rules and

M)Reform measures in tea sector

Chapter II. Nature of Problem

Chapter III. Literature Review

Chapter IV. Objective of the project

Chapter V. Research Methodology

Chapter VI. Analysis

Chapter VII. Findings and Observations

Chapter VIII. Recommendations for

Chapter X. Scope of further study

Chapter XI. Limitations of the project

Chapter XII. Bibliography

Chapter XIII. Appendix

Industries Limited in 2003.

on account of the year 2016’s figures):

SEASONS MONTHS PERCENTAGE AVERAGE HIGHEST LOWEST

-Singbulli Tea Estate figures as in 2016

B) Varieties of Darjeeling Tea available

Tea provides with this range of teas in general:

1.Darjeeling Black Tea

a. Darjeeling First Flush “Classic”

c. Darjeeling Second Flush “Classic”

2.Darjeeling Oolong Tea

3.Darjeeling White Tea

4.Darjeeling Green Tea

5.Darjeeling Organic Tea

C) Grades of Darjeeling Tea

Whole leaf : fetches the best prices due to its quality

 FTGFOP: Fine Tippy Golden Flowery Orange Pekoe

 TGFOP: Tippy Golden Flowery Orange Pekoe

less price than whole leaf

 FTGBOP: Fine Tippy Golden Broken Orange Pekoe

 TGBOP: Tippy Golden Broken Orange Pekoe

 FBOP: Flowery Broken Orange Pekoe

 BOP: Broken Orange Pekoe

usually used in the market for creating blends .

 GFOF: Golden Flowery Orange Fannings

 GOF: Golden Orange Fannings

than whole leaf teas.

D) Types of tea produced in Singbulli Tea Estate

 Organic Black tea

 Organic Green Tea

 Exclusive Teas like SFTGFOP1 RUBY

Plucking tea leaves from the gardens

be met to get full daily wage.

Darjeeling are done mostly by Nepali women.

Sorting & Packing

sizes (full leaves, broken, fanning and dust).

F) How the tea is brought into the market

Parties to the industry

 Green leaf Growers

 BLFs (bought leaf factories)

consultancy division.It is a private limited company, it is uniquely structured where only