Unlocking Nepal's Tea Potential

  7 min 26 sec to read
Unlocking Nepal's Tea Potential

BY Rajendra Prasad Adhikary

Although numerous seminars and conclaves are held on a regular basis to strategize and implement modern, mechanised, and commercial farming practices aimed at improving Nepal's agro-economic status, there is a conspicuous absence of programs focused on enhancing the quantity and quality of Nepali tea for the international market. Every year, a significant portion of the agricultural budget is allocated to convening experts for discussions in luxurious star hotels, accompanied by high-tea parties. However, no substantial policy programs have been introduced to promote and expedite the utilisation of our traditional tea expertise on the global stage.

This indifference to recognizing tea as a high-value cash crop may be attributed to its presence in the country as an inexpensive and ubiquitous refreshment. Policymakers may have failed to identify its potential as a local source material for the thriving global tea industry which could generate local employment opportunities.

Taking a cue from the success of Darjeeling tea, which gained widespread popularity when the British East India Company branded it according to its place of origin, it is important to acknowledge that high-altitude Nepali tea products, with their unique characteristics, could become a highly sought-after product by tea enthusiasts worldwide. Given that tea can be enjoyed in both cold and hot variations, its potential to reach every corner of the globe and appeal to a diverse range of people is considerable.

The early references to drinking tea originate in China centuries ago. Today, tea has become a versatile and beloved beverage around the world. Its aromatic and distinctive taste has made it an indispensable drink, served not only in restaurants before and after meals but also at high-level tea parties attended by tea connoisseurs and international leaders at luxury hotels worldwide.

Tea cultivation in Nepal began nearly 150 years ago in the eastern district of Ilam and has since expanded to 30 districts in the eastern and central regions, covering approximately 20,000 hectares of land. The origins of Nepali tea can be traced back to 1873 when Prime Minister Junga Bahadur Rana, inspired by his experience of drinking tea as a guest of the British Empire in India, tasked his son-in-law Gagaraj Singh Thapa with establishing the Ilam and Soktim tea estates. The tea plant used was the Camellia Sinensis of Chinese origin, which produces a central bud and two adjoining leaves three times a year – in spring, followed by the monsoon and autumn seasons. These tender leaves, once plucked and processed in dry roller machines, transform into high-quality tea leaves ready to be packed and shipped to various corners of the world, where people savour its rich and aromatic flavour in both hot and cold brews.

According to records from the National Tea and Coffee Development Board, the tea production for the fiscal year 2021/22 reached 26,380 tons, marking a 3,000-ton increase compared to the previous year. This boost in productivity, accompanied by export growth, indicates that the tea industry is now earning foreign exchange, having nearly met domestic demand. Data shows Nepal exported tea worth $23 million in the first nine months of the 2022/23.

However, the Nepali tea industry faces challenges due to a heavy dependence on the Indian market and the southern neighbour's reluctance to accept packaged tea that does not conform to Indian standards. Although Nepal produces both CTC and Orthodox varieties of tea to target the national market and meet India's demand, Nepali tea has found its way into countries such as China, Japan, Germany, the USA, and Australia, with the Middle East and Russia joining the list of new destinations thanks to improved connectivity and growing international recognition.

Sri Lanka is the fourth largest tea producer and the largest producer of orthodox tea among tea-producing countries. The island nation's success in achieving this status is attributed to their commitment to quality compliance with ISO standards, as they adopt Good Agricultural Practices (GAP) and Good Manufacturing Practices (GMP). Nepali tea products, too, have the potential to gain a special status as a highland product and can compete effectively with other tea producers, especially on flatlands, once they establish their brand name in alignment with the internationally accepted ISO quality control standards.

In addition to the collective efforts of tea growers and manufacturers in ensuring precise quality control, the practice of incorporating a traceability system in the form of QR codes is essential. This system provides consumers with comprehensive information about how and where the tea is grown, processed, and packaged, including the geographical location of the tea garden and the quality control methods employed. This level of transparency assures consumers of the reliability of tea producers throughout the entire journey from the tea garden to their cup.

A model auction, conducted in the Kanyam tea estate in Ilam in April of this year, showcased the global market potential of high-quality Nepali tea. The auction garnered substantial values, with a kilogram of Nepali orthodox tea fetching prices of up to Rs 10,000. Importantly, the event witnessed enthusiastic participation from traders of the US, Japan, China, and Russia, underscoring the immense market opportunities for the Nepali tea industry in major economies.

Sri Lanka, which caters to nearly six percent of global tea demand, recently transitioned to an e-auction system to set the base price at the factory. Since the onset of the COVID-19 pandemic, the traditional 137-year-old outcry auction conducted in the physical presence of traders has evolved into a digital auction system. Nepali tea manufacturers can gain significant commercial value for their products by integrating the auction system into the tea export chain. The e-auction system successfully adopted by tea estates in Sri Lanka can serve as a model to establish the primary unit cost of tea grown in remote hilly regions in Nepal.

Tea, among all other agricultural cash crops, stands out as a high-value product that can be efficiently transported to the global market within a compact package. Furthermore, the footprint of tea estates and processing factories is environmentally friendly, leaving a negligible carbon footprint. Tea industry has the potential to create employment across various sectors, including labour-intensive tasks such as tea farming and harvesting, as well as packaging, processing, and transportation. Additionally, high-skilled service jobs are available in the realms of digital marketing and IT-based e-auctions. In essence, a tea estate is a comprehensive national industry with a wide range of benefits, including the use of locally generated hydroelectricity, the promotion of hill slope stability through lush tea shrubs, and employment opportunities for the youth, from the farm to the factory outlet. Immediate policy-level support is required to eliminate existing hindrances obstructing the growth of tea estates and to encourage a shift in the government's approach towards providing economic subsidies for tea farming, thereby ensuring the continued growth and success of the tea industry.

The 1,818-kilometre Mid-Hills Highway Project, spanning from Phidim of Panchthar in the east to Jhulagahat of Baitadi in the west and crossing 26 hilly districts across the country, demands significant investment. However, the financial investment in this project can only be justified if there is a substantial agricultural yield to be sold. Among all the cash crops that can be grown in the hills, tea plantations can be extended to both hill slopes and valleys, ensuring the perpetual operation of tea estates and processing and packaging factories. With a focused plan and program, similar to how the government turned our nation from an electricity-deficient country into an electricity-selling one, a highland cash crop program that is climatically viable across the hills of Nepal can transform erosion-prone barren slopes into prosperous and productive tea zones.

It, however, is necessary to establish a lasting connection between tea estates and educational institutions. This not only hones students' theoretical knowledge before they enter the tea business in their careers but also allows them to learn about the technical knowledge and modern practices being employed by tea industries worldwide as part of their academic syllabus. The ignorance of policymakers regarding the significance of tea estates as labour-intensive industries producing highly value-added commodities for global export has led to the fragmentation of old tea estates into housing colonies. While the real estate business may generate short-term revenue benefits by sacrificing the long-term economic viability of these estates, it is essential to recognize that a hectare of fully grown tea plants can provide tea leaves for over 100 years, and subsequently, the tea processing industry can employ numerous youth for as long as tea leaves continue to grow on the farm. Forward-thinking planners should prioritise evaluating the economic value from the perspective of sustained revenue growth and the pressing need to engage the youth in their national tea industry. 

(Adhikary is an engineer and served Nepal government in various high level capacities.)

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