Tea Industry in the Global Economy

Tea is not only a drink, but in many countries in the world is also an important economic factor. In 2002 the blue planet produced 3.02m tons of tea (a year earlier just under 3m tons). It is the most popular drink in the world after water. Consumption keeps on rising, in both developed and developing countries.

In production areas cultivating and processing tea is usually a key sector of the economy. One example is Sri Lanka, where the tea industry is the largest provider of employment opportunities. It employs approximately 800,000 people out of a total number of 19,000,000.

Tea production is also important for India, which hs an annual production of 830,000 tons, making it the world’s leading cultivator. The tea plant grows in approximately 30 countries in Asia, Africa and South America. The relationships between internal consumption and export are very different in these countries.

Whereas Sri Lanka exports around 90% of production, thanks to high domestic demand India and China only export 22% and 35% respectively of the total processed tea crop. However, before green tea or another product appears on shop shelves, it has to take a very long journey; you will find the basic information about this issue in this article.

From Tea Plant to Consumer

Harvested and processed tea is usually sold in weekly cycles. The largest part of tea production is offered at auction for a local production area. This rule does not only apply to exported tea, but also to tea consumed in the country of origin. Only occasionally is tea directly exported (contracts with a specific plantation). These cases mostly concern the export of high-quality tea, which is available only in a limited quantity.

When sold at auction the tea arrives from the plantation to a broker, who processes it based on contracts with the relevant government or tea office. Brokers assemble the tea for current auctions into individual lots, which are always marked with a certain leaf size and certain quantity.

A typical lot comprises 20 or 40 units of 50kg or 60kg. Brokers assess the quality of each unit on offer and give their valuations. A sufficient time before the start of the auction they send a sample of all the teas offered to companies that are registered at the auction as buyers. Brokers participate in the auction themselves as auctioneers. In return for this service they receive a 0.5-1% commission. Six weeks passes between production and sale.

The most important role in the decision what tea will be selected is played by a tea-taster. The individual samples are compared by a certain quantity of tea being poured into special testing cups (usually around 2.8g); 150ml of boiling water is then poured on them and the tea is left to steep for five minutes (this is the procedure for black tea). The tea-taster then rates the individual qualities of the finished tea: primarily aroma, colour and taste. Using their refined smell and trained taste they choose the batches that have the required qualities.

The procedure is similar for the creation of new blends. It is necessary to choose teas for a blend that, in the final product, provide the expected result. For this purpose manual samples of tea blends are mixed or the purpose on very sensitive scales. The result is registered as a finished recipe. Such a blend is called a standard. It is usually designated with a certain number.

If there is a lot of demand there is usually a joint offer by multiple sellers, who divide the quantity offered between them. The seller buys teas in a ratio so that it achieves, as far as possible, always the same quality in the finished blend. If a certain part of a blend is not on the market or is available at too high a price, the tea-taster tries to blend in a similar or very close quality. Blending, aromatising and packaging finished teas is performed mostly in the countries of consumption.

Social Situation on Tea Plantations using Example of India

India is the largest producer of tea in the world. Of India’s population of 960m, a full 2m are employed in the tea industry. Tea is an important economic factor for India. In 1951, a few years after the declaration of Indian independence, the Plantations Labour Act set out the basic rights of tea-pickers.

Since then their working conditions have got better and better, so today the tea industry is, in social terms, doing relatively well in the Indian economy. Pickers get a fixed salary for a pre-set harvested quantity. In addition, each kilogram is rewarded in the form of a bonus. There is a 100% bonus for overtime. Pickers are entitled to maternity leave.

Large plantation companies even offer workers medical care, subsidised food and fuel for heating, or subsidised housing. Employees on thousands of smaller plantations can only dream of this.

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