Tea from Camellia sinesis, is the most widely consumed non-alcoholic beverage in the world and an important commodity for several developing countries (Martin, 2007 and Macfarlane et al., 2004). In South Asian nations, the tea industry generates employment opportunities and export earnings. There are more than 35 countries in the world that are recognized to be top tea producers, and four countries from South Asia were among the top 20 countries, namely: India, Sri Lanka, Bangladesh, and Nepal (FAO, 2009). This would indicate the great potential of the region as key player in international tea industry.

World tea production (black, green and instant tea) increased significantly by 4.2 percent to 4.1 million tons in 2010. Black tea output increased by 5.5 percent in response to record prices while green tea output increased by 1.9 percent (FAO, 2012).Tea producers in Asia, especially South Asian nations, have experienced a steady growth in production in recent years. In the last decade from 2000 to 2010 India and Sri Lanka are among the three largest black tea producing countries. India is the world’s largest black tea producing country.

Nepal has a high potential to expand its tea production similar to neighboring countries in South Asia because it possess favorable climatic and soil conditions suitable for tea gardening. Nepal, home to the Himalayas and some of the world’s tallest mountains, including Mt. Everest, is generally classified into three geographical regions namely the mountains, the hills and the plains. The country is characterized by distinct bedrock, geology, climate and hydrology. Moreover, only 20% of the country’s lands, which lie mainly in the plains and hills of the districts of Ilam, Taplejung, Panchthar and Dhankuta, are appreciably arable. Although the eastern hills are often rugged and require extensive irrigation and terracing, 10% of this area represents some of the most fertile, rain-rich and arable soil in the country. The Ilam district, for instance, has an average of between 1,500 millimeters (mm) to 1,800 mm of rainfall annually. The Nepalese government, local producers of tea and several concerned international partners have provided special concern on environmental issues. They have prioritized environmental concerns to assure that these issues are seared into the fabric of the country’s development strategy. These concerned parties are committed to implementing environmentally friendly technologies and farming practices. Measures are taken to preserve the nitrate and nitrogen content of the soil and thereby maintain a sustainable environment for tea farming (WIPO, 2014). In fact, Nepal ranks 25th in the world in terms of bio-diversity and has a total land area of 147,181 square kilometers. It has an agricultural land area of about 42,500 square kilometers. Currently, Nepal tea production is around 18.3 million kilograms from 18000 hectares and has provided employment to 100 thousand people (NTCDB, 2013). Accordingly, it is estimated by the Association of Himalayan Orthodox Tea Producers that Nepal has only utilized 20% of its potential lands suitable for tea production.

Nepalese tea is well known for three kinds of high quality tea such as green tea, white tea and black tea. The green tea, which is minimally oxidized or fermented, is made solely from the leaves of camellia sinensis. The white tea, which is allowed to wither under natural light then processed to prevent oxidization or further fermentation, is made from the young buds and leaves of camellia sinensis. Similarly, the black tea, which is allowed to fully oxidize and is therefore stronger than other teas and contains more caffeine, is usually made of camellia sinensis. Nepal tea is characterized by two types, the orthodox tea and the “Crush-Tear, and Curl” (CTC) tea. More specifically, the orthodox tea in Nepal is characterized by four flushes (NTDCLTD, 2011) namely, (a) first flush, which is considered to be more expensive because of its light and delicate flavor, begins in the fourth week of March and continues until the end of April. The leaves are tender and the liquor is light yellowish green in color, having a delicate taste with subtle aroma and flavor. (b) Second flush, starts during the second week of May and lasts until the last week of July. In the second flush the leaves gain more strength and exhibit the main characteristics of tea in contrast to the first flush tea. (c) Monsoon flush, which due to the continuous rain exhibits a very intense and dark fusion as the tea develops its full color and strength, resulting into a full bodied tea, also referred as "Rainy tea" begins immediately after the second flush, that is around the last week of July and continues until the end of September. (d) Autumn flush, usually begins in October and lasts until the end of November. The autumn tea gives a fantastic combination of musky flavors, tangy aromas and amber liquor. CTC tea is produced in lower altitudes in the fertile plains of Nepal, which are warm and humid, Jhapa in special that is known to be an ideal district for the production and processing of CTC tea. The CTC tea produced in Nepal, which accounts for almost 95% of the domestic consumption, is known to be of average quality. The Nepal CTC tea is also characterized by four pronounced flushes, the First, Second, Monsoon and Autumn flushes, but unlike the orthodox tea, the CTC tea is more or less uniform throughout, often exhibiting a strong color and subtle aroma after infusion. However, the flushes do not begin and end in accordance with that of the orthodox tea, mainly because of the difference in the geographical and topographical conditions (WIPO, 2014).

To augment the tea production and trade in Nepal and the South Asian region, this study was conducted to analyze the international trade of South Asian tea industries with special emphasis on the emerging Nepalese tea industry. This paper reviewed the status of tea production, consumption and exports in South Asian nations, and compared the strengths and weaknesses of each South Asian countries. The objective is to analyze the trends of production, consumption and export in/from Nepal, compare it with other South Asian nations and identify opportunities and threats of the industry in the near future.

Materials and Methods

This study was conducted based on data collected from extensive literatures on international tea production and trade behavior for agricultural products from South Asia. In order to grasp Nepalese foreign tea trade behavior and its long term significance in national development, data from 1994/95 to 2011/12 has been collected from Nepal Rastrya Bank (NRB) and Central Bureau of Statistics (CBS). This study covers most of South Asia’s tea producing countries in regards with tea production, export, contribution, etc. Secondary data were collected to assert those that have already been provided. Major facts and figures in this study have been obtained from the published literatures of FAO, World Bank, National Tea Boards of India, Sri Lanka and Bangladesh, National Tea and Coffee Development Board (NTCDB) of Nepal, Agricultural Ministry tea resources of concerned countries, and various national and international reliable online sources.. Statistical methods such as central measure or average and percentage have been used in this study.

Results

Brief history of tea production in South Asia and Nepal

Chinese Emperor, Shan Nong first discovered evergreen tea plant in China in 2737 B.C. Tea plants are considered to be the native of East and South Asia, specifically along the regions of Northeast India, North Burma and Southwest China (Yamamoto et al., 1997). Black tea consumed in all countries has 97 percent share of total world production whereas green tea, which is especially cultivated in China and Japan. has only 3 percent share (ERF, 1985). The British introduced tea culture in South Asian nations namely India and Ceylon (now named Sri Lanka) using seeds from China at first and later from the clonal Assam in 1836 and 1867 respectively. Only black tea was produced until recent decades (Tea, 2008). India, the largest tea consumer worldwide, has a per-capita consumption of 750 grams per year (TBI, 2013), where tea plantation thrives in the regions of Assam, Darjeeling, Dooars and Nilgiris. According to the Tea Board of India, there are 86 tea estates in Darjeeling that produce a total of around 10 million kilograms of tea annually. Whereas Sri Lanka, the fourth biggest tea producing country has a production share of 9 percent worldwide. World recognized Ceylon tea from Sri Lanka continued its success in international market up to the 21st century. In 2001, despite setbacks on tea industry Sri Lanka retained its position as the world's top tea exporter by selling a record 294 million kilograms (648.2 million lbs) compared to 288 million kilograms (634.9 million lbs) in 2000. The total land area for tea cultivation has been assessed at approximately 187,309 hectares (STB, 2013). Pakistan, ranking as the third largest importer of tea in the world has consumed as much as 109,000 tonnes of tea in 2003, placing it as the seventh largest tea-consuming country in the world (FAO, 2005). Bangladesh having 163 large and small tea gardens produces a huge amount of tea every year and is one of the top tea exporters. Nearly 300 thousand workers are employed on the tea estates of which over 75 percent are women. Employers prefer to engage women for tea estates since they do a better job and are paid less than men. Bangladesh produces 60 million kilograms of tea every year, with almost 95% consumed domestically where tea consumption rises by 4.5 percent annually, in line with steady economic growth.

Nepal, a beautiful Himalayan and landlocked country in South Asia, produces tea similar to Darjeeling tea in appearance, aroma and fruity taste (TTG, 2011) and is often considered as a great alternative to the "more expensive" Darjeeling tea. It is believed by historians that the first tea bushes in Nepal were grown from seeds which were given as a gift by the Chinese Emperor to the then Prime Minister of Nepal, Jung Bahadur Rana. Mr. Gajaraj Singh Thapa, son-in-law of Jung Bahadur Rana, is a remarkable name in Nepalese tea history first planted tea in Ilam District of Nepal. The said district shared an open border and same topographical conditions to the neighboring estate of Darjeeling in India. and is. Nevertheless, Nepal tea industry owes its roots to the colonization of India, by the world's first multinational company, “East India Company”, under the British Empire. At around 1863, within a span of 10 years after the first tea plantation was set up in Darjeeling, hybrids of tea bushes were imported, and Nepal’s first tea plantation, Ilam Tea Estate was set up in Ilam district, at an altitude of 4,500-5,000 feet above the sea level. Envisioning future potential of the tea industry in Nepal, Soktim Tea Estate was set up in the Jhapa district two years later (Vander et al., 2010). In Nepal, orthodox tea is produced and processed in the mountainous regions of Nepal at an altitude ranging from 3,000 – 7,000 feet above the sea level. There are six major districts namely, Ilam, Panchthar, Dhankuta, Terathum, Sindhupalchok and Kaski, primarily in the eastern regions of Nepal that are known for producing quality orthodox tea. The CTC tea produced of average quality, accounts for almost 95 percent of the domestic consumption, owing to its cheaper cost of production than that of the orthodox tea. The main tea producing regions in Nepal are Jhapa, Ilam, Panchthar, Dhankuta, Terhathum with newly involved regions being Kaski, Dolakha, Sindhupalchok, Solu and Nuwakot, with a goal of increasing the total tea production in Nepal (NTCDB, 2011).

South Asia Tea production & trade

Tea is an important product having trading importance not only in the South Asia but also in the whole world. The annual tea production of the world is around 4 million tons of which over 1.3 million tons (approximately one third) is produced only in South Asia (Table 1). Among the top five tea producing countries India and Sri lanka are from south Asia and other three countries are China from East Asia, Kenya from Africa and Turkey from Eurasia. India, the most populous and the largest country of South Asia has emerged to be a world leader in tea trade in terms of production, consumption and export accounting for 31 percent on total global tea production. It is the only industry where India has retained its leadership over the last 150 years. The range of tea offered by India, from orthodox tea, CTC, green tea, Darjeeling tea to the strong Assam and Nilgiri tea still remains unparalleled in the world. According to a report by tea industry of India, the total turnover of the tea industry is around IRs. 10,000 crores (USD 1 = IRs. 61). Since its independence in 1947, tea production has grown over 250 percent, while land area has just grown by 40 percent. Among the top twenty tea producing countries, four nations, namely India, Sri Lanka, Bangladesh and Nepal, are from South Asia and they occupy the second, fourth, thirteenth and twentieth positions respectively (Table 2). For the advancement of South Asian tea industry, SAARC (South Asian Association for Regional Cooperation) tea council was established in order to help tea producers compete and cope with the regularly increasing demand of tea around the world. In the very near future, the council will conduct joint marketing, research and also look into other issues like setting minimum quality standards for exportable tea. India, Pakistan and Bangladesh are the first, second and third highest tea consuming countries respectively in South Asia and they share above one fourth of the total world annual tea consumption (Table 3). There has been a considerable increase in export too in the past few years. South Asian countries have achieved their own status in the international tea trade. Sri Lanka, India and Bangladesh are the top three tea exporters from South Asia (Table 4). In 2011 Sri Lanka has exported 301.27 thousand tonnes of tea And together with India and Bangladesh shares about 29 percent of the annual world tea exports. Tata global beverages limited of India, which operates in over 60 countries, is the second largest global branded tea. In Sri Lanka, the tea industry supports about 20 percent of the country’s population, through direct and indirect employment, with around 4.3 million of the total population of 22 million. Black Tea Exports (private) limited, established in 1993 by an expert tea taster with the aim of making Ceylon Tea the world’s favorite natural beverage, is recognized as one of Sri Lanka’s leading exporters of pure Ceylon Tea. The company enjoys the annual turnover of USD 4 million (STB, 2013). From south Asia, Nepal and Bangladesh have also the mentionable contribution in the world tea production while some other nations are also moving towards the initiation of tea production. The tea industry of Bangladesh is one of its most mature industries occupies an important fraction in its national economy. Although tea cultivation in Bangladesh began in 1857, it shares only 2% of the world's tea production. It accounts for 0.81 percent of her GDP. At present, Bangladesh earns a substantial amount of revenue in terms of consumption of tea. The involvement of South Asian nations in the international tea trade and its stakes on national economy necessitates the formulation of a tea council to strengthen trade relations among these nations. Obviously the opening of the SAARC tea council will always put the south Asia tea trade and export at the top in the world tea trade.

As far as the production of black tea is concerned, there are seven main black tea producing countries in the world namely Sri Lanka, India, Malawi, Kenya, Indonesia, Tanzania and Zimbabwe. In addition, Turkey, Argentina, Iran, Nepal and Bangladesh also produce black tea in smaller scale. Nations from South Asia produce and export around 55 and 60 percent respectively of the black tea in the world. Nepal occupies the top third position in south Asia in context of black tea production. The recent production and export per annual is above 17 and 8 thousand tonnes of black tea respectively (Table 5). In the last decade, Nepal has achieved 9 percent and 47.6 percent production and export growth rate respectively, the highest among south Asian nations (Table 6).

Nepal Perspective of Tea

Trade is one of the most important component in Nepalese economy and currently holds around 37 percent of its GDP. Iron, steel, textiles, woolen carpets, garments, pash-mina, tea, coffee and large cardamom are the major export products of Nepal. Agricultural products such as lentils, tea, coffee, ginger, large cardamom and jute, etc. have been identified as potential goods for export by National Trade Policy in 2009 and the Nepal Trade Integration Strategy (NTIS) in 2010 (Koirala, 2007). In the last couple of decade tea production and trade has achieved a dramatic progress and played really a mentionable role in the economy of Nepal. Its production dramatically increased by more than 3 thousand tonnes in 2003/2004. 196.4 tonnes of tea was produced in the year 1994-95 whereas the production obtained was 18309.8 tonnes in 2011-12 with only 5 folds increase in the plantation area (Table 7). It suggests a rapidly progressing trend of tea production. In other words, the net production is increased by 100 folds or 10,000 percent only in hardly last 20 years. This drastic change is only due to attraction of huge number of farmers towards the cash crop and replacement of the traditional way of farming with advanced methods of farming. Tea is produced in around 12 out of 75 districts in Nepal (Fig. 1). Among them the main tea producing districts are Jhapa, Ilam, Panchthar, Dhankuta and Terathum (Table 8). These are the districts in Eastern part of Nepal where climate favors tea production. Among these five districts, Jhapa takes the highest share of tea plantation area at 52% and contributed 87% of the net production. Next to Jhapa, the district of Ilam contributes almost 10% of the total production. Ilam and Jhapa are ideal and main tea producing districts in Nepal. In Ilam, tea production is being popular as a cash crop by small and now adopted other districts in the country, primarily because specialization in one crop has proven to increase the overall yield and promote commerce in agriculture outputs (SAWTEE, 2006).

The popularity of tea gardening as cash crops helped reduce poverty rates among small farmers in the tea growing regions. In fact, 54% of the total plantation area is occupied by tea gardens that contribute 62 % of the total tea production in Nepal, The remaining 38% of the total production is contributed by large estates with tea processing facilities (Table 9).

There are mainly two types of tea industries in Nepal namely Orthodox and CTC that captures 28.26 and 68.58 percent of the total tea plantation area in Nepal. Farmers working at the small scale are the backbone of the orthodox tea production. Around 19 thousand farmers at their individual effort contribute about 72 percent orthodox tea production. Tea estates operating at large scale contribute about 70 percent of the total CTC tea production. Most of these tea estates have their own processing plant and some of them outsource the tea leaf raw material to manufacture tea. These tea estates and the farming at individual effort have undoubtedly created huge employment opportunities. Guranse is the biggest tea garden in Nepal. Guranse Tea won China Expo 1999 award for superb taste, aroma, infusion and character. An informal survey made by private companies determined that the four major organic tea producing companies exported 300 metric tonnes of organic tea in 2011. All tea exported from Nepal are produced from pure agricultural soil with biologically and ecologically balanced methods and are 100 percent organic in nature. They are certified by NASAA, Australia, which is accredited by IFOAM and AQIS and garnered several tea awards and recognitions (NepalVista, 2013).

Tea is the major exportable item in Nepal. USA, UK, Germany, Hongkong, Austria, Japan, France, Norway, Australia, India, Denmark and Holland are the major markets for the Tea from Nepal. Nepal’s tea export (excluding India) in monetary value is increased from $ 275,000 in 2000/01 to $ 2,622,916.7 in 2011/12 (NRB, 2013) and the import is decreased from $ 1,020,833 in 2000/01 to 376,041.7 in 2009/10 (Table 10). In last ten year the trade balance shows the positive response.

Discussion

This paper presents an overview of the tea production, export and consumption in South Asian nations. Although South Asia is identified as the poorest region in the world after Sub-Saharan Africa, the tea trade has played an important role in the betterment of its economic condition in the last couple of decade. A substantial portion of the economy of these developing nations from South Asia depends on the tea trade. Tea industries in South Asia provide round-the-year employment to over 1.5 million workers, mostly women and belonging to economically challenge group. An equal number of populations depend on tea-related activities for their livelihood. In South Asia, the tea plantation is practiced as a self-contained unit, which provides accommodation and all facilities for its workers and their families. Each unit forms a virtually closed community having really appreciable social livelihood. Women form a large proportion of the workers in tea industries and gardens in India, Sri Lanka and Nepal. In other words, tea trade in South Asia not only has helped to withdraw foreign currencies required for the economy of the nation but also has provided huge employment opportunities to the local residents. Numerous varieties of tea are brewed at specific temperatures for exact amounts of time to achieve the perfect cup. Even the act of pouring tea has been refined into an art form which takes years to perfect tea has replaced alcohol as the social drink of choice in Southeast Asia's Islamic countries and the South Asian nations where every time is considered as the tea time. In SAARC countries, tea is most efficiently and economically produced in large plantations in addition to its mentionable production as a smallholder crop.

Agriculture in whole has played a significant role in the Nepalese economy. Nepal’s export trade is highly concentrated, both in product and destination. It is still at the stage of its infancy in international trade arena. At present, tea exports from Nepal only account for approximately 2.4 percent of its overall exports, but it is the third leading agricultural product to be exported from Nepal. Recent advancements of Nepal’s tea sector have widespread socio-economic implications for the country. It has created employment for hundred thousand people, the majority of them women from country side. The tea industry in Nepal has really played a crucial role in the earning of foreign currencies, poverty alleviation and the empowerment of rural women.

The export of agricultural products including tea from Nepal faces several obstacles due to compromised quality and standard requirements imposed by international trading partners, the geographical status, lack of adequate physical infrastructure, lack of proper branding and marketing, inadequate research & development (R&D) investments, poorly developed information and telecommunication facilities, illiteracy, lack of skilled manpower, and labor shortage etc. In the context of especially tea export from Nepal, it performs the best in domestic logistics costs and its weakest performance is found in the quality of transport and information technology infrastructure for logistics. Nepal is a landlocked country having two-third of its area covered by high rise mountains, which has created huge transportation challenges for manufactured goods and most of its goods are compelled to travel through India that unexpectedly increase the transportation costs and worsens the ease of communication. Even in the presence of such adversities, tea exports from Nepal have increased by 150 folds only in the last ten years. Nepalese tea export trade is enjoying huge opportunities in the recent years due to factors such as favorable market access circumstances in most export destinations and signs of recovery of the world market since the global financial crisis. Nevertheless the tea sector in Nepal urgently needs to overcome numerous serious challenges, especially its limited supply side capacity.

Continuation of the expansionary policies and adaptation of the novel strategies can only ensure the tea export industry in Nepal. Measures to be taken must include access to credit, improved and adequate infrastructure, up-to-date information of existing and prospective market analysis as well as trend, skilled manpower development, proper promotion of the product in addition to the development of auxiliary industry. Government of Nepal must continue supports from its side like relaxed taxation, provision of cash reimbursements and should provide incentives to exploit trading opportunities and invest in production. Tea sectors can create additional income opportunities via the promotion and proper establishment of tea tourism.

적 요

차 (Tea)는 네팔을 포함한 남아시아의 주요 농산물 수출품 목 중에 하나이다. 네팔의 차 생산은 150년 전에 시작되었지 만, 상업적인 생산 규모는 발전 가능성이 있음에도 불구하고 초창기 모습 그대로이다. 차 생산에서 우위를 차지하고 있는 인도, 스리랑카, 방글라데시와 같이 네팔은 좋은 품질의 차를 생산할 수 있는 큰 잠재력을 가지고 있다. 그리고 현재 차 산 업의 선도자로 남아시아 국가의 잠재력을 강화하기 위해 남아 시아지역협력연합 (South Asian Association for the Regional Cooperation, SAARC)은 각 회원국의 National Tea board가 차 산업을 육성할 수 있도록 지원하기 위하여 차 위원회를 설 립할 예정이다. 이러한 남아시아지역협력연합의 차 위원회 설 립에 맞추어 본 연구는 남아시아 차 산업에서 부각되고 있는 네팔의 차 생산과 소비, 그리고 수출 경향을 다른 남아시아 국가와 비교하여 분석하였다. 남아시아는 전세계 차 생산량의 약 1/3를 생산하고 있으며, 대표적인 차 생산국가는 인도, 스 리랑카, 방글라데시, 네팔이다. 남아시아 중에서 네팔은 연간 약 1만8천톤의 차를 생산하고 있으며, 최근 20여년간 (1994 ~ 2012) 차 생산량이 약 100배(196톤 → 18,309톤) 가까 이 급증하고 있다. 네팔의 차 산업은 수출증대를 통해 외화획 득과 경제발전에 기여할 뿐만 아니라 차 생산과 가공산업에 참여하는 농가와 농촌여성의 고용창출 측면에서 매우 중요한 역할을 담당하고 있다.