Nepal Faces Shrinking Market for its Tea

JHAPA, Nepal

Trade between tea growers in Darjeeling and adjoining Nepal will be sharply curtailed this year following two independent but related decisions.

The first is a joint communiqué signed this week between the Tea Board of India and the European Tea Committee (ETC), supporting the Protected Geographical Indication (PGI) registration granted to Darjeeling tea within the European Union (EU).

It calls on both groups to jointly implement the PGI registration for Darjeeling in letter and spirit.  Briefly stated, this means that only teas from Darjeeling with 100 percent Darjeeling content can be labeled Darjeeling tea.

Previously, if a tea packet contained 51 percent tea from any of Darjeeling’s 87 estates it could be marketed as Darjeeling. In many instances, because of its similarities, Nepalese tea constituted the remaining 49 percent.

Darjeeling received PGI protection in October 2011 largely due to the fact that suppliers sold three to four times the amount produced. Darjeeling annually produces less than 10 million kilos of tea. Sales figures indicate almost 40 million kilos are sold as Darjeeling. Manufacturers were given until January 2013 to change their blending practices and packaging.

Coincidentally, in 2007 India signed an agreement with the World Trade Organization (WTO) to ban the import of tea leaves that are not grown and certified under the Integrated Pest Management (IPM) method. 

Tea growers may use only non-hazardous pesticides and should not pick the tea leaves for a certain period after the application of chemicals to conform to IPM standards. Tests must then be conducted to insure that processed tea contains minimal residue and only residue from approved pesticides.

That ban takes effect Jan. 1, 2013.

Few growers in Nepal adhere to the IPM regulations. As a result bought-leaf factories in India already have notified Nepali growers that they will no longer buy Nepali tea.

“The largest chunk of Nepali tea leaves is produced without following the IPM method,” said Ramesh Prasad Poudel, chairman of Nepali Tea Producers´ Association told My Republica. “So, we will not be able to export our tea products to India from next year.”

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Less than 1 percent of India’s tea is imported from Nepal. Much of Nepal’s tea is consumed by the domestic market and the remainder is shipped directly to blenders in places like Dubai that also purchase tea from India and Sri Lanka. Since EU rules strictly prohibit the importation of tea leaves that do not comply with the WTO directive the market for Nepalese tea will shrink.

Simultaneously demand for quality leaf from Nepal will also decline since it will no longer benefit from the premium price awarded Darjeeling.

“We have no option left. We will have to follow the IMP method,” Poudel said.

Source: The Hindu, My Republica

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