• Grassroots Tea

    Equifarm tea is a new brand with deep roots. In 2017 New Delhi-based Grassroots Tea Corp. first shared its vision for transforming the livelihoods of 250,000 of India’s small tea growers (STGs) by processing and marketing well-made chemical-free teas. Subsistence growers with generations of experience understand how to cultivate tea but are held back by their inability to add value. Few advance beyond a time-bound role as raw leaf suppliers. Grassroots helps secure financing and then aggregates, repacks, wholesales, and retails authentic teas supplied by collectives. Tea Producer Companies then partner with the collectives to operate mini-factories that process 2,500 kilos of green leaf a day.

    Photo caption: From left, Sabin Narzary,  Sanibar Boro, Assaigra Boro, Thapsa Boro, Baburam Daimary, Pijush Goyary, Ajith Boro, Bijoy Boro, Kukhol Boro,  J. John, Minto Goswami,  and Sanjwrang Basumatary.

    Smallholders in Assam supply green leaf to locally owned mini-factories. Photos courtesy of J. John.

    Assam Smallholders Express Pride of Ownership

    By Roopak Goswami

    Tea grower Sabin Narzary, 32, is proud and brimming with confidence, as are 260 small tea farmers in the Udalguri and Biswanath districts of Assam.

    All are shareholders in a tea producer company, a new business model that enables subsistence growers to finance mini-factories and create local brands collectively. Their new equifarm tea is now on sale on Amazon. The Grassroots Tea Corporation (GTC) launched the product during a virtual meeting on Oct. 8.

    Two weeks later their teas debuted on Amazon.in priced from INRs 360 to 605 (US$4.85-$8.15 for 250 grams).

    Sabin Narzary

    In 2017 New Delhi-based Grassroots Tea Corp. first shared its vision for transforming the livelihoods of 250,000 small tea growers (STGs) by processing and marketing well-made chemical-free teas. Subsistence growers with generations of experience understand how to cultivate tea but are held back by their inability to add value. Few advance beyond a time-bound role as raw leaf suppliers.

    “I have not heard about growers becoming shareholders in the small tea grower sector,” says Narzary, a father of two who was raised in Khasiapather. Small tea growers now produce more than half of the millions of metric tons of green leaf grown in India. Producer-members of the Swmkhwr Valley Tea Producer Company contribute green leaf and are granted shares in the venture.

    Smallholders in 2020 produced 52% of India’s tea, primarily for production as black CTC (cut, tear, curl) but with a growing segment of specialty tea producers.

    The equifarm brand’s tea range includes Premium Orthodox Whole Leaf, Premium Orthodox packaged in stand-up pouches, and orthodox tea and green tea in teabags. Initially, it will be available online on major e-commerce portals like Amazon, Flipkart, and selected cloud kitchens.

    Shortly after it was founded, Grassroots Tea encouraged a group of 260 indigenous Bodo small tea farmers in Assam’s Udalguri and Biswanath districts to set up four manufacturing units to process green tea leaves sourced from their farms. Each unit required an investment of INRs 1.3 crores (about US$175,000) to purchase the property, structure, tea-making machinery, and other equipment. The four factories raised the required capital – as equity and as a term loan from Financial Services Limited (NABFIN), a subsidiary of the National Bank for Agriculture and Rural Development (NABARD).

    Ten years ago “We were not getting good prices as we used to sell our leaves individually [to bought leaf factories],” explains Narzary. One of the biggest problems and worries of small tea growers in Assam are getting low prices for the green leaf as they are dependent on bought leaf factories.

    Protests and demonstrations are ongoing. The Confederation of Indian Small Tea Growers Association (CISTA) says that bought leaf factories pay an average of INRs 15-17 (US$0.20 – 0.23) per kilo for green leaf growers in Assam and West Bengal. Growers say the cost of producing green leaf has increased as much as INRs 19 (US$0.25) per kg due to shipping expense and a tightening supply of fertilizer and other inputs increasing the cost of production.

    He said the entry of Centre for Education and Communication (CEC) New Delhi and J. John changed all that, and the growers formed a society to get a higher price for the leaf they supply to the processing factories. The collective leaf trade fuelled the leadership and entrepreneurial aspirations of kindling their desire to move up the value chain. The societies brought their active members as shareholders to constitute producer companies.

    While taking advantage of a ‘Company’ registration, like raising capital and sharing profit, the Producer Company framework has the advantage that it runs based on cooperative principles. The shareholders are ‘active producers,’ which means only those who contribute to the supply of green tea leaves can participate. Each shareholder has one vote irrespective of the number of shares owned.

    “Our lives are now completely transformed as we are getting good prices for the green leaf and have learnt a lot about tea,” he says.

    Kukhol Boro says one of the most significant learning has been the advantage of being united. “Earlier we were selling our green leaf only by ourselves and did not get good prices, later when we became a society, we got better prices,” he says.

    “We had difficulties in getting compliances, but now, we can proudly say that we have a factory of our own where we manufacture tea all by ourselves, a dream that we have been chasing for the last eight to 10 years.

    Today after many ups and downs, we could make it happen,” he said.

    Equifarm tea

    “We have many more miles to go, but today is the beginning, today is the day of farmers, today is the day of GTC. Let the small tea growers of the world unite and be active part of the value chain,” Kukhol Boro said.

    “We could never imagine that one day the growers would be owning factories as members of societies,” added Kukhol Boro.

    Grassroots Tea has a packaging unit in Barpeta, Assam.

    “It is a market linked to the farmers’ movement in which farmers own and govern various stages of value accrual of an ethical product and obtain a reasonable share of the value accrued. It also establishes a direct connect between farmers and consumers by making available high quality ethical, ecologically sound and traceable natural tea,” said J. John, managing director of Grassroots Tea.

    GTC provides support at three distinct stages: empowering small tea growers (STGs) to cultivate chemical-free tea; assisting STGs in raising equity to set up Tea Producer Companies (under the Company Act, 1953) to build processing factories that manufacture high quality, certified orthodox tea; and when the tea is made Grassroots aggregates and markets the tea to conscious consumers under the joint ‘equifarm tea’ brand.

    Teas are natural, traceable, single-origin (subsumed within geographical indicators); made and owned by small tea farmers, ensuring a sustainable livelihood and an optimum share of the profits, he said.

    “Our long term vision is to transform socio-economic outcomes for 250,000 small tea growers at risk, in India. We want to ensure dignity and economic justice for all STGs by enabling fair compensation at multiple levels of value accrual throughout the value chain,” John says.

    India needs an alternate model for the tea-value chain as a core strategy to drive systemic change. In this model, subsistence tea farmers organize in collectives that own and actively participate in the value-creation and value-sharing processes, he explains.

    “As part of our long-term vision, we will facilitate the setting up of more STG owned tea producer companies (TPC) across India, directly impacting larger number of STG households and worker households,” he added. In time big brands and retailers will recognize and execute, the principle of fair compensation at value accruals.

    At the virtual launch event, Adina Pasula, Supply Chain leader, IKEA, Sweden, commented on the distress faced by small-time farmers across the world: “Social entrepreneurship like the equifarm tea is contributing in addressing their plight,” she said. Initiatives of this nature lead to systemic change and would have a collective impact across stakeholders at various levels, she said.

    NABARD General Manager Baiju Kurup praised the GTC model. He said that during the “last couple of years, NABARD’s major focus has been in the facilitation of the aggregation of farmers to a farmers’ producer company, or FPO, where better share of the price can be transferred to the producers so that they enjoy better price realization.”

    CISTA president Bijoy Gopal Chakraborty said, “in equifarm tea, we see the prominent footprint of the small tea growers in India.”

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  • The Cost of Producing Specialty Tea

    Consumers who pay a premium at retail for specialty tea often leave growers to foot the bill. The costs of producing the distinctive taste of the authentic, transparent, eco-friendly, clean-label teas that are so popular with Millennial and Gen Z cohorts are significantly higher than what growers spend supplying conventional tea. A preference for chemical-free cultivation, third-party certifications, energy-efficient, carbon-neutral processing and transport, and recyclable and biodegradable packaging further erode margins along the length of the supply chain. This raises a fundamental question: Is anyone making money making specialty tea?

    Listen to the interview

    Will Battle discusses the additional expense of producing the best specialty teas

    Artisan teas require time and hands-on attention to detail
    Artisan teas require time and hands-on attention to detail that add significant costs. Photo courtesy Folklore Tea.

    An Investment in Quality

    In this post, Will Battle, author, consultant, and enthusiast for all things tea describes the additional costs to growers producing top-quality tea. Will trained as a taster in India, Sri Lanka, Kenya, and Malawi and has more than 20 years of experience sourcing tea. He is the author of The World Tea Encyclopaedia and founder and managing director of Fine Tea Merchants, Ltd., a wholesale tea importer and export venture that supplies tea merchants with mainstream offerings as well as rare teas and herbals. Will sees growers taking initiatives on quality at all levels of the cultivation and manufacture process and so regards the lines between the everyday and specialty sectors to be blurred, but here he focuses on the costs of creating the very best teas.

    Dan Bolton: Will, from a grower’s perspective, is manufacturing specialty tea worth the effort?

    Will Battle: I think frequently it probably isn’t. I look at some of the growers I deal with and the amount that they need to invest from a financial and human resources perspective and it’s so much greater in almost every area.

    Costs are higher at pretty much all stages of the chain. In my experience, Dan, whether it’s the approach to pruning, to leaf quality stipulated to pluckers, or to those buying leaf on the open market; the level of detail that the factory needs to apply to the processing of the leaf, right on through storage, shipping, all of those processes costs a lot more in the specialty tea industry.

    I struggle to see many instances where that’s appropriately rewarded.

    Dan: Let’s talk specifics, what costs are unique to producing specialty tea?

    Will: Let’s take Darjeeling for example, and their approach to the pruning cycle. A good case in point would be my experience with Jay Shree’s Darjeeling this year. They pruned more than they did in previous years, more than most other producers.

    That effectively writes off your first flush, but it might give you a better second flush, and then next year, you probably have an improved quality as well. But to write off your first flush is just an enormous financial handicap to impose on yourself and that’s your start point.

    Now consider the costs of for a kilo of fine plucked leaf. Let’s take the experiences of Tumoi in Nandi, Kenya.

    • In Part II Tea Biz will interview brands and category managers on costs they incur in bringing specialty tea to market.

    It might be seen in the wage pricing of seven to nine Kenyan shillings an hour for mainstream leaf, but around 25 [shillings] per hour for specialty leaf. You see, you’ve not even got the leaf to the factory yet and you’ve got an enormous margin to make up in the final product cost. And don’t forget, you’ve got 4.2 to 4.6 kilos of your green leaf for a kilo of made tea. So you’ve, got a big headway to make up on the final product cost and you haven’t even got the leaf  to the factory yet.

    Another example might be transport. The traditional way of getting green leaf to the factory might be to dump it in a pickup. But at Tumoi, in Nandi, they put it in some special aerated baskets to get it to the factory in optimal condition and that’s two or three pickup trucks getting the leaf there rather than one or a tractor adding fuel costs and wages. So again, another increment onto the final product cost.

    Packaging is a really, really good point. Let’s take Satemwa Tea Estate in Malawi. They are a great example because they make mainstream tea and they make some lovely specialty tea as well. The mainstream tea which I buy and use happily in my blends is lovely tea, but it’ll come in a paper sack and you get 60 kilos in a sack and more or less a ton on a pallet.

    The specialty tea. In fact, I’ve got one here that four is kilos net, eight kilos, 8.2 kilos, gross. So you’re shipping more air than product. And it’s in an expensive cardboard carton. So you can probably get nine of those on a pallet that’s just 720 kg in a 40-foot container. That means that the freight alone is almost $5.

    So when you get a freight rate increase like we’ve had this year, you have to automatically add another dollar to the cost. So that’s another cost and, here again, you’re not even taking into account the tea cost yet.

    The product that everyone wants is whole leaf. But for every kilo of whole leaf there is perhaps 25% waste or broken leaf that people won’t pay up for. It’s not as if every kilo that goes out of the factory is getting rewarded at the top price, because there’ll be some by-product as well. I think that is another instance where these guys aren’t always appropriately remunerated.

    It’s easy sometimes to say, I include myself in this, that we were supporting the specialty industry, but supporting the specialty industry is also remembering those other grades that they’re making, the leaf grades where they’re not always recovering a high margin on.

    You can go on and on. I see higher costs right through the process, along every stage of the supply chain but particularly labor because of the attention to detail, and in packaging, because of the attention to quality.

    Dan: When consumers pay a premium for specialty tea, what is the value received?

    Will: I think you’re ultimately investing in quality and an approach to creating a product, that is the best it can be. It’s worth remembering that those people who are making good specialty tea are also improving their mainstream quality as well.

    A large proportion [of that investment] should end up back in the communities that have spent the time in trying to create it for you. So wherever that specialty tea comes from ? whether it’s Japan, Darjeeling, Assam, Dimbula, or Malawi ? that investment in the regions and the districts where the tea is made is something really worthwhile.

    Dan: Why is it good practice to pay farm gate prices that allow sustainable production not just for specialty tea, as you mentioned, but commodity tea as well?

    Will: It’s a good practice because ultimately, we have an obligation to make sure our industry survives and that is reliant upon the people who grow and pluck and process tea. If we don’t pay a sustainable price, they will do something else. Without an appropriate farmgate price we don’t have an industry in my view, and it’s our obligation to make sure that any producer is appropriately remunerated.

    Otherwise, why would you grow it?

    A. Tosh & Sons tea warehouse
    UK-based Fine Tea Merchants partners with India-based A. Tosh and Sons, enabling multiple formats of tea bag and caddy packing as well as bulk exports from internationally accredited manufacturing facilities.

    Fine Tea Merchants

    FTM is a business-to-business supplier of tearooms, tea merchants and small packers in the UK, Continental Europe and further afield. The company imports direct from origin and stores a broad assortment of teas and botanicals in its warehouse in Lincolnshire. FTM specializes in fine and rare teas as well as high quality, mainstream teas and a selection of flavored-, herbal-, and fruit-blends.

    Tea may be ordered in quantities from 1 kilo to multiple containers and shipped as straight-lines, blends formulated to perform well in your local water, or custom blended against your own recipe.

    The World Tea Enclopaedia

    The award-winning book The World Tea Encyclopaedia was published in January 2017, with a second edition in November 2020. It covers every tea-producing country and advises tea lovers on tea cultivation and manufacture, origin, seasonality and local ‘terroir’ and tries to de-bunk tea myths and snobbishness. ? Will Battle

    Publisher: Troubador Publishing
    Hardback | 400 pages | £22.96

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