Middle East Unrest Heightens Tea Logistics Concerns for Transit via the Straits of Hormuz and Suez Canal | Just Ice Tea Raises $14 Million to Expand Distribution | Wagh Bakri Tea Executive Director Parag Desai, 49, Dies Fleeing Stray Dogs
PLUS | Tea Biz traveled to Tanzania last week to explore the tropical Usambara tea-growing region. There, I met with smallholder farmers, tea makers, traders, tea sellers, members of the Tea Board of Tanzania, and a tiny cooperative of 14 families deep in the jungle who invited me to watch as they hand-rolled and wood-fired organic black tea that always sells out on “market day” in the local village. I recount my adventure beginning today with Tahira Nizari, a savvy business school graduate and humanitarian who founded Kazi Yetu in 2018. This specialty tea brand advances the role of women in Tanzania’s tea industry.
Middle East Unrest Heightens Tea Logistics Concerns
By Dan Bolton
Tea shipping and logistics executives are closely monitoring Middle East unrest as tea sales to the region declined.
Immediate concerns involve insurance premiums and pricing risk, but if Iran-backed Hezbollah escalates the Hamas conflict, Israel will likely retaliate against Iran. The Islamic Republic’s navy (IRGCN) has increasingly harassed international vessels, with 20 incidents in the past few years, including the seizing of tankers in the Strait of Hormuz (which spans Oman and Iran), a route traveled by 30% of the world’s oil and much of the world’s tea.
Due to the violent and volatile Hamas-Israeli conflict, sales of orthodox tea at India’s Kochi Auction declined to 70% of the 2 million kilos on offer. Though Israel buys negligible quantities, exports to other destinations through the Suez Canal will be hit, according to a report in the Hindu BusinessLine.
Traders who spoke to the newspaper cautioned, “Shipments to destinations through the Suez Canal are likely to be hit on account of the war.”
They anticipate a further decline in demand and disruptions in tea procurement if the situation worsens.
Iran is the center of attention.
Normally a discerning trading partner with a preference for orthodox black tea, imports to Iran spiked last year yet, “At the moment, there are signs that Iran does not have enough teas to last through the winter season,” writes one trader.
In an attempt to stockpile supplies, tea imports during the past fiscal year (ending March 30, 2023) rose to 90 million kilos. Payments, complicated by economic sanctions, are now past due. “So far, we have no clear import support from the government. As a result, a lot of teas consigned for Iran are stuck in Dubai and Kenya,” writes the Iran-based trader.
Compounding the self-inflicted shortage is that domestic production declined to 20 million kilos this year.
Iran produced about 26 million kilos last year, exporting 10,000 metric tons valued at $44.2 million, according to the Iran Customs Administration (IRICA), which valued imports at $665 million through March 30, 2023.
Imports recovered from the pandemic to reach 35 million kilos in 2022. In the fiscal year ending March 2021, the country imported 21 million kilos valued at $201 million. India accounted for $96 million of tea imports. Sri Lanka shipped $75.8 million worth of tea to Iran, and Kenya shipped $19.2 million to round out the top three tea suppliers.
| A Daily Cup of Dark Tea Reduces the Risk of Diabetes: Researchers Demonstrate How Tea Helps Control Blood Sugar Levels | Mintel Consulting: Consumers Feel Culpable for Climate Change | Kagoshima Benefits from Diverse Tea Exports
PLUS | “We started the UC Davis Global Tea Institute Professional Tea Program at the request of the tea industry,” says GTI Founder and Director Prof. Katharine Burnett. Leaders in their fields from Finlay Beverage, Starbucks, Peet’s, ITI, Empire Tea, Mother Parkers, Ito En, and Hamburg Teehandel present the 15 two-hour weekly sessions across a wide spectrum of topics, from history and culture to science, business, and health. The program is aimed at industry members seeking to deepen their foundational knowledge of tea.
Researchers Demonstrate How Tea Helps Control Blood Sugar Levels
By Dan Bolton
Drinking dark tea, a fermented favorite in China, significantly decreases the risk of prediabetes and type 2 diabetes regardless of weight, age, gender, high blood pressure, and family history.
Researchers from the University of Adelaide in Australia and Southeast University in China found that compared to never-tea drinkers, those consuming dark tea daily had a 53% lower risk for prediabetes and 47% reduced risk for type 2 diabetes.
Associate Professor Tongzhi Wu from the University of Adelaide said, “The substantial health benefits of tea, including a reduced risk of cardiovascular disease and type 2 diabetes, have been reported in several studies over recent years, but the mechanisms underlying these benefits have been unclear.”
“Our findings hint at the protective effects of habitual tea drinking on blood sugar management via increased glucose excretion in urine, improved insulin resistance, and thus better control of blood sugar. These benefits were most pronounced among daily dark tea drinkers,” he writes.
A release summarizing the research explains that people with diabetes often have enhanced capacity for renal glucose reabsorption, so their kidneys retrieve more glucose, preventing it from being excreted in urine and contributing to higher blood sugar.
“These beneficial effects on metabolic control may lie in the unique way dark tea is produced, which involves microbial fermentation, a process that may yield unique bioactive compounds (including alkaloids, free amino acids, polyphenols, polysaccharides, and their derivatives)
These compounds exhibit potent antioxidant and anti-inflammatory effects, improve insulin sensitivity and the performance of beta cells in the pancreas, and change the composition of the bacteria in the gut.”
The study included 1,923 adults (562 men and 1,361 women aged 20-80 years) living in eight provinces in China. Participants indicated the frequency and type of tea consumed. Blood and urine tests measuring glucose excretion and related favorable effects were most robust for dark tea drinkers.
According to Associate Professor Wu: “These findings suggest that the actions of bioactive compounds in dark tea may directly or indirectly modulate glucose excretion in the kidneys, an effect, to some extent, mimicking that of sodium-glucose co-transporter-2 (SGLT2) inhibitors.
This new anti-diabetic drug class is not only effective at preventing and treating type 2 diabetes but also has a substantial protective effect on the heart and kidneys.”
The authors said drinking dark tea is a good blood sugar management tool, but you should consider your overall diet, too.
| Retail Sales Projections are Ho-Hum for the Holidays: Sales growth adjusted for inflation will be in the single digits, the lowest growth rate since 2018 | UC Davis Global Tea Institute Launches a Training Program for Tea Professionals
PLUS | More than 30,000 tea workers and supporters, mainly from the indigenous Bataga Community living in Ooty, Kothagiri, and Coonoor in the Nilgiris mountains of South India, participated in a silent hunger protest on behalf of farmers. The demonstrations ended last week, but only after the High Court took cognizance of the petitions that urgently plead the case for fixing a minimum price for green leaf. Aravinda Anantharaman reports.
Retail Sales Projections are Ho-Hum for the Holidays
By Dan Bolton
North American consumers are “trading down,” leading to projections of ho-hum holiday sales based on pre-season surveys.
“Consumers are skittish, and retailers will have to be on their toes, focused on making sure the products and the prices are right,” writes Forbes, quoting marketers who anticipate “a modest increase in sales with narrowing margins.”
Adjusted for inflation, Bain & Company projects real US holiday retail sales in the low single-digits, well below the 10-year average and the lowest since the financial crisis.
Deloitte writes that holiday sales will likely increase between 3.5% and 4.6% in 2023. According to Deloitte, E-commerce holiday sales are projected to grow between 10.3% to 12.8% compared to the 2022 season.
Overall, Deloitte projects holiday sales will total $1.54 to $1.56 trillion from November to January. In 2022, holiday sales grew by 7.6% and totaled $1.49 trillion in the same period, according to the U.S. Census Bureau.
Deloitte forecasts e-commerce sales will grow to between $278 billion and $284 billion this season. A survey by Bankrate reveals that 39% of holiday shoppers plan to do most of their shopping online, while 23% plan to shop in person.
Bankrate found that 50% of holiday shoppers will begin before Halloween, with 12% starting as early as September. November is the busiest month for shoppers, but 13% percent say they don’t shop until December, according to Bankrate.
More than half (54%) say they feel financially burdened this year, with 33% saying inflation will change how they shop. Another 25% expect higher prices to strain their budgets, and 13% attribute their shopping stress to concerns they will be forced to spend more than they’re comfortable spending.
“While September feels early to be talking about holiday shopping, it’s very smart to start thinking about it well ahead of time,” writes Bankrate.
BIZ INSIGHT – Sales of conventional hot tea are flat. In contrast, globally, sales of functional teas are growing at a faster 6.4% pace that is expected to accelerate through 2027. The market for herbal teas will add $885 million in sales by 2027, according to Technavio.
“Millennials and baby boomers are expected to be the major customer base for the herbal tea market as they make up the majority of the current workforce,” according to Technavio.
Shifting consumer preference towards online sales channels positively impacts the growth of the global herbal tea market, writes Technavio. Demand for herbal teas is expected to increase as consumers become more health conscious. Online channels offer consumers a wide range of products at discounted prices,” according to Technavio.
| A 70-page case study explains the lapses at James Finlay Kenya that led to the BBC exposé Sex for Work: The True Cost of Our Tea | Tea Price Protests in South India Continue for the Third Week | High Temps Lower Yields of Türkiye’s Black Sea Tea
PLUS | This week, the United Nations Educational, Scientific and Cultural Organization’s World Heritage Committee, meeting in Riyadh, Saudi Arabia, inscribed the Cultural Landscape of Old Tea Forests of Jingmai Mountain in China’s Yunnan Province as a World Heritage site.
New Report by Women Working Worldwide and THIRST Examines Causes of Gender-based Abuse in Tea
By Dan Bolton
Widespread gender-based violence and harassment concealed in commodity supply chains withers in the public spotlight, according to a consortium of gender and tea sector experts.
This week, the consortium, led by Women Working Worldwide and THIRST, the International Roundtable for Sustainable Tea, published a report that “describes the underlying causes and multiple perilous risk factors associated with gender-based violence and harassment (GBVH) for women producing and processing tea.”
The report opens with a case study of James Finlay Kenya, a company featured in the BBC Panorama exposé, “Sex for Work: The True Cost of our Tea,” aired in February 2023.
An infographic developed by THIRST and WWW with tea sustainability expert Michael Pennant-Jones illustrates 15 “risk points” along the supply chain. Smallholders, for example, risk abuse due to invisibility and lack of coverage by labor laws. There is a power imbalance at weigh stations where clerks or supervisors determine daily payments. In the factory, women risk abuse associated with allocating tasks, shifts, and working hours. On plantations, women face domestic violence and abuse risks in allocating housing and security issues.
In a press release, the authors explain their roles in supporting James Finlay in formulating and assessing gender policies, so they are ideally placed to explore why they ultimately failed to protect women on these tea estates.
“The document delves into James Finlay’s journey in establishing these policies and the supplementary measures taken to integrate women’s protection into their operations,” reads the release.
“A central issue highlighted is the persistently low wages for female tea workers, resulting in malnutrition, indebtedness, and the adoption of precarious survival strategies, such as transactional sex. Gender-based pay disparities exacerbate women’s vulnerability, with many relying on piece-rated plucking to bolster their earnings, even if they reside on the estate. Mechanization of harvesting further exacerbates the problem by rendering numerous women tea pluckers redundant, particularly in East Africa.
Furthermore, women in the tea sector frequently shoulder sole responsibility for their families, managing both unpaid domestic care work and paid employment. This dual burden often confines them to abusive work environments. The report is available to download at no charge at www.THIRST.international or www.women-ww.org
“I’ve seen some very good plantations in my travels, in India, in Tanzania, in Kenya, and I’m sure there are others in many other countries as well. But at the end of the day, a plantation is still a plantation, and the workers are still in that large entity,” says THIRST Founder/CEO Sabita Banerji.
“I think an alternative model of smallholder farmers aggregating is starting to emerge. Just comparing the two, the difference between how a tea plantation worker lives and how a smallholder farmer lives is really quite significant,” she says
Control distributed amongst its elements makes for a much more powerful, stronger, sustainable, and more efficient entity, explains Banerji
“I think this model will gradually replace plantations in the long run,” she said.
Tea Smallholders in Tanzania and Kenya are Banding Together to Make Better Tea
By Dan Bolton
Sabita Banerji founded THIRST in 2018.
The non-profit platform she heads is working towards a stronger, fairer, more resilient tea industry in both tea-producing and tea-consuming countries. Sabita was born and raised on tea plantations in Kerala and Assam. She has nearly 20 years of experience in ethical trade and international development, having held strategic posts at Oxfam and the Ethical Trading Initiative, and has been a human rights consultant to a wide range of companies and non-profits. She was previously a member of the Board of Directors of Just Change, UK – a voluntary community tea trading initiative. Sabita graduated from the University of Bristol, studying philosophy and English.
Dan Bolton: Tea smallholders now produce most of the world’s tea by volume yet retain only a small fraction of its value. To prosper, small and medium enterprises must add value at origin. The first step is learning to produce consistent, high-quality tea at scale.
Sabita Banerji: I’m completely on the same page as you. And I think, like you, that this model of smallholder farmers sort of aggregating is gradually going to replace plantations in the long run.
It seems to me that that’s what’s naturally starting to happen in the tea sector, that the plantations worked in an economic sense, and I suppose partially, some would say, in a social sense, for nearly 200 years. Now, that model is struggling to be economically viable.
And it’s struggling to be sort of socially and morally viable with the increasing kind of pressures on companies to ensure that workers have their own autonomy, that they’re living decent lives, and that they have sufficient income.
I’ve seen some very good plantations in my travels, in India, in Tanzania, in Kenya. I’m sure there are others in many other countries as well. But at the end of the day, a plantation is still a plantation, and the workers are still workers in that large entity.
There is an alternative model that’s starting to emerge in Tanzania and Kenya, where I’ve visited many different smallholder farms and a few plantations. Just comparing the two, the difference between how a tea plantation worker lives and how a smallholder farmer lives is really quite significant.
I’m not saying that a smallholder farmer’s life is easy; it’s far from it. It’s hugely hard work. In some senses, the typical day of a smallholder farmer, particularly the woman, is, in some ways, no easier than that of a tea plantation worker. She must get up at four in the morning, fetch water, get the kids ready for school, make food, then go out to the fields and work.
I spoke to one woman who said that the tea collection centers were between one and four kilometers away. There were various centers she could go to, and she could carry 30 kilograms at a time on her head. But if she’s produced 150 kilograms, she must make that journey five times.
So, it’s a hard, hard life, but she has her own house, she has her own land, can diversify, and can plant other crops. She can build onto her house if she wants. That model has a certain dignity and self-respect and a certain sort of agility built into it.
A central factory will have collection centers around its immediate area. And then individual farmers will bring their leaf to that collection center, so they are both part of a bigger whole, the whole entity of that region. But they’re also autonomous. And I think that combination is really, really promising.
Dan: You described a typical bought leaf factory supplied by independent smallholders. What other models are working?
Sabita: I saw three versions of that smallholder aggregated model, which I found very interesting.
Before I go into them, let me explain why we made this trip and why Narendranath Dharmaraj is going to Sri Lanka to do the same.
We plan to document as many of these alternative approaches as possible. Because I think alternatives are now needed. The tea industry is, you know, really up against it.
The different models I saw in Tanzania are block farming and the Kazi Yetu model you mentioned, which is a social enterprise working on a much smaller scale but focusing on specialty tea. And finally, the Kenya Tea Development Agency, which is, you know, well established. It’s not new, but it works.
Block Farming in Tanzania
Dan: Will you share some brief observations about each? Let’s start with the block farming model, which is new to me. Please describe how that works.
Sabita: Block farming is a model I came across in southern Tanzania. This was a project supported by The Wood Foundation.* In Tanzania, they helped to set up a company called the Njombe Outgrower Service Company (NOSC), which exists to help smallholder farmers set up unity production in this block farming model.
In Tanzania, there’s a lot of unused land. And in a village, you might have a wide tract of open land that belongs to the village. What they do is ask the local farmers if they want to plant tea in this area, and each farmer has a few acres.
One of the farms that I visited had 56 farmers and, I believe, 120 acres. Each farmer was responsible for their own area of this block farm. But together, they benefited from the extension services of NGOs and Njombe Outgrower Servicing Company, who would help them with soil testing and advise on what kind of fertilizer they need, provide the fertilizer in bulk for all the farmers to divide up an organized collection of the green leaf.
And the project has also been working with ekaterra to build a local factory, which is brand new; all the machinery is very new and fresh. From then on, it works like the other smallholder aggregation systems we’ve discussed.
The farmers in those block farms send their leaf to this factory, which is then processed, and they get paid according to the quantity and quality.
Dan: Are there incentives to improve quality? Does the factory offer training?
Sabita: The extension workers provide their farmers with a lot of advice about improving their quality and, you know, help them test it. The factory is the final arbiter of the quality and the price.
Dan: Are these bought leave factories independent businesses?
Sabita: This factory is. But it’s part of the project. I believe that eventually, the farmers will own the factory. Once they’ve had sufficient training and built up their skills and understanding of the model, so, it’s slightly different from factories in India, where the factories are independent entities just buying commercially from the local farmers.
Here they have this symbiotic relationship, where, you know, the success of the factory depends on the quality of the leaf that’s coming in. Also, there’s a concern about the well-being of the farmers. So, it’s not just about the tea; it’s also about the farmers themselves.
What THIRST is always looking at is the people, you know, how does it affect the workers? How does it affect the farmers?
We visited one farmer who was rebuilding his house, and he showed us his smallish house, which is bigger than a tea plantation worker’s house.
Now, he is building a reasonable-sized brick house with a solid roof. However, he was able to do this partly because of the tea. And he very much acknowledged that this block farming model had really helped boost his income, but he was also not 100% reliant on tea. Like all the smallholder farmers I met, he was growing many other crops, including maize, sugarcane, etc. That diversification was giving him an extra income, a direct result of this autonomy in land ownership.
Dan: These guys don’t have degrees in economics; they intuitively understand that they will only get a return on their investment by marshaling resources. They see many intangible benefits: self-reliance and peer respect, and over time, they build confidence from thoughtfully managing what they own, however meager.
Sabita: I think, in some senses, the only thing better than a degree in economics for understanding those issues ? is poverty. People who live in or very close to poverty are incredibly creative, resourceful, and able to judge where to use very limited resources to maximize the return. I will always remember when I worked for Oxfam, reading about women in Bangladesh who were illiterate. This particular group of women didn’t know maths, but they could look at a handful of rice and tell you exactly how much it weighed. And they were saving rice handful by handful to save up to buy a new house. So, that kind of attention to detail and understanding of their environment is what you see with small farmers.
Dan: When they harness that resourcefulness, they become profitable, they build a bigger house, their children stay on the farm, and their wives have better nutrition and health care. So many good things happen.
Sabita: Yes, that’s true. But maybe after we’ve talked through the different models, I’d also love to talk about what happens to the tea once it leaves the factory because I think that’s a big constraint on these farmers. It gets to the point where it doesn’t matter what they do, how well they manage it, how good the quality of the tea is, how good the system is; once it leaves the factory, it becomes this global commodity subject to market forces. And I think that’s what’s really putting pressure on the whole industry.
Sabita: The following example was a social enterprise based in Dar es Salaam, Kazi Yetu, which means “our work.” It’s a social enterprise.
I first visited their blending unit in Dar es Salaam. It’s a small blending unit with maybe 15 workers or so. The workers were measuring out the tea into tea bags, making the tea bags, and packaging it.
They are mostly young single mothers employed at a reasonable wage. They are given health insurance, which is incredibly valuable to anybody living in Sub-Saharan Africa. They have a pleasant, clean, calm, non-bullying work environment.
If she’s representative of the others, the worker I spoke to was very thankful for that working environment.
When I arrived, they had just been consulted about what kinds of chairs. Transform Trade, an NGO based in the UK, had offered to invest in improving the work environment to make it more comfortable, so they had gone out to buy some new chairs. Management had taken the workers to the chair shop to choose which chairs they would like. This attention to detail and the inclusion of the workers in the decision were really impressive.
Kazi Yetu produces lovely tea. It is very high-quality specialty tea, blended with herbs and spices, which they buy from smallholder farmers and then beautifully packaged. And then that is marketed for a high-end market.
That model seems also to be working quite well.
I was also privileged to go to north Tanzania, where they built a small factory. It was an investment made by CARE International and Bloomberg Philanthropies. They built a small factory in a village close to where the tea farmers lived to reduce the distance they would have to travel to deliver their tea, meaning the tea would be fresher. The farmers formed a cooperative that will own this factory so that more of the value chain is within their ownership and control. And when that’s done, they will get more of the return from the major tea.
This model seemed to be very much about the people as well as the quality of the tea and the commercial viability of the tea. So that was very heartening to see.
Dan: You also visited Kenya.
Sabita: The Kenya Tea Development Agency is very well established. It’s been around, you know, as long as Kenya’s independence. And it seems to be a model that works very well; I mean, no model is perfect. It’s got lots of challenges lots of issues. But fundamentally, it seems to be working well.
It’s a model of many smallholder farmers aggregating their tea. But it’s nationwide, and it’s very well organized.
Groups of smallholder farmers are organized into zones. The farmers will elect a leader. Zone leaders manage tea collection points. Then, the leaders of the collection points will elect somebody who is part of the directorship of the factories. You hear repeatedly in Kenya that the farmers own the factories.
The Kenya Development Agency, which used to be a government authority, was privatized and has become much more efficient. They also have a company which is a management Kenya Tea Development Agency management services. They’ve got a company that does packaging, and they’ve got Kenya Tea Development Agency Foundation, which looks more at sort of social issues and environmental issues.
All these elements are in place and highly well-functioning.
All these models have in common the autonomy of the smallholder farmer and the aggregation of bringing many smallholder farmers together to benefit from economies of scale.
One of the big concerns that people working on social issues have is that on a tea plantation, you have a great deal of control and oversight over the workforce. And you can have things like gender policies, occupational health and safety policies, etc.
The concern has always been that if the tea industry is going to fragment into tens of thousands of smallholder farmers, then you wouldn’t have that oversight.
But this aggregation also helps bring that oversight, except it becomes more support. So, the extension workers I met talked to the farmers about how to grow better quality tea and have a better crop and about environmental issues and social issues such as gender equity and household finances.
The Kenya Tea Development Agency Foundation had a very comprehensive Holistic Economics Training that also helped to improve dialogue between household members, which reduced gender-based violence.
I feel that this is the future of the tea industry. It’s, you know, it’s happening kind of organically. The plantation model is starting to feel the strain. You keep hearing about plantations closing or huge social unrest on tea plantations. In Kenya, there have been issues with people raiding tea plantations, stealing the tea, burning tea harvesters, etc.
The smallholder model presents different issues, but at least you know that there is autonomy and this ability to diversify, which is better for the farmers’ income and gives them more security because not all their eggs are in one basket. That biodiversity also means that it’s better from an environmental point of view.
Dan: In the book you mentioned, Out of Control, Kelly writes that common behaviors naturally align when many individuals work closely together with a shared purpose. Distributed systems are characterized by emergence, he explains. Each individual influences the behavior of the whole. Over time, a consensus emerges… “a process from quantitative change to qualitative change.”
Sabita: I think we’ve painted quite a rosy picture. We shouldn’t underestimate the challenges those farmers face.
I mentioned what happens once the tea leaves the factory. The tea is often sold through private negotiations, but a lot goes through auctions. And the fact is, once it leaves the factory, it becomes a commodity. Then, it becomes even more of a commodity because it gets blended with other teas from other countries. So, after it leaves the factory, it suddenly loses almost its value for the farmer while, at the same time, somehow adding enormous amounts of value to the blenders, packers, and retailers who will ultimately sell it. So, there’s something that needs to be addressed in how tea is marketed globally.
Almost all the models we’ve discussed have involved some injection of funds from a foundation or an NGO. And it’s almost like the industry can’t manage independently without something external being put in, almost as charity.
This is the most popular drink in the world, after water. Why should it be depending on injections from charities?
It should earn enough to support the people who produce this amazing product.
*The Wood Foundation works with 28,000 smallholder farmers in Tanzania. Their largest operation is the Tatepa tea factory (Watco), which serves 14,000 smallholders with support from the Njombe Outgrowers Services Company
Out of Control
Out of Control chronicles the dawn of a new era in which the machines and systems that drive our economy are so complex and autonomous as to be indistinguishable from living things. – Goodreads Out of Control: The New Biology of Machines Publisher: Basic Books | 531 Pages January 1992 Free Download Link: MediaFire
Editor’s Note: Tea Biz will continue this conversation on the importance of developing ways to capture and retain supply chain value in the tea lands.