Nepal’s tea industry going through tough timesMany small tea growers have switched to other crops due to the state’s unfriendly tea policy, insiders say.
Nepal’s tea industry is worth Rs8 billion annually, and tea is one of its largest exports. But the sector which provides jobs to nearly 100,000 Nepalis is mired in myriad problems, mostly related to the government’s export policy, insiders say.
The tea sector has the potential to narrow the country’s ballooning trade deficit, but experts say the government is more interested in imports to generate revenue than promoting the industry.
"We are not promoting our product and we are losing money," said Suresh Mittal, president of the Tea Producers Association. "There are many problems—starting from fertiliser to export. We have been telling our problems to the government for years, but no one is listening to us.”
Many small tea producers have switched to other crops due to the state’s unfriendly tea policy, insiders say.
Tea was once an attractive sector. Nepal has a long history of growing tea. The first tea estate, Ilam Tea Estate, opened in the hills of Ilam district in 1863.
Historians think 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 Jung Bahadur Rana. It is believed that tea planting in Nepal started about the same time as in the Darjeeling Hills of India.
In 1965, a second tea plantation, Soktim Tea Estate, was set up in the plains of Jhapa district.
Tea is grown in Nepal at elevations ranging from 800 to 2,200 metres above sea level.
Previously, production was centred in a few districts like Ilam and Jhapa in eastern Nepal. It soon spread to other parts of the country with the tea acreage now reaching 28,700 hectares.
But the government, insiders say, is focused on promoting trading, not manufacturing, putting the tea industry in total disarray.
“The government does not consider tea as being part of the agricultural sector, and for this reason it does not provide chemical fertilisers,” said Mittal. Tea producers say output has been decreasing each passing year for lack of fertilisers.
The government has also cut the irrigation facilities being provided to the tea sector.
Tea growers say that even small tea farmers have to pay the mandatory demand charge for electricity like in the industrial sector, which has increased their cost of production.
The key export market for Nepali tea is India. There are difficulties in exporting tea too.
Shipments of CTC (crush, tear, curl) tea are frequently obstructed by Indian authorities. There is no Nepali agency to turn to when shipments are stopped at the border, say exporters.
Nepali tea producers have to sell their product at the price set by Indian traders because there is no auction house.
Tea producer Shiva Kumar Gupta says tea-laden containers are stopped at Kakarbhitta on Nepal’s eastern border because they don’t have quality certification. They don’t have quality certification because there is no laboratory in Nepal to issue them.
The trucks are stranded at the border for weeks while tea samples are sent to Kolkata, India for laboratory tests.
In many parts of Nepal, small tea farmers have been operating farms and factories through cooperatives. But these farmers are not able to get tax exemption and other facilities provided under the Cooperatives Act 2017.
Setting the annual prices of tea leaves is a perennial problem. As the government does not announce the minimum support price of green tea leaves, disputes arise annually between small and big producers.
The National Tea and Coffee Development Board under the federal government looks after the tea sector. But it lacks adequate human resources and budget.
According to Gupta, the tea sector is not a priority for either the local or provincial government. And the municipalities have not even made a list of the tea growing areas.
Small tea farmers have not received licences to market their crops. They have not got permission to sell and distribute their tea by branding and labelling it.
Insiders say that the government’s policy is discriminatory. It provides concessional loans of up to Rs100 million to industries, but only Rs10 million to tea cooperatives.
Harka Bahadur Tamang, president of the Central Tea Cooperative Association, says tea farmers are not able to sell tea directly in the international market.
The government has implemented the Labour Act 2017, Labour Rules 2018 and the Social Security Fund Act 2018, but tea workers have not been able to benefit from them.
The Social Security Fund has also been established, but it doesn’t cover the tea sector.
Sita Sapkota, a labour union leader, says tea workers are not eligible to join the Social Security Fund.
Women make up more than 70 percent of the workers in the tea sector. Most of the workers are poor and landless. They are not covered by insurance despite the health hazards in the sector. A huge amount of pesticides is sprayed annually in the tea gardens.
Bhupal Sapkota, who is in charge of the All Nepal Trade Union Federation of Koshi province, says tea workers are being deprived of state facilities because the Labour Act is not being enforced effectively.
The process of giving the workers permanent status has been stopped.
According to the data of the National Tea and Coffee Development Board for the fiscal year 2021-22, Jhapa is the largest tea growing district in Nepal with 10,500 hectares under tea cultivation.
In the last fiscal year, Jhapa accounted for 18,252 tonnes out of the total production of 23,746 tonnes.
The board’s data shows that 1,921 tonnes of tea is exported annually. Nepal earned Rs3.79 billion from the export of tea in the last fiscal year.
Tamang says the tea sector has an annual turnover of more than Rs8 billion. “Around Rs4 billion worth of tea is exported to India and other countries, the rest is consumed domestically.”
There are 68 large tea factories operating in the country with 30 factories making orthodox tea and the rest CTC tea. There are more than 150 small orthodox tea processing factories.
Nepal has more than 160 tea gardens and 17,000 farmers engaged in tea cultivation.