Report Feasibility study organic bitter tea Cao Bang - Helvetas

Helvetas Vietnam Swiss Association for International Cooperation 

CB GEM – Community based Governance, Extension and Market project in Cao Bang 

Cao Bang Office: N003 Ly Tu Trong, Hop Giang Qr.,Cao Bang Town, Vietnam 

Tel: ++84 (0) 26 853 263 / 26 858 111, Fax: ++ 84 (0) 26 856 944 

Feasibility study for 

Organic Bitter Tea Production and Marketing 

in Cao Bang Province 

a collaboration between CB GEM and the Cao Bang Bitter Tea Company 

Koen den Braber (External Consultant) 

Hoang Thi Thu Huong (CB GEM staff) 

December 2007

TABLE OF CONTENTS 

Feasibility Study Organic Bitter Tea in Cao Bang: 2007 

LIST OF ABBREVIATIONS AND NAMES v 

SUMMARY vi 

1. INTRODUCTION 1 

2. BACKGROUND 1 

2.1. Context of Cao Bang Province 1 

2.2. Background information on bitter tea 1 

2.3. Current status of organic agriculture in Vietnam 3 

3. WHY ORGANIC BITTER TEA FROM CAO BANG 3 

3.1. Assessment of the Bitter Tea Market 3 

3.2. Feasibility study 4 

4. BITTER TEA VALUE CHAIN 5 

4.1. Supply Chain 5 

4.1.1. Producers 5 

4.1.2. Input supply 6 

4.1.3. Collectors 6 

4.1.4. Bitter tea company (BTC) 6 

4.2. Inputs 6 

4.2.1. Variety and planting material (including nursery management) 6 

4.2.2. Fertilizers 7 

4.2.3. Pesticides 7 

4.3. Production 8 

4.3.1. Field selection and preparation 8 

4.3.2. Collecting, yield, timing, etc. 9 

4.3.3. Biodiversity 9 

4.4. Collection and transport 10 

4.5. Processing 10 

4.6. Marketing 11 

5. ORGANIC PRODUCTION AND MARKETING REQUIREMENTS 16 

5.1. What regulations to follow when exporting? 16 

5.1.1. Food Safety Regulations 16 

5.1.2. Product traceability 17 

5.2. Organic regulation and procedures 17 

5.2.1. EU organic regulations and procedures 17 

5.2.2. Japanese organic regulations and procedures 18 

5.2.3. Korean organic regulations and procedures 18 

5.2.4. Group Certification 19 

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6. COST BENEFIT ANALYSIS 20 

6.1. Costs of external certification 20 

6.2. Costs of operating the ICS 20 

6.3. Cost - benefit analysis 21 

7. SUMMARY AND CONCLUSIONS 21 

7.1. Production and processing requirements 21 

7.2. Certification and ICS 22 

7.3. Market development for organic bitter tea 22 

7.4. Conclusions 23 

8. ADDITIONAL LITERATURE USED 24 

ANNEX 1 - LIST OF PEOPLE INTERVIEWED 25 

ANNEX 2 - NOTES FROM DANIEL V.'s FIELD VISIT 27 

ANNEX 3 - MAIN ORGANIC STANDARDS CONSIDERED 31 

iv

LIST OF ABBREVIATIONS AND NAMES 

ACT Organic Agriculture Certification (Thailand) 

ADDA Agriculture Development Denmark Asia 

BT Bacillus thurengiensis 

BTC Bitter Tea Company (Cao Bang) 

CB Certification Body 

DOST Department of Science & Technology 

EFA Environmentally Friendly Agriculture (Japan) 

EM Effective Micro-organisms 

EU European Union 

GEM Governance, Extension, Marketing project 

GMO Genetically Modified Organisms 


GTZ Gesellschaft für Technische Zusammenarbeit (Germany) 

ICEA Istituto per la Certificazione Etica e Ambientale (Italy) 

ICS Internal Control System 

IFOAM International Federation of Organic Agricultural Movements 

JAS Japan Agricultural Standard 

MAFF Ministry of Agriculture, Forestry and Fisheries (Japan) 

MARD Ministry of Agriculture and Rural Development (Vietnam) 

MDG Millennium Development Goals 

NAQS National Agricultural Product Quality Management Service (Korea) 

NPK Nitrogen - Phosphorus - Kalium (chemical fertiliser) 

PPSD Plant Protection Sub-Department 

RMA Rapid Market Assessment 

VND Vietnam Dong (1 USD = 16,020 VND) 

v

SUMMARY 


Bitter tea (Ilex kaushue) is an evergreen tree species that grows in the natural forests in Cao 

Bang. Because of its potential as a healthy and unique beverage, the Cao Bang provincial 

authorities started a bitter tea plantation project program and set up the Cao Bang Bitter 

Tea Company (BTC) for bitter tea processing and marketing. In 2006, the Cao Bang bitter 

tea market chain was assessed using the Rapid Market Appraisal approach (RMA) as part 

of a project supported by Helvetas. One of the topics of the action plan identified by the 

RMA is to focus on product diversification. Since some foreign companies, mainly from 

Korea, have shown interest in organic bitter tea, Helvetas and the BTC agreed to carry out 

a feasibility study of organic bitter tea production in Cao Bang. An external consultant 

specialised in organic agriculture and certification and one Helvetas staff conducted the 

study. The study included a document review and a field trip to Cao Bang (November 6-10, 

2007). The results of this study should then be used by the decision makers to decide if it 

would be worth to start a certified organic production for specifically identified markets. 

Technically there do not seem to be any obstacles for organic bitter tea production. 

However, a number of measures have to be taken to conform to the organic standards. 

Although there is no immediate demand for organic bitter tea (since the Korean buyer is 

more interested in "low chemical" than organic) it would be useful to consider conversion 

to organic at an early stage. Since some chemical inputs are being used in the current bitter 

tea production, a conversion period of two years has to be considered before the product 

can be sold as organic. 

Organic bitter tea should be seen as part of the diversification process of the BTC so that a 

larger variety of clients can be reached. It would therefore not be recommended to convert 

the entire production of the BTC to organic. It would be easiest (and most simple to 

manage) if for example a certain area will be converted completely and a processing unit 

set up there which is dedicated to the organic products. Since the processing of bitter tea is 

relatively simple and no expensive machinery is being used, the investment for this second 

processing unit would be rather low. A good area for organic production would, for 

example, be The Duc commune of Nguyen Binh district. 

In terms of certification it would be easiest to select one certification body that could 

provide all necessary certificates through one inspection visit. To further reduce costs a 

certifier with local or regional inspectors should be chosen. To eliminate the need for an 

inspection visit to all organic producers (and thereby greatly reducing the certification 

costs), a group certification system should be set up. This would require an Internal Control 

System (ICS), which, if managed by the BTC, would have the added advantage of 

providing a good tool for managing the organic supply chain and the training of farmers. 

Furthermore, the responsible staff of the BTC should develop a good understanding of 

concepts related to food safety and certification requirements. This would include organic 

production and certification but also GAP, HACCP, etc. Secondly, the existing overseas 

contacts, particularly from Korea and Japan, should be approached to find out what their 

requirements are in terms of adherence to specific standards. 

To develop a market for organic bitter tea it is essential to develop some organic 

production. This will allow potential clients to check the product and its specifications. 

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Having some organic production (with an ICS) already will also speed up the process of 

certification since the conversion period could be reduced at least for the pilot area. 

As mentioned in section 4.6, it would be interesting to also explore the possibilities of 

creating some new products on the basis of (organic) bitter tea. In many markets organic 

products are successfully introduced as new products and not just to replace a traditional 

product. This could really attract new customers who would otherwise not take bitter tea in 

its original form. 

vii

1. INTRODUCTION 


Cao Bang province is known as being a poor, remote, mountainous area with 77% of its 

total area covered by forest. 86% of the area’s population earns its livelihood from 

agriculture and forestry. However, Cao Bang has a favourable climate and forest area 

suited to the development of bitter tea, a high value medicinal plant. 

In the frame of its community based Governance, Extension, Marketing project in Cao 

Bang (CB-GEM), Helvetas Vietnam supported the Bitter Tea Company in Cao Bang to 

carry out a rapid market appraisal which identified many strengths and weaknesses of the 

bitter tea market. The CB-GEM project then supported the company to establish an action 

plan to improve the bitter tea market situation. One of the identified topics of this action 

plan is to carry out a feasibility study of organic bitter tea production in Cao Bang. The 

results of this study should then be used by the decision makers to decide if it would be 

worth or not to start a certified organic production for a specifically identified market. 

2. BACKGROUND 

2.1. Context of Cao Bang Province 

Cao Bang is a mountainous province with diversified agro-ecological conditions located in 

the North of Vietnam. It borders China along more than 300 km. It has a total area of some 

6700 km², in which about 77% is covered by forested hills and low mountains (500–1000 

m, with some reaching 1900 m). Therefore, Cao Bang possesses great potential for the 

development of natural resources and high-value agricultural and forestry products. 

Cao Bang has a total population of 513,700, where ethnic minority communities make up 

more than 95% of the total population across seven different ethnic groups (Cao Bang 

Statistics Office, 2005). It is one of the poorest provinces in Vietnam, ranked 60th in the 

Millennium Development Goal (MDG) index and the 50th in the poverty index out of 64 

provinces of Vietnam (UNDP, 2005). Agricultural production is the most important and 

dominant economic sector. It provides the main livelihoods of the population and it is 

considered that it will be the province’s economic foundation for the next 20 years (IFAD, 

2006). 

2.2. Background information on bitter tea 

Bitter tea is the name for a beverage obtained from various species of the plant genus Ilex. 

In Vietnam, bitter tea (or "cha dang") is obtained from Ilex kaushue, which is distributed in 

the North of Vietnam, mainly in Cao Bang province but also in Ha Giang and a few other 

provinces. In China, two groups of plants were traditionally being utilized for bitter tea (or 

"Ku Ding Cha"): several Ilex species and the wax tree (Ligustrum robustum). Today, it is 

estimated that more than 90% of the Ku Ding Cha used in China is from an Ilex, mainly 

Ilex kudingcha (though other Ilex species, such as Ilex latifolia, may be used), while several 

species of Ligustrum are substituted in Sichuan Province and in Japan. (Dharmananda, 

2002). Both in Vietnam and China the leaves of bitter tea are prepared and consumed in a 

way similar to green tea. 

In South America many species of Ilex are used for several popular tea-like beverages. Ilex 

paraguariensis is used to make yerba mate. Drinking mate with friends from a shared 

hollow gourd is an extremely common social practice in many South American countries 

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but also in Syria and Lebanon. Ilex guayusa is used both as a stimulant and as an admixture 

to the hallucinogenic tea "ayahuasca". The leaves of I. guayusa have the highest caffeine 

content of any known plant in the world. In North and Central America, Ilex vomitoria was 

used by the Native American Indians as a ceremonial stimulant and emetic known as the 

"black drink". As the name suggests, the tea's purgative properties were one of its main 

uses, most often ritually. (Wikipedia) 

Research at the Triet Giang Agriculture University in China found that there are 16 amino 

acids belonging to saponin compounds in fresh bitter tea leaf. These amino acids strengthen 

the metabolic process in the human body and are closely related to the body’s nutrition 

structure. Other scientific investigations defined that leaves and buds from bitter tea contain 

many ingredients that can effectively: 

reduces blood lipid and cholesterol levels 

regulates blood pressure 

enhances bile excretion 

has a tranquillizer effect 

assists heart function, and inflammation relief 

has a detoxifying effect, and alcoholic toxin relief 

stimulates digestion 

have a diuretic effect 

In China, Ku Ding Cha has been known for hundreds of years and was first described in 

1765 in the "Bencao Gangmu Shiyi". One of the main growing locations for Ilex is in 

Guangxi Province of south-western China. The oldest Ilex tree is found growing there: it is 

about 30 meters high and has grown for centuries. Guangxi has about 1,400 hectare of Ilex 

kudingcha trees under cultivation. In 1997 an Institute was established in Guangxi to 

research and develop Ku Ding Cha and other local medicinal plants (Dharmananda, 2002). 

Ilex kaushue is an evergreen tree species that grows in the natural forests in Cao Bang. Its 

height varies from 20-30m and the diameter is up to 0.6m. The moist, limey and rocky 

mountain areas above 600m are suitable for bitter tea growing. In 1996, Chinese buyers 

purchased a vast quantity of fresh bitter tea leaves and young branches collected from the 

Cao Bang forests, and started intensive production campaigns in China oriented especially 

to local and export markets. In Vietnam, national and provincial researchers started 

investigations on the medicinal properties of bitter tea. Moreover, large cultivation and 

reforestation with this evergreen tree could help protect watershed areas, the soil and the 

environment. Since Cao Bang has large areas of forestland and a favourable climate for 

bitter tea growing, the tree has been considered as a potential cash crop to help Cao Bang 

farmers escape from poverty. 

The Vietnamese government, particularly the Cao Bang provincial authorities, 

then started with a bitter tea plantation project program (under DOST) and the 

opening of a factory in Cao Bang (the BTC under DOST). The province has 

invested in the development of bitter tea plantation, processing and marketing. 

Cao Bang bitter tea has gradually become well-known particularly in the local 

market and apparently also has a high potential for the export market (EU, 

Japan and Korea). However, these markets have not been targeted very 

intensively yet, mainly because of a lack of bitter tea supply (which does not 

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even satisfy yet the domestic market) but also because of a lack of knowledge 

of these markets. 

2.3. Current status of organic agriculture in Vietnam 

Although it can be said that, as in all other countries in the world, all farmers were growing 

crops organically hundred years ago, organic farming according to the international 

understanding is quite new to Vietnam. Around 10 years ago some foreign companies 

started working with local companies and farmers to grow crops organically for export. 

After many years with only a few hundred hectares under organic management, there is 

presently an estimated 6,475 hectares of organic land (Willer & Yussefi, 2006). However, 

according to additional information collected by the consultant an additional 6000 - 7000 

ha has not been included in the report. The main organic products are herbs such as 

cinnamon, star anise and ginger, fruits, tea, cashew, shrimps and basa fish. These products 

are certified according to the standards of the importing countries, such as Europe and the 

USA, and foreign certification agencies carry out the inspection and certification work. 

The local market has not been developed at all, although one company tried to introduce 

organic vegetables to consumers in Hanoi some years ago. Few international and local 

organizations are supporting organic agriculture (main exceptions ADDA and GTZ). The 

Government also has no specific policies to support the development of organic agriculture 

in the country and as a result there is still little attention for organic farming from research 

and the extension service. However, in December 2007 the Ministry of Agriculture and 

Rural Development (MARD) issued national basic standards for organic production, which 

can now be used as a reference for producers, processors and others interested in organic 

products for the local market. MARD is planning to set up a certification system for the 

local market but a timeframe for this activity has not been developed yet. 

3. WHY ORGANIC BITTER TEA FROM CAO BANG 

3.1. Assessment of the Bitter Tea Market 

In 2006, the Cao Bang bitter tea market chain was assessed using the Rapid Market 

Appraisal approach (RMA). The main objectives of the appraisal included: 

To analyse the actual state of the Cao Bang bitter tea market chain; 

To identify appropriate intervention actions in order to improve the Cao Bang 

bitter tea market chain; 

To elaborate the concrete plan for the intervention actions. 

The RMA estimated that Cao Bang bitter tea has a share of about 10% of the domestic 

market, with the majority of bitter tea coming from China. With regards to the national 

production, the Cao Bang Bitter Tea Company (BTC) is the largest producer, with an 

annual return of around 1 billion VND per year (on a total turnover of around 4 billion 

VND). There are, however, also many smaller processors, who use the name (Cao Bang) 

bitter tea while allegedly they source their tea from China. (The shape of the BTC's bitter 

tea is quite specific and very different from the shape of the Chinese bitter tea.) 

Market demand for bitter tea started to decline in 2004. As a result, the number of BTC 

outlets and distributors has declined across the country. Bud tea is still in high demand but 

the tea bags (using cut tea leaves and left-overs from the production of bud tea) are more 

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and more difficult to sell. At the time of the feasibility study the production of tea bags was 

already stopped completely. 

According to the RMA, bitter tea is mostly bought as a gift, with the highest demand in 

winter, during holidays, festivals and in particular the Tet holiday. A small group of people 

buys bitter tea for personal consumption, mainly because of its health properties. 

Some of the reasons for the low sales volume include the fact that consumers are not 

convinced about the health qualities of the bitter tea or even have a negative feeling about 

the tea (since it has been reported that bitter tea has a negative effect on fertility and 

reproductive health) 1 . For the BTC in particular, the price of their products is relatively 

high while the packaging is not so attractive. However, despite the apparent health benefits, 

many people are not very interested in bitter tea because the product is just too bitter and 

they would prefer drinking green tea or some other beverage. 

The RMA concluded that the following solutions should be prioritised in order to improve 

the Cao Bang bitter tea value chain: 

To mark the boundaries of growing materials according to cultural and 

ecological conditions and habits of each region; 

To determine the origin of the bitter tea tree's origin; 

To invest in and protect existing growing areas continuously; 

To (set up strategies and implement research to) diversify the product; 

To change some products into functional products; and 

To design the product and its packaging in accordance with the targeted clients 

and in a more professional manner. 

(Pham, 2006). 

3.2. Feasibility study 

In parallel with the RMA, Helvetas had some discussions with the BTC on activities to 

improve the bitter tea production and marketing. One of the topics of the action plan 

identified by the RMA is to focus on product diversification. Since some foreign 

companies, mainly from Korea, have shown interest in organic bitter tea, Helvetas and the 

BTC agreed to carry out a feasibility study of organic bitter tea production in Cao Bang. 

Main objectives of the feasibility study: 

To review the existing bitter tea value chain (inputs, production, processing, 

marketing) by emphasising the most important topics in regard to the 

conversion to the organic farming system; 

To review the standards for organic products for some of the main markets 

(Japan, Korea, and EU) 

To make a cost benefit analysis to assess whether or not a conversion to the 

organic standard is profitable 

To analyse the changes or modification in the bitter tea value chain (inputs, 

production, processing, marketing) necessary to met the standards and propose 

approaches and strategies on how to do it 

1 : A more recent study has, however, demonstrated that this in unfounded and there is no negative effect of bitter 

tea on fertility and reproductive health. (Bui and Bui, 2006) 

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An external consultant specialised in organic agriculture and certification and one Helvetas 

staff conducted the study. The study included a document review and a field trip to Cao 

Bang (November 6-10, 2007). The field trip, in which staff from the BTC also participated, 

included visits to: 

Nguyen Binh district: meet farmers planting bitter tea on sloping land, local 

collectors, and district authorities. 

Na Giang village, Ha Quang district: meet farmer households planting bitter tea 

in paddy field and on sloping land, meet Mr. Nhan – specialist on bitter tea 

Visit Cao Bang Bitter Tea Company: meet company management and visit 

bitter tea processing workshop and nursery at Km 3, Cao Bang. 

Debriefing with bitter tea company management and product quality 

management office in DOST 

Visit market places selling Cao Bang and Chinese bitter tea and interview 

clients 

Note: the visit to Dong Khe district to see the bitter tea processing workshop and to meet 

farmer households planting bitter tea in the forest was cancelled due to bad road conditions. 

A list of the persons met is given in Annex 1. 

4. BITTER TEA VALUE CHAIN 

4.1. Supply Chain 

The bitter tea supply chain in Cao Bang is relatively straightforward, with a limited number 

of actors involved. The supply chain is summarized as follows (distributors are not 

included since they were not part of this study): 

Inputs 

(NPK, seedlings) 

Producers 

Collectors 

Processing 

(km 3 unit) 

Packaging 

(BTC head office) 

4.1.1. Producers 

Bitter tea production in Cao Bang takes places throughout the entire province. A total of 

around 4000 households is currently producing bitter tea, with a total area of 1380 ha.. 

Originally, bitter tea was harvested from wild stands growing in the forest. However, 

currently production is almost entirely from cultivated bitter tea. The older bitter tea 

gardens (around 1000 ha in the whole province) are characterised by a low density of 

planting, with some 3,200 trees/ha. There was not much investment in these fields and, as a 

result, production was low. Farmers harvested mostly leaves. 

In 2007 the provincial bitter tea project started to encourage farmers to intensify 

production. The density of planting was increased to 10,000 trees/ha and the level of inputs 

was also increased. Both seedlings and fertilisers was subsidized by the project. Farmers 

are now mostly harvesting buds (or better said "two leaves and a bud", just as in "normal" 

tea). 

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Farmers from all districts in the province supply to the BTC. Focus of production is 

currently on three districts, in particular Nguyen Binh. Farmers are not organised but sell 

directly to the BTC as individuals. 

Total production sold to the BTC during 2007 was nearly 10 tons of fresh leaf (bud). Farm 

production is in the order of 1 - 1.5 ton of buds/ha/year for the low density plantings. For 

the high density plantings this is higher, up to 3 - 4 ton/ha/year. Prices received by the 

farmers from the BTC for one kg of buds is 15,000 VND/kg. 

4.1.2. Input supply 

Limited external inputs are used in bitter tea production. From data collected in the survey 

it seems that these inputs (mainly chemical fertilisers and planting materials) are also 

almost entirely provided by the BTC. Planting materials is coming from the nursery set up 

as part of the provincial bitter tea development project. Input support to farmers is only for 

the first year. After that, farmers are supposed to buy all inputs at full cost price . 

4.1.3. Collectors 

Farmers deliver the tea directly to the BTC or through a collector. In each of the districts 

there is one collector. BTC staff estimated that 60% of the tea delivered to the company 

goes through the collectors. 

4.1.4. Bitter tea company (BTC) 

The BTC has a head office in Cao Bang town and a processing unit at km 3 in Cao Bang. 

Previously, there was also a processing unit at Dong Khe but at the time of the feasibility 

study this unit was being closed down and equipment was moved to the BTC head office. 

Processing of the tea is being done at km3, while packaging is done at the head office. 

The BTC collaborates with the local extension service to contact farmers and to get 

information which farmers are interested in planting bitter tea. Training and other support 

to bitter tea growers is done by the BTC directly and here the extension service does not 

play a major role. 

4.2. Inputs 

The following section focuses on the use of inputs in the bitter tea production, with 

particular reference to their application under the organic standards considered for this 

report (EU, Japan and South Korea). This section is based on information collected during 

the survey as well as on data from the field visit by Daniel Valenghi to Cao Bang in May 

2007 (see Annex 2). A summary of findings is given in Table 1 at the end of this chapter. 

4.2.1. Variety and planting material (including nursery management) 

There are no specific varieties for bitter tea. However, the material used by the farmers 

supplying to the BTC is rather uniform since it for a large part originates from the nursery 

set up under the bitter tea project. 

Under the organic standards considered, seeds and planting material used for organic 

production should be from organic origin. This requirement can easily be met once bitter 

tea is being grown organically. Nurseries could be set up that produce planting material 

from organically grown "mother" trees. 

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In the current nursery a number of chemical inputs are being used. Fungicides are regularly 

applied to control diseases. Also, a growth hormone is being used to stimulate root 

formation of the cuttings taken from the "mother" plants. It could not be established 

whether this hormone was of a synthetic or natural origin. In organic farming natural plant 

hormones such as gibberellic acid (as long as it is made from the fermentation process 

without the use of GMOs and has not been fortified with prohibited synthetic substances), 

indole acetic acid (IAA), and cytokinins are generally allowed as long as they do not 

contain prohibited synthetic substances (WSDA, 2006). However, gibberellic acid is not 

allowed under the EU organic standards. 

4.2.2. Fertilizers 

During establishment of the seedlings, most farmer use chemical fertilisers (NPK) and 

animal manure. The BTC has the following recommendation to the farmers for the planting 

and establishment of seedlings: 

Year 1: Apply NPK and manure at planting, followed by a second NPK application 

later in the year 

Year 2: Apply NPK two times 

Year 3: Apply NPK two times 

From Year 4: Apply NPK one time + weeding 

The bitter tea project provides the NPK (5-10-3) at a subsidized rate to the farmers during 

the first year and farmers are expected to buy the fertiliser at the full cost price from the 

second year onwards. Most farmers interviewed did not continue to apply the NPK when 

they had to pay it fully themselves and applied manure only. 

In organic agriculture, synthetic (chemical) fertilisers are not allowed. Organic soil fertility 

management should include a variety of materials, for example compost, aged animal 

manure, green manure and possibly additional mineral inputs from natural sources. Mineral 

fertilizers may only be used as a supplement to other practices implemented to ensure longterm. 

Compost may be difficult to apply on sloping land but here green manures will be 

very effective, also to control erosion. 

Animal manure can only be used when it is aged or hot composted. Ageing and hot 

composting are normally not used for manure applied in the current bitter tea plantations. 

Some farmers say that their manure is composted but not by hot composting. In some 

cases, EM is used in the composting. EM is allowed in organic but not an essential input. 

4.2.3. Pesticides 

Some farmers use insecticides (Trebon, Bassa) to control pests in the bitter tea plantations. 

Pests targeted were aphids and some kind of leaf rolling caterpillar. Diseases do not seem 

to pose a problem in the field, but fungicides are regularly applied to control diseases in the 

nursery. One farmer was observed to have used a herbicide in his bitter tea plantation. 

In organic agriculture, chemical plant protection chemicals are prohibited. Organic pest and 

disease management should be based on growing a healthy crop and the application of a 

variety of preventive measures. In emergency situations, botanicals or biological sprays 

could be used, for example Bacillus thurengiensis (BT) against caterpillars. 

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4.3. Production 


4.3.1. Field selection and preparation 

Bitter tea is normally planted as a single crop in a field. Sometimes, maize is grown among 

the small bitter tea plants during the first year. In cases where other crops are grown in the 

same field as the organic bitter tea, then these other crops should also be grown organically. 

Most farmers have also other crops then bitter tea and these normally grow in separate 

fields. In these other crops (rice, maize, fruit trees, vegetables) farmers commonly use some 

chemical inputs, such as urea fertilizer and pesticides, although the level of use is not very 

high. The use of chemicals in these fields could contaminate the organic fields. 

Bitter tea fields with adjacent rice fields. Use of chemicals in the rice field would pose contamination risk to organic 

production of the bitter tea. (Picture left at The Duc, Nguyen Binh. Picture right at Nam Tuan, Hoa An.) 

According to the organic standards, if prohibited substances are used on adjacent fields, the 

organic field must have a buffer area to prevent chemical contamination. Since most of the 

bitter tea field observed during the survey are quite large, this requirement should not pose 

any problems, except that farmers may have to cut down some bitter tea trees that are too 

close to the field border. Alternatively, farmers could always decide to stop using 

chemicals also in their other fields. 

Another important aspect of organic production is the prohibition of parallel production, 

which means that it is not allowed for a farmer to grow a crop in one field organically and 

in another field with chemicals. The emphasis is on the field, which means that even when 

a crop is grown organically but other crops in 

the same field not, then this plot cannot be 

considered as organic. Therefore, farmers 

should not be allowed to convert only part of 

their bitter tea. If they convert, they should 

convert all their plots with bitter tea and, where 

applicable, grow all the crops in those plots 

organically. 

Clearing primary forest for organic farming is 

prohibited as well as the burning of stalks, 

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straw and other materials. During the survey, it was observed in one plot that trees were cut 

to plant bitter tea and that the field was burned. (See picture on the right.) 

No forest should be cut for bitter tea planting and burning should not be practised. 

Available plant material should be composted or used as mulch. 

Farmers in The Duc commune of Nguyen Binh district mentioned that in their commune a 

lot of land was available for bitter tea planting. The soil in large areas of the commune is 

too poor to grow food crops but still suitable for bitter tea. However, it was also noted that 

there is now not enough maize in the commune because the land is used for bitter tea. To 

compensate for the loss of income from maize farmers now have to go and work sifting soil 

in the gold mine. 

Two remarks have to be made here. First is that bitter tea planting should not go at the cost 

of planting food crops. Although there is no organic standards specifically forbidding this 

practices, it is definitely against the spirit of organic production. Therefore, care should be 

taken in selecting what land to use for bitter tea planting. Secondly, the river that flows past 

the gold mine and through the commune seems very polluted. This river is a major source 

for irrigation of the commune. No water samples were taken during the survey but the 

water is very muddy and full with soil. Farmers also said that the water is very polluted. If 

this water is to be used for irrigating organic bitter tea, it should be tested and not contain 

any contaminants in the form of heavy metals, pesticides or other chemicals. 

4.3.2. Collecting, yield, timing, etc. 

Farmers collect buds by hands regularly during the year. Farmers interviewed said that they 

use new bags (bought in the market) to bring the tea to the BTC. There is almost no storage 

at the farm since the tea has to be at the processing unit within 24 hours after plucking. 

Bags and container used for transporting and storing organic product must be clean or new. 

Synthetic fertilizer bags are not allowed. 

4.3.3. Biodiversity 

Bitter tea is originally a plant from the forest. However, cultivated bitter tea is mostly 

grown as a monocrop. Conservation of biodiversity is an important aspect of organic 

production, although few regulations have specific rules on how to conserve biodiversity. 

However, the IFOAM Basic Standards (which serves as the reference for many national 

and private organic standards) requires relevant measures to be taken for the provision and 

improvement of biodiversity. 

Improving biodiversity should, however, 

not only be seen as a requirement for 

organic farming alone, but also as 

something to enhance the "natural" image of 

bitter tea which may be appreciated by a 

number of customers. (As already expressed 

to the BTC by a Japanese company 

interested in buying bitter tea from Cao 

Bang.) 

- 9 -


In South America, bitter tea (mate) specialists claim that the taste of bitter tea grown under 

shade in the rainforest is much better than tea made from plants grown in full sunlight as it 

has more flavour, vitality and nutrition (www.guayaki.com, accessed December 8, 2007). 

Biological diversity could be improved through the use of various practices, such as: 

Establishment or preservation of non-agricultural areas, such as hedgerows and 

woodlands, adjacent to or adjoining the organic field; 

The planting of plants, adjacent to or between cropped areas, that provide 

habitat for beneficial organisms; 

Introduction of diverse species into any field or farm parcel planted with a 

perennial crop; 

Cover cropping; and 

Soil building practices. 

Good examples for enhancing biodiversity would be growing a green manure in the bitter 

tea field (which is also beneficial for maintaining soil fertility) or to plant bitter tea in a 

banana field as done by one farmer visited during the survey. 

(See picture.) 

4.4. Collection and transport 

Farmers bring bitter tea to the factory themselves or through a collector. In some situations, 

staff of the BTC will come to the farmer's house to pick up the tea. 

As described by one collector the process is as follows: Farmers bring tea in the afternoon, 

the leaves will be taken out of the bags and put in a layer on the bed (to keep the tea cool), 

the following morning the tea will be packed in bags again and put on the bus for 

transportation to the factory. 

Farmers use their motorbike for transportation or send the tea by bus. The collectors also 

mostly make use of the bus service to bring the tea to the factory and there is no control 

over what is happening during transportation. 

Bag and container used for transporting and storing organic product must be clean or new. 

Synthetic fertilizer bags are not allowed. Care should be taken that during transportation 

the organic products are not contaminated or mixed with non-organic products. As 

mentioned under 4.2.3 farmers could use new bags for transporting the tea. However, 

transportation by bus is risky since there is no control over what happens with the tea 

during the time on the bus or during loading and unloading. 

Materials used in or produce from organic production must not be stored in the same area 

as materials/produce from conventional production. Therefore, appropriate measures 

should be taken to avoid mixing in the case when a collector handles both organic and nonorganic 

tea. 

4.5. Processing 

The processing of bitter tea is quite a simple process. It includes the following steps: 

Washing of leaves and cleaning out bad quality leaves 

Boiling of the leaves in a wok 

- 10 -


Drying in the open air (for up to 4 days, until dry enough) 

Spraying water on the leaves (so that it can be rolled) 

Rolling (by hand) 

Drying 

Quality check (remove badly shaped or coloured tea 

No additives are used in the process, which will make the processing conform to most 

organic standards. 

However, basic sanitation of the 

processing unit is limited. Besides, there 

is a risk of contamination from the outside 

environment. Most of the steps in the 

processing take place in the open air and 

there is a risk of contamination with dust 

and dirt. Also, motorbikes of staff are 

parked right next to the drying area, which 

also poses a risk. This problem could 

easily be solved with some investments to 

create separated drying areas, use of 

drying tables, etc. 

In organic production and processing care should be taken not to mix organic and nonorganic 

products in case the processing unit processes both products. The simplest solution 

would be to set up a separate processing unit just for the organic. Alternatively, one has to 

create separate storing areas for organic and non-organic and to create a system to 

physically separate processing of the organic and non-organic materials, for example by 

processing them on separate days. However, this would require the routine cleaning of all 

equipment and machinery before starting the processing of the organic batches. 

4.6. Marketing 

Currently, the BTC sells almost exclusively bud tea. The production of tea bags and instant 

tea have stopped due to the lack of a market. Organic production is one way to diversify the 

product range offered by the BTC through which a larger range of customers could be 

reached. Organic bitter tea is already being offered by some Chinese companies as well as 

from South America (mate). There are several companies selling tea through the internet. 

One of these companies offers an organic bitter tea from China for 26 USD/lb (or around 

57 USD/kg) (www.twohillstea.com, accessed on November 23, 2007). Below are some 

pictures of organic bitter teas from China sold in the USA: 

- 11 -


However, it would be interesting to also explore the possibilities of creating some new 

products on the basis of bitter tea and this could be especially interesting when combined 

with the organic product. In many markets organic products are successfully introduced as 

new products and not just to replace a traditional product. This could really attract new 

customers who would otherwise not take bitter tea in its original form. 

The South American mate bitter tea is sold organically by one company both in flavoured 

form and traditional (unflavoured). Mate is commonly flavoured with mint, orange and 

grapefruit skin, etc. Tereré is an infusion similar to mate but prepared with cold water 

(rather than with hot water). The vast majority of people in Paraguay take their tereré with 

water infused remedial herbs such as mint or lemongrass. When not prepared with plain 

cold water, citrus or pineapple fruit juices are usually used (http://en.wikipedia.org/, 

accessed November 16, 2007). 

Examples of other interesting products are "Materva", a mate soft drink produced with 

herbs and bitter tea chewing gum from the China Hangzhou Tearrow Foodstuff Company. 

The Materva Soft Drink Company was founded in Matanzas, Cuba, in 1920. There is also a 

diet brand called Diet Materva. 

- 12 -


Table 1. Assessment of improvements to be made to comply with organic standards in comparison with the current situation 

Applicable Organic Standard Current Situation Improvement to be made 

1. Synthetic fertilizers are prohibited. NPK is being used by farmers who planted bitter 

tea in their fields as well as in the nursery 

2. Chemical plant protection chemicals are 

prohibited. 

Some farmers use insecticides (Trebon, Bassa) to 

control pests in the bitter tea plantations. 

Fungicides are regularly applied to control 

diseases in the nursery. One farmer was observed 

to have used a herbicide in his bitter tea 

plantation. 

3. Synthetic hormone is prohibited. A rooting hormone is used in the nursery. It 

could not be established whether this hormone is 

of a synthetic origin. 

4. Farmer must maintain records of sources of 

all farm inputs as well as of harvested 

products. Records include sales records. 

Annual production plans are also required.. 

5. Parallel production is not allowed: crops in 

organic fields must be different from crops in 

conventional fields. 

6. If prohibited substances are used on adjacent 

fields, the organic field must have a buffer 

area to prevent chemical contamination. 

At present, farmers do not keep any records. 

However, the BTC has a quite detailed system 

for keeping records of farmers it is supporting 

with establishing new plantations. 

Most farmers grow bitter tea as monoculture, 

with a limited number of plots. 

Many bitter tea plantations border fields with 

maize, vegetables or rice. Especially in rice and 

vegetables chemical fertilisers and pesticides are 

being used. 

- 13 - 

Soil fertility management should include a 

variety of materials for example compost, aged 

animal manure, green manure and possibly 

additional mineral inputs from natural sources. 

Compost may be difficult to apply on sloping 

land but here green manures will be very 

effective, also to control erosion 

Organic pest and disease management should be 

based on growing a healthy crop and the 

application of a variety of preventive measures. 

In emergency situation, BT could be used against 

caterpillars. 

Seedling production without use of synthetic 

growth hormone should be studied. 

Once farmers start organic conversion, they 

should start to keep records. BTC's current 

system of record keeping could provide good 

basis for and ICS. 

Farmers should not be allowed to convert only 

part of their bitter tea. If they convert, they 

should convert all their plots with bitter tea. 

Farmers should create buffer zones and plant 

border crops where required.


7. Clearing primary forest for organic farming In one plot it was observed that trees were cut to No forest should be cut for bitter tea planting 

is prohibited. 

plant bitter tea. 

8. All farm inputs containing GMOs are 

prohibited. 

This appears not to be a big issue. None at the moment. 

9. If available, organic seed and plant material Not an issue at present. Once bitter tea is being grown organically, plant 

should be used. 

material can be taken from these trees. 

10. Organic fertilizers should include a variety of Presently only manure is being used by most Organic fertilisers used in organic production 

materials for example compost, aged animal farmers. 

should include compost, green manures, animal 

manure, green manure and possibly 

manure, mulches and, in certain situations, 

additional mineral inputs from natural 

sources. 

allowed mineral fertilisers. 

11. Animal manure can only be used when it is Ageing and hot composting are normally not All animal manure should go through an aging or 

aged or hot composted. When manure is not used for manure applied in the plantations. Some hot composting process. (Hot composting would 

composted before use, it should be applied at farmers say manure is composted (but not by hot be easier to check and manage.) 

least 120 days before harvesting. 

composting). In some cases, EM is used for the 

composting. 

12. Burning of stalks and straw is prohibited. Although this was not observed during the study, 

it is a common practise among Vietnamese 

farmers. 

Just follow the rule. 

13. Night soil and urban compost are prohibited. Not an issue at the moment. Just follow the rule. 

14. For brought-in poultry (ducks, chicken and Some farmers buy in poultry manure from Since in Vietnam there is no commercial free- 

birds) manure only the manure from poultry outside. 

range poultry production, this means that it is not 

raised in free-range farms is allowed. 

possible to use poultry manure from outside 

sources. 

15. Farmer must have measures to prevent top No particular measures against erosion are In areas sensitive to erosion, hedgerows could be 

soil erosion and soil salination. 

currently being taken. 

planted. 

16. Measures shall be taken for the provision and Bitter tea mostly planted as a single crop. For example, grow green manure in bitter tea 

improvement of landscape and biodiversity 

fields, grow bitter tea with other crop, such as 

banana, or plant hedgerows and border crops. 

17. Bag and container used for transporting and Farmers visited used new bags. However, Establishing processing unit close to production 

- 14 -

storing organic product must be clean or new. 

Synthetic fertilizer bags are not allowed. 

18. Materials used in or produce from organic 

production must not be stored in the same 

area as materials/produce from conventional 

production 

19. Spraying of prohibited pesticides in storage is 

prohibited. 

transport itself is mostly by bus and farmer has 

no control over what is happening during 

transportation. 

Not an issue at the moment. 

- 15 - 


site makes it possible for producers to deliver 

themselves so that the process can be controlled. 

Set up separate processing unit for organic tea or 

create separate storage areas for organic and nonorganic 

when only one processing unit used for 

both.


5. ORGANIC PRODUCTION AND MARKETING REQUIREMENTS 

One of the observations of the survey was that the BTC has a limited understanding of the 

requirements and standards related to food safety in overseas markets, including organic 

production. The reason for this survey was an apparent interest from a Korean buyer in 

organic bitter tea. However, during our interview with the BTC management it became 

clear that this was merely an interest in "clean" production, not in organic. This confusion 

was caused because the BTC management was of the impression that "clean" production 

(which is production with limited use of chemicals) was similar to organic production. 

Therefore, before going into more detail on the requirements for organic production, some 

more general information will be given on international for food safety regulations; 

5.1. What regulations to follow when exporting? 

When exporting agricultural products, either as raw material or processed, to another 

country the exporter has to be aware of two main areas where the importing country will 

have regulations for the exporter to follow. The first are food safety regulations and the 

second requirements on product traceability (FAO, 2007). For the main markets, 

European Union, Japan and Korea, which are considered for this report these regulations 

are compulsory and have to be followed by exporters or producers who want to sell their 

products into these markets. These are the basic regulations to follow for any product to be 

exported. 

On top of these compulsory standards, additional requirements will apply when the 

exporter wants to sell the product under a specific label required in the importing country, 

such as organic or "low pesticide". These standards are usually called voluntary standards 

since they only need to be followed in case an exporter wants to sell under that specific 

label (FAO, 2007). Voluntary standards are normally specific for a country. For example, 

Korea has a label for "low pesticide" products but a similar label does not exist in the EU 

nor are there any international "low pesticide" standards. Also, there is no system for 

recognition between "low pesticide" standards of different countries that have such 

standards, for example between Vietnam's "safe" vegetables standards and the Korean "low 

pesticides" standards. On the other hand, Korea, Japan and the EU have standards for 

organic products but these are not the same for the three countries. However, there exist 

some system for mutual recognition of organic certificates between the different countries. 

5.1.1. Food Safety Regulations 

Producers need to ensure the quality and safety of their produce and avoid all potential 

hazards such as risks from contaminated water or from other microbial or chemical 

contaminants. Regulations on the maximum residue limits (MRLs) of pesticides an 

herbicides are effective both at national and international levels. Producers and exporters 

must comply with both the regulations of their own country (in this case Vietnam) and the 

regulations of importing countries. They may only use chemicals that are registered for use 

on a particular crop and must strictly follow the directions indicated in the instructions 

leaflet or on their containers (boxes and bottles) (FAO, 2007). 

In the European Union, there are now common limits for many pesticides that apply to the 

entire European Union. However, for some pesticides the residue limits vary from country 

to country. Each country verifies that regulations are met (usually through the Ministry of 

Agriculture) at its point of entry. When European Union countries have not set up 

- 16 -


maximum limits, exporters are required to obtain an import tolerance. It should be noted 

that the EU continues to lower the maximum limits of pesticide residues permitted in 

products (FAO, 2007). 

In Japan, the Ministry of Health, Labour and Welfare and the Environmental Department 

are responsible for establishing and testing residue limits. These limits are based on the 

Food Sanitation Law (FAO, 2007). 

5.1.2. Product traceability 

In response to recent problems about food safety (e.g. mad cow disease) and global 

terrorism, many governments are increasing control over all stages of food production, 

processing and distribution to protect consumers against the biological, chemical and 

environmental contamination of food. Traceability (product tracing) is the ability to follow 

the movement of food through specified stages of production, processing and distribution. 

They also enable efficient recall in case of the products' contamination. Furthermore, they 

help determine the origin of a food safety problem, comply with legal requirements and 

meet consumers' expectations for the safety and quality of purchased products (FAO, 

2007). 

The EU regulations on traceability entered into force in January 2005. In order to comply 

with these rules, it is important that EU importers identify the origin of products. As a 

consequence, the latter could require exporters to comply with traceability requirements 

even if the exporter in trading partner countries are not legally required to fulfil the 

traceability requirement imposed within the EU. No traceability requirements for exporters 

exist in Japan yet (FAO, 2007). 

5.2. Organic regulation and procedures 

5.2.1. EU organic regulations and procedures 

In 1991 the EU passed a regulation about organic farming. This regulation EEC Regulation 

2092/91 contains the legal provisions regarding farming, labelling and monitoring of 

organic farming for the whole European Community. The Regulation provides the basic 

standard for organic plant and livestock production and, at the same time creates specific 

requirements regarding farming, processing and importation from third countries. All farms 

and processing units are submitted, at least once a year, to a programmed inspection. As 

well, unannounced random inspections are carried out. The costs of inspection and 

certification are to be paid by the company requesting the service. 

A European logo for organic products exists since February 2000. 

However, the use of this label is not mandatory and for now is still not 

commonly used. 

If an operator in a country outside the EU wants to export organic 

products to the EU, then a certification body (CB) must perform on-site inspections. In the 

case of Vietnam, where local organic certification bodies do not exist, an international 

certifier has to be selected. This could either be one based in Europe or one with a branch 

office in Vietnam. Currently, there is only one CB with an office in Vietnam, while several 

other CBs use local or regional inspectors. 

The EU does not have specific environmental or "low pesticide" food labels and 

regulations (although some regulations exist at the national level of the individual EU 

- 17 -


member states). However, major EU importers are increasingly using more general food 

safety regulations, such as EurepGAP. 

5.2.2. Japanese organic regulations and procedures 

Environmentally friendly agriculture (EFA) is a concept used in 

Japan. It encompasses more than organic agriculture and this, to 

some extend, creates some confusion. The total of EFA certified 

farms comprises 22 % of all farm households in Japan. In 2002, organic farmers accredited 

under the Japan Agricultural Standard law represented only 0.7 % of EFA farmers. 

Organic regulations took effect in Japan from 2001. The regulation was revised in 2005 

and this new regulation became effective on March 01, 2006. Organic production is 

regulated as part of the new Japanese Agricultural Standards (JAS) under MAFF. 

Standards are very similar to the EU standards, with main exception of the list of permitted 

products. One specific, and very important, requirement of JAS is for a "Grading Manager" 

who acts as quality assurance manager. Grading means that prior to authorizing the use of 

the JAS seal the person in charge (the Grading Manager) checks that for the respective lot 

the organic standards and internal instructions were followed. The result of this verification 

has to be documented in a checklist, which has to be filed during at least one year. Like the 

person responsible for production, the grading manager has to attend a JAS seminar, prior 

to first JAS inspection (www.ceres-cert.com/en_jas.html, accessed on October 15, 2007). 

MAFF officially recognized the equivalence of EU regulation (EEC) 2092/91 with JAS 

standards. Due to this agreement on equivalence, JAS certification can be issued without 

additional inspection when the operator is already EU certified. (This process is called "recertification"). 

However, the JAS certificate should be issued by a certifier, which is 

accredited by MAFF. 

5.2.3. Korean organic regulations and procedures 

The Korean organic labelling system for fresh produce and grains is called 

“environmentally friendly” with four variations of an organic seal. The first is Organic 

(green), Transitional (light green), No Chemicals (blue), and Low Chemicals (orange). 

In terms of inspection and certification, there is an important difference whether a raw 

material/fresh product or a processed product is being imported into Korea. 

Organic raw materials need to be inspected in the country of production by a Korean 

inspector, foreign certifications are not accepted. The applying company pays all expenses 

for the inspector to travel to the farm. However, the applicant can be the importer and not 

necessarily the producer. The certification lasts one year and the time frame to receive 

certification is one to two months after the application is received (Llandry, 2004). 

- 18 -


For a processed product, the determination as to whether the product meets the Korean 

standards may be based on a certificate issued by an organization, which satisfies the 

qualifications to be a certifying entity under the relevant regulations of: 

a) the exporting country, or 

b) a reliable organization certified by a recognized international body, such as IFOAM. 

In the case of Vietnam, the second option would be the only one applicable. 

5.2.4. Group Certification 

Organic certification norms and regulations, e.g. the EU regulation, requires an annual 

inspection visit of every producer. However, for most smallholders in developing countries, 

it is impossible to pay for annual inspection visits by a foreign certification body (IFOAM, 

2004). 

To cope with this situation, smallholders in developing countries in co-operation with 

certification bodies have been developing systems to assure compliance to organic 

standards for producers as a group. Different forms of quality assurance systems of smallholder 

groups have developed over time with respect to the nature of the operation and 

size, ranging from tens to thousands of individual producers. The systems have in common 

the following aspects (IFOAM, 2004): 

A central body responsible for marketing and the group's compliance to 

applicable standards: (This body can be the buyer, processor, or self organized 

cooperative/association.) 

One single certification for all individual production as well as processing and 

handling activities registered within the group. Individual operators within the 

group may not use the certification independently. 

Group members operate under contractual or binding membership requirements 

specifying the commitment to comply with applicable organic standards and 

permit inspection, etc. 

Presence of an internal control system (ICS), operated by the responsible 

central body or an external body contracted by the central body. The ICS 

normally maintains files on all members of the group and inspect each 

member's operation at least once a year. A list of all individual member 

producers is available. 

The ICS has two important components: 

Training the producers and anyone else who is responsible for processing or 

handling the organic product in their responsibilities for maintaining the 

organic integrity of the crop, and 

Setting in place the systems for measuring and inspecting the farmers, 

processors and handlers compliance to the organic standards. 

With an ICS in place, the external inspection process is then focused on evaluating the 

operation of the ICS and the inspection of a sample of farms not each individual farm 

(generally only 10% of the farmers in the group is inspected) as well as processing 

facilities. 

Coupled with an annual inspection of the operation cum evaluation of the ICS, group 

certification thus offers two tiers of control as opposed to just an external annual inspection 

- 19 -


visit. Furthermore, the flow of produce from individual producers is under greater control 

with centralised marketing as a group (IFOAM, 2004). 

Several ICS have been set up in Vietnam already, for example by the tea company Ecolink. 

This ICS includes over 200 farmers as well as a processing unit and several warehouses for 

tea storage. One staff of Ecolink is assigned to manage the ICS, while the ICS inspectors 

are government staff (from PPSD or extension service) that do the ICS inspections on a 

part-time basis. However, Ecolink is responsible for arranging training for these ICS 

inspectors. Some NGOs in Vietnam, such as ADDA, can provide training and assistance in 

setting up an ICS. 

6. COST BENEFIT ANALYSIS 

6.1. Costs of external certification 

The cost of certification generally consist of two parts, the first is the certification fee 

(based on the kind of certificate needed) and the second the actual cost for the inspection. If 

several certificates are required (for example, both EU and JAS) it is most economic to 

select one certification body that can issue both certificates through one inspection visit. 

Recently, a regional CB (ACT Thailand) set up collaboration with a well-established 

European CB (ICEA Italy), which offers a very interesting menu of certification options to 

operators in South East Asia, i.e. IFOAM Accredited and BioSuisse certification through 

ACT as well as EU, NOP and JAS certification through ICEA. 

The cost for certification though this arrangement ranges between 350 and 450 Euro, 

depending on the certificate required. The two partners also give a discount if more than 

one certificate is requested. Based on the certificate needed there could be some additional 

costs, for example for samples to be analysed for chemicals (300 Euro per sample). Total 

cost for three certificates: EU (direct) 400 Euro, JAS 440 Euro, Korea (through ACT 

private standards) 350 Euro. Total: 1190 Euro - 20% = 950 Euro, plus 300 Euro for the 

sample. Total costs 1250 Euro. 

Inspection fees are 150 Euro per day per inspector, plus all local and international travel 

and food and lodging. With 100 producers there are 10 producers to be inspected plus the 

processing unit (3 days), plus 1 day for ICS check. Adding 2 days for travelling to Cao 

Bang makes a total of 6 days or 900 Euro (6 x 150 Euro). Finally, we need to add the travel 

from Bangkok (300 USD) as well as food and lodging for 6 days (240 USD, 6 days @ 40 

USD/day). 

Adding the costs for certification (1250 Euro or 1750 USD) and the inspection (900 Euro 

or 1260 USD) and the travel, food and lodging (540 USD) gives a total of 3,550 USD. 

(Please note that the current exchange rate of Euro to US dollar is quite unfavourable.) 

6.2. Costs of operating the ICS 

There are initial funds required for setting up the ICS and training producers, ICS 

personnel and inspectors. However, since most of the costs, including for trainers, are local, 

total funding needs are not high. An estimated initial expenditure of 500 - 1000 US dollar 

may be needed, which could maybe be requested from Helvetas or provincial funding. 

- 20 -


Once the ICS has been set up, the annual running costs are mostly limited to payments for 

personnel and travel. When the ICS is being managed by the BTC, staff costs will be 

minimal and the only costs will be the fee for the inspectors. When working with local ICS 

inspectors travel costs will also be quite limited. The requirement for the number of visits 

to each farmer in the ICS is normally two per year. 

The operation of the ICS should in principle be funded out of the additional income from 

sales of organic products, unless there is a general fund available for training activities or 

so. Farmers could also contribute to the operation of the ICS. Ecolink, for example, has the 

agreement with its producers that they pay 5% of the price of the tea bought by Ecolink to 

the ICS. 

6.3. Cost - benefit analysis 

Since there are no market data available for organic bitter tea, the cost benefit analysis was 

made using a different approach. In discussion with the BTC, the director remarked that the 

Korean company interested in the (clean) bitter tea was willing to buy 1 ton for a price of 

250,000 VND/kg. However, the BTC was negotiating for a price of 300,000 VND/kg. So 

let us assume a premium of 50,000 VND/kg: possible for a better product, including 

organic. For an order of 1000 kg, this premium would generate an additional income of 50 

million VND or 3,100 US dollar. In section 6.1 the total costs for certification and 

inspection were estimated to be 3,550 US dollar annually. 

The break-even point for the cost of certification is as follows: 

1. With the three certificates required and at the current Euro - US Dollar exchange rate of 

1.40, the amount of tea required to recover the cost of certification would be 1,140 kg. 

2. When only two certificates would be required, for example only the Japanese and the 

Korean, then the break-even point would be at 995 kg. 

3. When the exchange rate would change in favour of the US dollar (for example, to 1.20) 

then the break-even point for three certificates would be at 1,000 kg. 

7. SUMMARY AND CONCLUSIONS 

7.1. Production and processing requirements 

Although there is no immediate demand for organic bitter tea (since the Korean buyer is 

more interested in "low chemical" than organic) it would be useful to consider conversion 

to organic at an early stage. Since a variety of chemical inputs is being used in the current 

bitter tea production, one has to consider a conversion period of some two years before the 

product can be sold as organic. However, during the conversion period all organic 

requirements already have to be met. 

Technically there do not seem to be any obstacles for organic bitter tea production. As 

discussed in Chapter 4 a number of measures have to be taken to conform to the organic 

standards. 

Organic bitter tea should be seen as part of the diversification process of the BTC so that a 

larger variety of clients can be reached. It would therefore not be recommended to convert 

the entire production of the BTC to organic. Thus, a system has to be developed to manage 

- 21 -


two types of production without threatening the integrity of the organic production. As 

mentioned in Chapter 4 no farmer should be allowed to convert only part of his/her bitter 

tea production. However, managing two production systems will be most critical at the 

processing level. 

It would be easiest (and most simple to manage) if for example a certain area will be 

converted completely and a processing unit set up there which is dedicated to the organic 

products. Since the processing of bitter tea is relatively simple and no expensive machinery 

is being used, the investment for this second processing unit would be rather low. 

A good area for organic production would, for example, be The Duc commune of Nguyen 

Binh district. There currently are 98 farmers registered with the BTC here and production 

conditions are quite similar among these farmers making it very suitable for setting up an 

ICS. Commune authorities are also quite positive about the bitter tea project and seem to be 

supportive to the idea of organic production. A small processing unit could be set up in the 

commune that is dedicated to organic processing. This number of producers will allow for 

the production of reasonably sized batches of tea (one ton). A processing unit close to the 

producers would also make it possible for the producers to bring their tea directly and 

personally to the processing unit, eliminating the use of the bus services during which there 

cannot be any control over what happened with the tea. 

7.2. Certification and ICS 

In terms of certification it would be easiest to select one certification body that could 

provide all necessary certificates through one inspection visit. To reduce costs a certifier 

with local or regional inspectors should be chosen. To eliminate the need for an inspection 

visit to all organic producers (and thereby greatly reducing the costs for certification), a 

group certification system should be set up. This would require setting up an ICS, which 

would have the additional advantage of providing an excellent tool for managing the 

organic supply chain, including the training of farmers. 

7.3. Market development for organic bitter tea 

First of all, the responsible staff of the BTC should develop a good understanding of 

concepts related to food safety and certification requirements. This would include organic 

production and certification but also GAP, HACCP, etc. Secondly, the existing overseas 

contacts, particularly from Korea and Japan, should be approached to find out what their 

requirements are. 

To develop a market for organic bitter tea it is essential to develop some organic 

production. This will allow potential clients to check the product and its specifications. 

Having some organic production (with an ICS) already will also speed up the process of 

certification since the conversion period could be reduced at least for the pilot area. 

As mentioned in section 4.6, it would be interesting to also explore the possibilities of 

creating some new products on the basis of (organic) bitter tea. In many markets organic 

products are successfully introduced as new products and not just to replace a traditional 

product. This could really attract new customers who would otherwise not take bitter tea in 

its original form. 

- 22 -

7.4. Conclusions 


The key conclusion from the feasibility study is that there is excellent potential for the 

production of organically certified bitter tea in Cao Bang. 

BTC management and local authorities, through the DOST, appear to be very supportive to 

organic production. The DOST also indicated that the province could support the 

conversion to organic provided that it can be demonstrated that organic production will 

bring benefit to the farmers. 

To achieve organic certification the bitter tea and any other crops should be grown to 

comply with organic standards. 

The use of fertilizer and pesticide inputs is relatively minimal and could be substituted with 

acceptable organic inputs and farming practices. 

In many cases the bitter tea and other crops are grown in such close proximity that the risk 

of contamination from the other crop to the tea is too great. If it is not possible to convert 

the entire farms to organic, appropriate measures should be taken (in the form of buffer 

zones) to avoid contamination of the organic bitter tea from chemicals used in the other 

crops. 

The most cost effective way to organize organic certification for small holders is through a 

group certification programme that requires all the farmers in a group to be farming all 

their crops organically. 

It is most practical to set up a unit that will only process organic bitter tea. All the farmers 

supplying to this unit must be certified organic. Otherwise a parallel production issue will 

arise which is difficult to manage in an ICS. 

Costs for external certification are relatively high when three certificates are needed. 

However, it seems possible to recover the investment through a reasonable increase in the 

export price for the bitter tea (20%). Volumes of bitter tea required to recover the cost of 

certification are between 1000 - 1150 kg based on the number of certificates needed and the 

Euro - US dollar exchange rate. 

Since the demand for organic bitter tea from the BTC is not very clear, it may be good to 

start with a trial on organic bitter tea production. Key aspects of the trial would be to test 

the use of organic fertilisers, particularly compost and green manure cover crops, and 

organic pest and disease management. It would also be worthwhile to test whether bitter tea 

would grow well under shade. 

- 23 -

8. ADDITIONAL LITERATURE USED 


Bui Thi Bang and Bui Thi Dieu An (2006). Nghiên cứu về hoá học, độc tính và sản phẩm 

mới từ lá chè đắng Cao Bằng”, Dec. 2006. (This research was presented in the National 

Workshop on medical materials held on 26 th October 2007 in HCM city and published as 

workshop material (page 131-140).) 

Dharmananda, Subhuti (2002). KU DING CHA. Itmonline article retrieved November 

23, 2007 (www.itmonline.org/arts/kudingcha.htm). 

IFOAM (2004). Smallholder Group Certification: Training Curriculum for Producer 

Organizations. International Federation of Agricultural Movements, Bonn, Germany. 2004. 

Landry consulting (2004). OTA Market Overview South Korean Organic Market. Landry 

consulting, llc., April 2004. 

Pham Tuan Khuong (2006). Rapid Market Appraisal on Cao Bang Bitter Tea Product. 

Cao Bang Bitter Tea Company and Helvetas Cao Bang. October 2006. 

Rundgren, Gunnar (2001). Organic Standards in importing countries: differences and 

similarities. FAO conference on Organic Horticulture, Trinidad and Tobago 8-10 October, 

2001. 

USDA (2004). Food and Agricultural Import Regulations and Standards - Republic of 

Korea, Country Report. GAIN Report - KS4039, USDA Foreign Agricultural Service. July 

2004. 

Willer, Helga and Minou Yussefi (2006). The World of Organic Agriculture. Statistics 

and Emerging Trends 2006. International Federation of Organic Agriculture Movements 

(IFOAM), Bonn Germany & Research Institute of Organic Agriculture FiBL, Frick, 

Switzerland. 

WSDA (2006). European Organic Verification Program Producer Additional 

Requirements. Washington State Department of Agriculture Organic Food Program, 

document AGR 2204 R/4/06 retrieved November 30, 2007 (http://agr.wa.gov) 

- 24 -

ANNEX 1 - LIST OF PEOPLE INTERVIEWED 


Mr. Trieu Dao Son Farmer, Nam Un village, The Duc commune 

Mr. Dang Dao Phau Farmer, Nam Un village, The Duc commune 

Mr Hoang Bich Vien BTC staff responsible for The Duc commune 

Mr Say The Duc commune chairman 

Mr Cuong Chairman Farmer Union, The Duc commune 

Mr Van Head of Nam Un village, The Duc commune 

Mr Hoang Van Trang Husband of collector Mrs Nguyen Thi Phuong 

Mrs Nong Thi Hue Quality controller, BTC processing unit at km 3 Cao Bang 

Mrs Nong Thi Huong Staff in charge of bitter tea nursery, km 3 Cao Bang 

Mrs La Thi Hoa Staff of bitter tea nursery, km 3 Cao Bang 

Mrs Nong Thi Thin Farmer, Na Giang village, Nam Tuan commune, Hoa An 

district 

Mr Nguyen Van Nhan Bitter tea expert and pioneer, former vice-director DOST 

Mr Chu Duc Ngoc Director BTC Cao Bang 

Mr Hoang The Tung Vice-director BTC, in charge of production 

Mr Nong Trong Thang Head of Planning Section, BTC 

Mr Phuong Chinh Tuong Staff of Materials Section, BTC 

Mr Trieu Vice-director DOST 

Mr Hung Staff DOST, Intellectual Property Department 

Several bitter tea sellers at the Cao Bang central market were also interviewed. 

- 25 -

ANNEX 2 - NOTES FROM DANIEL V.'s FIELD VISIT 


Meeting with Bitter Tea Company, in Cao Bang on 14.3.07 

• The meeting, attended by the director of the company accompanied by some staff was 

an occasion to review the main findings of the RMA which assessed many difficulties 

for the bitter tea (BT) from Cao Bang 

• The BT Company, which is underway to become a joint stock company (Vinatea or 

Vinatobacco ?) counts on the Helvetas support to: diversify the product, introduce GAP 

or organic standards, and support for marketing 

• Mr Nien, one of the pioneers of the Bitter Tea promotion in Cao Bang also attended the 

meeting 

• China exported bitter tea some years ago from Cao Bang and started huge export 

oriented plantations 

• Bitter Tea became famous abroad via the Chinese marketing and received also an 

award in New York 

• The Vietnam Government wanted also to start the promotion of BT and opened a 

factory in Cao Bang (the BT company under DOST) and with a bitter tea plantation 

project program (under DOST) 

• The assessment is that the marketing is a problem and also the production is not well 

established (too much leave production and not enough buds) 

• The action plan of the company contains following: 

Plantation campaign with a density of at least 10,000 tree/ha (now 3000/ha) 

Higher density, higher bud production (closer plantation and cuttings of the 

trees) 

Research on planting material/varieties and launch info campaign among 

farmers 

Scientific and commercial promotion of BT on VTV 

Collaboration with Institutes and Medicine Departments to prove that BT has 

no negative effect on health and to repeat that BT has very good effects 

Reduction of bitterness with mixture with another herbal medicinal plant (to be 

identified and tested) 

Need more capital (equitisation is underway) 

Re-organisation of the distribution channel (see RMA report) 

Develop marketing (design, size, form, etc.) 

Collaboration with elderly people organisation 

Knowledge on how to grow organically bitter tea 

Developing clear technical guidelines for farmer 

Research and development on bitter tea growing, especially in regard to the use 

of Effective Micro-organism (EM) 

• Prices at farm gate: 15,000 VND/kg (buds) and 7,000 VND/kg (leaves) 

• Support for contracting farmers (95%): 65% of the price for seedlings and 50% for the 

chemical fertilizer prices 

• Cost for seedlings is 2362 VND/seedling (normal density is 3000/ha but now 

recommended should be 10,000 = 2362 x 10,000 = 23.6 millions/ha as initial 

investment ! 

• Yield 3-4t/ha (?) 

• Production accessible for ethnic minorities? Yes (?) How? 

- 27 -


Meeting and visit to Mr. Toan household in Na Giang village, Hoa An districton 

15.5.07 

• She is harvesting buds in this 3 years old plantation with BT trees at an average high of 

150-170 cm. She can harvest during all the year but the production is reduced during 

the summer (rainy season) because of the attacks of the aphids on the apical leaves 

• 40-60 kg/week in spring (50 x 10,000 = 500,000 x 4 = 2 millions per month x 10 = 20 

millions/year on 4000 m2). Per ha: 2.5 x 20=50 millions/ha (rice in Cao Bang is only 

10-12 million/ha) 

• Harvested leaves must be in the BT Company 24 hours after harvesting (transport!) 

• Sometimes she brings the leaves to the company sometimes the company picks up the 

leaves 

• She is the only in the village who tried BT because the other have not enough land 

• Before she made tobacco and rice 

• Capital 19 millions for seedlings (5 million own and rest from company) 

• No insecticide spraying 

• NPK (subsidy from BT Company during the first 3 years) plus compost 

• Income with BT is higher than before 

• Company pays cash: she made a 5 year contract 2004-2009 

• Plantation is for ever. The only labour is to cut the trees and to collect the buds. Wants 

to keep the contract when is finished and if company still pays 

• Irrigation 2-3 month a year 

• For marketing 100% dependent from company. There are no other market issues 

• Processing is complicated 

• Does not believe that BT can grow in the forest and on sloping land because it needs 

irrigation 

• Harvest during the first 3 year is very low 

• Replace chemical fertilizer by organic fertilizer is very difficult. She has compost but 

it’s not enough 

Visit of bitter tea nursery on 16.5.07 

• The nursery is owned by the BT company and is located in Cao Bang town 

• Production is around 1 million seedlings per year (10’000seddlings /ha =100ha) 

• The objective of the BT company is to increase the acreage of BT in Cao Bang by 

1000ha (need 5 years) 

• The farmer can grow BT via the participation in the project 

• Planting material: 

35-40 cm 

7-8 leaves 

Planting time is during rainy season (beginning is better) 

No need for irrigation (???) 

Nursery uses 2 chemical fertilizer, 1 hormone and 2 pesticide (Fugaran and 

Trebon) 

Transplantation rate is high (around 90%) 

Price is 2362 VND/seedling 

May is best planting season 

Farmer pays only 35% (800), not cash but can pay later 

• The production is concentrated in 4 districts: Nguyen Binh, Hoa An, Thach An & Tra 

Linh. Comparison between the Cao Bang and China BT origins: the VN grows faster, 

has red buds (China green), has higher saponin content 

- 28 -


Visit of processing unit in Cao Bang (3km) on 16.5.07 

BT Company employs 10 staff in Cao Bang 

• Processing consists in: washing, pre-heating, drying, curling, drying, packaging 

• Production is around 300 grams/day/person 

• Unit produces 3kg/day in a 6 day week 

Visit of processing unit in Dong Khe town. Thach Anh district on 16.5.07 

• Has the equipment to produce tea bags and instant tea but stopped production of both 

• Reasons: instant tea is too expensive to produce and for tea bags there is no market 

• Bud production is very same as in Cao Bang (12 people working) 

• Normally needs 5,3kg of fresh leaves to get 1 kg of processed buds 

• Price composition: 

10,000 of 12grams buds (packaged) 

830,000 /kg 

100,000 /packaging and handling 

100,000 /raw material (12% should be higher) 

100’,000 /labour 

100,000 /processing material and equipment 

430,000 /selling margins (50%) 

• The processing is simple and easy and could be decentralised. The BT company 

already started to decentralise (but which step exactly?) 

• Processing at HH level is possible but HH need to be trained and monitored 

• The BT Company has a list of the producers and registers all the purchases made by the 

processing unit (which information is registered?) 

• Normally farmers bring the buds to the processing station. Sometimes the collection is 

made at the district market and then the bulked production of different farmers is 

brought to the processing unit 

• Farmers normally are paid cash 

• BT Company has all 1300 farmers registered (data?): area, number of trees, villages, 

production, monitoring 

• The BT company has 7 technical staff 

• Visits to the farmers: 2 visits/year 

• Are there registration of farming techniques 

• Normally farmers are not using pesticides with the exception of some big farmers (7?); 

what is big? Farmer who has 7-10,000 trees 

• All the farmers are using NPK, but only because this chemical fertilizer is subsidized 

by the BT Company in the first year 

• After the first year only the big farmer keep buying NPK, not the smaller ones. Bt there 

is no experiences what happen to the trees with no NPK fertilizer application 

• There is no experienced farmers in organic techniques 

Visit of a second farmer in Dong Khe town, Thach An district on 16.5.07 

• Plantation on a smoothly slope land; 2-3000 trees but the trees are definitely too high 

for any bud collection (farmer needs now a ladder) 

• Plantation supposed to produce leaves, but now leaves aren’t anymore needed by the 

market 

- 29 -


• Farmer has now to cut down all the trees and then wait again until the trees produces 

buds (will most probably loose one year) 

• There is a lack of technical guidelines on how to grow BT. 

- 30 -

ANNEX 3 - MAIN ORGANIC STANDARDS CONSIDERED 


The following section, based on Rundgren (2001), outlines the main characteristics of the 

organic standards of the EU, the US (NOP) and Japan (JAS) and major differences between 

these three sets of standards. Some information is also given on the IFOAM basic standards 

since these are relevant for the Korean situation. 

Scope 

The organic regulations are typically regulating the marketing of a product with the claim 

"organic" or similar. That is the case both for the US and EU regulations. The Japanese rule 

is limited to labelling; other market claims (advertisements, etc.) are not regulated. 

Terminology 

The US rule is regulating the claim that the product is: 

"100 percent organic" 

"organic" (>95% organic ingredients) 

"made with organic ingredients" (70%-95% organic ingredients) 

The rule also regulates the use of the word "organic" in ingredients panel. Other words 

(ecological, etc.) are not regulated in the rule and therefore permitted to use. 

The EU regulation is regulating the claim that a product is: 

"Referring to the organic production method" 

Includes also synonyms like ecological, biological and diminutives bio and eco. 

"Organic" (>95% organic ingredients) 

"Made with x% organic ingredients" (70%-95% organic ingredients) 

No statement is allowed for products below 70% organic ingredients. 

Categories of production 

The EU regulation applies to: 

Unprocessed agricultural crop and livestock products 

Processed agricultural crop and livestock products for human consumption 

Feed stuff 

What is not covered under these categories, i.e. textiles, wild fish, wild animals etc. is not 

regulated, i.e. organic claims can be made. 

The Japanese regulation includes agricultural, marine and forest products and processed 

products thereof excluding liquors, drugs and cosmetics. 

The US regulation covers "crops, livestock and other agricultural products". Some 

categories of production are still missing detailed regulation, such as apiculture, 

aquaculture and mushrooms. Cosmetics are not included in the rule. Raw materials in 

textiles can be referred to as being organic. 

Conversion periods 

"Conversion" is the terminology used in the EU, while "Transition" is used in the US. 

Conversion requirements can be split in different parts: 

a. Length of the period 

b. Start of the period 

c. Verification of start 

d. Verification of period 

- 31 -


a. Length of the conversion period 

US: a crop shall come from land that has been free from prohibited materials for 36 

months, no exception mentioned. 

Japan, EU: the principles shall normally have been applied for at least 2 year before sowing 

of annual crops, or 3 years before harvesting of a perennial crop. Exceptions are possible. 

b. Start of the period 

US: When last prohibited material was used. 

EU: organic management 

c. Verification of start 

US, EU: not specified, i.e. conversion can be retrospective. 

d. Verification of period 

EU, US: No specific requirement other than that an initial inspection must be made before 

certification. 

Approved inputs 

The US rule has a different approach than the EU, Japanese and IFOAM regulations. The 

principle in the US is that natural is OK unless specifically prohibited and that synthetic is 

not OK unless a positive listing. 

Japan and the EU: All inputs need positive listing 

The most controversial difference is that Sodium nitrate is allowed for up to 20% of the 

crops nitrogen requirements in the US rule. It is prohibited in IFOAM and EU rules. 

Manure 

EU has limitations on the origin of manure. Not composted conventional manure may be 

used if it originates from "extensive animal husbandry". Composted conventional manure 

may be used unless it comes from "factory farming". 

Japan requires that all manure to be composted. 

US NOP has requirements for composting (with some exceptions) of manure regardless of 

origin. No limitation of origin of manure. 

Seeds and planting materials 

Both the EU and US regulation as well as the IFOAM standards have a basic requirement 

for organic seeds and transplants. 

Genetically Modified Organisms (GMOs) 

JAS and EU prohibit the use of organisms or products derived thereof that are produced 

using recombinant DNA technology. The NOP states that recombinant DNA technology is 

considered not compatible with organic production. 

Parallel production 

The EU regulation is restrictive in relation to parallel production, i.e. production of the 

same crop both organic and not organic in the same holding. Only crops of different 

varieties may be grown, exception for perennial crops. Inspection must cover also the nonorganic 

part of the holding. 

- 32 -


The US rule does not address parallel production, i.e. there are no special restriction or 

limitations for this scenario. However the "organic plan" must relate the management 

practices to prevent "commingling". 

Contamination 

Contamination from outside 

The EU has no regulations regarding contamination from the outside. NB: it is proposed by 

the EU Commission to implement “zero tolerance” in the EU regulation. 

The US rule: Products may not contain prohibited substances (read pesticides) at levels 

greater than 5% of EPA tolerance. The rule requires defined boundaries and buffer zones. 

GMO contamination is not clearly regulated in any of the systems. 

Contamination within the farming system 

Heavy metals are regulated in a number of EU approved inputs (e.g. Cadmium in 

Phosphates). There is no such regulations in the US. Irrigation water is not regulated in EU 

and US regulations. 

Environmental aspects 

Conservation of biodiversity is mentioned in the definition of organic in the US rule and 

environment is mentioned in the preamble of the EU regulation. No specific rules exist in 

the regulations. IFOAM requires relevant measures for the provision and improvement of 

landscape and biodiversity. 

Social aspects 

Not regulated in EU, US or Japan standards. IFOAM has general provision, which are 

supposed to be considerably expanded in the new draft. 

- 33 -

Report Feasibility study organic bitter tea Cao Bang - Helvetas

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