Ministry of Commerce And Supplies - Enhanced Integrated ...

N T I S2010Index 3: Domestic Supply ConditionsProducers: There are reportedly a total of 12,200 smallholder plots, 19 31 cooperative societies, 134 mediumsizedgardens (57 are CTC tea estates), and 38 large plantations. There are 40 tea processing units of differentsizes. There are 28 units having both tea estates and processing units and about 20 tea packers, exporters,and importers in the country.Production Capacity: The sector is concentrated in five districts in eastern Nepal. The last decade or so hasseen a tremendous growth in the Nepalese tea industry with the plantation area expanding from 3,502 ha in1996/97 to 16,594 ha in 2007/08. This increase in plantation area has been matched by an increase in theoutput of tea: 2,900 MT in 1996/97 to 16,100 MT in 2007/08. Of this, 85 per cent was CTC and 15 per cent wasorthodox type. Production is concentrated in a number of fragmented areas such as private gardens, smallfarmers’ plantations, and factories. Consequently, marketing efforts are also disjointed. For instance, Nepal’stea factories are supplied by over 12,200 producer farmers.YearTable 2.17Acreage and Production of TeaArea (ha)Production(Million kg).Yield(kg./ha)2003/04 15,012 1.17 7762004/05 15,900 1.26 7932005/06 16,012 1.37 8552006/07 16,420 1.52 9242007/08 16,594 1.61 972Quality of Product: All the stakeholders of tea value chain reported that quality of Nepal tea was high andexpected it to improve further in future, but pesticide residues has been a problem in recent years.Productivity: In 2007/08, the overall average yield of CTC tea plantations was 972 kg/ha, while it was only274 kg/ha for orthodox type. The productivity per unit of land area is steadily increasing over the years. Theorthodox tea yield in Nepal is about 25 per cent less than India and 30 per cent less than Sri Lanka. In the caseof CTC the yield is less than that of Kenya.Availability and Quality of Labour Force: There is scarcity of skilled personnel and expertise in the tea sector,partly due to a lack of formal training institutions.Labour Cost and Overall Production Cost: Production costs--leaf production and processing--on the averageare comparable to the competitors. Labour costs were reported to be around US$1.50-2 for tea pluckers in2007, but depend on the amount plucked (ITC, 2007d). However, these costs apparently have since risen andindustry sources complained about, in their view, excessive wage demands from unions and have thereforerated overall labour costs as ‘high’.Level of Processing Technology: The technologies used in tea production and processing are of averagestandard. The past efforts of all stakeholders have helped increase the production of green leaf of smallfarmers, cooperatives, and tea estates. But the processing capacity has not developed to cope with theincreased production of green leaf.19NTCDB indicates a total of 7,791 smallholder farmers. However, data collected from associations/chambers/and INGO/NGO’s suggests that atotal of 12,200 smallholder farmers are active.48NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT