THE WORLD BANK

FA U-15

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Agro -Industry ProfilesTEA

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PROFILES IN THIS SERIES:

OILCROPS - OVERVIEW........... FAU-01

OIL SEEDS. . . . . . . . . . . . . . . . . . .. .FAU-02

OIL PALM..... . .. e .o ee * n *@FAU-03

COCONUT. ...e.e. . . e o . e. .. .. FAU-04

SUGAR.e .e * . , e e e .e * .D .e e e e o * e FAU-05

ETHANOLn . . . . . e . e . e e . . . . . .e e ..FAU-06

WHEAT. . e o * . o e o e o o e . . . . . . .e .eeFAU-07

RICE.. o .oe de * * * ** * .e o. o .9 .eFAU-08

CORN . . . . o e . s e e . . . .s . e . . . . e o . FAU-09

CASSAVA . . .e *. . . .. . . . . . . . . e o . eFAU-10

ANIMAL FEEDS ................. eFAU-11

FRUITS AND VEGETABLES. .......e FAU-12

RUBBER. e . .e . . . . . . .e . .e * . .o .e eFAU-13

COFFEE. e e e e . e s .e .. s e . e o o o e e e **FAU-14

TEA. @*e¢e ¢ X e X o.oo @ee o es v@ @e e oe e eFAU-15

COCOA. e .e e * e . . . . e . e . e . e e . . .*e .FAU-16

COTTON. * Q * * * e . e .o o . * . . . o e * e 6 .FAU-17

MEATe AND e ESETA eo eeeo* e oL eFAU-18

SPICES AND ESSENTIAL OILS .. e...eFAU-19

ABSTRACT

The objective of this Profile is to provide a review of the teaprocessing industry. It examines all aspects of the teaindustry, from the production and processing of the raw materialto the marketing of the finished product. It contains yieldspecifications and conversion rates, a glossary of key words, anda bibliography of useful references. The Profile discussesvarious processing procedures, including withering andfermentation, and distinguishes the different processes used inblack, oolong, green, and instant tea production. Marketingaspects such as quality control, storage, market barriers, andprices are addressed, as are the criteria for factory location.An Annex containing examples of operating and investment costs isincluded at the end of the Profile, along with Metric/USconvers ion tables.

FOREWORD

The nature of project and sector work in the World Bank is suchthat staff are often called upon to work outside their majorfields of specialization, if only to make an initial judgement onthe utility of further, often costly, investigation. Under thesecircumstances, up-to-date and authoritative reference material isessential.

The profiles in this series are designed for use by operationalstaff with experience in the agricultural sector but who do nothave a technical knowledge of the particular commodity underdiscussion. Their purpose is not to substitute for technicalexpertise but to provide a reliable inhouse reference which willhelp Bank staff to determine when and what expertise is needed inthe detailee evaluation of investment proposals in agro-processing.

The conditions for any particu.lar proposal are bound to be uniquein a number of respects, and the use of norms and general data inproject analyses could give rise to significant errors. On theother hand, by providing responsible staff with a guide to theissues on which appropriate expertise should be sought, theseprofiles can contribute to the overall quality of agro processinginvestment. Used with care, they should also.facilitate broadpre-screening such as may occur during sector work andreconnaissance.

Questions, comments and further inquiries should be addressed to:

Agro-Industries AdviserFinance and Agro Industry UnitAgriculture and Rural Development Department

The contribution of Harrisons Fleming Advisory Services, Ltd. inthe review of this profile is gratefully acknowledged.

September 1985

Tea

CONTENTS

DATA SHEET...................................................

INTRODUCTION ...............................................1

GLOSSARY ................................................... 1

RAW MATERIALS................................................3

PROCESSING ................................................. 5

MARKETING ASPECTS............................................14

OTHER FACTORS................................................16

BIBLIOGRAPHY................................................18

ANNEX I EXAMPLES OF INVESTMENT AND OPERATING COSTS

ANNEX II CONVERSION TABLES (METRIC/US)

Tea

DATA SHEET

The average yield of made black tea from principal sources isabout 1,000 kg/ha/yr, a1thour..-. yields of up to 3,000 kg can beachieved on well-managed estates. Yields are influencedprimarily by climate, altitude, cultivation &.nd harvest practicesand growing conditionis, including latitude and the number ofdaylight hours.

100 kg fresh green leaf produces approximately 45 to 70 kgwithered tea, depending on conditions and requirements.

100 kg fresh green leaf produces approximately 18 to 27 kg madeblack tea, depending on the process and other factors.

100 kg withered leaf produces approximately 32 kg to 45 kgs madeblack tea.

i

INTRODUCTION

Tea is classified as: fermented; partially fermented; orunfermented. The teas produced in these classifications are:black tea, oolong tea, and green tea respectively. Black tea isthe most important of the three and accounts for about 75% ofworld tea production and over 90% of international tea trade.

This Profile can be supplemented with more detailed informationin Tea Processing by J. Werkhoven, FAQ (1974).

GLOS SARY

Black Tea Fermented tea; leaves are withered, distorted,fermented and dried.

Blending Mixing of teas to satisfy market demands.

CTC Crushing, Tearing, Curling; machine used forleaf distortion.

Fermentation Development of flavor, aroma and color inblack or oolong tea by permitting enzymaticoxidation under controlled conditions.

Firing Drying to check fermentation.

Flush Seasonal growth periods in the tea plant.

Green Tea Unfermented tea; leaves are steamed, rolled anddried.

Instant Tea Liquor from either black made tea or green leafis dried to produce water-soluble particles.

Leaf Distortion Rolling, crushing, tearing or otherwisebreaking the leaves; fluids are released whichbegin fermentation.

Liquor Brewed tea.

Made Tea Black tea after the firing process has beencompleted.

1.

Oolong Tea Partially fermented tea; leaves are withered,fermented and steamed.

Packet Tea Loose tea in small retail-sized packages.

Plucking Harvesting of the leaf.

Rolling Traditional technique for leaf distortion.

Soluble Tea Instant tea.

Tea Bags Individual sachets of tea for retailing.

Withering Preliminary drying of fresh leaf; first stage.of black and oolong tea manufacture.

RAW MATERIALS

Tea (Camelia assamica or Camelia sinensis) is grown in tropicaland subtropical regions. Although usually grown on largeestates, it is also cultivated on small farms. The tea plantstarts to yield usable leaf two to three years after planting,reaching full producticn after seven to ten years. Yields ofmade tea vary depending on climate, variety and cultivationpractices. The average is just over 1000 kg/ha, but some yieldsreach as high as 3000 kg/ha.

The quality of tea produced is closely linked to growingconditions and cultivation practices. Quality of tea depends onthe nature and chemical composition of the plucked leaf. Thecharacteristics of the leaf vary according to the plant's growthpatterns and growing conditions as well as cultivation andharvesting practices.

Although tea is harvested or 'plucked' year-round, its growthpattern is characterized by distinct seasons when shoots developat higher latitudes. These seasonal changes in the plant affectthe internal composition, size and fineness of the leaf, andsubsequently the quality of the end product. From a processingviewpoint this pattern determines the harvesting frequency.These patterns are affected by temperature, humidity, andrainfall.

2

The most important cultivation practices affecting tea growth andyield are pruning, plucking, and use of fertilizers. Differentpruning cycles are practiced and are largely dependent ontradition and local situations. Plucking itself is a form ofpruning and great skill and care is required to ensure that theplant remains productive. Other significant factors are shade andpest/disease control.

Plucking

As noted above, plucking is one of the most critical operationsin tea production. It helps to determine the quality of the finalproduct and has a significant effect on the growth of the plant.Plucking is usually by hand, although various mechanical devicesare used in some areas.

Traditionally, higher quality tea is produced from 'fine'plucking of 'two leaves and a bud'. To obtain higher yields(more leaves processed)-, 'coarse' plucking of up to five or sixleaves and a bud is employed. Although production will increase,quality will decrease and, if practiced continuously the plant'sgrowth will slow down. Mechanical harvesting also results in'coarse' plucking. The fineness of the plucking system should belinked to processing requirements. In some high altitude areaswhere leaves are produced with inherently high quality, fineplucking is essential, in other areas where the quality is loweranyway, a coarser pluck may be employed.

In general, fine plucking will produce 'blacker' tea, goodliquoring characteristics. and a higher percentage of bettergrades in the finished product.

Tea bushes are usually plucked once every one to two weeksdepending on the season. Plucking in the morning often producesbetter quality leaf than evening plucking.

Once the leaf is plucked it should be taken to the factory forfurther processing as quickly as possible so that bacterialattack and leaf deterioration can be reduced. Uncontrolledfermentation due to bruising, and overheating result from poorhandling. Clean leaves waiting for processing should be kept inthe shade and away from heat.

3

PROCESSING

Introduction

The main purpose of tea processing is to allow chemical changesto take place within the tea leaf. Because of this, theprocessing itself does not involve complicated machinery orsophisticated technology. It is, however, time-,space-, andusually labor-intensive. Developments in mechanization aremainly concerned with limiting the amount of space, and in somecases labor, needed. Because of the long-standing traditions oftea consumption, the major aim of processors is to achieveconsistent levels of quality and appearance. Recent changes inconsumer habits have led, however, to the elimination of someprocessing steps in the production of some tea products, e.g. teabags and instant tea.

The fundamental process in black tea manufacture is enzymaticfermentation of polyphenols within the leaf. Different processesprepare the leaf, establish optimum conditions for fermentation,and end the process when it has gone far enough.

Flowchart 1 provides an overview of tea processing. The mainoperations involve: withering, or moisture reduction of theleaves; leaf distortion (rolling, chopping or cutting); leaffermentation; leaf drying; grading and blending of made tea;packaging; and instant tea manufacture.

Oolong and green tea processing systems are relatively standard.However, variations are more common in black tea processing.Orthodox black tea production involves withering, rolling,fermentation, and firing of freshly picked leaves. More modernmechanical systems differ in the early operations. Instead ofsimply rolling the leaves, machines for crushing, cutting andcurling the leaves are employed.

4

Plucking

Withering Withering Steaming

Leaf Distortion Fermentation Rollingand/or Rolling I

I Firing/DryingFermentation I

- - Steaming Firing/DryingFiring/Drying I i

(Blakk Tea) (Oolong Tea) (Green Tea)

Grading

Stalk/FiberExtraction

I' < -> I,For Export Domestic Processing

l> -- l -< I

Cleaning

(Packing)

Blending

(Wholesaler)

Packaging

(Instant Tea) (Packet Tea) (Tea Bags)

Flowchart 1: Tea Processing

Withering

The object of withering is to both reduce the moisture content ofthe fresh leaves by 30-50%, and to prepare or condition theleaves for further processing. Physical and chemical changes inthe leaves occur during the withering process which influence thelater processing and the quality of the tea produced. The mainchanges in the leaves include: loss of moisture; increase in freeamino acids (aroma precuirsors); increase in caffeine; andincrease in carbohydrates which contribute to taste and aroma.Insufficient attention to withering will create problems inrolling and drying and will affect the character of the teaproduced.

The degree of wither is dependent on the type of tea to beproduced and the method of manufacture. It determines theduration of withering and the percentage of moisture left in theleaves. Orthodox processing usually requires a 'harder' witherwhich reduces the moisture content to around 55%, whereas moremodern mechanical processes only require withering to about 70%moisture content.

Traditional techniques utilize racks and trays on which theleaves are thinly spread. Movement of air, either naturally or byfans both dehydrates the leaves and carries away the moisture.The duration of withering ranges from 18 to 24 hours depending onthe degree of wither required and ambient conditions.

Natural withering relying on the elements tends to be slow,inefficient and difficult to control. Newer methods include drum,trough, and tunnel withering. These systems are designed forgreater efficiency and accelerated production of more uniformlydried leaves. They require storage facilities, however, and cancause too rapid withering which prevents the necessary chemicalchanges taking place. Advantages include: space and timesavings; reduced labor costs; greater uniformity of leavesproduced; and increased control over the process. (For details ondifferent systems see the excellent discussion by Werkhoven,1974).

Trough withering is the most widely introduced of the newsystems. It consists of long troughs deep enough to hold up to20 cm of leaf. The bottoms of the troughs are made of wire meshcovered with netting. The trough forms the upper part of an airflue through which air can be moved in different directions,permitting less handling and more even wither.

6

Leaf Distortion

The rolling process is intended to initiate fermentation;traditionally this has meant giving a twist to the tea leaves.This twist gives a distinctive look to the tea leaves which isnow expected by consumers; therefore, choosing a rolling methodnow means striking a. balance between appearance and liquoringconsiderations. The orthodox process uses a series of rollers tobreak and press the withered leaves. The configuration of therolling device imparts the characteristic twist or curl to theleaves which will carry through to the final product. Crushingfrees the fluid and semifluid contents of the cells, permittingfermentation to commence. It is critical that heat generatedduring rolling be controlled, the optimum is often around80-90 P. After rolling is completed, sifting separates theparticles of tea from the leaf mass (the residue is commonlyreferred to as the 'big bulk'). This 'roll-breaking' operationcools the leaf, aerates the mass, and separates it into portionswhich will be fairly uniform in their fermentation and size ofparticle.

In many areas conventional rollers are still used. However,modifications have been added to deal with special problems. Tostreamline processing, reduce labor requirements and simplifymanagerial control, the conventional batch system has in manyinstances been replaced. Mechanical systems have been developedand increasingly the industry is moving towards use ofcombination cutting, crushing and drastic leaf distortionmachines. The most common machines in use are the Legg-cut, theCTC (Crushing, Tearing and Curling) and the Rotorvane. Thesemachines and others are used on their own, in combination witheach other, or with rollers. Precise configurations depend onlocal circumstances and end product requirements. (Details areprovided by Werkhoven, 1974).

Overall, liquoring qualities are enhanced with the modernmachines, whereas flavor is best preserved with conventionalprocessing.

Fermentation

Once the leaf has been bruised or rolled, oxidation of thepolyphenols in the leaf begins, Chemical and physical changes inthe leaves are responsible for developing liquoring qualities inthe tea; this operation is commonly referred to as fermentation.

7

Although fermentation is the most important stage in teaprocessing, it is usually the simplest and cheapest. Intraditional processing, the sifted leaves from the'roll-breaking' are laid out in a plain room under controlledconditions of humidity and temperature. During fer-mentation theleaf changes color and 'improves' in quality. It is importantthat correct conditions for production of the desiredcharacteristics are available.

The two most important factors affecting the final product arethe temperature and the duration of the process.

Fermentation is more active between 800 and 85 F (27-30°C) andcompletely stops at temperatures over 150 F (65 C). The optimumtemperature during rolling and fermentation is around 85 0F.

During fermentation the color of the leaf changes from green tored and liquoring characteristics develop. These characteristicsinclude: briskness; quality; color; and strength. They develop atdifferent rates, however, and it is important that fermentationcontinue long enough to develop the optimum combination ofliquoring characteristics, e.g., flavor develops more quicklythan quality and may completely disappear if fermentation isunduly prolonged. Over-fermented tea tastes dull and heavy,while under-fermented tea tends to be harsh.

The rate of fermentation depends mainly on the severity of leafdistortion, as well as temperature. In orthodox manufacture usingrolling, the duratiorl is about three to three and a half hours.Tea which is produced using modern leaf d"stortion techniques canbe fermented in around one to two hours.

Other factors such as leaf characteristics, condition of the leafafter distortion, humidity, ventilation, degree of wither,thickness and density of spread, room conditions, fermentationmethod, and bacterial cleanliness are also important.

Fermentation conditions should always represent the mostacceptable and profitable compromise among the various factors.Modern leaf distortion techniques have radically changed theprocess; duration can be shortened, temperatures can be higherand oxygen can be applied in place of air. Newer techniques inuse include skip, trough, and continuous systems.

8

Drying

The physical and chemical changes taking place duringfermentation are abruptly stopped by exposing the fermented leafto hot air. In this process, usually called 'firing', the tea isdried to a moisture content of around three percent, reducirig theweight of the tea by about one third. In addition to stoppingfermentation, drying produces a comparatively stable and easilyhandled finished product.

Drying is a continuous operation in which the leaves are exposedto forced blasts of hot air. The temperature, the duration ofheati%g, and the thickness of the spread tea are importantfactors. Insufficient heat results in moist tea which issusceptible to quality deterioration. Too much heat will causecase-hardening of the leaves; this prevents even dryingthroughout the particles, and causes deficiencies in quality andflavor. The final product should be black. Brown colorindicates poor processing. After firing, the tea is cooled andgraded.

Drying is usually the ,Lust costly operation in tea processingand, therefore, the machines should be used at full capacity.Because of this, drying capacity usually determines the minimum(and maximum) outputs of other processing stages.

Oolong Tea

These teas are produced from an abbreviated version of theprocess outlined above for black tea production. The processdiffers in the order and duration of the steps. Freshly pickedleaves are withered for about one hour and then cooled. Afterlight manipulation in the hands, the leaves are fermented for ashort time and then fired. After drying there may be furtherrolling followed by steaming and redrying to halt fermentationaction.

Green Tea

The primary objective in green tea manufacture is the destructionof the oxidase enzymes responsible for fermentation in theleaves. Although there are numerous regional variations, thebasic process is as follows: First, the leaves are steamed indrums, or, as in the case of most smallholder production, in hotpans. Since fermentation is minimized, the leaf remains green.

9

After steaming, the leaves are rolled and fired; the latterprocess kills any microorganisms which might otherwise causesubsequent discoloration or fermentation of the leaves.

Grading

After cooling, the teas are graded using various sifting devices.Each tea is treated separately and has different grading systems.Tea particles are sorted by size and form so that adequateuniformity and cleanliness requirements are met. For black tea,the grading is determined by the mesh size. In many casesparticle sizes for specific grades differ between regions orcountries.

Those particles which remain after sifting are broken or cut intodesirable sizes. All grades contain pieces of stalk and fibre.These undesirable elements can be reduced by plucking leaves withthe minimlum stalk. In addition, mechanical stalk/fibreextractors are utilized.

Winnowing, standard practice in most tea operations, removes thedust, fiber, and fluff, according to the size and density of thetea particles. Several designs, most of them based on windtunnels and air separation, are in use. (Werkhoven, 1974 offersa detailed description.)

Ai undesirable gray color in black tea results when the film offermentation products surrounding the tea is removed by excessivesifting, rubbing, and cutting. Another problem that can ariseduring grading is exposure to atmospheric moisture. Moisturecontent before packing should not exceed five percent.

Blending

The grades into which tea is sorted in producers' factories areusually sold to middlemen. Retail tea is normally a blend ofdifferent grades from different factories. Traditionally, theblending operation was carried out in consuming countries by afew large companies, although teas are increasingly being blendedin producer countries.

To make a blend, several alternative mixes, or 'breaks', arepossible, and the blender's choice varies, depending in part onsupply but mainly on price. In addition, a blend is chosen to

10

achieve certain characteristics: appearance, quickness of brew,flavor, color, briskness and aroma. Blends differ principallyaccording to the market being supplied.

The composition of a blend is also determined by the mode ofpackaging (the leaf's appearance is important for loose tea,while quickness af brew is important for tea bags), and, in thecase of tea bags, the materials used (perforated or fast-flowpaper). Herbs, spices, and other flavors can be added to any ofthe teas to satisfy market demands.

Traditional blending involves the sorting and assembly of 80 to100 tea chests, and then tipping them into drum blenders. It is,however, labor intensive, inaccurate, prone to human error, andrequires constant supervision. Modern blending operations aremore automated, as a result of efforts to reduce costs, increaseefficiencies, and improve the consistency of blends.

Packaging

In the past, black tea needed no further processing ormanufacturing after leaving the factory. However, in addition toloose tea in packets, it is now consumed in the form of teabagsand 'soluble' or instant tea.

Teabags are of two kinds: the type popular in traditionally hightea consumption developed markets is heat-sealed; the other typeis stapled and attached to a string and tag and is popular ingourmet and non-traditional markets. Teas used for tea bags arethe lower grade brokens, fannings and dusts which result mainlyfrom processes using modern leaf distortion systems.

Instant Tea

Instant tea is believed to have originated in the United States,although green tea has been powdered and sold in Japan for sometime. Developments in 'iced tea', demand for convenience, anduse in vending machines have stimulated its consumption.

Details on the techniques for instant tea manufacture aregenerally trade secrets or protected by patents. Instant tea canbe manufactured from various products of the tea process. Fullyprocessed dried and blended black 'made tea' is brewed,concentrated and then dried using freeze-, spray- or

11

vacuum-drying to form cold water instant tea. In tea-growingareas a hot water instant tea can be obtained from fresh greenleaves or fermented, undried leaf. In both cases a brew iscreated and then dried. The brew from the fresh leaves isfermented before drying.

The most important factor in the process is temperature. Overlyhigh temperatures, particularly with green tea, affect thechemical composition of the leaves and cause qualitydeterioration. An overview of the process is shown inFlowchart 2:

(Black Tea) (Fresh Green (Wet FermentedLeaves) Leaves)

Liquoring

(FermeLtationfor Green Tea)

Drying

Packaging

INSTJA T TEA

Flowchart 2: Instant Tea Manufacture

12

MARKETING ASPECTS

Introduction

After the first stages of processing are complete, tea is gradedand packed into chests and shipped to be sold either at auctionor directly to a blender. In some cases the tea is furtherprocessed locally before being sold for domestic consumption orfor export. This further processing may consist simply ofblending, or it may involve packaging into tea bags or packets,or instant tea manufacture.

Recent significant changes in the tea market include: a growingnumber of producers; an increasing proportion of tea grown bysmallholders; an increasing degree of local processing beforeconsumption; large growth in developing-country markets with slowgrowth in traditional developed-country markets; and increasingconsumer preference for tea bags.

Traditionally tea has been sold at auctions with brokersrepresenting producers. The domination of the market by a smallnumber of brokers and buyers has led some governments to questionthe dependence on auctions and an increasing proportion of tea isbeing sold directly by producers. This also has its drawbacks,however, and on the whole most governments prefer to see opentransactions through the auctions.

Quality Control

The value of a tea depends largely on the market to which it issold. It is determined not only by its characteristics, but alsoby its suitability for blending. Tea quality is determined bythe genetic character of the leaf, growing conditions, agronomicand harvesting practices, properties of the green leaf,processing methods and environmental conditions. In teaprocessing, a balance between quality factors and marketrequirements is necessary.

Tea quality is primarily based on subjective assessments oftaste, aroma, strength, colour and body. In addition there issome use of chemical tests to provide guidelines. The traditionalquality evaluation is derived from tasting the brew from a smallsample of the tea for sale. There is much 'lore' associated withtea tasting; some of the terms used include: malty, hard, burnt,stewed, nose, dull, green, flaky and tippy.

13

Depending on the form of packaging and consumption, the demandfor different teas will vary. Teas consumed in different partsof the world have different standards and requirements. Formarkets such as India, which rely on 'loose' tea, the appearanceof the tea is important; in the United Kingdom,. packet teas aresold on their 'liquoring' qualities while 'soluble' teas are soldon their rapidity of infusion.

Generally, blenders require a regular supply of uniform teas withstable prices.

Storage

There is often a considerable time lapse between tea productionand blending; unfortunately keeping quality in tea is limited.Precautions to maintain quality include: low moisture content,proper firing or drying, and maintenance of low moisture andtemperature levels during storage and shipping. Tea should bedried to about 3% during firing, the level should not be above 5or 6% on leaving the factory. The uptake of moisture duringstorage and shipping, even under the best conditions is around 2to 3%.

A short period of storage under good conditions 'matures' the teaand improves its taste. However, keeping qualities of teadeteriorate with prolonged storage, in particular when conditionsinclude high temperature and relative humidity levels. Tea can bestored for up to 300 days without loss of character in goodconditions. In conditions with humidity levels around 100%, theyare 'flat' after 15 days.

Other significant factors include the degree of wither, and themethod of leaf distortion. Leaves which have undergone a shortwither are less stable than harder withered tea, whilst tea madefrom modern leaf distortion processes which do not include anywithering can be kept in the shop for no longer than a couple ofweeks.

Instant tea requires a low moisture content during storage; itwill start to cake at moisture levels around 10%, causing rapiddeterioration in taste and physical appearance.

14

market Barriers

World trade in tea and tea products is not seriously impeded bytariff barriers. In some countries there is a higher tariff onprocessed teas relative to bulk or made tea.

Efforts have been made, however to implement country exportquotas. In 1981, tea-producing countries adopted the principlethat national quotas should be related to expected futureproduction performance. These countries, representing 95 percentof world production, agreed in February 1982 to an export quotasystem, in order to stabilize world prices within a fixed range.Consuming countries, especially, the U.S., oppose theinternational regulation of tea supplies, arguing that tea pricesare among the least variable of primary commodities.

Other important factors which impede market entry aretransportation costs, taxes in consuming countries, and standardsof quality, packaging and labelling which differ substantiallyamong markets.

OTHER FACTORS

Process Location

Although there is a trend towards increased processing andpackaging in producing countries there are certain limiti ngfactors. Tea blenders and packers in centers such as London canadjust their blends in response to price and supply fluctuationsin the market. They also have ready and inexpensive access to thenecessary packaging materials.

In producing countries, blenders and packers for the exportmarket are at a disadvantage. Although the gross value added byprocessing tea before export appears to be about 25% for packettea, 100% for tea bags, and 200% for instant tea, the need toimport packaging materials (filter paper, cellophane, etc.) maysignificantly reduce the net benefit or lead to pricing the endproduct above that of competitors. There are also difficultiesin obtaining a sufficient range of teas for blending.

15

BIBLIOGRAPHY

01, Barua, T C. (1972) The Atmosphere Inside a Tea Factory.Two and A Bud, 19(2) : 68-71.

02. Basu, R P. & Ravindranath. (1981) Factors AffectingBlackness of CTC Teas.Two and A Bud, -8(l) : 8-9.

03. Basu, R P. & Ullah, M R. (1978) Notes on Tea Fermentation.Two and A Bud, 25(1) : 7-11.

04. Cooper, R T. & Wertheim, J. (1973) The Economics of WorldTea Production. I.World Coffee and Tea, 13(9) 108-111.

05. Dougan, J. et al. (1978) A Study of the Changes Occurring inBlack Tea During Storaqe.London : Tropical Products Institute. Report No. G116

06. Eden, T. (1965) Tea. 2nd Ed.London : Longmans.

07. Guinard, A. (1970) Programmation des Investissements dansles Usines a The.Cafe Cacao The, 14(2) : 130-140.

08. Hampton, M. (1981) Compare Fuel Requirement Then Select TeaProcess.World Crops, 33(4) : 85-86.

09. Jayaratnam, S. & Kirtisinghe. (1974) The Effect of RelativeHumidity on the Storage Life of Tea.Tea Quarterly, 44(4) : 170-172.

10. Nelson, W B. (1980) Automatic Blending Cuts Costs.Tea and Coffee Trade Journal, 152(11) : 18-19,43.

11. Perkins, R S. (1980) Variety: Key in Teabag Packaging.Tea and Coffee Trade Journal, 152(9) : 28-29.

12. Sivapalan, K. (1982) Storage of Black Tea: A Review.Tea Quarterly, 51(4) : 185-189.

13. Theobald, D V. (1983) How Do We Define Tea Quality?Tea and Coffee Trade Journal, 155(10) : 36, 52-53.

16

14. UJNCTAD. (1982) The Marketing and Processing of Tea : Areasfor International Co-operation.New York : UN Report No. TD/B/C.1/PSC/28.

15. Wanigatunga, R C. (1983) The Packaging of Tea into Bags andthe Manufacture of Instant Tea for Export in India and SriLanka. IN: World Bank. Case Studies on IndustrialProcessing of Primary Products. Vol II.Washington, DC : World Bank

16. Werkhoven, J. (1974) Tea Processing.Rome : FAO. Agricultural Services Bulletin No. 26.

17. World Bank. Commodities & Export Projections Division. (1982)Tea Handbook.Washington, DC : World Bank.

18. World Bank. East Africa Projects Department. (1974)Appraisal of the Tea Factory Prolect Kenya.Washington, DC : World Bank. Report No. 311a-KE.

19. World Bank. South Asia Projects Department. (1982) StaffAppraisal Report : Sri Lanka Tea Rehabilitation andDiversification Prolect.Washington, DC : World Bank. Report No. 353la-CE.

17

ANNEX I:

EXAMPLES OF INVESTMENT AND OPERATING COSTS

TEA PROCESSINGEXAMPLE 1

- PAGE 1 of 2

Representative Investment and Operating Costs~---------J---------------- -----------------

TEA PROCESSING FACTORYEstablishment of a tea processing and packaging facility.

COUNTRY: Tanzania (Ukalawa Tea Factory)

NOTE: These data are intended as indicative only and are unique tothe time, circumstance, and country of the identified invest-ment. Their applicability to other situations may varyconsiderably.

Annual Full Development Production (tons):-------- =------------------------ -- ------

FiniL,hed tea 874.00

Capacity Utilization at Full Development: not available

-------- US$ 'OOO-------end 1979 prices

Local Foreign TotalI. Investment Costs:

Civil Works.factory buildings 662.65 662.65 1325.30water supply 36.14 36.14 72.29architect/consulting fees 60.24 60.24 120.48

Sub-Total Civil Works 759.04 759.04 1518.07Machinery & Equipment

Withering 59.53 79.51 139.04Rolling/Processing 7.37 66.36 73.73-Drying 12.99 116.89 129.88Sorting/Packing 28.88 82.83 111.71Miscellaneous 38.45 43.39 81.83

Sub-Total Equipment 147.22 388.98 536.19Utility Installation 185.54 79.52 265.06Machinery Installation 36.14 36.14 72.29Power (Diesel) Equipment 12.43 111.90 124.34

Total Investment Costs 1140.37 1375.58 2515.95---- ----- -------

--- ---- ------ S- -------

TEA PROCESSINGEXAMPLE 1Page 2 of 2

Representative Investment and C erating Costs----------------------- - ------------

NOTE: These data are intenided as indicative only and are unique tothe time, circumstance, and country of the identified invest-ment. Their applicability to other situations may varyconsiderably.

us $ '000end 1979 prices

Total

II. Annual Full Developmlent Operating Costs:--------------------- ------ ------------- -

Variable Costsraw materials 803.62labor, fuel, packing materials 378<,03

Sub-Total Variable Costs, 1181.65

Fixed Costsmaintenance 12.64depreciation 181.12administrative 69.50

Sub-Total Fixed Costs 263.25

Total Operating Costs 1444.90

DATA SOURCE: Adapted from World Bank project appraisal report No.2814-TA, Tanzania Smallholder Tea ConsolidationProject, Vol. I., Table T-3D, and Vol. II,Appendix 1, Table 5.

NOTES:a. Exchange rate - Tanzanian Shillings 8.30 = US $ 1.00b. Full development is year five after project start-up.c. Breakdown between foreign/local operating costs is not available.d. Data are net of contingencies.

TEA PROCESSINGEXAMPLE 2PAGE 1 of 3

Representative Investment and Operating Costs------------ ------------------------------

LEAF TEA PROCESSING FACTORY

Construction of a 15 ton/day green leaf tea processingfactory. Data are for a rehabilitation project butapproximate actual cost of a new investment.

COUNTRY: Sri Lanka

NOTE: These data are representative only and are uniqueto the time, country, and circumstance of the Ldentifiedinvestment. Their applicability to other situations mayvary consid.erably.

ANNUAL FULL DEVELOPMENT PRODUCTION:

900 tons of made tea

Per Cent of Full Capacity Utilization: not available

-------- US$ '000-------Local Foreign Total

1980 pr.icesI. Investment Costs

Civil Worksline room rehabilitation 220.50 73.50 294.00water tanks 14.00 9.33 23.33utility upgrade 4.44 6.67 11.11ramps and drains 120.71 51.73 172.44water supply 92.20 61.47 153.67

Sub-Total Civil Works 451.86 202.70 654.56Machinery & Equipment

lenear through withovers 626.47 417.64 1044.11lenear ft. hot ducting 10.00 6.67 16.67rollers 1091.73 727.82 1819.56roll breakers 444.67 296.44 741.11driers 367.00 217.78 584.78

TEA PROCESSINGEXAMPLE 2Page 2 of 3

Representative Investment and Operating Costs----------------------.--------------------

NOTE: These data are representative only and are uniqueto the time, country, and circumstance of the identifiedinvestment. Their applicability to other situations mayvary considerably.

------------ us$ '000-------Local Foreign Total

1809 prices

Machinery & Equipment (cont'd)humidifiers 42.00 28.00 70.00shifters 146.60 89.85 236.44winnovers 80.63 53.76 134.39stalk extractor 173.67 115.78 289.44leaf trolleys 116.67 77.78 194.44d~ust fans 24.50 16.33 40.83cutters 24.73 16.49 41.22leaf hoist 29.00 19.33 48.33fuel tanks 9.90 6.60 16.50scales 3.77 1.62 5.39terry nippers 25.00 16.67 41.67pelton 35.33 53.00 88.33double packers 36.00 24.00 60.00electrical equipment 90.67 60.44 151.11generators 348.64 244.69 593.33tea bulkers 33.33 22.22 55.56driers 102.67 68.44 171.11factory motors 133.33 88.89 222.22miscellaneous 17.47 11.64 29.11

Sub-Total Machinery & Equipment 4013.77 2681.89 6695.67

Total Investment Costs 4465.63 2884.59 7350.22-------------------------

------------------------

TEA PROCESSINGEXAMPLE 2Page 3 of 3

Representative Investment and Operating Costs

NOTE: These data are representative only and are uniqueto the time, country, and circumstance of the identifiedinvestment. Their applicability to other situations mayvary considerably.

US$ '1000Total

1980 pricesII. Annual Full Development Operating Costs

(excluding raw materials)--------------------------------------------

Fixed Costspermanent staff 1101.91upkeep & maintenance 373.70depreciation 2891.63sundries 50.00

Sub-Total Fixed Costs 4417.24

Variable Costspower 760.03fuel 2930.52seasonal labor 2577.02packing materials 6880.63storage 909.00

Sub-Total Variable Costs 14057.18

Total Operating Costs 18474.42

DATA SOURCE: Adapted from Preparation Report for the SecondTea Rehabilitation Project, Sri Lanka, 1980.Prepared by National Plannilng Division, Mi.nistryof Finance and Planning.

NOTES:1. Exchange rate Sri Lankan Rupees 20.55 = US $ 1.00.

IMF's International Financial Statistics, May, 1985.2. Foreign/local cost breakdown is not available

for operating expenditures.3. Data are net of contingencies.4. Production assumes 300 working days per year.

ANNEX II:

CONVERSION TABLES

WEIGHTS AND MEASURES

avoirdupois

Ton: short ton 20 short hundredweight, 2000 pounds;08907 metric tons;

long ton 20 long hundredweight, 2240 pounds;1.016 metric tons.

Hundredweight -ft;short hundredweight '.'0 pounds, 0.05 short tons; 45.359

kilograms;long hundred weight 112 pounds, 0.05 long tons; 50.802

kilograms.

Pound lb or lb av; also #;16 ounces, 7000 grains; 0.453 kilograms.

Ounce oz or oz av;16 drams, 437.5 grains; 28.349 grams.

Dram dr or dr av;27.343 grains, 0.0625 ounces; 1.771 grams.

Grain gr;0.036 drams, 0.002285 ounces; 0.0648 grams.

Troy

Pounw., lb t;12 ounces, 240 pennyweight, 5760 grains; 0.373kilograms.

Ounce oz t;20 pennyweight, 480 grains; 31.103 grams.

Pennyweight dwt also pwt;24 grains, 0.05 ounces; 1.555 grams.

Grain gr;0.042 pennyweight, 0.002083 ounces; 0.0648 grams.

METRIC SYSTEM

Square kilometer sq km or km2;1,000,000 square meters;0.3861 square mile.

Hectare ha;10,000 square meters;2.47 acres.

Hectoliter hl;100 liters; 3.53 cubic feet; 2.84 bushels;

Liter 1;1 liter; 61.02 cubic inches; 0.908 quart(dry); 1.057 quarts (liquid).

Deciliter dl;0.10 liters; 6.1 cubic inchs; 0.18 pint(dry); 0.21 pint (liquid).

Centiliter cl;0.01 lit'ers; 0.6 cubic inch; 0.338fluidounce.

Metric ton MT or t;1,000,000 grams; 1.1 US tons.

Quintal q;100,000 grams; 220.46 US pounds.

Kilogram kg,;1,000 grams; 2.2046 US pounds.

Gram g or gm;1 gram; 0.035 ounce.