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EVALUATION OF TEA BOARD AND

COFFEE BOARDWITH REFERENCE TO

INDIAN EXPORT DURING LAST DECADED

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INDIAN TEA INDUSTRY

The tea industry in India is about 172 years old. It occupies an important

place and plays a very useful part in the national economy. Robert Bruce in 1823

discovered tea plants growing wild in upper Brahmaputra Valley. In 1838 the firstIndian tea from Assam was sent to United Kingdom for public sale. Thereafter, it

was extended to other parts of the country between 50's and 60's of the last century.

However, owing to certain specific soil and climatic requirements its cultivation

was confined to only certain parts of the country.

Tea plantations in India are mainly located in rural hills and backward areas

of North-eastern and Southern States. Major tea growing areas of the country are

concentrated in Assam, West Bengal, Tamil Nadu and Kerala. The other areas

where tea is grown to a small extent are Karnataka, Tripura, Himachal Pradesh,

Uttaranchal, Arunachal Pradesh, Manipur, Sikkim, Nagaland, Meghalaya,Mizoram, and Bihar.

Unlike most other tea producing and exporting countries, India has dual

manufacturing base. India produces both CTC and Orthodox teas in addition to

green tea. The weightage lies with the former due to domestic consumers

preference. Orthodox tea production is balanced basically with the export demand.

Production of green tea in India is small. The competitors to India in tea export are

Sri Lanka, Kenya, China, Indonesia and Vietnam.

Tea is an agro-based commodity and is subjected to vagaries of nature.

Despite adverse agro climatic condition experienced in tea growing areas in many

years, Indian Tea Plantation Industry is able to maintain substantial growth inrelation to volume of Indian tea production during the last one decade.

There has been a dramatic tilt in tea disposal in favour of domestic market

since fifties. While at the time of Independence only 79 M.Kgs or about 31% of

total production of 255 M.Kgs of tea was retained for internal consumption, in

2008 as much as 802 M.Kgs or about 82% of total production of 981 M.Kgs of tea

went for domestic consumption. Such a massive increase in domestic consumption

has been due to increase in population, greater urbanisation, increase in income

and standard of living etc.

Indian tea export has been an important foreign exchange earner for thecountry. There was an inherent growth in export earnings from tea over the years.

Till 70s, UK was the major buyer of Indian tea Since 80s USSR became the

largest buyer of Indian tea due to existence of the trade agreement between India

and erstwhile USSR. USSR happened to be the major buyer of Indian tea

accounting for more than 50% of the total Indian export till 1991. However, with

the disintegration of USSR and abolition of Central Buying Mechanism, Indian tea

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exports suffered a set back from 1992-93. However, Indian Tea exports to

Russia/CIS countries recovered from the setback since 1993 under Rupee Debt

Repayment Route facilities as also due to long term agreement on tea entered into

between Russia and India. Depressed scenario again started since 2001 due to

change in consumption pattern, i.e. switch over from CTC to Orthodox as per

consumer preference and thus India has lost the Russian market. Another reason

for decline in export of Indian tea to Russia is offering of teas at lower prices by

China, South Asian countries like Indonesia and Vietnam.

The major competitive countries in tea in the world are Sri Lanka, Kenya,

China and Indonesia. China is the major producer of green tea while Sri Lanka and

Indonesia are producing mainly orthodox varieties of tea. Kenya is basically a

CTC tea producing country. While India is facing competition from Sri Lanka and

Indonesia with regard to export of orthodox teas and from China with regard to

green tea export, it is facing competition from Kenya and from other African

countries in exporting CTC teas.Because of absence of large domestic base and due to comparatively small

range of exportable items, Sri Lanka and Kenya have an edge over India to offload

their teas in any international markets. This is one of the reasons of higher

volume of export by Sri Lanka and Kenya compared to India. Another important

point is that, U.K has substantial interest in tea cultivation in Kenya. Most of the

sterling companies, after Indianisation due to implementation of FERA Act started

tea cultivation in Kenya. So, it makes business sense for U.K. to buy tea from

Kenya and Kenya became the largest supplier of tea to U.K.

Tea is an essential item of domestic consumption and is the major beverage

in India. Tea is also considered as the cheapest beverage amongst the beverages

available in India. Tea Industry provides gainful direct employment to more than a

million workers mainly drawn from the backward and socially weaker section of

the society. It is also a substantial foreign exchange earner and provides sizeable

amount of revenue to the State and Central Exchequer. The total turnover of the

Indian tea industry is in the vicinity of Rs.9000 Crs. Presently, Indian tea industry

is having (as on 18.12.2009 )

1692 registered Tea Manufacturers,

2200 registered Tea Exporters,

5848 number of registered tea buyers,Nine tea Auction centres.

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Trends in Production, Yield and Prices of Tea in Domestic and

International Markets

Tea is an important beverage and is generally placed in the polymorphic specis.

Camellia

Sinensis. There are three main varieties of tea plant- China, Assam and Cambod. It

is grown in

areas where the climate is moist and there is well distributed rainfall. Tea can grow

at altitudes

ranging from sea level to about 6000 feet above, but it grows best in regions near

the Equator.

Area, Production and Yield of Tea in tlie World

India, China, Sri Lanka, Kenya and Indonesia are the major tea growing countries

of the

world., production and yield of tea in different countries of

the world.

Economics of Tea Gardens

This chapter deals with farm economics of tea cultivation in Nilgiris district. The

economics of

tea cultivation has been estimated by dividing the tea growers into two sectors:

small growers

and large estates. Small growers are classified as those having an area below 10.12

ha and estates

are those having an area of 10.12 ha or above. Benefits have been assessed in terms

of net

income earned from the activity during the reference year.

Tea crops are grown in plains as well as at elevations upto 2400 metres above

mean sea

level. Tea grown at higher altitudes has good flavour while that grown in plains has

better liquor.

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It requires moist climate with a heavy rainfall of 150 to 300 cms well distributed

throughout the

year. The entire Nilgiris district is hilly with a minimum and maximum height of

750 to 2950

metres above the mean sea level. Tea is grown in approximately 70 per cent of net

cultivated area

and is the mainstay of the economy of the district. Tea cultivation is prevalent in

Coonoor,

Kothagiri, Ooty and Kundha regions in the district.

Category of Farmers

As stated in chapter 2 of the report, a sample of 1 8 small growers and 5 estates

wereselected for the study. 50 per cent of the sample small growers were members of

INDCO tea

factory. T he m embership fee for t he m embers r egistered w ith INDCO w as R s.

2 500 p er a ere

which is to be paid once and the entrance fee is Rs. 500. Registration number is

allotted to each

member. Sample farmers who were members of INDCO factory were found to

avail facilities

from the factories like supply of inputs- manures, planting material, pesticides at

their door steps.As regards the ownership pattern of the sample estates, it was found that 40 per

cent of

the sample estates were proprietary, 40 per cent were private limited companies

and 20 per cent

was owned by TANTEA.

All the sample farmers and estates were found to avail technical advice from

UPASI. For

instance, advice on application of pesticides, manures, etc., and demonstration and

trainingprogrammes on tea cultivation were organised by UPASI for the benefit of tea

growers in the district.

All the sample farmers were agriculturists except 1, who was also owning a

provision

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store besides cultivating tea. All the sample estates were having tea gardens and

were also

owning tea processing units for the manufacture of made tea.

Age of Sample Tea Gardens and Plant Population

The age of sample tea gardens (other than replantation) varied between 25 to 80

years

for small growers and estates. Average plant population was 12350 per ha in the

sample small

growers' farm and the same was 13000 per ha in case of sample estates.

Shade Trees

Shade trees are planted to regulate temperature and increase humidity at the bush

level,

serve as wind break, reduce injury caused by ultraviolet radiation, minimise soil

erosion, help to

maintain ecological equilibrium, minimise loss of water through evaporation, etc.

Only sparse

shade, about 60% mid-day sunlight is required for tea. Some of the shade trees for

tea plantations

are A. Chinensis, Grevillea Robusta, A. Odoratissima, Acacia Lenticularis, DerrisRobusta,

etc.The permanent shade tree for tea plantations in South India is Silver Oak

{Grevillea Robusta).

Grevillia Robusta was found to be the shade tree planted by all the sample covered

during the

study. The economic life of silver oak is 40-50 yrs and generates additional income

by way of

sale as timber and fuel.

Investment/ Replantation Cost for Tea Gardens

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The age of tea bushes in Nilgiris district is estimated to be more than 60 years.

The

Government policy in South India is not to encourage establishment of new tea

gardens but to

uproot the old gardens and replant there. Hence, replantation cost is taken as the

cost of

investment for tea gardens in the study area. Replantation cost includes the cost of

uprooting old

bushes, land levelling, revetments, digging pits, planting, etc. Replantation was

undertaken by

only 22 per cent of the sample small growers. Majority of the sample have not

undertaken

replantation due to financial constraints and expected crop loss in the initial years.

However, 80

per cent of the sample estates were found to replant their tea gardens on an averageof 2 ha land

and 1 tea estate has been replanting 2 ha of tea gardens every year for the last 10

years. The main

reason for not undertaking replantation by 1 sample estate (20%) was due to the

fact that good

clonal varieties were planted about 25 years ago. Since the replantation has been

undertaken by

the sample in the last 5-6 years, the same was estimated at reference year prices.

The average

replantation cost per ha capitalised upto 3 years for sample small growers worked

out to Rs. 2.26

lakh and the same capitalised upto 4 years for the sample estates worked out to Rs.

3.09 lakh.

There may be variations in the replantation cost for different farms in the district as

the uprooting

and land levelling cost will be more in hilly regions. Item- wise cost for

replantation per ha for

the sample

Field Practices for Maintenance of Tea Gardens

Manuring

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In tea plantations, mainly chemical fertilisers are appHed. Nitrogenous fetihsers in

theform of urea, ammonium sulphate, calcium ammonium nitrate, etc are used.

Phosphate and

potash are also applied wherever necessary. The fertiliser is applied in two or three

rounds. All

the sample estates were found to apply chemical fertilisers like urea, potash, etc for

three rounds

during the year.

Irrigation

Tea is mainly a rainfed crop and there is a limited scope for irrigation. Extended

droughtadversely affects the growth of bushes, hence supplementary irrigation is required.

It was

observed that the holdings owned by the sample small growers were rainfed but for

sample

estates all the sample estates had sprinkler irrigation facilities on 9.4 per cent of the

average land

holdings.

Pest ManagementRed spider mite (oligonychus cqffeae), the largest of all tea mites has assumed

significance due to its widespread occurrence in all the tea growing regions of

South India. This

mite first appeared in Gudalur in the year 1999-2000 and gradually spread to other

parts of

Nilgiris district. It infests upper surface of mature leaves causing reddish brown

spots at the

points of sucking, making the infested fields distinct from a distance. Severe

infestation may leadto defoliation. A study by UPASI TRF revealed that the mite can cause more than

18 per cent

loss in crop if the infestation is severe. Recommended dosages of chemicals like

dicofol, ethion,

quinalphos, wettable sulphur, etc may be applied after plucking to control the pest.

The sample

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gardens were found to take preventive measures against red spider mite like

spraying of

pesticides - zolon, sulphur, etc as prescribed by UPASI from time to time.

Disease Management

There are different root, stem and leaf diseases that affect tea. Blister blight

(Exohasidiuni

Vexans) was first reported in South India in 1946. It is a primary leaf disease that

affects tender

shoots and succulent stems. This disease results in crop loss and the quality of

made tea is

affected as the leaves affected by blister produce flaky tea. Crop loss may be as

high as 16percent due to these kind of diseases. The first sign of infection is the production of

pale yellowish

circular spots about 13 mm in diameter on the first three young leaves. For blister

blight control,

chemicals like copper oxychloride, nickel chloride, safnik, triazole fungicides like

bitertanol,

propiconazole, etc are recommended. The planters were found to normally use a

spray schedule

to combat pests and diseases. Plant diseases were also found to be prevalent in the

samplegardens. The most common plant disease was blister blight. All the sample

growers were

reported to be using chemicals like copper fungicide, blue copper, nickel chloride,

etc to control

this disease.

Weed control

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Morphologically, the major weed groups are either dicotyledonous or

monocotyledonous.

It is estimated that the dicot weeds can cause 12 per cent crop loss and monocots

21 per cent croploss. Mulching suppresses weeds and helps moisture conservation.

Besides manual weeding,

chemicals like dalapon, glyphosate, paraquat, etc were used for weed control by

the sample.

Pruning

Pruning is an important field operation. It is done by cutting the branches of tea at

a

height of 32 to 40 cms at a specified interval. The bushes are generally pruned

periodically toprevent lateral growth and provide a good spread of lateral branches. The principal

objectives of

pruning are: to re-establish the initial vigour of the shoot system to stimulate

growth, maintain

convenient h eight for plucking, control crop during rush period, remove dead

wood and help

rejuvenate bushes that have crossed the period of maximum productivity, maintain

quality in

made tea, etc.

There are different types of pruning as rejuvenation pruning, hard pruning,medium

pruning, light pruning and skiffing. The factors that affect choice of pruning

system are health of

the bushes, quality and quantity of crop needed, growth characteristic of plant type,

etc. If the tea

bushes are left continously unpruned, it would lead to the formation of large knots

on the bushes

accompanied by general thickening.

Pruning was done by all the sample small growers and estates. The pruning cycleadopted

by the sample was 4 years i.e. 25 per cent of total area under tea is being pruned

every year.

Labour was employed by the sample on a contractual basis and the average cost for

pruning for

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small growers worked out to Rs. 6175 per ha and Rs. 6500 per ha for the sample

estates

@Rs.0.50 per bush. Plucking is carried out after 3 months of pruning and 50 -100

kg of green

leaf is plucked in each round. After 1 year, full fledged plucking is be carried out.

Burial of pruning was also undertaken by the sample estates as this helps in water

conservation and increases the soil fertility.

Infilling

Infilling is done during the pruned year. Pegging is done to protect the plants fi-

om being

trampled. It helps in increasing the productivity and reduction in the cost per kg of

made tea andhence improves the economies of tea gardens as a whole. All the sample estates

were found to

undertake infilling operation and on an average 100 to 400 plants per acre were

planted. Infilling

was being undertaken by 3 sample small growers (16%). The average infilling cost

worked out to

Rs. 450 per acre for the small growers and Rs. 1800 per acre for the sample estates.

PluckingPlucking denotes harvesting of tea crop. The quantity and quality of harvested

crop

depends upon the standard of plucking. Proper training and skills are required for

plucking as

indiscriminate removal of buds would adversely affect the health of the bushes. It

is generally

accepted that fine plucking makes the best quality tea as it is picking of two leaves

and a bud.

Medium or coarse plucking increases the quantity of harvested crop but only at thecost of quality

and also affects the health of the bushes. Leaf standards are fine- 2 leaves & a bud

or single leaf

banji, medium- 3 leaves and a bud or 2 leaves banji, coarse- more than 3 leaves are

plucked.

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Plucking interval is also important for efficient harvesting of tea. It influences

yield,

quality of harvested leaf and plucking average. As recommended by UPASI, the

frequency of

plucking maybe once in 7-10 days during high cropping months and 12-15 days

during lean

season. Recommended rounds in a year is 26 to 28 rounds depending upon

elevation, weather

conditions and age fi-om pruning. Plucking rounds at a shorter interval with fine

plucking can

give better quality of made tea than leaves plucked at longer intervals. Apart from

quality,

plucking interval also affects the quantum of leaves. As the plucking interval is

increased, there

is a continous increase in yield but quality deteriorates.Plucking was mostly done manually by the sample small growers and estates and

on an

average, there were 25 plucking rounds in a year. Female labour were employed

for plucking and

were paid wages at the rate of Rs. 2 per kg of leaf plucked and an incentive of 50p

per kg was

given for plucking green leaf more than the scheduled quantity.

About 80 per cent of the total green leaves plucked from the tea gardens of small

growers

were 3 leaves and a bud, 10 per cent were a single leaf banji and the remaining 10

per cent were

coarse plucking. It was also observed that the entire stem of the bushes were also

plucked to

generate revenue at the cost of quality. The estates laid stress on plucking good

quality leaves and

about 70 per cent of the total leaves plucked were 2 leaves and a bud.

Shear harvesting was used by the sample estates during rush periods for effective

crop

harvesting. Flat instead of steep shears may be used and 3-4 rounds shearharvesting during high

cropping season is recommended by the research institutions. Studies by TRF have

indicated that

continual shear harvesting adversely affects bush health resulting in crop loss of

10-20 per cent.

Therefore, integrated shear harvesting is recommended.

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Maintenance Cost for Tea Gardens

Maintenance cost on tea gardens includes cost on fertilisers, peticides, weedicides,

hai-vesting, pruning, etc. The maintenance cost on tea gardens is taken from theyear of stabilised

yield. Details of average maintenance cost for the sample small growers and tea

estates

Marketing of Green leaf

Small growers in Nilgiris district are generally covered by co-operative (ENDCO)

and

bought leaf factories. The sample small growers (non- members of fNDCO) weresupplying

green leaf to BLFs which had their collection centres in the villages. Members of

INDCO

factories were supplying GTL to the INDCO factories which also had collection

centres nearby.

It was revealed during the study that these members are not bound to sell their

GTL to INDCO

:and :sometirnes when the bought leaf factories offer price slightly higher than that

offered byfNDCO factories, the members sell off their GTL to them causing a shortage of

GTL to these

factories.

Financial Viability

The economics of tea cultivation has been worked out with the following

assumptions:

The tea gardens start yielding green leaves from the second year onwards andstabilised yield

is obtained from the fifth year.

Tea plants give yield for a long period of time, which may be more than 70 years.

However,for the study, the economic life of the garden has been assumed at 25 years.

Tea gardens have double hedge planting.

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As the sample farmers have been involved in tea cultivation since a very long

period, the predevelopment

income has not been taken into consideration.

The gross income from sale of tea has been calculated for both the pre- stabilised

and

stabilised period.

The residual value of tea plant and silver oak tree has been taken into account for

calculating

the gross benefits.

FRR has been calculated both with and without subsidy for replantation.

All the costs and income has been calculated at reference year prices.

4.34 The cash flow statement for the small growers is given in Annexure II and

111 and the

financial parameters worked out are indicated in Table 4.5 and 4.6. The sample

estates wereutilising the GTL produced in the processing of made tea in their own factories. As

such, the

economics of tea cultivation for the sample estates have been calculated by taking

into account

the yield of made tea and has been discussed at length in chapter 5 of the report.

annimi as lease. The cost of machinery for CTC and orthodox type at the reference

year prices

was ascertained from the dealers of the same. The cost on civil works was

collected at historical

prices and converted to reference year prices by using suitable price indices. Table

Tea Marketing

This chapter analyses in detail the marketing aspects and the pricing structure of

tea in Nilgiris

district. Nilgiris district is a major tea producing district in South India but the

made tea from

Nilgiris is mostly consumed in other parts of the country and are also exported.

6.2 Tea is sold through well established auction system and auctions continue toremain the

primary marketing channel for tea in South India. It is estimated that about 75 per

cent of tea

produced are still being sold through the auction centres despite the relaxation

under clause 17 of

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TMCO order, which grants full freedom to the manufacturers of made tea by any

means. At

present, tea is auctioned through the following centres in South India- Coonoor,

Cochin,

Coimbatore and TEASERVE. All the 4 centres are now e- auction. There are

advantages of eauction

over manual bidding like transparency, speed, post sales data readily available, etc.

But

there are certain disadvantages of electronic auction also like breakdown of server,

VSAT

disturbance, etc. Further, if the system hangs, then the sellers and buyers have to

wait for 30

minutes and conduct auction manually.

Marketing Channels

Marketing channels are sets of interdependent organisations involved in the

process of

making a product or service available for use or consumption. It is estimated that

out of the total

sales at the auction centres of Tamil Nadu, about 50 per cent of sales are inter state,

40 per cent

are exported and 10 per cent are consumed within the State. However, during the

study, theimportant marketing channels identified in the district are enumerated below:

I. ForBLFs and INDCO factories (within the State)

Small Grower >Processing units >auction centres

auctioneers

>wholesaler >retailers >consumers

Commission agentsForBLFs and INDCO factories (outside the State)

Small grower >Processing units >auction centres >proxy buyers

auctioneers commission agents///.

Forestates & TANTEA (within the State)

Plantations >Processingunits- >auctionCentres >

auctioneers

wholesaler >retailers >consumers

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Commission agents

IV. Forestates & TANTEA (outside the State)

Plantations >Processing units > auctioncentres > proxy buyers

Auctioneers commission agents

V.Exports

Plantations >Processing imits >direct exports

Plantations >Processing Unitsexporters

>destination countries

-> auctioncentres >merchant

VI. Direct Retail

Plantations >Processing imits- ->retailers >consumers Among the various

marketing channels, marketing of tea through auction centres is the

most popular channel.

Auctioneers

Auctioneers have been operating for the sale of made tea of the manufacturers at

the

auction centres. It was reported that they are required for market analysis,

sampling, tasting, etc.

The auctioneers charge 1 per cent of the total sales value realised at the auction

from the sellers.

Commission Agents

Commission Agent is a middleman who does not have the title of goods but

merely

negotiates price for the sale of goods that he handles. The commission agents also

charge 1

per cent of the total sales value from the buyers.

Wholesalers

The wholesalers buy the made tea from the auction and blend, packet and sell

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it to the

retailers. The marketing cost of the wholesalers would be expenses on transport,

blending,

packeting, sales promotion, etc. Marketing cost for the wholesalers has been

worked out and

presented in Annexure Vlll.

Retailers

The sample retailers were purchasing different brands of tea from the estate

factories,

Bought leaf factories, etc at 20 per cent margin and were selling at an average price

of Rs.

120 per kg. Other tea like white and organic tea were sold @ Rs. 400 per kg. Valueadded tea

like rose, ginger lime, chocolate, mint, masala, jasmine tea, etc were also being

sold in a small

quantity. No value addition was reported by the sample retailers. Loose tea is

generally sold in

retail through kirana stores @ Rs. 80 per kg and there is also a margin of 20 per

cent on the

same.

It may also be mentioned that within Tamil Nadu, TNGST of 8 per cent and CST

of 4per cent for made tea marketed outside the State has to be paid.

Price Spread

Price spread is the price paid by the consumer and the price received by the

producer.

The economic efficiency of a marketing system of an agricultural commodity is

generally

measured in terms of the price spread.

The smaller the price spread, the greater the efficiency

of the marketing system. Marketing cost is considered in the study as all the costs

incurred by

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an intermediary in moving the produce from one stage to another in the marketing

channel.

Marketing margin is that part of income which is over and above the marketing

cost of the

functionary.

Tea Board

Tea Board is an apex body formed under Ministry of Commerce and Industry,

Government of India to regulate the area, production, sales and exports of tea in

the country.

Besides the regulatory functions, the Board also provides financial assistance for

different

activities. Some of the important Tea Board schemes to be implemented during theTenth Plan

period with a sanctioned outlay of Rs. 403 crore are:

Tea Quality Upgradation and Product Diversification Scheme: The main

objective of the

scheme is to provide financial assistance to tea gardens/ factories for renovating

the

processing capabilities inorder to produce good quality tea. Replacement of old

and worn out

machinery is required to produce quality tea. Financial assistance is to be provided

by TeaBoard by way of subsidy @25% of the total cost which would include the basic

cost of the

machinery, taxes, freight, insurance and cost of commissioning, subject to a

maximum of Rs.

25 lakh per unit. The subsidy is back ended and is paid in a single instalment after

the

installation of the machinery. Tea Board undertakes pre approval, post installation

and

evaluation inspection for the release of subsidy. All tea growers, manufacturers andothers

dealing with value addition of tea like blending, packaging, etc and registered with

Tea Board

are eligible for the subsidy. Items eligible for subsidy are electronic and

mechanical sorters,

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electronic m onitoring d evices for c ontrol o f t ea p rocessing, p urchase of t ea m

achinery for

orthodox, green tea and speciality tea manufacture, replacement of old CTC rollers

and other

allied machineries, etc. The subsidy is not allowed for any equipment imported

under Export

Promotion Capital Goods scheme and for companies availing benefit of Tea

Development

Account S cheme 2 001 under section 3 SAB of Income Tax Act. Rs. 76.80 crore

has been

allocated by the Gol for this Scheme. The Deputy Chairman in Head Office and

Executive

Directors in the Zonal offices at Guwahati and Goonoor are the sanctioning

authorities under

the scheme.Tea Plantation Development Scheme: Under this scheme, 25 per cent of the

approved unit

cost per ha is provided as subsidy and the rest 75 per cent has to be mobilised by

the growers

as their own funds or loans from the financial institutions. The activities eligible

for subsidy

under this scheme are replanting, replacement planting, rejuvenation, pruning and

infilling

and creation of irrigation facilities. This is for all the growers regardless of the size

of land

holdings. For small growers, there are subsidy schemes for new plantation in North

East and

Uttranchal, setting up of pilot tea producers societies and usage of mechanical aids

(pruning

machines) for field operations. The financial outlay sanctioned for this scheme

during the

tenth plan period is Rs. 98.59 crore

EVALUTIONOFCOFFEE

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The Starbucks Center, Seattle. The company HQ, in the old Sears, Roebuck and

Co. catalog distribution center building

The first Starbucks was opened in Pike Place Market in Seattle, Washington, on

March 30, 1971 by three partners: English teacher Jerry Baldwin, history teacher

Zev Siegl, and writer Gordon Bowker. The three were inspired by entrepreneur

Alfred Peet (whom they knew personally) to sell high-quality coffee beans and

equipment.[8]

The name is taken from Moby-Dick; afterPequodwas rejected by

one of the co-founders, the company was named for the first mate on thePequod,

Starbuck.

The Starbucks store at 1912 Pike Place. This is the second location of the original

Starbucks, which was at 2000 Western Avenue from 1971 to 1976.

From 19711976, the first Starbucks was at 2000 Western Avenue; it then wasrelocated to 1912 Pike Place, where it remains to this day. During their first year of

operation, they purchased green coffee beans from Peet's, then began buying

directly from growers.

Entrepreneur Howard Schultz joined the company in 1982 as Director of Retail

Operations and Marketing, and after a trip to Milan, Italy advised that the company

should sell coffee and espresso drinks as well as beans. The owners rejected this

idea, believing that getting into the beverage business would distract the company

from its primary focus. To them, coffee was something to be prepared in the home,

but they did give away free samples of pre-made drinks. Certain that there wasmoney to be made selling pre-made drinks, Schultz started theIlGiornale coffee

bar chain in April 1986.

In 1984, the original owners of Starbucks, led by Baldwin, took the opportunity to

purchase Peet's (Baldwin still works there).

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During the 1980s Starbucks' benefits were enviable: part-time baristas not only had

medical insurance, they had stock options.[citation needed]

Sale and expansion

In 1987, they sold the Starbucks chain to Schultz's Il Giornale, which rebranded the

Il Giornale outlets as Starbucks and quickly began to expand. Starbucks opened its

first locations outside Seattle at Waterfront Station in Vancouver, British

Columbia, and Chicago, Illinois, that same year. At the time of its initial public

offering on the stock market in 1992, Starbucks had grown to 165 outlets.

Indian filter coffee

Beans

Traditionally, the coffee bean varieties Plantation A or Peaberry are used to makeFilterCoffee, withPlantation A being considered slightly inferior.

Preparation

Metal South Indian coffee filter disassembled

South Indian coffee is brewed with a metal device that resembles two cylindrical

cups, one of which has a pierced bottom that nests into the top of the "tumbler"

cup, leaving ample room underneath to receive the brewed coffee. The upper cuphas two removable parts: a pierced pressing disc with a central stem handle, and a

covering lid.

The upper cup is loaded with fresh ground coffee mixed with chicory (~2

tablespoons of mixture per serving). The grounds are gently compressed with the

stemmed disc into a uniform layer across the cup's pierced bottom. With the press

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disc left in place, the upper cup is nested into the top of the tumbler and boiling

water is poured inside. The lid is placed on top, and the device is left to slowly drip

the brewed coffee into the bottom. The chicory sort of holds on to the hot water a

little longer, letting the water extract more flavour from the coffee powder. The

brew is generally stronger than western "drip style" coffee.

Traditional Madras-style Dabarah (or) Davarah and tumbler placed with the open

end facing down as customary

The resulting brew is very potent, and is traditionally consumed by adding 12

tablespoons to a cup of boiling milk with the preferred amount of sugar. The coffee

is drunk from the tumbler (although a word of English origin, it seems to be the

most commonly used name for this vessel), but is often cooled first with a dabarah

- "dabarah" (also pronounced in some regions as 'davarah'): a wide metal saucer

with lipped walls.

Coffee is typically served after pouring back and forth between the dabarah and the

tumbler in huge arc-like motions of the hand. This serves several purposes: mixing

the ingredients (including sugar) thoroughly; cooling the hot coffee down to a

sipping temperature; and most importantly, aerating the mix without introducing

extra water (such as with a steam wand used for frothing cappucinos). An anecdote

related to the distance between the pouring and receiving cup leads to the coffee's

another name "Meter Coffee".

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Filter coffee served hot and frothy in a traditional tumbler and dabara

Culture

Coffee is something of a cultural icon in Andhra, Karnataka and Tamilnadu. It is

customary to offer a cup of coffee to any visitor. Coffee was originally introduced

by Baba Buden to South India in 16th century and became very popular under the

British Rule. Until the middle of the 20th century traditional households would not

use granulated sugar but used jaggery or honey, instead in coffee.

History

Chennai is famous for its filter coffee, and many shops like this grind fresh coffee

powder

The popular Indian lore says that on pilgrimage to Mecca in the 16th century, Baba

Budan, a revered Muslim holy man from India, discovered for himself the wonders

of coffee. In his zeal to share what hed found with his fellows at home, he

smuggled seven coffee beans out of the Yemeni port of Mocha, wrapped around

his belly. On his return home, he settled himself on the slopes of the Chandragiri

Hills in Kadur district, Mysore State (present day Karnataka). This hill range was

later named after him as theBaba Budan Hills and one can see his tomb even

today by taking a short trip from Chikmagalur.

Rev. Edward Terry, chaplain to Sir Thomas Roe who was ambassador at the court

of Emperor Jehangir, provides a detailed account of its usage (1616):

"Many of the people there (in India), who are strict in theirreligion, drink

no Wine at all; but they use a Liquormore wholesome than pleasant, they

call Coffee; made by a black Seed boiled in water, which turns it almost into

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the same colour, but doth very little alterthe taste of the water:

notwithstanding it is very good to help digestion, to quicken the spirits, and

to cleanse the blood."

The British East India Company brought in fresh influences. David Burton, a food

historian based in New Zealand writes in his bookThe Raj at Table (1993)

"India's first coffee house opened in Calcutta afterthe battle of Plassey in

1780. Soon after, John Jackson and Cottrell Barrett opened the originalMadras Coffee House, which was followed in 1792 by the Exchange Coffee

Tavern at the Muslim, waited at the mouth of the Madras Fort. The

enterprisingproprietorof the latterannounced he was going to run his

coffee house on the same lines as Lloyd's in London, by maintaining a

registerof the arrival and departure of ships, and offering Indian and

European newspapers forhis customers to read. Otherhouses also offeredfree use of billiard tables, recovering theircosts with the high price of one

rupee fora single dish of coffee."

Indian filter coffee was popularised by the India Coffee Houses run by the Coffee

Board of India since mid 1940s. It became the drink of millions after the

emergence of more popular Indian Coffee Houses in mid 1950s. We can read this

story in the Malayalam book Coffee Housinte Katha by Nadakkal Parameswaran

Pillai.

Indian filter coffee even migrated overseas in the early 20th century to Malaysiaand Singapore, where kopi tarik(pulled coffee) is a close cousin of the Madrasi

coffee-by-the-yard / metre, and was introduced at roadside kopi tiams run

originally by Indian Muslims.

Trivia

A term often heard for high-quality coffee is degree coffee. Milk certified as pure

with a lactometer was called degree milkowing to a mistaken association with the

thermometer. Coffee prepared with degree milkbecame known as degree coffee

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y Another explanation fordegree coffee is that chicory beans were used to

make the coffee. The South Indian pronunciation ofchickory became

chigory then digory and finally degree.

y Yet another explanation is that, when coffee is decocted for the first time, it

is called as the first degree or simply as the "Degree Coffee". This has the

strongest flavour and the necessary strength to mix with milk without

watering down the taste. In less affluent households, in earlier days, coffee

was decocted for a second or third time from the same initial load; this

became the second degree coffee and naturally, is not as strong. Affluent

households drank first degree or the famous "Degree Coffee" only

y The name derives from the filter used for making the decoction.

y Interestingly, there is a Kannada name for coffee "Boondh Bisneeru".

"Bisneeru" sounds a great deal like "bisi neeru," or "hot water," thus leading

to speculation that the terms are connected. Although not used currently, this

was used by ladies two generations ago. The Srilankan Tamil name forcoffee is "Kottai Vadineer"

y

y Over the past few decades, tea has become one of Indias most important

commodities. Not only is tea indigenous to India, it is also something that

the country takes a lot of pride in as it is the second largest tea producer in

the world after China and contributes greatly to the countrys GDP growth

as well as foreign exchange earnings.

y

Accounting for over 30% of the global production, India is a world leader in

all aspects of tea production, consumption as well as export. It is the only

industry where India has retained its leadership over the past 150 years,

offering a variety of products, from original Orthodox to CTC and now

green tea, Darjeeling tea, Assam tea and Nilgiri tea. No other country has so

many popular varieties of tea.

y

The total turnover of the tea industry is around Rs 10,000 crore and since

independence tea production has grown over 250%, while the land area has

just grown by 40%. There has been a considerable increase in exports too in

the past few years.y

The total net foreign exchange earned per annum is over Rs 1,850 crore. The

labour-intensive tea industry directly employs over 1.1 million workers and

generates income for another 10 million people. Women constitute 50% of

the workforce especially in northeast India.

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y

In the domestic market, tea trading is done in two ways - auction and private

selling. Market reports are received from the six major auction centres in

India, namely, Kolkata, Guwahati, Siliguri, Cochin, Coonoor and

Coimbatore. Bulk trading is done through auctions held in these centres.

y

The latest thing to happen to the industry is e-auction, which took off earlier

this year. The electronic auctions implement the latest technology in tea

trading in India, but, changing the 150-year-old system has not been easy.

These e-auctions have been on the Tea Board of Indias agenda for almost a

decade now.

y

Headquartered in Kolkata, the Tea Board first started trying to implement

the process in 2002 when they hired Ferguson & Co (now Deloitte) to

prepare an extensive report on the industry. The firm recommended severalchanges and one of them was to replace physical or manual auctions with e-

auctions.

y

As regulators of the industry we saw that this change would bring about

more transparency and speed across the system. We also looked forward to

standardizing procedures across our six centres. So we decided it was time to

go beyond regulation and the government funded this upgradation process.

A well-known IT company first started developing our software in 2004 but

it failed and we gave up in 2006. In 2007, we then chose NSEs IT

department to produce the software, says Basudeb Banerjee, chairman, Tea

Board of India.

y

E-auctions aim to get rid of many flaws such as sharing of lots. If a buyer

bids for a lot, he has an upfront option whether he wants to share the lot or

not. This was not possible in manual auctions. Also the board set up a

minimum price system in e-auctions, which is unknown to the buyer.

Besides, in manual auctions, many sales happen in the heat of the moment

such as an ego issue between two multinationals. So buyer anonymity is

another advantage.y

So far things are robust. NSE IT, the company that built the software at an

estimated cost of Rs 18 crore has not left space for major technical failures.

Apart from minor technical glitches and connectivity issues with broadband,

we have done pretty alright, says Banerjee, adding that they have learnt on-

the-job. We took almost three years to come out with the software and in

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this period there were over 300 technical modifications to make the system

as user-friendly as possible, he says.

y

There has certainly been an escalation in costs as the board did not foresee

cost of software changes and service provider charges. There are also huge

connectivity costs as the servers are based out of Mumbai. Each centre is

also supplied technical manpower by NSE IT.

y

All this has initially cost us Rs 10 crore and furthermore we will be spending

Rs 2 crore each year. However, we will only be covering this for three years,

after which the industry will take over and it wont be much, just 10 to 12

paise per kg of tea, according to our assessment, says the Tea Board of

Indias Chairman.

y

Guwahati is the first centre in east India to become completely electronic.People have been more co-operative here and in fact they find the system

more convenient to use. There are a few enhancements in the pipeline but as

of now the system is working fine, informs J Kakoti, secretary general of

the Guwahati e-auction committee.

y

The primary reason behind resistance and complaints in this system is the

mindset of the industry, which has been running traditionally for over 150

years. Kolkata is thelongest-running auction centre (since 1861). It was

difficult to change the 19th century thinking. I had personally persuade some

65-year-olds to pass on the business to their children. This is also the reason

why most in the business have low computer compatibility.

y

A year back, we were unhappy with the way things were going as we were

constantly pushing back deadlines. However, today everything is going well.

In fact, Kenya, Sri Lanka and all other competitor industries are looking up

to us and have approached us too. There is huge interest with India being the

first country to implement e-auctions, says Banerjee, who has spent a

decade at the Tea Board.

y

An all-India auction centre on the web will soon be a reality, where people

from all over the country, even the world, can buy and this will lead to a

bigger bulk of tea being sold through auctions. This is bound to happen in

the long term, adds Banerjee.

y

Most tea company stocks from Goodricke to Mcleod Russel, Warren Tea,

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Jayshree Tea and a few others have gone up in the past few months.

Depleting global production is one of the main reasons why this is

happening. However, while lower production is good news for plantation

owners, it is not so good for blenders like Tata Tea and HUL.

y

One of the main points that many tend to miss is that although tea prices

have shot up, they have simply reached the 1999 levels. All these years,

owners of tea estates have suffered while blenders have made maximum

money due to oversupply. Things were so bad that this sector was almost

written off. It is only now that things have started looking up as worldwide

shortage has sent wholesale prices of tea on the upward spiral, says

Ananyavrat Kanoi, owner of six tea estates in the state of West Bengal.

y

McLeod Russel, the worlds largest tea leaf producer with a portfolio of 80

million kg recently predicted that tea prices would jump a further 10% to15% within this year as inventories reduce even further - in some areas by

15% - due to drought-hit Sri Lanka, Kenya and India in the midst of ever-

growing demand. These countries output has fallen by over 10% from the

2008 levels.

y

We can see another 10% to 15% increase by the end of the current financial

year, says Kamal Beheti, CFO, Mcleod Russel. Prices will remain near the

current level for the next few months as the harvest peaks in India, but

afterwards they are likely to firm up.

y

Further with demand growing as supplies fall, the cost of leaf tea at auction

is being pushed up. Although blenders had a good phase in the recent past,

big planters like the BM Khaitan Group whose flagship is McLeod Russel

do not want to enter the packaged tea business. Our expertise is in the

plantation business and we command a position in the global market. There

are big players like Tata Tea and Levers in the packet tea business. Our core

expertise is in investment in plantations and we will continue to do that. Our

Q1 profits have increased over four times since last year, a clear cash gain

on higher prices of tea. We fetched an average of around Rs 30-35 per kg oftea, which propped up profits. Things are great for us, why enter the

blending business? asks Aditya Khaitan of McLeod.

y

Tea prices have been rising in recent times but are still lower than what

they should be. As far as McLeod is concerned, if the current price trend

continues, there could be an approximate cash accretion of around Rs 150

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crore, perhaps on account of higher prices of tea. We are looking at a

turnover of around Rs 1,000 crore this year, adds Khaitan.

y

Adverse weather conditions till last year in almost all tea-producing

countries affected production substantially and the global shortfall up to HY

2009 was estimated to be over 84 million kg as compared to 2008. In India,

the weather condition has improved, although it continued to be unfavorable

in Sri Lanka and Kenya.

y

Producing 1.16 billion kilos of tea per year, China is the number one source

for tea in this world. At 980 million kilos, India stands at number two,

followed by Kenya and Sri Lanka. When it comes to exports, China ships

out 297 million kilos of all types of tea whereas India, with primarily black

tea, moves 203 million kilos.

y

Prior to the 1960s, India was the top producer and exporter. For example, in

1955, India shipped out 165 million kilos of the total production of 301

million kilos. China caught up in 1993 with 201 million kilos to Indias 175.

For total production, India has taken the second place after China since 2006

and has been lagging behind ever since.

y

Experts from the tea industry are of the opinion that this is bound to change

soon. Assam, the largest tea producing state in India is headed for a better

season in the year 2010 on the back of good crop and also better price

realizations. If 2009 was good for the Assam tea industry as far as

production and price realizations are concerned, this year might be even

better if industry captains are to be believed.

y

Tea industry sources said indications are such that they are expecting good

crop production and firm price realization to continue or be even better in

the initial months of the next calendar year. What I see is that the initial

months of next year would be even better for the Assam tea industry, said

Bidyananda Barkakoty, chairman of North Eastern Tea Association

(NETA).y

Though the Assam tea industry had seen a decline in crop production till

May last year due to prolonged dry weather condition, it bounced back and

has now overcome the shortfall.

y

Assam production during January-September last year was 359.739 million

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kg, higher by 2.8 million kg though all-India production was lower by about

10 million kg. Till May, the Assam tea industry had posted a total shortfall

of around 9 million kg, with the worst being the month of April.

y

Industry sources said that the crop production for the last quarter, for which

the figures were not yet out, was pretty good. This calendar year, it appears,

production might surpass 2008, which was one of the best years for the

Assam tea industry since 1999.