Despite being a major tea producer, Vietnam has been urged to restructure its tea industry to enhance its competitiveness and foster sustainable development.
While the country has a long tradition of tea growing and tea drinking culture, there have remained several problems that are hindering the industry’s sustainability including substandard tea growing and processing, overuse of pesticides, low quality, low export prices and low profits for farmers.
In order to discuss a solution for a sustainable tea industry, several government leaders, experts and business people made comments and proposals on the issues at the fifth international conference “Vietnam Tea Outlook 2013”, opened on October 7 in Hanoi.
Speaking at the meeting, Doan Xuan Hoa, Deputy Director of the Ministry of Agriculture and Rural Development (MARD)’s Department of Agro-Forestry-Fishery Product Processing and Salt Industry, said tea is still among Vietnam’s ten major exporting industries. Currently, tea is grown on a combined area of 125,000 hectares in 34 cities and provinces nationwide .The industry generates jobs for around three million people. However, tea production value is still rather modest, as tea export revenues are estimated to be around USD200 million per year, much lower than pepper exports.
“It’s high time to change the mechanism to foster sustainable development instead of focusing on production,” Hoa emphasised.
According to Hoa, there is still a lack of regulations to ensure standards in tea production and processing. Several related policies have yet to be effectively implemented.
“The tea industry’s development is somewhat off the market trend as we’re growing and selling what we have instead of what the market needs. We’ve just focused on expanding our market share in the world instead of taking into account consumers’ taste,” he commented.
He said that the licensing of tea businesses is a bit uncontrollable as the number of tea factories has mushroomed to as much as 455. There are over 200 tea exporters and each of which can export only 500 tonnes per year.
“There is a paradox in the tea industry as even though Vietnam is the world’s fifth largest tea producer, its tea prices are the lowest among tea exporters. Up to 80% of the world’s tea industry is contributed to by non-tea producers. When Vietnam exports tea at USD1.45 per kilo, several European countries import our tea and sell at much higher prices,” Hoa noted.
The incomes of tea growers also vary in the country. While incomes of tea growers in the central highlands province of Lam Dong are averaged at USD180 each per hectare, the figure was just USD30 in the northern province of Thai Nguyen and USD15 in Bac Can Province. Many tea growers in northern Vietnam are finding it hard to live on such low income.
Flavio Corsin from Sustainable Trade Initiative (IDH) said, “Vietnam’s tea industry is entangled in a vicious circle. Many tea factories are under capacity, so they are willing to buy materials at any quality. This has discouraged tea growers to enhance their product quality and resulted in lower quality, lower prices, lower profits, lower incomes and lower investment in tea production”.
Changing relations of production
In order to deal with the aforementioned problems, Hoa emphasised the necessity of restructuring the tea industry based on market demand, moving from household production to larger-sized production and the application of advanced technology in production and processing.
He added that the government should provide financial incentive policies for tea growers and exporters while tea growers should be encouraged to voluntarily comply with production standards and connect with enterprises.
Dr. Dang Kim Son, Director of the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) attributed the situation to the inadequate relations of production in the tea industry. He proposed gathering tea growers into cooperatives or production groups so as to develop a sustainable production chain.
He said that MARD is implementing a project to build a coffee coordination committee with a half participation of farmers, enterprises and foreign organisations and another half by state agencies. The committee is expected to be unveiled in the next two years with a hope of helping to revamp the coffee industry. The tea industry should follow suit as two industries face the same difficulties.
“It’s high time to put farmers in the centre of the supply chain and to foster connections between enterprises so as to uphold the potential of Vietnam’s agriculture, enhance production value, increase product prices and raise farmers’ incomes,” he added.