Fair Trade and the Tea Industry

This post on the truth about tea is by guest blogger, Alex Zorach, Founder and Editor of RateTea 

The tea industry has a myriad of ethical, human rights, and environmental issues that parallel those of any industry involving the production of goods in less wealthy countries, imported into wealthier countries. An outstanding, in-depth summary of these issues can be found in Sustainability Issues in the Tea Sector, a 2008 report from the the SOMO Centre for Research on Multinational Corporations; this report focuses on India, Sri Lanka, Vietnam, Indonesia, Kenya and Malawi. China, another major producer, is not covered in this report, but has similar issues, on top of its own unique issues associated with its government that combines elements of capitalism and authoritarianism. In this post I will explain some issues specific to the tea industry itself, and I will point the reader towards conscious decisions that can help people buying tea to make decisions that are more likely to shape the economic landscape in a way that helps tea producers and workers in the country where tea is produced.  

How and why do profits concentrate mostly in wealthier countries? The tea industry has a long supply chain, which involves growers, processing factories (which range from larger regional factories to tiny operations smaller than a single house), bulk tea auctions, importers, blenders, packers, marketers, and a variety of support industries. In conventional trade, the bulk of the profits go to the blending, packing, and marketing industries, which tend to reside mostly in wealthier Western countries. People within the tea industry often describe the processes of blending, packing, and marketing in terms of "adding value", which I see as a euphemism masking the essential reality that the price of the product has been marked up considerably. Whether or not any value has truly been added, in terms of resulting in a better experience for tea drinkers, is a subjective question. A higher profit for the seller, and a greater portion of costs flowing into the wealthy country in which the tea is sold, results in a lower portion of the purchase price going to the original producer. Below I will show how a conscious shopper can partially address this issue, without sacrificing price or quality.  

Tea vs. coffee: a few key differences: People often treat tea together with coffee, when thinking about the industries, because the two are both caffeinated beverages, and both drinks tend to be sold in the same stores, often side-by-side, and both industries involve labor-intensive picking, but there are some important distinctions between the two:

• The tea plant is hardier with respect to cold than the coffee plant. Coffee requires a tropical climate, whereas tea grows and thrives in mild subtropical climates and at higher elevations in the tropics. This means, among other things, that there are many regions which can produce tea commercially, but cannot feasibly grow coffee.
• As a bulk commodity, tea tends to cost considerably less per cup than coffee. This has several implications; it opens the door to price gouging by businesses selling tea in the West (thus further concentrating profits in wealthy countries), but it also means that informed shoppers can buy remarkably high-quality tea for a reasonable price, and can comfortably afford products that have been produced in more ethically and environmentally sound ways.
• In many regions of the world, tea production pays considerably less per acre than coffee. People unfamiliar with the tea and coffee industries usually are surprised to learn that, climate-wise, tea can be commercially grown throughout much of South and Central America, and that the greater economic prosperity of these regions, rather than the climate, explains why most tea is produced in Asia and Africa.
• Tea production has increased more than demand in recent years, leading to a fall in prices. This has created economic pressure that has led to falling wages for seasonal laborers engaged in tea production.

Smallholders, small-scale tea producers, and seasonal labor wages: Small producers, called smallholders, have come to dominate tea production in Sri Lanka and Kenya. In Kenya, these smallholders mostly have tiny plots, with 90% of the total tea crop being grown on plots of 1 acre or less. In the activist culture in the U.S., people often have a tendency to assume "smaller is better", operating on the false premise that exploitative models are imposed by large, powerful corporations onto individuals, and that smaller operations will necessarily result in better working conditions. This is not necessarily true. In Kenya, Sri Lanka, and India, small farmers are more easily able to evade labor laws and other laws governing tea plantations. According to SOMO's report, these small operations are viable in large part because they can pay less for labor, especially seasonal labor. Some activists in Western countries may think of these models in terms of the tea estate owners exploiting their workers, but the owners themselves are often working within difficult economic constraints. I find it unempowering to think of these estate owners as exploiting their workers; I prefer to refrain from passing value judgements on people, and instead focus on the system that creates bad incentives and leaves people with little or no viable alternatives.  

Fair Trade and other approaches: Fair Trade, as administered by FLO and IFAT, is one of the major approaches to solve this problem. Fair Trade aims to addresses multiple issues at once, putting a minimum on the portion that goes to producers, creating traceability of the tea, and aiming to address. Fair Trade is not perfect; for a particularly scathing criticism of fair trade in the tea industry, you can watch The Bitter Taste of Tea: A Journey into the World of Fair Trade, an hour long program which shows how, in many cases, there is little difference between Fair Trade and non-Fair Trade operations. Another, weaker form of certification, is run by the Ethical Tea Partnership (ETP), which has also been criticized on similar grounds; you can read an overview of the ETP and criticisms of it that I wrote. Some time ago, I conversed online with Sonam Paljor Lama, who has worked with tea estates in Darjeeling, and who briefly ran an online tea company selling tea directly from Darjeeling, and he validated the major concern expressed in the film, explaining that most workers travel frequently between estates seeking work, and that the conditions are likely to vary little regardless of whether or not the teas are Fair Trade certified. I am hopeful though that critiques of Fair Trade tea, coupled with increased transparency due to the information age, can to strengthen the Fair Trade certification system so that it can address more of these issues in the long-run.  

My recommendations for buying tea: Other than buying Fair Trade certified tea, there are other conscious decisions that tea drinkers and people shopping for tea in the West can do to influence where the money flows in the tea industry.

• Buy single origin tea, rather than blends - Blending is a practice carried out primarily in wealthy countries. When you buy blended tea (a generic tea marked only as "tea", "green tea" or "orange pekoe black tea"), it is more likely that the teas that went into the blend were lower quality, and purchased for a lower price. With single-origin tea, it is more likely that a greater portion of the price you pay will reach the original producer. 
• Buy loose-leaf tea, rather than tea bags - The packaging of tea into tea bags, besides using energy and resources that are discarded, also tends to concentrate profit in wealthy countries. By buying loose-leaf tea, you not only reduce waste and resource usage, but you make it more likely that a greater portion of the price you are paying reaches the producers.
• Seek out quality - The biggest economic pinch, driving the race to the bottom, resulting in poor working conditions and environmental degradation, comes when producers sell tea as a bulk commodity. Unique and artisan teas can fetch a higher price for the producer. Kenya in particular, which has until recently produced mainly bulk tea for blending, is rapidly becoming a global leader in tea innovation, developing new cultivars of tea, as well as putting their own unique spin on traditional Chinese and Japanese styles of tea. Because the skill and art resides with the producer of artisan teas, the producer has greater agency and is able to command a higher share of profits than in the case of bulk commodity tea. Innovation also stands to help both producers and tea growing countries in the long-run, as growers develop cultivars better adapted to local conditions and more resilient in the face of climate change.
• Comparison shop, and buy reasonably priced tea - One unfortunate side-effect of the Fair Trade movement is the idea that paying more for a tea is the best way to achieve ethical and environmental goals. But from the standpoint of a shopper concerned with the conditions for tea producers and pickers, the worst outcome is to spend a large amount of money on a low-quality tea on which a large markup has been charged, where the profit is mostly being taken by the final seller. Shopping around, and making sure that you are paying a reasonable price and getting good value, especially whenever you buy tea that is not fair trade certified, can help put a cap on the most obscene profits. Then, when you do splurge, make sure you are spending in accordance with your values.
• Buy direct sourced tea - The tea industry is hardly transparent; retailers rarely reveal their sources of tea, and wholesalers rarely reveal their clients. A claim that a company directly sources their teas from a region of production is not a guarantee of this fact. But, I would recommend avoiding buying from companies that do not identify anything about the origin of their teas. Farmer-owned cooperatives with a retail presence, which may or may not be fair trade certified, can also be a good source of tea. A few tea gardens, like Makaibari Estate in Darjeeling, India, have a web presence and sell some tea directly. Makaibari has been a global pioneer in organic and biodynamic tea production, as well as in Fair Trade and the empowerment of women. Companies shipping directly from a tea's region of production are becoming more common now both in China and India. One example of such a company is Yunnan Sourcing, specializing in Pu-erh and other teas from China's Yunnan province, which sells many products at a fraction of the price at which they are available from other retailers.

Is it better to buy a box of organic certified tea bags, blended and mechanically processed, or a loose-leaf artisan tea from a small producer, directly sourced from a tea company that does not have Fair Trade certification? I don't know the answer to this question. But I am personally not convinced that Fair Trade certified tea is always the better option; I think it is more productive to think holistically. While I often seek out the Fair Trade label, and encourage others to do so, I would recommend for people to consider more factors than just Fair Trade certification alone in choosing which products to buy--not just with tea but with all products. The main danger is that we fall into thinking that Fair Trade instantly solves the social, economic, and environmental issues associated with trade between wealthier and less wealthy countries. It does not. The Fair Trade system is powerful, but is in need of continuous pressure to improve on reaching its goals, and is best combined with other approaches to tackle the underlying issues from as many angles as possible. 

Alex Zorach, Founder and Editor of RateTea 

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Message from Journey for Fair Trade Blogger, Mitch Teberg:

The above posts presents the views and professional opinions of Alex Zorach, and do not represent my own research. In June, 2012, Alex approached me with his independent information website providing consumer information on sourcing tea. His site does not sell any products, nor does it contain any affiliate links. reviewing RateTea.com and considering Alex's unique insight to the tea industry, I invited him to contribute this post. As a Fair Trade advocate, I believe we can progressively improve Fair Trade when we review well-founded critiques and as consumers make demands on Fair Trade certification organizations to raise the bar for certification. Most importantly, it means to improve the monitoring of certified organizations. I invite consumers not only to comment below, but to take act an active role and contact FLO and Ethical Tea Partnership (ETP) directly with your concerns.

If you have a Fair Trade related issue, project, or perspective you would like to share as a guest blogger on Journey for Fair Trade, please feel free to contact me directly.  On a personal note, my Journey for Fair Trade has come to it's completion and after a period of rest, I have endeavored on yet another journey...

From June, 2012, I have resided in Kabul, Afghanistan as a UN Volunteer with the United Nations Development Programme (UNDP). I am working in the National Institution Building Project (NIBP) which is an effort to improve the capacity of ministerial, provincial, and district level government officials to deliver government services to the Afghan people. As NATO troops begin departing prior to the 2014 deadline, the ability of government officials to provide social services will prove vital to Afghanistan's future and the success of their fledgling democracy as they face an insurgency committed to death and destruction; for it is far easier to destroy than to construct. For this reason, I have accepted a volunteer position as my personal contribution to the future of people who have suffered heavily under three decades of war.

My work here is only possible with the selfless ongoing support of my wife, Chou and our son, Thoreau residing in Vietnam while I am on assignment. 

Mitch Teberg, MA

Capacity Development Advisor

National Institution Building Project

United Nations Development Programme

Shah Mahmood Ghazi Watt

Kabul, Afghanistan

www.undp.org.af Follow us: