Economic Activity

Question 1

Nature of Tea

Answer 1

• Tea is a perennial crop (lives > 2yrs), produced from the Camellia Sinensis plant
• Has been harvested as a beverage crop for approx. 5000 years – originating in the Yunnan province of South-West China in 2700 BCE
• Most consumed beverage globally (after water) with 3.6 billion people drinking it daily
• 18-20 billion cups of tea consumed everyday
• Produced from leaves of the 2 major camellia species: Camellia Sinensis sinensis (Chinese variety) and Camellia Sinensis assamica (Indian variety)
• Primarily consumed as black tea (oxidised tea): 72%  Green tea (non-oxidised tea) – 25%  oolong tea (semi-oxidised) 3%
• Tea is sold as single-origin (higher price, commonly traditional) or blends (lower price, commonly industrial)
• More than 3000 types of tea produced globally
• 6 million tonnes of tea is produced annually by 45 countries, with China and India accounting for over 60% of all global production
• Traditionally labour intensive and spatially restricted by agro-climatic factors. Smaller tea gardens were typically a polyculture of less than 0.4ha
• Contemporary (industrial) production is capital intensive and has expanded as a result of technological innovations since the Blue and Green Revolution (e.g. mechanisation, irrigation and HYVs)
• Larger tea plantations are commonly a monoculture of 1ha  ownership is concentrated in multinationals such as Unilever, Lipton and Twining’s
• More than 9 million smallholder growers in the developing world – 95% are female
• Kenya = largest exporter of black tea, China = largest exporter of green tea and India + Sri Lanka

Question 2

Tea: spatial patterns of production and consumption

Answer 2

Historically:

• Originated in the mountainous region of the Yunnan province
• Spread to East Asian countries: to India and Japan
• China established tea trade with Turkey, then Iran, Rome, the Arabian peninsula, Afghanistan, Pakistan and Korea (the Silk Road)
• 16th century: England
• Tea is now produced in 45 countries in 6 of the 7 continent

Production:

• Camelia Sinensis is native to SW China, but is today cultivated on a commercial scale in 45 countries
• Predominately in tropical and subtropical climates
• Largest production in China (1.9 million tonnes), India (1.2 million tonnes) and Kenya (430 000 tonnes)
• Latitudes; as far north as Russia (45oN) and as far south as Tasmania (43oS)
• Altitudes: grown at a range of altitudes from coastal plains of Sri Lanka (Sea level) to the Western Ghats in India (2400,). Production decreases in altitude with increased latitude. The most high quality tea are produced in higher altitudes.
• 1.1% of the worlds arable land is dedicated to tea production (1/2 of this production in China)
• In Sri Lanka, tea production takes up 4% of arable land (1.8 million ha)

Question 3

Future Directions - Increasing Production

Answer 3

• World production is projected to rise by 30% over the next decade, reaching 8 million tonnes by 2030
• This reflects major output increases in China, Kenya and Sri Lanka as high yielding clones and mechanisation is expanded in developing countries
• Technology and capital-intensive production will grow, with agri-tech and precision agricultural (e.g. GIS and automation) improving yields and production quality

Question 4

Future Directions - Increasing Consumption

Answer 4

• Grown particularly rapidly in China, India and other emerging economies driven by a growing middle class with higher disposable incomes
• The next several decades will see the ‘global middle class’ population rise from 440 million to 1.2 billion (7.6% to 16.1%) – mostly from countries such as India and China
• In India, tea consumption is expected to rise from 1.118m tonnes to 1.365m tonnes in the next 5 years
• China consumes 60% of the tea is produces
• Consumers are increasingly demanding high quality (single-origin_, health and sustainable tea `

Question 5

Future Directions: Challenges

Answer 5

Reduced Arable Land
- Rapid urban sprawl in major producing countries reduces arable land and increased the need for higher yields on less land through mechanisation and biotechnology
- China: rapid urbanisation and industrial development is reducing farmland by 1% annually
- Demand for food crops will increase by 50% in 2030 (tea will have to compete with these food crops and other cash crops for available land)
- Between 2005-2010, 13000 ha of land in Indonesia was converted from tea to other crops
Reduced Agricultural labour force
- As young plantation workers migrate to urban places and farms continue to mechanise, there is reduced agricultural labour force

Multinational control
- Multinational control will be a feature of production (45% of tea is sold by only 2 companies – Unilever and Tata) and more than 85% of all tea is sold by multinationals

Question 6

Future Directions Sustainability

Answer 6

• Evergreen revolution – a return to organic, high quality and traditional production methodologies. The valuing of traditional methods and indigenous knowledge. Sector dominated by smallholder producers (controlled by multinationals).
• Transition towards socially and environmentally sustainable production (as a result of consumer demand). Fair trade certification – improved wages and working conditions for developing world farmers

Question 7

Future Challenges: Climate Change

Answer 7

Climate Change

• Production is highly sensitive to changes in growing conditions. Tea can only be produced in narrowly defined agro-ecological conditions and is thus limited spatially
• Changes in temperature and rainfall patterns, with more floods and droughts, are already affecting yields
• Assam, India: In the past 60 years, rainfall has fallen by more than 1/5th and minimum temperatures have risen by one degree
• Kenya: rising temperatures are pushing production into higher altitudes (1500m – 2000m)

Question 8

List of Future Challenges

Answer 8

• Demographic changes
• Resource constraints
• Climate change
• Competition for land and productivity
• Availability of labour and mechanisation
• Balance of power across the supply chain
• Emergence of new business models
• Sustainability of leadership of emerging economies
• Improvement in wages and labour welfare in the supply chain
• Consumer attitudes to food value