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Friday, 27 July, 2001, 07:08 GMT 08:08 UK
Darjeeling tea growers at risk
Indian tea growers face competition from all over the world
Indian tea growers face competition from all over the world
Fans of Darjeeling tea no doubt know that the first two flushes of the crop produce the best flavours, earning it the right to be known as the champagne of tea.

It is in April and June that producers can command the highest prices for their product, with the quality deteriorating from then on.

But it has now emerged that some Nepalese tea could pass for the coarser grades of the Darjeeling variety.

And this has prompted fears that Indian tea producers could see their profits - already hit by poor yields - further eroded.

Tea growing is an important part of the Darjeeling economy
"The teas being produced have no organised marketing system and it is believed that traders from India and foreign buyers are purchasing these teas at very low prices," said Mr K.S David, managing director of leading Indian tea producer Goodricke Group.

"The produce is then finding its way to markets all over the world and being sold as Darjeeling Tea or is being blended in India and sold as Darjeeling Tea."

The worst fears that consumers could be duped into drinking a fake Darjeeling are unlikely to be realised in the UK.

"You could see other markets in Eastern Europe or on the continent, might utiltise those teas if they were not producing pure blends," a UK tea buyer said.

"It is not something we would be looking to dilute with Nepalese tea."

Darjeeling competition

Anything that hurts the local tea producers could create huge problems for the regional economy.

The problem has in part arisen because of the Nepalese ambition to boost its tea production.

The Nepalese government is now thought to be interested in privatising some of its tea plantations or leasing them out to private managers, according to an article in the Kathmandu Post.

Whether Nepal would be able to command the investment and expertise needed to become a large scale producer of tea is unclear.

Unlike other commodities, tea is bought at weekly auctions in different countries or by private agreement.

As such, it has never attracted the speculative interest of other commodities that are traded on world futures markets.

But, even as the situation currently stands, it creates a problem for the Darjeeling tea growers.

Some Darjeeling producers have switched to making green tea but this now faces competition from China, Mr David wrote in a recent article.

"For the Goodricke Darjeeling gardens, it is also a struggle... Efforts are on to find new markets," wrote Mr David.

Figures vary as to how many the local industry employs, but some estimate that more than 52,000 people have work on a permanent basis. The industry is thought to generate more money locally than tourism.

Indian tea competition

Indian tea producers could also face more competition from companies keen to target its local market.

About three quarters of the 850 million kilos of tea India produces a year is destined for its home market.

This market is protected by India's import duties, which are expected to eventually fall under pressure from the World Trade Organisation.

So, in practice, Indian tea producers could in future face greater competition from from companies trying to access its home market than from Nepalese tea exporters, the UK tea buyer said.

India was once the world's leading tea producer, accounting for about 30% of world production in 1997.

But the country has been relegated in the world's export markets as a result of growing domestic demand and increasing competition from other countries.

Kenya and Sri Lanka are two countries who have successfully managed to boost their exports of tea.

Nepal joins Vietnam, in trying to boost their exports of tea.

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