Tea Business Trailblazers Seek Ways to Prosperity
Many a hero was born out of chaos. Much the same is true in the tea business. As various issues blight the industry in West Java, tea business people, especially smallholders, are striving to find bright paths.
Tea is of huge significance in West Java. Tea plantations cover a total area of 84,630 hectares in the province, accounting for 77 percent of all tea estates in Indonesia. The plantations are controlled either by smallholders, by private companies or by state-owned enterprise PT Perkebunan Nusantara (PTPN) VIII.
PTPN VIII manages 19,342 ha of estates divided into 23 plantations in 6 cities and regencies. The leaves are processed in 23 factories. Most of PTPN VIII’s factories are dilapidated and in serious need of repair. One of them is the Malabar tea factory in Bandung regency.
This factory was built by Karel Albert Rudolf Bosscha in 1896. The factory’s interior is dimly lit, with many parts neglected and lying in darkness. Broken or missing tiles leave holes in the floor in some areas.
This factory was built by Karel Albert Rudolf Bosscha in 1896.
The Malabar tea factory may represent the condition of the majority of factories owned by PTPN VIII. By and large, they are not efficient, with an overall equipment effectiveness (OEE) below 90 percent. Some even only score 57 percent. “As I entered (PTPN VIII), I shook my head and [thought to myself] alhamdullillah (thank God) people are still willing to drink tea under such circumstances,” said Wahyu, who became the president director of PTPN VIII in October 2018.
For last year, he set himself the target to repair five factories. However, as the cost was too high, only the factory in Rancabali, Bandung regency, was restored with a budget of at least Rp1.7 billion.
Inefficiency also prevails at plantations in the province, as reflected in the enormous number of employees at 19,000 people – almost one per hectare. For the sake of comparison Wahyu noted that at tea plantations in Taiwan, one employee could handle 20 hectares.
Also read : Tea Therapy in West Java Tea Plantation
Suboptimal fertilization and maintenance are weighing on estate productivity, producing yields of only 0.9 to 1.8 tons per hectare. The Tea and Cinchona Research Center has calculated that well-maintained tea estates could yield up to 5 tons per hectare.
Meanwhile, most of the smallholder tea plantations in Garut, Sukabumi and Cianjur are also damaged. Their maximum production is only 1.5 tons per hectare; some only produce 0.6 tons per hectare. Farmers are complaining, among other things, about the difficulty to secure good fertilizer at affordable prices.
Besides, the price of fresh tea shoots has never exceeded Rp2,400 per kilogram, if farmers are prepared to get paid a week later. If they demand prompt payment after weighing, the price can be as low as Rp2,000 per kg. “The price isn’t enough to maintain plantations, because the cost of seedlings, fertilizer and other things may reach Rp3,000 per kg,” said Garut Smallholder Tea Association chairman H. Alo.
Also read : Timeline of Nusantara Tea Culture
Dede, a tea farmer of Cisurupan in Garut regency, cultivates tea on his land of 6,150 square meters. Every two weeks, the 30-year-old harvests around 200 kg of tea shoots that he sells for Rp480,000. The revenue is insufficient to cover daily needs, let alone the purchase of fertilizer or pesticide. Eventually, he may need to abandon his tea plantation.
This is not to mention farmers entangled in debt to middlemen. They are helpless when middlemen fix prices at will, below the market rate.
Even the middlemen often have financial headaches, as the factories they deliver the tea shoots to aren’t ready to make prompt payments. “The sums can accumulate to hundreds of millions,” said H. Alo.
Strategy
Small tea factories with capacities of 5 to 10 tons frequently suffer under the maneuvers of cartels. To cut out the middleman, they try to sell their production directly to major beverage factories in Central Java, but usually they succeed only once and at most four times. Subsequently, they will be prevented from doing so by brokers or cartels forbidding the big factories from accepting tea from small factories.
Finally their production is fruitless, no money is earned and small factories breath their last breath. “Such maneuvers have become public knowledge,” said Sobar Hidayafullah, 44, the owner of a small factory in Sukabumi, who buys fresh shoots from around 60 farmers.
The cartels’ ploys have prevented prices from rising. For instance, the green tea produced by Sobar sells at only Rp12,000 per kg, while its production cost is Rp13,000 per kg. To turn a profit, he blends high-quality green tea with low-quality tea worth only Rp8,000 per kg, earning him a respectable gain of around Rp1,500 per kg.
A truck pulling up at a factory owned by Yusuf, 46, in Sukabumi with tea plants was carrying everything from roots to shoots. Some estates seem to have been rejuvenated by pulling out old plants, which were bought up by Yusuf. At the back of the factory, a sieve was separating stems from twigs. These twigs were cut up to be mixed with tea leaves.
This is low-grade green tea produce that will later be blended with high-quality green tea as practiced by Sobar. In a day, Yusuf produces at least 20 tons of low-quality green tea.
Downstream operations
Tea business practitioners have begun to realize that it is hard to make progress by relying on bulk tea sold through middlemen or auctions. They are gradually seeking ways to become more independent. PTPN VIII has studied the market and found a famous brand selling Malabar orange pekoe (OP) and Taloon OP at up tp Rp500,000 per kg. OP is premium tea so far sold at a maximum price of Rp65,000 per kg, ranking it above 19 other types.
PTPN VIII president director Wahyu is determined to increase OP and broken orange pekoe (BOP) production to boost income. If the company can obtain 20 percent of about 40,000 tons of dry tea production per month and sell it at Rp500,000, this will considerably help PTPN VIII’s finances. If this is successful, PTPN VIII will be capable of not only improving its factories and estates but also promoting the welfare of its employees.
Today, PTPN VIII is cooperating with various private-sector companies like Eiger, Asep Stroberi and Picnic Dodol Garut for the special and limited supply of premium tea. Besides, in cooperation with PT Mandiri Maslahat Masagi, PTPN VIII produces Teh Warga Bandung (TWB). There are now dozens of blends in different flavors, packaged in colors ranging from bright blue to pink. The creations can be enjoyed among at Thee Huis (tea house) in Bandung, among other places.
In Bandung regency, a group of tea farmers and pickers gather in the Arafa Tea processing house, initiated by Ifah Syarifah. They are trained to create tea derivative products, from green tea powder and soap to masks, chips and chocolates. Several members have become independent by turning out such tea products.
A slightly different strategy has been adopted by a group of farmers in Pasir Canar, Cianjur regency. It was Ferri Kurnia, 41, who originally got an offer to supply specialty tea of premium quality to an exporter of Russian descent at Rp350,000 per kg. He then trained smallholding tea farmers to grow tea and pick the leaves by hand instead of using scissors or knives.
Fifty farmers have joined and are enjoying the benefits. “With the method taught by Kang Ferri, we can pick every week. We used to do it every two weeks. This means a shorter cycle. The price is also higher,” said one of the farmers, 46-year-old Yan Yan.
The market pressure is great, but there’s always the chance to break free from it. What they have attempted is indeed moderate in terms of quantity compared to the annual tea production in West Java totaling 100 tons. Nonetheless, Ifah, Ferri and other tea business promoters in the country have emerged as trailblazers to find a bright path out of the darkness engulfing the tea business.