Low standards, lax regulation drag down tea industry

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Vietnam is the fifth largest exporter of tea worldwide. Production is on the rise, so is output. But the price and, experts say, the quality is steadily sliding.

Many argue that Vietnam desperately needs government oversight and intervention before bad growing practices, price gouging and a total disregard for quality destroy the growing business.

Figures from the Vietnam Tea Association (VITAS) show that from 1998 to 2009, the total area of tea plantations in the country grew from 80,000 hectares to over 130,000 hectares.

The average yield per hectare also surged, from less than four tons up to over 6.5 tons.

Unfortunately, these increases have not translated to fatter wallets or better tea. In 1998, the nation's tea sold for US$1.52 per kilogram; 11 years later, the figure was only $1.23. Overall, Vietnam's tea went for around 50 percent of the per kilogram values set on world commodity markets.

VITAS chairman Doan Anh Tuan said that Vietnamese tea usually makes its way to more undiscriminating markets like Russia and the Middle East. Even these markets demand that processers blend their homegrown leaves with high-quality ingredients from Sri Lanka and Kenya, Tuan said.

Because the nation's tea is considered an inferior blending component which must be masked by better products, it lacks an identity on the world market. For the most part, Vietnam's tea industry has just two well-known brands: Cozy tea and Kim Anh tea.

By contrast, new tea ventures are popping up every day.

Vietnam currently plays home to 600 tea trade enterprises and over 3,000 processing facilities, most of which are running at half of their production capacity. "There are too many small enterprises," Ranjit Dasgupta, general director of Phu Tho-based Phu Ben Tea Company complained. "Some of these businesses are so small that they only process one ton of fresh tea a year."

As tea is the second most widely consumed beverage in the world, after water, many consumers are now demanding that their tea be processed in accordance with food safety regulations. "Tiny businesses are certainly not able to meet these standards," Tuan said. "In household processing units like the ones you'll find in Thai Nguyen Province, it's not uncommon to see tea being dried out on a dirt floor."

At the same time, the competition for raw material among export businesses has hampered quality.

"Exporters don't even bother to make a cup of tea and taste their product any more," said Pham Minh Hai, marketing manager of Thanh Son Tea Company, in Ha Giang Province. "They just pick up the tea and toss it on their palm; if it feels heavy enough they nod their head," he said


Because the exporters don't care about quality, neither do the farmers.

These days tea growers pick tea leaves with increasingly longer stems to increase volume. Some even travel around to collect chaff from other processing facilities to mix into their crop.

"We process ampelopsis cantoniensis [aka vine tea], and [other processors] come to buy our stems. I don't know what they do with the stuff," Hai told Thanh Nien Weekly. As a consequence, the enterprises have to spend thousands of US dollars on machines to sort out the waste product. "Vietnamese tea itself is waste and when exporting to other countries it is considered an additive. When will it make a name for itself?"

In the race for higher and higher yields, farmers are turning to chemical answers.

During the 1996-1999 period, the UK-based Tea Estate Agencies sent Vietnamese tea samples to Europe for food safety analysis; over 85 percent of the samples received the green light to enter the eager market, office manager of the British-based Tea Estate Agencies Nguyen Thi Thu Hang recalled. Since 2000, the overuse of chemicals has given Vietnamese and Chinese tea a bad name.

"The highly reputable packaging companies in Germany now boycott Vietnamese tea," said Hang.

Tea Estate Agencies said they have been trying to raise awareness about food safety among local farmers; they even met with VITAS brass to discuss eliminating toxic chemicals from tea. Yet, they say, their efforts have not accomplished much.

The Plant Protection Department under the Ministry of Agriculture and Rural Development has enumerated a category of chemicals which are deemed acceptable in tea cultivation. Still, farmers are using rice pesticides to spray on the leafy evergreen shrubs. "Now farm land is distributed to individual households, if you are not a member of the legislature or a member of the executive system, you are in no position to interfere with what happens on private farm land," the chairman of VITAS explained.

He also noted that Vietnam tea has brand names that could make a splash in luxury markets if they were promoted well. Lotus Tea, for example, sometimes sells for $150 per kilogram. What's more, there are famous production areas like Moc Chau, Ha Giang, and Suoi Giang.

Nevertheless, before these brands could get off the ground, their reputations were tarnished by imitators. The snow green tea, a specialty of Ha Giang Province, was known for growing at altitudes of more than 1,000 meters above the sea level and being totally organic. Now the species has been expanded to the lowlands, where it flourishes with the help of chemical fertilizers and pesticides. Suoi Giang is a little village in Yen Bai and Suoi Giang tea used to be the exclusive brand name of this mountainous northwest province. Yet, as Hai of Thanh Son Tea Company noticed, "Now everywhere you go you see made-in-Suoi Giang tea," said Hai.

Besides low quality, another contributing factor to the low price of Vietnam's tea is said to be the lack of fair-play among Vietnamese exporters. "Vietnamese enterprises do everything they can to sell their product. If my competitor gets $1.50 for theirs I will offer mine for $1.40," said Tuan, VITAS chairman.

Without fully understanding market rules, many small enterprises agree to supply tea at a low price. It's only later that they realize they've made an agreement that will leave them with a loss.

"Foreign customers are often shocked that the product they receive differs so widely from the samples they were sent, Tuan said. "The Association has received many, many complaints from angry customers abroad."

Ranjit Dasgupta of Phu Ben Tea Company said solving the problem could be simple: limit or ban new tea enterprises and shut down existing businesses that are not doing very well. Dasgupta's plan might work if Vietnam had an established standard for safe tea and local governments didn't rely on these businesses for revenue.

As Vietnam looses its grip on the world market, domestic consumers turn their backs. Vietnam is one of the ecological cradles of tea plants and has a thousand year-old tea drinking culture. Yet, the the annual domestic consumption of tea per capita is only about 300 grams, roughly one tenth of that in Russia, the Middle East and the UK.

In the meantime, the country's tea entrepreneurs have been looking for a way out of this vicious economic cycle. Tuan has compared these men and women to sailors trapped on a rudderless ship that needs regulation, fast. "Whether the ship crashes into an iceberg or not depends on the captain," said Tuan.

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