Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

TEA
THE WORLD BANK

.
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11
-

... .
Agro -Industry Profiles

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FA U-15

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- .I
 PROFILES IN THIS SERIES:

OILCROPS - OVERVIEW........... FAU-01

OIL SEEDS. . . . . . . . . . . . . . . . . . .. .FAU-02

OIL PALM.....
e . o.. . ee* n *@FAU-03

COCONUT. ...
e.e. .. . e o . ...
e. FAU-04

SUGAR.e .e * .e ,
e ee .* D. e e. e e o *e FAU-05

ETHANOLn . . . . . e . e . e e. . . . . .e e .. FAU-06
WHEAT. . e o.* oe oe o o e. . . . . . .e .eeFAU-07
RICE.. o oe de . * o.
* * ** o
* .e .9 .eFAU-08
CORN . . . . oe . s e .e s
. . . o.. . e
. e . . FAU-09

CASSAVA . . .e *.
. . ... . . . . . . . e o . eFAU-10

ANIMAL FEEDS ................. eFAU-11

FRUITS AND VEGETABLES. .......

e FAU-12

RUBBER. e e
. . . . . . . . .e . .e * . .o e eFAU-13
.

COFFEE. e e e e . e s .e .. s e. e o oeoe e **FAU-14

TEA. @*e¢e ¢ X e X @ee

o.oo oes v@ @e
e oee eFAU-15

COCOA. e .e e * e .. e. e . e. e e
. . . . *e
. .FAU-16
COTTON. * *Q ** e . eo. o . * . . . o e * e 6 .FAU-17
MEATe e ANDeo ESETA
eeeo* e oL eFAU-18

SPICES AND ESSENTIAL OILS .. e...eFAU-19

 ABSTRACT
The objective of this Profile is to provide a review of the tea
processing industry. It examines all aspects of the tea
industry, from the production and processing of the raw material
to the marketing of the finished product. It contains yield
specifications and conversion rates, a glossary of key words, and
a bibliography of useful references. The Profile discusses
various processing procedures, including withering and
fermentation, and distinguishes the different processes used in
black, oolong, green, and instant tea production. Marketing
aspects such as quality control, storage, market barriers, and
prices are addressed, as are the criteria for factory location.
An Annex containing examples of operating and investment costs is
included at the end of the Profile, along with Metric/US
convers ion tables.
 FOREWORD
The nature of project and sector work in the World Bank is such
that staff are often called upon to work outside their major
fields of specialization, if only to make an initial judgement on
the utility of further, often costly, investigation. Under these
circumstances, up-to-date and authoritative reference material is
essential.
The profiles in this series are designed for use by operational
staff with experience in the agricultural sector but who do not
have a technical knowledge of the particular commodity under
discussion. Their purpose is not to substitute for technical
expertise but to provide a reliable inhouse reference which will
help Bank staff to determine when and what expertise is needed in
the detailee evaluation of investment proposals in agro-
processing.
The conditions for any particu.lar proposal are bound to be unique
in a number of respects, and the use of norms and general data in
project analyses could give rise to significant errors. On the
other hand, by providing responsible staff with a guide to the
issues on which appropriate expertise should be sought, these
profiles can contribute to the overall quality of agro processing
investment. Used with care, they should also.facilitate broad
pre-screening such as may occur during sector work and
reconnaissance.
Questions, comments and further inquiries should be addressed to:
Agro-Industries Adviser
Finance and Agro Industry Unit
Agriculture and Rural Development Department

The contribution of Harrisons Fleming Advisory Services, Ltd. in

the review of this profile is gratefully acknowledged.

September 1985
 Tea

CONTENTS

DATA SHEET...................................................

INTRODUCTION ...............................................1

GLOSSARY ................................................... 1

RAW MATERIALS................................................3

PROCESSING ................................................. 5

MARKETING ASPECTS............................................14

OTHER FACTORS................................................16

BIBLIOGRAPHY................................................18

ANNEX I EXAMPLES OF INVESTMENT AND OPERATING COSTS

ANNEX II CONVERSION TABLES (METRIC/US)

 Tea

DATA SHEET

The average yield of made black tea from principal sources is

about 1,000 kg/ha/yr, a1thour..-. yields of up to 3,000 kg can be
achieved on well-managed estates. Yields are influenced
primarily by climate, altitude, cultivation &.nd harvest practices
and growing conditionis, including latitude and the number of
daylight hours.

100 kg fresh green leaf produces approximately 45 to 70 kg

withered tea, depending on conditions and requirements.
100 kg fresh green leaf produces approximately 18 to 27 kg made
black tea, depending on the process and other factors.
100 kg withered leaf produces approximately 32 kg to 45 kgs made
black tea.

i
INTRODUCTION

Tea is classified as: fermented; partially fermented; or

unfermented. The teas produced in these classifications are:
black tea, oolong tea, and green tea respectively. Black tea is
the most important of the three and accounts for about 75% of
world tea production and over 90% of international tea trade.

This Profile can be supplemented with more detailed information

in Tea Processing by J. Werkhoven, FAQ (1974).

GLOS SARY

Black Tea Fermented tea; leaves are withered, distorted,

fermented and dried.

Blending Mixing of teas to satisfy market demands.

CTC Crushing, Tearing, Curling; machine used for

leaf distortion.

Fermentation Development of flavor, aroma and color in

black or oolong tea by permitting enzymatic
oxidation under controlled conditions.

Firing Drying to check fermentation.

Flush Seasonal growth periods in the tea plant.

Green Tea Unfermented tea; leaves are steamed, rolled and

dried.

Instant Tea Liquor from either black made tea or green leaf
is dried to produce water-soluble particles.

Leaf Distortion Rolling, crushing, tearing or otherwise

breaking the leaves; fluids are released which
begin fermentation.

Liquor Brewed tea.

Made Tea Black tea after the firing process has been
completed.

1.
 Oolong Tea Partially fermented tea; leaves are withered,
fermented and steamed.
Packet Tea Loose tea in small retail-sized packages.
Plucking Harvesting of the leaf.
Rolling Traditional technique for leaf distortion.
Soluble Tea Instant tea.
Tea Bags Individual sachets of tea for retailing.
Withering Preliminary drying of fresh leaf; first stage.
of black and oolong tea manufacture.

RAW MATERIALS

Tea (Camelia assamica or Camelia sinensis) is grown in tropical

and subtropical regions. Although usually grown on large
estates, it is also cultivated on small farms. The tea plant
starts to yield usable leaf two to three years after planting,
reaching full producticn after seven to ten years. Yields of
made tea vary depending on climate, variety and cultivation
practices. The average is just over 1000 kg/ha, but some yields
reach as high as 3000 kg/ha.

The quality of tea produced is closely linked to growing

conditions and cultivation practices. Quality of tea depends on
the nature and chemical composition of the plucked leaf. The
characteristics of the leaf vary according to the plant's growth
patterns and growing conditions as well as cultivation and
harvesting practices.
Although tea is harvested or 'plucked' year-round, its growth
pattern is characterized by distinct seasons when shoots develop
at higher latitudes. These seasonal changes in the plant affect
the internal composition, size and fineness of the leaf, and
subsequently the quality of the end product. From a processing
viewpoint this pattern determines the harvesting frequency.
These patterns are affected by temperature, humidity, and
rainfall.

2
The most important cultivation practices affecting tea growth and
yield are pruning, plucking, and use of fertilizers. Different
pruning cycles are practiced and are largely dependent on
tradition and local situations. Plucking itself is a form of
pruning and great skill and care is required to ensure that the
plant remains productive. Other significant factors are shade and
pest/disease control.

Plucking

As noted above, plucking is one of the most critical operations

in tea production. It helps to determine the quality of the final
product and has a significant effect on the growth of the plant.
Plucking is usually by hand, although various mechanical devices
are used in some areas.

Traditionally, higher quality tea is produced from 'fine'

plucking of 'two leaves and a bud'. To obtain higher yields
(more leaves processed)-, 'coarse' plucking of up to five or six
leaves and a bud is employed. Although production will increase,
quality will decrease and, if practiced continuously the plant's
growth will slow down. Mechanical harvesting also results in
'coarse' plucking. The fineness of the plucking system should be
linked to processing requirements. In some high altitude areas
where leaves are produced with inherently high quality, fine
plucking is essential, in other areas where the quality is lower
anyway, a coarser pluck may be employed.
In general, fine plucking will produce 'blacker' tea, good
liquoring characteristics. and a higher percentage of better
grades in the finished product.
Tea bushes are usually plucked once every one to two weeks
depending on the season. Plucking in the morning often produces
better quality leaf than evening plucking.
Once the leaf is plucked it should be taken to the factory for
further processing as quickly as possible so that bacterial
attack and leaf deterioration can be reduced. Uncontrolled
fermentation due to bruising, and overheating result from poor
handling. Clean leaves waiting for processing should be kept in
the shade and away from heat.

3
PROCESSING

Introduction

The main purpose of tea processing is to allow chemical changes

to take place within the tea leaf. Because of this, the
processing itself does not involve complicated machinery or
sophisticated technology. It is, however, time-,space-, and
usually labor-intensive. Developments in mechanization are
mainly concerned with limiting the amount of space, and in some
cases labor, needed. Because of the long-standing traditions of
tea consumption, the major aim of processors is to achieve
consistent levels of quality and appearance. Recent changes in
consumer habits have led, however, to the elimination of some
processing steps in the production of some tea products, e.g. tea
bags and instant tea.
The fundamental process in black tea manufacture is enzymatic
fermentation of polyphenols within the leaf. Different processes
prepare the leaf, establish optimum conditions for fermentation,
and end the process when it has gone far enough.
Flowchart 1 provides an overview of tea processing. The main
operations involve: withering, or moisture reduction of the
leaves; leaf distortion (rolling, chopping or cutting); leaf
fermentation; leaf drying; grading and blending of made tea;
packaging; and instant tea manufacture.
Oolong and green tea processing systems are relatively standard.
However, variations are more common in black tea processing.
Orthodox black tea production involves withering, rolling,
fermentation, and firing of freshly picked leaves. More modern
mechanical systems differ in the early operations. Instead of
simply rolling the leaves, machines for crushing, cutting and
curling the leaves are employed.

4
 Plucking

Withering Withering Steaming

Leaf Distortion Fermentation Rolling

and/or Rolling I
I Firing/Drying
Fermentation I

- - Steaming Firing/Drying
Firing/Drying I i

(Blakk Tea) (Oolong Tea) (Green Tea)

Grading

Stalk/Fiber
Extraction

I' < -> I,

For Export Domestic Processing
l> -- l -< I
Cleaning

(Packing)

Blending

(Wholesaler)

Packaging

(Instant Tea) (Packet Tea) (Tea Bags)

Flowchart 1: Tea Processing

Withering

The object of withering is to both reduce the moisture content of

the fresh leaves by 30-50%, and to prepare or condition the
leaves for further processing. Physical and chemical changes in
the leaves occur during the withering process which influence the
later processing and the quality of the tea produced. The main
changes in the leaves include: loss of moisture; increase in free
amino acids (aroma precuirsors); increase in caffeine; and
increase in carbohydrates which contribute to taste and aroma.
Insufficient attention to withering will create problems in
rolling and drying and will affect the character of the tea
produced.

The degree of wither is dependent on the type of tea to be

produced and the method of manufacture. It determines the
duration of withering and the percentage of moisture left in the
leaves. Orthodox processing usually requires a 'harder' wither
which reduces the moisture content to around 55%, whereas more
modern mechanical processes only require withering to about 70%
moisture content.
Traditional techniques utilize racks and trays on which the
leaves are thinly spread. Movement of air, either naturally or by
fans both dehydrates the leaves and carries away the moisture.
The duration of withering ranges from 18 to 24 hours depending on
the degree of wither required and ambient conditions.
Natural withering relying on the elements tends to be slow,
inefficient and difficult to control. Newer methods include drum,
trough, and tunnel withering. These systems are designed for
greater efficiency and accelerated production of more uniformly
dried leaves. They require storage facilities, however, and can
cause too rapid withering which prevents the necessary chemical
changes taking place. Advantages include: space and time
savings; reduced labor costs; greater uniformity of leaves
produced; and increased control over the process. (For details on
different systems see the excellent discussion by Werkhoven,
1974).
Trough withering is the most widely introduced of the new
systems. It consists of long troughs deep enough to hold up to
20 cm of leaf. The bottoms of the troughs are made of wire mesh
covered with netting. The trough forms the upper part of an air
flue through which air can be moved in different directions,
permitting less handling and more even wither.

6
Leaf Distortion

The rolling process is intended to initiate fermentation;

traditionally this has meant giving a twist to the tea leaves.
This twist gives a distinctive look to the tea leaves which is
now expected by consumers; therefore, choosing a rolling method
now means striking a. balance between appearance and liquoring
considerations. The orthodox process uses a series of rollers to
break and press the withered leaves. The configuration of the
rolling device imparts the characteristic twist or curl to the
leaves which will carry through to the final product. Crushing
frees the fluid and semifluid contents of the cells, permitting
fermentation to commence. It is critical that heat generated
during rolling be controlled, the optimum is often around
80-90 P. After rolling is completed, sifting separates the
particles of tea from the leaf mass (the residue is commonly
referred to as the 'big bulk'). This 'roll-breaking' operation
cools the leaf, aerates the mass, and separates it into portions
which will be fairly uniform in their fermentation and size of
particle.
In many areas conventional rollers are still used. However,
modifications have been added to deal with special problems. To
streamline processing, reduce labor requirements and simplify
managerial control, the conventional batch system has in many
instances been replaced. Mechanical systems have been developed
and increasingly the industry is moving towards use of
combination cutting, crushing and drastic leaf distortion
machines. The most common machines in use are the Legg-cut, the
CTC (Crushing, Tearing and Curling) and the Rotorvane. These
machines and others are used on their own, in combination with
each other, or with rollers. Precise configurations depend on
local circumstances and end product requirements. (Details are
provided by Werkhoven, 1974).
Overall, liquoring qualities are enhanced with the modern
machines, whereas flavor is best preserved with conventional
processing.

Fermentation

Once the leaf has been bruised or rolled, oxidation of the

polyphenols in the leaf begins, Chemical and physical changes in
the leaves are responsible for developing liquoring qualities in
the tea; this operation is commonly referred to as fermentation.

7
Although fermentation is the most important stage in tea
processing, it is usually the simplest and cheapest. In
traditional processing, the sifted leaves from the
'roll-breaking' are laid out in a plain room under controlled
conditions of humidity and temperature. During fer-mentation the
leaf changes color and 'improves' in quality. It is important
that correct conditions for production of the desired
characteristics are available.
The two most important factors affecting the final product are
the temperature and the duration of the process.
Fermentation is more active between 800 and 85 F (27-30°C) and
completely stops at temperatures over 150 F (65 C). The optimum
temperature during rolling and fermentation is around 85 0 F.
During fermentation the color of the leaf changes from green to
red and liquoring characteristics develop. These characteristics
include: briskness; quality; color; and strength. They develop at
different rates, however, and it is important that fermentation
continue long enough to develop the optimum combination of
liquoring characteristics, e.g., flavor develops more quickly
than quality and may completely disappear if fermentation is
unduly prolonged. Over-fermented tea tastes dull and heavy,
while under-fermented tea tends to be harsh.
The rate of fermentation depends mainly on the severity of leaf
distortion, as well as temperature. In orthodox manufacture using
rolling, the duratiorl is about three to three and a half hours.
Tea which is produced using modern leaf d"stortion techniques can
be fermented in around one to two hours.
Other factors such as leaf characteristics, condition of the leaf
after distortion, humidity, ventilation, degree of wither,
thickness and density of spread, room conditions, fermentation
method, and bacterial cleanliness are also important.
Fermentation conditions should always represent the most
acceptable and profitable compromise among the various factors.
Modern leaf distortion techniques have radically changed the
process; duration can be shortened, temperatures can be higher
and oxygen can be applied in place of air. Newer techniques in
use include skip, trough, and continuous systems.

8
 Drying
The physical and chemical changes taking place during
fermentation are abruptly stopped by exposing the fermented leaf
to hot air. In this process, usually called 'firing', the tea is
dried to a moisture content of around three percent, reducirig the
weight of the tea by about one third. In addition to stopping
fermentation, drying produces a comparatively stable and easily
handled finished product.
Drying is a continuous operation in which the leaves are exposed
to forced blasts of hot air. The temperature, the duration of
heati%g, and the thickness of the spread tea are important
factors. Insufficient heat results in moist tea which is
susceptible to quality deterioration. Too much heat will cause
case-hardening of the leaves; this prevents even drying
throughout the particles, and causes deficiencies in quality and
flavor. The final product should be black. Brown color
indicates poor processing. After firing, the tea is cooled and
graded.
Drying is usually the ,Lust costly operation in tea processing
and, therefore, the machines should be used at full capacity.
Because of this, drying capacity usually determines the minimum
(and maximum) outputs of other processing stages.

Oolong Tea
These teas are produced from an abbreviated version of the
process outlined above for black tea production. The process
differs in the order and duration of the steps. Freshly picked
leaves are withered for about one hour and then cooled. After
light manipulation in the hands, the leaves are fermented for a
short time and then fired. After drying there may be further
rolling followed by steaming and redrying to halt fermentation
action.

Green Tea
The primary objective in green tea manufacture is the destruction
of the oxidase enzymes responsible for fermentation in the
leaves. Although there are numerous regional variations, the
basic process is as follows: First, the leaves are steamed in
drums, or, as in the case of most smallholder production, in hot
pans. Since fermentation is minimized, the leaf remains green.

9
 After steaming, the leaves are rolled and fired; the latter
process kills any microorganisms which might otherwise cause
subsequent discoloration or fermentation of the leaves.

Grading
After cooling, the teas are graded using various sifting devices.
Each tea is treated separately and has different grading systems.
Tea particles are sorted by size and form so that adequate
uniformity and cleanliness requirements are met. For black tea,
the grading is determined by the mesh size. In many cases
particle sizes for specific grades differ between regions or
countries.

Those particles which remain after sifting are broken or cut into
desirable sizes. All grades contain pieces of stalk and fibre.
These undesirable elements can be reduced by plucking leaves with
the minimlum stalk. In addition, mechanical stalk/fibre
extractors are utilized.
Winnowing, standard practice in most tea operations, removes the
dust, fiber, and fluff, according to the size and density of the
tea particles. Several designs, most of them based on wind
tunnels and air separation, are in use. (Werkhoven, 1974 offers
a detailed description.)
Ai undesirable gray color in black tea results when the film of
fermentation products surrounding the tea is removed by excessive
sifting, rubbing, and cutting. Another problem that can arise
during grading is exposure to atmospheric moisture. Moisture
content before packing should not exceed five percent.

Blending
The grades into which tea is sorted in producers' factories are
usually sold to middlemen. Retail tea is normally a blend of
different grades from different factories. Traditionally, the
blending operation was carried out in consuming countries by a
few large companies, although teas are increasingly being blended
in producer countries.
To make a blend, several alternative mixes, or 'breaks', are
possible, and the blender's choice varies, depending in part on
supply but mainly on price. In addition, a blend is chosen to

10
achieve certain characteristics: appearance, quickness of brew,
flavor, color, briskness and aroma. Blends differ principally
according to the market being supplied.
The composition of a blend is also determined by the mode of
packaging (the leaf's appearance is important for loose tea,
while quickness af brew is important for tea bags), and, in the
case of tea bags, the materials used (perforated or fast-flow
paper). Herbs, spices, and other flavors can be added to any of
the teas to satisfy market demands.
Traditional blending involves the sorting and assembly of 80 to
100 tea chests, and then tipping them into drum blenders. It is,
however, labor intensive, inaccurate, prone to human error, and
requires constant supervision. Modern blending operations are
more automated, as a result of efforts to reduce costs, increase
efficiencies, and improve the consistency of blends.

Packaging
In the past, black tea needed no further processing or
manufacturing after leaving the factory. However, in addition to
loose tea in packets, it is now consumed in the form of teabags
and 'soluble' or instant tea.

Teabags are of two kinds: the type popular in traditionally high

tea consumption developed markets is heat-sealed; the other type
is stapled and attached to a string and tag and is popular in
gourmet and non-traditional markets. Teas used for tea bags are
the lower grade brokens, fannings and dusts which result mainly
from processes using modern leaf distortion systems.

Instant Tea

Instant tea is believed to have originated in the United States,

although green tea has been powdered and sold in Japan for some
time. Developments in 'iced tea', demand for convenience, and
use in vending machines have stimulated its consumption.
Details on the techniques for instant tea manufacture are
generally trade secrets or protected by patents. Instant tea can
be manufactured from various products of the tea process. Fully
processed dried and blended black 'made tea' is brewed,
concentrated and then dried using freeze-, spray- or

11
vacuum-drying to form cold water instant tea. In tea-growing
areas a hot water instant tea can be obtained from fresh green
leaves or fermented, undried leaf. In both cases a brew is
created and then dried. The brew from the fresh leaves is
fermented before drying.

The most important factor in the process is temperature. Overly

high temperatures, particularly with green tea, affect the
chemical composition of the leaves and cause quality
deterioration. An overview of the process is shown in
Flowchart 2:

(Black Tea) (Fresh Green (Wet Fermented

Leaves) Leaves)

Liquoring

(FermeLtation
for Green Tea)

Drying

Packaging

INSTJA T TEA

Flowchart 2: Instant Tea Manufacture

12
MARKETING ASPECTS

Introduction

After the first stages of processing are complete, tea is graded

and packed into chests and shipped to be sold either at auction
or directly to a blender. In some cases the tea is further
processed locally before being sold for domestic consumption or
for export. This further processing may consist simply of
blending, or it may involve packaging into tea bags or packets,
or instant tea manufacture.

Recent significant changes in the tea market include: a growing

number of producers; an increasing proportion of tea grown by
smallholders; an increasing degree of local processing before
consumption; large growth in developing-country markets with slow
growth in traditional developed-country markets; and increasing
consumer preference for tea bags.

Traditionally tea has been sold at auctions with brokers

representing producers. The domination of the market by a small
number of brokers and buyers has led some governments to question
the dependence on auctions and an increasing proportion of tea is
being sold directly by producers. This also has its drawbacks,
however, and on the whole most governments prefer to see open
transactions through the auctions.

Quality Control

The value of a tea depends largely on the market to which it is

sold. It is determined not only by its characteristics, but also
by its suitability for blending. Tea quality is determined by
the genetic character of the leaf, growing conditions, agronomic
and harvesting practices, properties of the green leaf,
processing methods and environmental conditions. In tea
processing, a balance between quality factors and market
requirements is necessary.

Tea quality is primarily based on subjective assessments of

taste, aroma, strength, colour and body. In addition there is
some use of chemical tests to provide guidelines. The traditional
quality evaluation is derived from tasting the brew from a small
sample of the tea for sale. There is much 'lore' associated with
tea tasting; some of the terms used include: malty, hard, burnt,
stewed, nose, dull, green, flaky and tippy.

13
Depending on the form of packaging and consumption, the demand
for different teas will vary. Teas consumed in different parts
of the world have different standards and requirements. For
markets such as India, which rely on 'loose' tea, the appearance
of the tea is important; in the United Kingdom,. packet teas are
sold on their 'liquoring' qualities while 'soluble' teas are sold
on their rapidity of infusion.
Generally, blenders require a regular supply of uniform teas with
stable prices.

Storage

There is often a considerable time lapse between tea production

and blending; unfortunately keeping quality in tea is limited.
Precautions to maintain quality include: low moisture content,
proper firing or drying, and maintenance of low moisture and
temperature levels during storage and shipping. Tea should be
dried to about 3% during firing, the level should not be above 5
or 6% on leaving the factory. The uptake of moisture during
storage and shipping, even under the best conditions is around 2
to 3%.
A short period of storage under good conditions 'matures' the tea
and improves its taste. However, keeping qualities of tea
deteriorate with prolonged storage, in particular when conditions
include high temperature and relative humidity levels. Tea can be
stored for up to 300 days without loss of character in good
conditions. In conditions with humidity levels around 100%, they
are 'flat' after 15 days.

Other significant factors include the degree of wither, and the

method of leaf distortion. Leaves which have undergone a short
wither are less stable than harder withered tea, whilst tea made
from modern leaf distortion processes which do not include any
withering can be kept in the shop for no longer than a couple of
weeks.
Instant tea requires a low moisture content during storage; it
will start to cake at moisture levels around 10%, causing rapid
deterioration in taste and physical appearance.

14
 market Barriers

World trade in tea and tea products is not seriously impeded by

tariff barriers. In some countries there is a higher tariff on
processed teas relative to bulk or made tea.
Efforts have been made, however to implement country export
quotas. In 1981, tea-producing countries adopted the principle
that national quotas should be related to expected future
production performance. These countries, representing 95 percent
of world production, agreed in February 1982 to an export quota
system, in order to stabilize world prices within a fixed range.
Consuming countries, especially, the U.S., oppose the
international regulation of tea supplies, arguing that tea prices
are among the least variable of primary commodities.
Other important factors which impede market entry are
transportation costs, taxes in consuming countries, and standards
of quality, packaging and labelling which differ substantially
among markets.

OTHER FACTORS

Process Location

Although there is a trend towards increased processing and

packaging in producing countries there are certain limiti ng
factors. Tea blenders and packers in centers such as London can
adjust their blends in response to price and supply fluctuations
in the market. They also have ready and inexpensive access to the
necessary packaging materials.
In producing countries, blenders and packers for the export
market are at a disadvantage. Although the gross value added by
processing tea before export appears to be about 25% for packet
tea, 100% for tea bags, and 200% for instant tea, the need to
import packaging materials (filter paper, cellophane, etc.) may
significantly reduce the net benefit or lead to pricing the end
product above that of competitors. There are also difficulties
in obtaining a sufficient range of teas for blending.

15
 BIBLIOGRAPHY

01, Barua, T C. (1972) The Atmosphere Inside a Tea Factory.

Two and A Bud, 19(2) : 68-71.

02. Basu, R P. & Ravindranath. (1981) Factors Affecting

Blackness of CTC Teas.
Two and A Bud, -8(l) : 8-9.

03. Basu, R P. & Ullah, M R. (1978) Notes on Tea Fermentation.

Two and A Bud, 25(1) : 7-11.

04. Cooper, R T. & Wertheim, J. (1973) The Economics of World

Tea Production. I.
World Coffee and Tea, 13(9) 108-111.
05. Dougan, J. et al. (1978) A Study of the Changes Occurring in
Black Tea During Storaqe.
London : Tropical Products Institute. Report No. G116

06. Eden, T. (1965) Tea. 2nd Ed.

London : Longmans.

07. Guinard, A. (1970) Programmation des Investissements dans

les Usines a The.
Cafe Cacao The, 14(2) : 130-140.

08. Hampton, M. (1981) Compare Fuel Requirement Then Select Tea

Process.
World Crops, 33(4) : 85-86.

09. Jayaratnam, S. & Kirtisinghe. (1974) The Effect of Relative

Humidity on the Storage Life of Tea.
Tea Quarterly, 44(4) : 170-172.

10. Nelson, W B. (1980) Automatic Blending Cuts Costs.

Tea and Coffee Trade Journal, 152(11) : 18-19,43.

11. Perkins, R S. (1980) Variety: Key in Teabag Packaging.

Tea and Coffee Trade Journal, 152(9) : 28-29.

12. Sivapalan, K. (1982) Storage of Black Tea: A Review.

Tea Quarterly, 51(4) : 185-189.
13. Theobald, D V. (1983) How Do We Define Tea Quality?
Tea and Coffee Trade Journal, 155(10) : 36, 52-53.

16
14. UJNCTAD. (1982) The Marketing and Processing of Tea : Areas
for International Co-operation.
New York : UN Report No. TD/B/C.1/PSC/28.

15. Wanigatunga, R C. (1983) The Packaging of Tea into Bags and

the Manufacture of Instant Tea for Export in India and Sri
Lanka. IN: World Bank. Case Studies on Industrial
Processing of Primary Products. Vol II.
Washington, DC : World Bank

16. Werkhoven, J. (1974) Tea Processing.

Rome : FAO. Agricultural Services Bulletin No. 26.

17. World Bank. Commodities & Export Projections Division. (1982)

Tea Handbook.
Washington, DC : World Bank.

18. World Bank. East Africa Projects Department. (1974)

Appraisal of the Tea Factory Prolect Kenya.
Washington, DC : World Bank. Report No. 311a-KE.

19. World Bank. South Asia Projects Department. (1982) Staff

Appraisal Report : Sri Lanka Tea Rehabilitation and
Diversification Prolect.
Washington, DC : World Bank. Report No. 353la-CE.

17
 ANNEX I:

EXAMPLES OF INVESTMENT AND OPERATING COSTS

 TEA PROCESSING
EXAMPLE 1
- PAGE 1 of 2

Representative Investment and Operating Costs

~---------J---------------- -----------------

TEA PROCESSING FACTORY

Establishment of a tea processing and packaging facility.

COUNTRY: Tanzania (Ukalawa Tea Factory)

NOTE: These data are intended as indicative only and are unique to
the time, circumstance, and country of the identified invest-
ment. Their applicability to other situations may vary
considerably.

Annual Full Development Production (tons):

-------- =------------------------ -- ------

FiniL,hed tea 874.00

Capacity Utilization at Full Development: not available

--------US$ 'OOO-------
end 1979 prices
Local Foreign Total
I. Investment Costs:

Civil Works
.factory buildings 662.65 662.65 1325.30
water supply 36.14 36.14 72.29
architect/consulting fees 60.24 60.24 120.48
Sub-Total Civil Works 759.04 759.04 1518.07
Machinery & Equipment
Withering 59.53 79.51 139.04
Rolling/Processing 7.37 66.36 73.73-
Drying 12.99 116.89 129.88
Sorting/Packing 28.88 82.83 111.71
Miscellaneous 38.45 43.39 81.83
Sub-Total Equipment 147.22 388.98 536.19
Utility Installation 185.54 79.52 265.06
Machinery Installation 36.14 36.14 72.29
Power (Diesel) Equipment 12.43 111.90 124.34

Total Investment Costs 1140.37 1375.58 2515.95

---- ----- -------
--- ---- ------ S- -------
 TEA PROCESSING
EXAMPLE 1
Page 2 of 2

Representative Investment and C erating Costs

----------------------- - ------------

NOTE: These data are intenided as indicative only and are unique to
the time, circumstance, and country of the identified invest-
ment. Their applicability to other situations may vary
considerably.

us $ '000
end 1979 prices
Total

II. Annual Full Developmlent Operating Costs:

--------------------- ------ ------------- -

Variable Costs
raw materials 803.62
labor, fuel, packing materials 378<,03
Sub-Total Variable Costs, 1181.65

Fixed Costs
maintenance 12.64
depreciation 181.12
administrative 69.50
Sub-Total Fixed Costs 263.25

Total Operating Costs 1444.90

DATA SOURCE: Adapted from World Bank project appraisal report No.
2814-TA, Tanzania Smallholder Tea Consolidation
Project, Vol. I.,Table T-3D, and Vol. II,
Appendix 1, Table 5.

NOTES:
a. Exchange rate - Tanzanian Shillings 8.30 = US $ 1.00
b. Full development is year five after project start-up.
c. Breakdown between foreign/local operating costs is not available.
d. Data are net of contingencies.
 TEA PROCESSING
EXAMPLE 2
PAGE 1 of 3

Representative Investment and Operating Costs

------------ ------------------------------

LEAF TEA PROCESSING FACTORY

Construction of a 15 ton/day green leaf tea processing

factory. Data are for a rehabilitation project but
approximate actual cost of a new investment.
COUNTRY: Sri Lanka

NOTE: These data are representative only and are unique

to the time, country, and circumstance of the Ldentified
investment. Their applicability to other situations may
vary consid.erably.

ANNUAL FULL DEVELOPMENT PRODUCTION:

900 tons of made tea

Per Cent of Full Capacity Utilization: not available

-------- US$ '000-------

Local Foreign Total
1980 pr.ices
I. Investment Costs

Civil Works
line room rehabilitation 220.50 73.50 294.00
water tanks 14.00 9.33 23.33
utility upgrade 4.44 6.67 11.11
ramps and drains 120.71 51.73 172.44
water supply 92.20 61.47 153.67
Sub-Total Civil Works 451.86 202.70 654.56
Machinery & Equipment
lenear through withovers 626.47 417.64 1044.11
lenear ft. hot ducting 10.00 6.67 16.67
rollers 1091.73 727.82 1819.56
roll breakers 444.67 296.44 741.11
driers 367.00 217.78 584.78
 TEA PROCESSING
EXAMPLE 2
Page 2 of 3

Representative Investment and Operating Costs

----------------------.--------------------

NOTE: These data are representative only and are unique

to the time, country, and circumstance of the identified
investment. Their applicability to other situations may
vary considerably.

------------ us$ '000-------

Local Foreign Total
1809 prices

Machinery & Equipment (cont'd)

humidifiers 42.00 28.00 70.00
shifters 146.60 89.85 236.44
winnovers 80.63 53.76 134.39
stalk extractor 173.67 115.78 289.44
leaf trolleys 116.67 77.78 194.44
d~ust fans 24.50 16.33 40.83
cutters 24.73 16.49 41.22
leaf hoist 29.00 19.33 48.33
fuel tanks 9.90 6.60 16.50
scales 3.77 1.62 5.39
terry nippers 25.00 16.67 41.67
pelton 35.33 53.00 88.33
double packers 36.00 24.00 60.00
electrical equipment 90.67 60.44 151.11
generators 348.64 244.69 593.33
tea bulkers 33.33 22.22 55.56
driers 102.67 68.44 171.11
factory motors 133.33 88.89 222.22
miscellaneous 17.47 11.64 29.11
Sub-Total Machinery & Equipment 4013.77 2681.89 6695.67

Total Investment Costs 4465.63 2884.59 7350.22

-------------------------
------------------------
 TEA PROCESSING
EXAMPLE 2
Page 3 of 3

Representative Investment and Operating Costs

NOTE: These data are representative only and are unique

to the time, country, and circumstance of the identified
investment. Their applicability to other situations may
vary considerably.

US$ '1000
Total
1980 prices
II. Annual Full Development Operating Costs
(excluding raw materials)
--------------------------------------------

Fixed Costs
permanent staff 1101.91
upkeep & maintenance 373.70
depreciation 2891.63
sundries 50.00
Sub-Total Fixed Costs 4417.24

Variable Costs
power 760.03
fuel 2930.52
seasonal labor 2577.02
packing materials 6880.63
storage 909.00
Sub-Total Variable Costs 14057.18

Total Operating Costs 18474.42

DATA SOURCE: Adapted from Preparation Report for the Second

Tea Rehabilitation Project, Sri Lanka, 1980.
Prepared by National Plannilng Division, Mi.nistry
of Finance and Planning.

NOTES:
1. Exchange rate Sri Lankan Rupees 20.55 = US $ 1.00.
IMF's International Financial Statistics, May, 1985.
2. Foreign/local cost breakdown is not available
for operating expenditures.
3. Data are net of contingencies.
4. Production assumes 300 working days per year.
 ANNEX II:

CONVERSION TABLES
 WEIGHTS AND MEASURES

avoirdupois
Ton: short ton 20 short hundredweight, 2000 pounds;
08907 metric tons;

long ton 20 long hundredweight, 2240 pounds;

1.016 metric tons.
Hundredweight -ft;
short hundredweight '.'0 pounds, 0.05 short tons; 45.359
kilograms;
long hundred weight 112 pounds, 0.05 long tons; 50.802
kilograms.
Pound lb or lb av; also #;
16 ounces, 7000 grains; 0.453 kilograms.
Ounce oz or oz av;
16 drams, 437.5 grains; 28.349 grams.
Dram dr or dr av;
27.343 grains, 0.0625 ounces; 1.771 grams.
Grain gr;
0.036 drams, 0.002285 ounces; 0.0648 grams.

Troy
Pounw., lb t;
12 ounces, 240 pennyweight, 5760 grains; 0.373
kilograms.
Ounce oz t;
20 pennyweight, 480 grains; 31.103 grams.
Pennyweight dwt also pwt;
24 grains, 0.05 ounces; 1.555 grams.
Grain gr;
0.042 pennyweight, 0.002083 ounces; 0.0648 grams.
 METRIC SYSTEM

Square kilometer sq km or km2;

1,000,000 square meters;
0.3861 square mile.
Hectare ha;
10,000 square meters;
2.47 acres.
Hectoliter hl;
100 liters; 3.53 cubic feet; 2.84 bushels;
Liter 1;
1 liter; 61.02 cubic inches; 0.908 quart
(dry); 1.057 quarts (liquid).
Deciliter dl;
0.10 liters; 6.1 cubic inchs; 0.18 pint
(dry); 0.21 pint (liquid).
Centiliter cl;
0.01 lit'ers; 0.6 cubic inch; 0.338
fluidounce.
Metric ton MT or t;
1,000,000 grams; 1.1 US tons.
Quintal q;
100,000 grams; 220.46 US pounds.
Kilogram kg,;
1,000 grams; 2.2046 US pounds.
Gram g or gm;
1 gram; 0.035 ounce.