STiR Tea & Coffee Industry International

Volume 3, Number 3

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58 STiR tea & coffee industry international ndonesia is a tea growing country so thirsty for tea it now im- ports a quarter of the tea consumed. This is largely because domestic demand has risen 20% per year as production fell in the past five years. Indonesia is the world's eighth largest producer of tea but previously ranked sixth before thousands of hectares of tea bushes were uprooted to plant palm trees for oil. Last November Indonesia Tea Board Chairman Rachmat Badruddin told delegates at the National Tea Dialogue confer- ence that tea lands have declined by 30,000 hectares. "Unless mas- sive action is taken to reverse it, tea in Indonesia will be history," Badruddin convincingly told government officials, spurring them to action. An emerging local market of 240 million people poses as oppor- tunity, he explained. As a result, the national tea development budget was increased from $425,000 to $4.1 million in 2014 "and the govern- ment will double it if the initial stimulus proves effective," he said. "Lucrative business prospects of palm oil and rubber are partly responsible, causing Indonesia's tea output to stagnate," explains Badruddin. Several tea plantations have been transformed to palm oil plantations on West Java (which produces 70% of the nation's tea. Tea Production in Decline Production, Export, and Import : Source: Indonesian Tea Statistics "A large responsibility lies with the Indonesian tea farmers to in- crease production rates with the assistance of government funds," he said. It is important for the in- dustry to streamline its capabilities from leaf to cup. Indonesia exports about 65% of its tea in bulk, typi- cally without blending and packag- ing which add value. Only 6% of Indonesia's exports are value-added tea. The country's most important trading partners are Russia, Great Britain, and Pakistan. Global de- mand is rising at 4% annually. The government, which owns some of the largest plantations, is committed to revitalizing Indone- sia's tea industry said Rusman He- riawan, Deputy Minister of Agricul- ture. "The Ministry of Industry has an important role to play in remov- ing obstacles for growth in the tea processing industry," he said. Smallholders "are a vital cog in the industry" and grow most of the tea consumed by the domestic market, which holds great potential as per capita consumption remains less than 1 kilo per year, accord- ing to Badruddin. Nonetheless, tea imports are expected to grow if tea output in Southeast Asia's largest economy cannot be raised. Tea growers in Indonesia are converting tea gardens to crops less subject to price swings. Between 2005 and 2010 Indonesia, which previously grew 3.5 percent of the world's green tea for export, converted 13,000 hectares of tea gardens to rubber, palm and fruit orchards. Production is down 50,000 metric tons to 150, 000 metric tons and hectares under tea have declined by 30,000. The country now ranks 8th among tea producing lands and less than 6% of exports are value-added tea. Dewata Tea Estate in the province of West Java. By Dan Bolton I Year Production export % to Retained Consumed Import % to Production Consumed 2007 155,437 83,659 54% 71,778 80,473 8,695 11% 2008 153,282 96,209 63% 57,073 63,698 6,625 10% 2009 152,550 92,304 61% 60,246 67,415 7,169 11% 2010 151,012 87,101 58% 63,911 74,781 10,870 15% 2011 146,591 75,450 51% 71,141 90,953 19,812 22% 2012 145,748 70,071 48% 75,676 100,073 24,397 24% 2013 148,671 70,842 48% 77,829 98,409 20,580 21%

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