STiR coffee and tea magazine

34 STiR coffee and tea | 2024 Issue 4 (August / September) Calculating all financial outgoings and yields validates what green leaf price will deliver a living income by family and farm size. JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC MONTHS DEPENDENT ON LAND √ √ √ √ √ √ √ √ √ √ √ √ MONTHLY YIELD GREEN LEAF KGS 0 0 0 700 900 900 900 900 900 700 0 0 TRANSPORT COSTS Rs 0 500 500 500 500 500 500 500 FIELD INPUTS Rs NOT COUNTING LABOUR 5000 0 3000 0 0 4000 0 0 0 0 6000 0 AVERAGE LEAF QUALITY PLUCKED BY MONTH % 72% 70% 66% 66% 66% 68% 68% PRICE Rs/KG/MONTH 0 0 0 50 40 40 40 40 40 40 0 0 AREA UNDER OTHER CROPS 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 02 0.2 0.2 MONTHLY YIELD KGS 40 40 40 20 20 20 20 20 20 40 40 40 FIELD INPUTS Rs NOT COUNTING LABOUR 2500 0 0 0 2500 0 0 0 2500 0 0 0 SALE PRICE RS/KG/MONTH 400 400 400 400 400 400 400 400 400 400 400 400 #WORKERS ON LAND/MONTH 1 1 1 1 1 1 1 1 1 1 1 1 #WORKERS OTHER 0 0 1 0 0 0 0 0 0 0 1 0 THAN FAMILY(ABOVE) DAYS WORKED PER MONTH 10 0 0 0 0 0 0 4 PAY Rs/WORKER/DAY 1200 1200 1200 1200 1200 1200 1200 1200 COST OF LABOUR RS 0 0 12000 0 0 0 0 0 0 0 4800 0 FAMILY INCOME FROM OTHER SOURCES(OFF FARM)RS 0 0 0 0 0 0 0 0 0 0 0 0 INCOME FROM TEA OTHER CROPS LABOUR Farm Statistical Analysis Private label and branded tea products in the UK are closely grouped, illustrating a focus on competitive pricing rather than on raw material sustainability. 0 0.5 1 1.5 2 2.5 Price £/100grm tea (80 count product) Sainsbury Red label Tesco Everyday Asda Everyday Clipper Organic Everyday Twinings Everyday Tetley Original Yorkshire PG tips Source: Supermarket grocery websites Tesco, Asda, Sainsbury Once we have this starting point, we can overlay the living income requirements for each individual farmer family, based on size, age, work, education, housing, nutrition etc. This informs us whether the remittances deliver a living income or not (with the important caveat that where not, the leaf price is mandated to meet the need). The Anker method provided inspiration for this theory. https://www.globallivingwage.org/about/anker-methodology/ Is this easy? No! Does it take work? Yes! Will it pay? Yes! This is a traditional zero cost budgeting/accounting method, where the determination of a minimum selling price is de-linked from historical pricing or competitive analysis in order to en- sure that the source is compensated appropriately to costs. That stance will raise hackles in retail channels and be greeted with raised eyebrows in the cor- ridors of CPG companies because the very thought of ignoring "their" marketplace in deference to the needs of the supply chain has been a foreign concept, to date. The ludicrous gaps between the two primary competitive markets (private label and branded products) on UK supermarket shelves proves no focus on product cost. However, as consumers demand more from retailers and brands and as ESG in- vesting gathers momentum in the world, the need to be able to answer the question "Does this tea deliver a living income for all in the supply chain?" become more persistent and relevant. Many will point to third party on-pack certifications as proof positive of their ethical procurement practices and, while delivering some signifi- cant attributes in this direc- tion, they do not—I repeat, do not—guarantee commer- cial sustainability. Santosh Unni of Iron Ket- tle puts it like this: "Iron Ket- tle… is building a tea agron- omy model leveraging science and technology to raise the level of quality, standardiza- tion, and cleanliness of the tea. Is Iron Kettle getting the right price for these efforts? The answer is a definite 'NO'. Instead, the industry hides be- hind charades of sustainabil- ity and fairness articulated by rubber stamp certifications, while continuing to pay the lowest prices." Value vs Cost Irrespective of the narrative, the facts remain that while tea prices for teabag grade teas have declined in real terms, over the last 40 years the price on the shelf continues to rise at a healthy clip. Add to this that, according to nearly every expert in the industry, the av- erage quality of that "cuppa" has declined and the question of how much should tea cost becomes more one of who should pay more, or is there a more equitable distribution of profit required? Jem McDowall, vice presi- dent, Universal Commodities said, "We in tea have gone through an extended period of 'removing costs from the supply chain'. Unfortunately,

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