Georgian Tea Overwhelming problems

Nino Arveladze

World prefers coffee to tea – the price of tea made up $4 per kilogram. There were the times, when tea growing industry was one of the first-priority and strong fields.

However, today, the stores are full of foreign tea of doubtful quality, but accredited laboratories in Georgia are not able to conduct research of imported tea. Tea sector is in a grave condition, but it still has left big inheritance of tea plantations. Unfortunately, the most of plantations are wilderness and requires attention. We are constantly thinking of export potential, but nobody remembers Georgia tea that has huge export potential. Leaders of Georgian tea production are making big efforts for the development of this sector. But the problems are too many and too serious. The president of Georgian Tea Producers Association, Tengiz Svanidze:
– It has already been a fourth year since traditional Tea Festival is being held in Georgia by the initiative of the Ministry of Agriculture, Association of Georgian Tea Producers and Association of Caucasus Tea Growers. Eight companies from Georgia are participating in the festival this year. Companies are producing high quality Georgia tea. Aim of the festival is to encourage economic development of this sector; to accomplish joint regional economic projects; support of local tea producer SMEs; popularization of high quality, natural, ecologically clean tea of local production and entering the domestic market. Georgia Tea Festival has developed into International Tea Festival over last two years. Azerbaijani, Armenian and Turkish tea producers expressed their will to participate in the festival. The festival was held on Oct-23-2009. Azerbaijani, Armenian and Georgia tea growers, foreign specialists, representatives of governmental institutions attended the II Tea Congress on Oct-22-23. Caucasus Tea Association has been established by common decision at the congress held in Baku last year.
Society for Technical Cooperation of Germany and Business and Development Network of Caucasus supported association in arranging of this event.
G.E. – What concrete results were achieved at the congress for Georgia tea sector?
T.S. – Communiqué – joint address of congress to the governments of the republics concerning existing situation of the sector and government’s role in its development. Governments should pay more attention to tea sector. Leaders of Georgian tea sector should attract investors. We should present positive aspects of Georgia tea. Both events were very fruitful. Some actual investors are appearing. Tea Museum has offered an innovative idea to establish Tea Houses in Georgia, Azerbaijan and Armenia. Consumers will be able to taste Caucasian tea and buy it.
G.E. – What is the situation in tea sectors of neighbouring countries in comparison with Georgia?
T.S. – Situation at Georgian tea sector is much better that in Azerbaijan, which always dropped behind Georgia in scales. Tea sector is actually destroyed in Azerbaijan. The country was producing 3000-5000 tons of tea, but now the production is decreased to 500 tons.
G.E. – What is the condition of tea plantations in Georgia?
T.S. – Seventy percent of tea plantations, excluding Abkhazian region, are a wilderness. It is impossible to cultivate other crops on these lands. Georgia was producing 100,000 tons of tea a year, but unfortunately now we are producing only 2000 tons.
G.E. – What can you say about processing enterprises?
T.S. – There are big, medium and small processing enterprises in Georgia, but technologically they are obsolescent. Aim of Association of Georgian Tea Growers is to achieve that operating enterprise to produce only high quality tea. Georgia tea is considered as a low quality product. It is called a “down price tea”, in other words it is bought only at low prices and then mixed with other good quality tea. High quality tea is produced by few companies in micro-factories or by family factories. As a result, Georgian tea obtained domestic consumers and is gradually entering foreign markets. However, this is a just drop in a bucket.
G.E. – What is the volume of exported tea?
T.S. – About 2000 tons of Georgian tea is exported at present. We want to achieve higher quality of tea exported aboard as unfortunately the quality of exported is not satisfying.
G.E. – Does Georgian tea have some properties that might get foreign consumers interested?
T.S. – Mostly Indian and Chinese sorts of teas are spread in the world. The quality of product depends on climate. Indian tea leaves contain more moisture. Georgia tea is harmonious, gentle and light. Chinese tea is exported in Middle East, but Georgian tea is still more valuable as it is light and can be taken in big amounts without any danger to health. Georgia can produce at least 20,000 tons of tea and 30,000 tons at best. It is possible to sell the products at domestic and foreign markets and employ about 100,000 people.
G.E. – Is Georgian tea standing in disadvantageous position due to state policy of economic liberalization, as market is flooded with low quality and cheap tea products of doubtful origination?
T.S. – Production must be competitive in the conditions of market economy, but competition must be fair, of course. This cannot be said about domestic market of tea in Georgia. Financially weak sector cannot develop aggressive advertising campaign. I am far from the idea that any imported tea is of low quality or that import must not exist in Georgia. The main obstacles of Georgian tea begin to appear since demolition of Soviet Union, when we lost many markets. However, Georgian tea has never been steadily introduced at domestic market. In Nineties of the last century, customs duty on imported tea was 12 percent. The rate was increased up to 18% afterwards. Loads of falsified goods were entering the market in this period. All the above mentioned caused lost of the market niche for Georgian tea. Now, contraband is being eradicated, but tea sector is still experiencing difficulties. We are trying to make any changes in this situation. The first Tea Festival was simply a funny event. Few companies gathered at Shardeni St and that’s all. Festival is taking more loads and more interest is showed. Today, government members are attending the festival and their decisions are very important. Tea was having problems even before liberalization. I think, the sector itself must withstand competition under the conditions of market economy.
G.E. – Does sector need no governmental assistance? If the sector is not introduced correspondingly none of the investors might become interested in it. We declare that Georgia tea has big potential of employing people. State should be interested in the development of such field.
T.S. – Tea growing sector is subsidized in Turkey and Argentina. Turkey, like Georgia is the member of World Trade Organization, but they have extremely big customs duty (154%) on import of Tea. We are not allowed to impose high customs duty because of membership. Georgian tea industry can employ people in western Georgia, where population is actually unemployed. State was paying 20 cents per kilogram of exported tea to the producer in 2001-2002. Export of tea in these years increased up to 2000 tons. If such task-oriented subsidies continue, this will bring many benefits to the sector.
G.E. – What kind of state assistance do you give preference?
T.S. – Government started to pay attention to tea sector after the festivals held in March. Problems of Georgian tea were introduced to parliament of Georgia by the initiative of Petre Tsiskarishvili. Some strategy of development was designed, but as new state institutions were being established nowadays, we requested some time for elaboration of a new strategy plan. A group of dozen people in the parliament designed the strategy plan that was introduced in the parliament and ministries of agriculture and economic development. The strategy was discussed and approved at the sitting of Agrarian Committee. Working group was assigned to develop terms of measures necessary for the development of tea growing sectors and their financial aspects. The work is still in the process.
One part is separated from the strategy plan – model tea enterprise must be established in each region with the state support. This will show actual support from the state and enable attraction of local and foreign investors. Ministry of Agriculture issued corresponding order and separate group is founded for selection of enterprises. After selection, enterprises will be presented to the ministry and parliament. Afterwards the plan will be elaborated about what is necessary for foundation of such enterprises.
G.E. – What share is Georgian tea holding at domestic market?
T.S. – Georgian tea has the potential to satisfy demand of domestic market. Unfortunately, it is holding only 8-10% of domestic market. According to statistical and customs data, Georgian population consumes 1500 tons of tea a year. Georgian tea cannot satisfy local market yet. State support is not limited to financial support, it is necessary to provide population with more information by means of TV and radio. Majority of imported tea is of low quality; it is painted with colouring matters and might be dangerous to health. Unfortunately, we do not have any proof of this, as accredited laboratories in Georgia cannot test quality of imported tea.
G.E. – Food Safety Service is operating in Georgia, and how it might respond to this question – what is the sense of having accredited laboratory, if it cannot test the production?
T.S. – When there is no customer, whether state of private entity, laboratory won’t start to check products by its own initiative.
G.E. – Can Georgian Tea Producer’s Association order the laboratory research of imported tea?
– When you declare in press that imported products are low quality and you name concrete brand, you must have some evidence. I held the meetings with the head of Food Safety Service, Maia Metreveli. I asked her to allow me to introduce initiative of testing tea imported in Georgia. This is the only possible way to establish fair competition for Georgian tea at the market. Initiative of Azerbaijani company Azersanholding is quite dangerous. The company wants to build a factory producing 2000 tons of tea. Two million dollar investment will be made and thirty people employed. This company is packing tea of doubtful quality from third country. It is unacceptable to left 100,000 people unemployed for this. Enterprise must be constructed if it works on packing of Georgian raw materials only.
G.E. – Turkish company bought tea processing factory in Georgia, what can you say about this?
T.S. – Turkish company bought one of old factories in Kobuleti, but they are using it for different purposes. Despite many attempts, Turkey is not interested in Georgian tea sector.
G.E. – What is the situation at international tea market?
T.S. – Demand on tea is growing at international market. This is defined by increased population in Muslim countries. Coffee consumption is rather decreased in whole world. People understood that tea is healthy product. World population started to consume tea instead of coffee and grown demand was resulted in rise of prices. Georgia must be prepared to meet tendencies of international market. It is much difficult to eradicate wilderness plantations rather than just take care of it.
G.E. – Are there any international projects that are interested in Georgian tea?
T.S. – Advantage designed project in Tskhaltubo, village Ternali and opened an enterprise producing high quality Georgian green tea. It took a first place in latent competition held in Baku.
It is impossible to develop this sector without state support. Georgian tea cannot overcome the problems such as unfair competition; neglected plantations; technical re-equipment of processing factories and attracting investors. The price of tea is constantly growing at the world markets, while Georgia is still in offside position.