Tea Production Drops 10-20% This Year

Thursday, 02 February 2012

The tea production may keep decreasing until 2015 to 124,975 tons. (IFT/MELLY RIANA SARI)

JAKARTA (IFT) – National tea production may drop 10-20 percent this year to 112,752 tons-126,846 tons from 140,940 tons year-on-year (YOY). Endang Sopari, Deputy Head of the Indonesian Tea Farmers Association, said that the lower production was caused by high rainfall which affected the growth of tea shoots. 

The low maintenance of the plantation due to cost problems also affected production. The most burdensome cost for farmers is financing fertilizer activities which is done twice a year.

 Tea farmers must provide 400 to 500 kilograms of urea fertilizer every year and 600 kg a year of NPK. Urea is currently priced at Rp 1,600 per kg, while NPK is at Rp 2,400 per kg.

 Meanwhile, the selling price of tea at factory level remained at Rp 2,000 – Rp 2,200 per kg in late 2011. Farmers' low revenue encouraged them to convert tea plantations into vegetable and fruit plantations.

Endang added that tea farmers can only use 40 percent of the land for planting. Ideally, one hectare can produce 10 thousand plants, but the farmers only plant four thousand to six thousand.

 As a result, national production only reaches 600 kg per hectare per year. It is estimated that it can be maximized to two tons per hectare per year.

Based on the Directorate General of Plantation of the Ministry of Agriculture, tea production dropped to 140,940 tons last year from 156,600 tons YOY as plantation areas remained at 123 thousand hectares.

The production may keep decreasing until 2015 to 124,975 tons, according to Rohayati Suprihatini, Researcher of Tea and Quinine Research of PT Riset Perkebunan. This will be fueled by higher production costs, particularly with fertilizer price rising 9.5 percent a year. National tea production cost grows 13.3 percent per year with a 4.6 percent a year tea price increase.

Tea plantation areas drop 2.3 percent a year due to land conversion, making productivity fall 0.5 percent a year.

Rohayati requested the government to keep the price at farmers’ level and avoid tea imports. It also urged the government to raise the import tariff from zero percent to 25 percent.

Gamal Nasir, Director General of Plantation of the Ministry, said that the government will increase tea production and productivity by increasing land area, targeting to total 1,010 hectares in one province and six regencies. About 70 percent of tea lands in Indonesia are concentrated in West Java, while the rest are in Central Java, East Java, West Sumatera and North Sumatera.

Production Up

Meanwhile, PT Perkebunan Nusantara VIII (PTPN VIII) targets tea production to reach 49,672 tons this year, an 11.84 percent growth from 44,407 tons YOY. Bagas Angkasa, Chief Director of PTPN VIII, said that the target will be supported by the company's revitalization program and higher productivity.

PTPN VIII has 25 thousand hectares of tea area. Tea contributes 30 percent to its revenue, the second largest. The company sees a Rp 2 trillion revenue this year, an 11.11 percent increase from Rp 1.8 trillion YOY. The net profit is projected to increase 15 percent YOY to Rp 270.25 billion. (*)

Source: Finance Today