Tea in Indonesia

Tea 

Tea is one of the world's most consumed beverages. It is thought to originate from China where tea has been drunk for thousands of years. Around the 16th century, when the Portuguese were expanding their power, this beverage was imported to Europe and quickly gained popularity. This popularity made the Portuguese and the Dutch decide to establish large-scale tea plantations in their tropical colonies. 

Constant temperatures and humidity are ideal conditions for the tea plant to grow. Such conditions can be found in the tropical and subtropical climates in Asia where currently more than 60 percent of global tea production is cultivated. In particular, the cooler highlands will produce a good quality of tea leaves. The tea plant can be first harvested after it has reached the age of around four years. When harvesting, only young leaves are selected, implying that manual picking is more efficient than using mechanical equipment. Tea production is therefore a labor-intensive business.

Two countries that dominate the global tea production are China and India. Together these two countries account for almost half of global tea production. 

Top Eight Tea Producers in 2011

1. China 1,640,310 

2. India 966,733

3. Kenya 377,912

4. Sri Lanka 327,500 

5. Turkey 221,600

6. Vietnam 206,600

7. Iran 162,517

8. Indonesia 142,400

in metric tonnes

Source: Food and Agriculture Organization of the United Nations

Tea in Indonesia 
Production and Export of Indonesian Tea 

Indonesia currently ranks number eight on the list of largest global tea producers. In the past it has been higher up that list but the lucrative business prospects of palm oil have caused the tea output to stagnate as some tea plantations were transformed into palm oil plantations. But tea estates have also been given up for the production of vegetables and other crops that are considered more profitable. Despite the resulting decrease in land acreage tea production has remained relatively stable. This indicates that the remaining tea estates have become more productive.

Indonesian Tea Production (in metric tonnes)
2007 : 150,623
2008 : 153,971
2009 : 156,904
2010 : 150,342
2011 : 142,400
Sources: Food and Agriculture Organization of the United Nations

The provinces that produce most of Indonesia's total tea output are:
1. West Java (produces around 70 percent of national tea production)
2. Central Java
3. North Sumatra

Approximately 65 percent of the Indonesian tea production is exported. The main countries of export destination are Russia, Great Britain, and Pakistan. Export is dominated by large plantations, both state-owned and private, while the majority of smallholders are more oriented towards the domestic market (which is not big as Indonesia contains a low rate of per capita tea consumption). This orientation towards the export market has implications for the Indonesian tea sector as it is highly dependent and vulnerable to the international market, in particular regarding the tea price. When supply exceeds demand in the international market, domestic prices fall sharply. This affects smallholder farmers severely, as they need to sell their tea at lower prices (which hardly compensate production costs).

Similar to other commodities, Indonesia relies on the export of bulk tea, which is a primary (upstream) product. The weak development of Indonesia's downstream tea industry curtails the competitiveness of the Indonesian tea industry on the international market. The export of downstream tea products is only around 6 percent of total tea exports.

Future Prospects

Global tea consumption rises by about four percent annually. Indonesia's domestic tea consumption is rising on a much higher level: more than 20 percent annually in recent years. As Indonesia's tea production is showing a decreasing trend and exports account for around 65 percent of tea production (mostly the premium quality), the country needs to import tea to satisfy domestic demand. Tea imports comprise about 25 percent of Indonesia's domestic tea consumption. Imports will have to be increased if the government provides no incentives to develop the country's tea industry. Moreover, Indonesia will keep losing ground to the other tea producing countries if no investments - whether public or private - are made.

Major Indonesian Companies Occupied in Tea Production
• PT. Perkebunan Nusantara VIII Company File
• PT. Perkebunan Nusantara IV Company File
• PT. Perkebunan Nusantara VI Company File
• PT. Perkebunan Nusantara XII Company File
• PT. Tatar Anyar Indonesia Company File

Source: Indonesia - Investments

Higher standards sought for tea sourced locally, overseas

The Jakarta Post | Headlines | Thu, January 10 2013, 11:47 AM

Indonesia, the world’s seventh largest tea producer, plans to upgrade the standard of tea and tea products produced locally as well as sourced overseas.

Deputy Trade Minister Bayu Krisnamurthi said on Wednesday that new developments in the industry, which demanded improved qualities of raw material for both local consumption and exports, would be accommodated by measures supported by the National Indonesian Standards (SNI).

Higher standards would open up more opportunities for plantations, outside those owned by state plantation companies (PTPN), to join auctions for major buyers.

“Our key concern is to enhance competitiveness, to increase added-value in our production chain and to further develop the flagship commodity,” he said.

The government’s standards for tea set the maximum limit of pesticide residue. The limit will be raised under the planned new standard.

Indonesia, once the world’s fifth largest producer, suffered a decline in tea production due to shrinking tea plantations as farmers prefer more lucrative commodities.

Tea plantations have dropped by 3,000 hectares per year to 123,351 hectares in 2011. The tea plantation business has also become less attractive due to the low added-value for investors.

Bayu said that in line with the push to improve standards, the government also planned to differentiate import duty for unprocessed tea and finished products to help protect local growers and industries.

“We want to facilitate easy access to raw materials and semi-finished products to inject growth in the local industry,” Bayu said while acknowledging that imports were inevitable as imported varieties were used for blending. Indonesia imports tea for blending sourced primarily from India, Kenya and Sri Lanka.

Indonesia has imposed a 5-percent import duty on tea but has lifted it to zero percent for Southeast Asian countries under the ASEAN free trade agreement.

The tariff is still relatively low compared to other countries, such as Sri Lanka and China who impose up to 30 percent duties. The World Trade Organization allows import duty up to 40 percent.

In 2011, Indonesia imported 20,000 tons of tea. During the same year, Indonesia produced 123,700 tons of tea, with around 75,000 tons exported.

Secretary for the Indonesian Tea Council Harry Hendrarto welcomed the government’s plan to upgrade tea SNI, but warned that the move should be accompanied by measures to support local planters.

“Otherwise, the policy will severely hurt local growers and business as some of them will face difficulties in meeting the standards,”he said.

— Linda Yulisman

Source : The Jakarta Post 

Great strides in the Indonesian tea market

Once only known for its exportation of black tea, Indonesia has now diversified its yield and taken steps to improve its business.

By Foster, Lauren
Publication: Tea & Coffee Trade Journal
Date: Tuesday, September 1 2009

For over 200 years, tea has played an integral part in Indonesian culture. Since then, it has blossomed into a major tea-producing country Teas from Indonesia are light, fragrant and flavorful, and mainly used for blending purposes. But, new developments in the industry have fueled the expansion of the Indonesian tea trade, opening up the market for more variety in the types of tea produced and giving the tea business even more room to grow.

Today, Indonesia's main market for exporting tea is Germany, the UK, Japan, Pakistan, the Middle East and Russia. Prices for tea continue to fluctuate, and most companies are following the international market; presently, prices are quite high due to a shortage of tea production in origin countries caused by a period of inclement weather conditions. The biggest challenges the exporting companies are presented with are the increasing complexities of rules and regulations of importing countries. In addition, non-tariff barriers still exist in several countries. Another major issue is the increasing pressure on the tea farmers in developing countries from the consumers to develop more eco-friendly processes. While some companies are finding it difficult to deal with Europe's strict requirements about staying environmentally conscious, other companies are making great efforts to do their part in protecting the planet. Most tea farmers have supported the consumers' noble intentions, for they are aware of the ways in which they will benefit from these efforts in the future. But, it must be noted that factors such as language barriers and certain customs of the country prevent many of the ideas behind the eco-friendly campaign from actually being implemented in the fields.

There is a growing market for tea exports in Indonesia, which means a surge in business for companies like Buhler Sortex--a global company with over 20,000 installations in more than 100 countries worldwide. Buhler Sortex has about 30 installations currently in Indonesia. The market has continued to grow steadily over the last ten years, and has picked up even more rapidly in the last three years. Indonesia is one of the biggest green coffee bean exporters and as people are becoming more health conscious, the demand for green tea (due to its anti-oxidant properties) has increased. The market also continues expand for the processers because more and more processors are considering sorting technology to help increase the quality of their products to meet their customers' expectations.

Companies such as PT KBP Chakra (tea) and PT Sari Makmur (coffee), in Indonesia, have found success in using Buhler Sortex machinery--equipment designed to clean and sort the products. The high resolution SORTEX Z+ product is a sorter for food processing and known for its efficiency. Buhler's SORTEX Z+ optical sorter enables processors to deliver cleaner and safer food by eliminating defective product and foreign material from tea and coffee. Recently, Buhler has launched a new shape sorting enables both coffee and tea processors to simultaneously sort the product according to shape, and even by color. Previously, it was only possible for the machinery to distinguish defects by optical color sorting, but this innovative development has enabled such progress. The removal of foreign material the same color as the accept product, such as stalks that are the same color as tea leaves or brown sticks in roasted coffee, could previously only be done by a mechanical or hand sorting process. The new PROfile shape sorting technology enables SORTEX Z+ sorters to simultaneously identify and reject material by shape as well as color, dramatically increasing productivity and operational efficiency. For tea, the SORTEX Z+ optical sorter works to identify and remove sticks, stalks, rotten leaves, stones and other foreign material. For coffee, the technologies employed by the SORTEX Z+ recognize and eliminate from green and roasted coffees any color defects, broca (insect damage), under/over roasted beans and foreign material such as glass, metal, sticks and stones.

In addition, Buhler Sortex has representatives in over 100 countries globally. Specifically in Indonesia, Buhler Sortex employs the help of ET. Jabar Mulia, an engineering company founded in 1971. Its head office is located in Jakarta, and the business has a branch office in Bandung, West Java, Indonesia. This location remains one of the most promising markets in the Far East due to its large population of over 210 million and the abundance of natural resources in the area. ET. Jabar Mulia has several sales and service engineers to cover the whole of the Indonesian market and whenever Buhler Sortex customers require assistance of any kind, technicians are on hand to assist. However, Buhler Sortex also offers remote diagnostics-- meaning that the SORTEX Z+ can connect by phone to Buhler's Z-Anyware service. This allows engineers to access the sorter in order to evaluate and prevent problems before they arise, thus optimizing performance remotely.

Buhler Sortex is not the only company making adjustments to stay modern--the oldest Indonesian tea export company, Yoosuf Akbani, too, has committed itself to advancing itself. Yoosuf Akbani was established in 1937, when Indonesia was still a Dutch colony and its capital was Batavia. This company is undergoing some changes, such as shipping more packed teas (in addition to the bulk teas they usually ship) and they are also working with producers on specialty teas, which continue to grow more popular. The main product in the Indonesian market remains the black tea--of which 80% of production is exported. It may come as a surprise then that in recent years, consumers have begun to look at tea from Indonesia as a specialty tea and therefore, it is now possible to purchase Indonesian tea that is branded and marketed as a specialty tea.

A great example of producing specialty teas in Indonesia originated over a decade ago, when the TEH 63 company believed they could turn a 40-km area just south of Bogor, West Java into a tea plantation that could grow and produce Taiwan Oolong tea. Despite the difference in climate and soil type, they managed to produce quality Oolong tea, and now, the Jawa Oolong TEH 63, is sold in over 30 outlets throughout Indonesia, in addition to being exported to numerous countries worldwide. Currently, TEH 63 is focusing its efforts on educating consumers about the health benefits of Oolong tea, seeing as it is the only producer of Oolong tea in Indonesia. The tea was first used in the third century B.C. as a medicinal tea, containing more polyphenol (also known as tannin) than green tea. Scientists believe tannin may account for the lower risk of cancer in tea drinkers because of its ability to help DNA cells reproduce accurately. Reduced heart disease, aided digestion and lowered cholesterol accumulation are all health benefits attributed to Oolong tea. But, TEH 63 is also striving to educate consumers also on the wonderful flavor and aroma of this special tea. A step that TEH 63 has taken to promote the Jawa TEH 63 is to offer free demonstrations of its teas and sample out six flavors in the TEH 63 boutiques, which are located in major shopping malls and airports in Indonesia, offer free demonstrations of their teas and sample out six flavors.

The promotion of specialty teas, along with Indonesia's usual export of black tea, will prove beneficial to the country's economy. Exporting companies will proceed to make adjustments in light of the continuously evolving market. Luckily, companies, such as Buhler Sortex, make this easier by continuing to develop technology that can aid in the processes of the tea trade.

This article was taken from Allbusiness.com.  Read the original article