Paperwork hassles stymie tea industry

Non-tariff barriers have stymied Nepal’s tea exports and growth of the industry, said tea growers. Traders said that India had imposed yet another strict provision this year.

Under the new rule, Nepali tea producers are required to obtain quality certificates on an individual basis before their products can be exported to ensure that they meet the standards.

“Earlier, traders were allowed to export processed tea to India under a common certificate,” said Uday Chapagain, proprietor of Gorkha Tea Estate in Fikkal.

For example, if one company obtained the certificate, other companies were also allowed to export their products with the same certificate.

“Now, each company is required to obtain a particular certificate.” Nearly, 75 percent of the tea produced in Ilam is exported to India.

Chapagain said that obtaining the certificate was expensive and time consuming. “Directly, the system is a regulation, but indirectly it seems to be a strategy to restrict the export of Nepali products.”

Each producer is now required to pay Rs40,000 to Rs50,000 to get the certificate and a new one has to be obtained every six months.

“Given the cost and time factor, it is difficult for small producers to obtain individual certificates on a regular basis.”

Om Kafle, manager of Ilam Tea Producers, said that the new provision had hit small producers and exporters. There are 25 big orthodox tea producers in Ilam, Panchthar and Dhankuta, while there are 45 small producers. “All the small producers depend on the Indian market.”

The eastern hill districts produce 4,000 tonnes of orthodox tea. Of the total output, 10 percent is consumed in the country, 15 percent is shipped to Western countries and the rest is sent to India.

Traders said that India had also imposed a rule requiring them to show a bank guarantee while exporting tea to overseas markets like Japan, the US and Europe.

“Small producers and traders are unable to show bank guarantees that require a huge amount of money,” said Chapagain.

Ganesh Tea Estate in Dhankuta, Kanchenjunga Tea Estate in Panchthar, Gorkha Tea and Sankhejung Tea in Fikkal, Ilam produce organic tea for export to overseas markets. More than 400 tonnes of organic tea are exported to overseas markets annually.

Tea is one of the major foreign currency earning commodities. Traders said that the government had shown little interest in developing the tea industry.

Six districts in Nepal produce orthodox tea, namely Ilam, Dhankuta, Kaski, Terhathum, Sindhupalchok and Panchthar.

There are a small number of medium to large-scale tea estates and a large number of small farmers in these districts. More than 25,000 farmers are directly employed in the tea industry in Nepal.

Source: The Kathmandu Post.  Date: March 5, 2016

http://kathmandupost.ekantipur.com/news/2016-03-05/paperwork-hassles-stymie-tea-industry.html