Climate Change and the Tea Industry
Can this multinational tea producer weather the storm climate change brings with it?
Chai! Or tea as it is commonly known across the world, an inheritance from the British when colonial rule ended in the late 1940’s, is a staple drink in India. It is omnipresent; prepared at home, offices and the numerous tea stalls at street corners. India is one of the largest producers of tea in the world, second only to China. The country recorded the highest ever tea production in 2015-16 at 1,233 million kilograms, of which a walloping 80% was consumed within the country1.
Tata Global Beverages (TGB), an India based global natural consumer beverage company, is one of the largest producers of tea. Tea plantations are heavily dependent on the monsoon season (June-August in India) as they require 150-250 cm of water on average2. Most of the company’s tea estates are in the states of Assam (north-east) and Kerala (south-west), where climatic conditions favor growth of tea.
Figure 1: A tea plantation in southern India
The threats
Global warming has the potential of disrupting rainfall in these parts of the country. Consequently, TGB faces a significant threat of low yield and reduced production.
Erratic weather conditions alter the amount of rainfall a tea plantation receives. Since tea is a moisture heavy crop, dry periods can lead to a complete wipe out of that year’s crop. Conversely, periods of very heavy rainfall can lead to water stagnation which is equally detrimental to tea plantations. In this way, changing rainfall patters can significantly reduce TGB’s ability to continue producing at historical rates. Being a large player in the tea industry, production shortfalls can curtail supply and lead to an increase in prices. Other large tea producers across the world face similar consequences with changing weather patterns.
A simulation, considering production in India and Srilanka, was conducted to predict the impact of climate change on tea production and prices. The results showed that between 2012 and 2022, production on average will decline by 3.4% and global tea prices will increase by over 26%3.
Increased frequency of pest attacks due to climate change is another threat TBG faces. Tea pests such as Red Spider Mites, Tea Mosquito Bug etc can destroy large plantations in short periods4. A higher number of such attacks would once again lower yield and production.
What has TGB done so far?
The company is working on several different fronts to study and combat such risks of climate change on its business.
- Earlier this year, the company commissioned the Tea Research Association to conduct a comprehensive study on the impact of climate change on the tea plantations in Assam. The intent is to identify those areas of the state which will no longer be suitable for tea cultivation and would require switching to another crop4
- They have asked scientists to research common tea pests and suggest non-pesticide solutions to mitigate the risk of crop loss due to these pests. Initial trials have proved successful4
- To promote sustainable agricultural practices, TGB has launched the Trustea initiative to train farmers in sustainable practices such as drip irrigation and soil management5
Potential remedies
While sustainable irrigation practices are important, TGB should consider rainwater harvesting as an important measure to prevent a drought from destroying an entire tea crop. Water can be stored for a long period in underground water tanks or natural reservoirs at the base of mountains, to be used when the monsoons fail. Perhaps, TGB can consider scaling this across all their plantations in India and abroad to respond to fluctuations in rainfall.
Moreover, TGB may also do well to invest heavily in developing varieties of tea which can tolerate extreme conditions such as those induced by global warming. For instance, Dr. Barman from the Tocklai Tea Research Association in Assam, has used plant physiology to clone tea varieties. His research has produced cactus-like tea plants, which can withstand extreme drought6. If trials prove to be successful, this can revolutionize the tea industry; and since this this isn’t a GMO version, it would be more acceptable to the public.
TGB seems to be heading in the right direction in safeguarding itself for the future. Though only time will validate this; combating the dangers of climate change isn’t everyone’s cup of tea!
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Bibliography
- Rakshit, Avishek. “India records highest-ever tea production in 2015-16.” Business Standard, June 17, 2016.
[http://www.business-standard.com/article/markets/india-records-highest-ever-tea-production-in-2015-16-116061700687_1.html], accessed November 2016
- Important India, “Climatic condition for growing tea.” http://www.importantindia.com/4407/climatic-condition-for-growing-tea/, accessed November 2016
- Chang, Kaison and Brattlof, Margarita, “Socio-economic implications of climate change for tea producing countries.” Food and Agricultural Organization of the United Nations,
http://www.fao.org/3/a-i4482e.pdf, accessed November 2016
- Tata Global Beverages, 2015 Annual Report, p. 22, [http://www.tataglobalbeverages.com/docs/default-source/default-document-library/tgbl-annual-report-2015-16-web-pdf-filefbe7b6881a2368caa65dff02001c5be1.pdf?sfvrsn=0], accessed November 2016
- Tata Global Beverages, “Sustainability,” [http://www.tataglobalbeverages.com/sustainability/climate-change/the-initiatives/sustainable-agriculture], accessed November 2016
- Maya Tea, “Blogs.”
https://www.mayatea.com/blogs/maya-tea/6079470-tea-or-cactus-tea-for-the-apocalypse, accessed November 2016
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Interesting perspective about the tea industry! It’s good to know that TGB is working on to keep providing quality tea at low price.
It looks like India and Srilanka are two of the major producer of tea and both regions are suffering from climate change. If that is true, I think the company’s risk is depend on the price elasticity of the demand of tea. How will customers act if the tea companies raise the price all together? Will customers consume more coffee instead? It would be interesting to know about customers behavior and impact on TGH and the tea industry.
The problem TGB is facing is one that practically all agriculture-dependent companies will run into as climate change continues – how do you produce more for an increasingly larger consumer base as the population grows, with a decreasing product yield? And as you’ve noted, the use of improved irrigation techniques and rainwater harvesting are temporary at best. The real opportunity and the future of agriculture lies in your last point regarding the clone tea varieties. Similar to the Indigo Case, the entire agriculture industry will have to evolve in order to address the ever increasing demands of plant production.
Rahil, thanks for the insightful post. I’m an avid tea drinker and had no idea that tea prices will increase by such a staggering percentage over the next decade. It is reassuring to see that TGB is taking a proactive approach to explore many potential solutions from pest-resistant options to improving water resourcefulness. I was particularly curious about rainwater harvesting and how this process can be implemented. Interestingly, Mana Organics group is preparing to install a rainwater irrigation system based on extensive analysis and AutoCAD design in the Assam region [1]. It would be fascinating and mutually beneficial if TGB could serve as a pilot client to help Mana test and scale the solution more broadly.
Fortunately, TGB is a $2B company with plenty of risk-taking ability and resources to expend on this research process. I worry instead about the Indian farmers with smaller landholdings and whether they can continue to compete in the tea market if one season of extreme weather wipes out their quality crop. As you mentioned, TGB has started an initiative to train farmers on sustainable practices. Given your research, I would be interested to hear which of these alternative methods you think will be particularly successful in helping local farmers mitigate against crop loss in a cost-effective way? I think methods like drip irrigation and soil management will not be enough to overcome climate-related risks and that farmers will need to employ higher cost methods like new irrigation equipment and monitoring technology to weather the storms.
[1] http://mana-organics.com/
Great post on agricultural impact of climate change. This article also reminded me of the “Indigo” case. However, unlike cotton or wheat, some tea brands are perceived as luxury brands, and I think customers might be more sensitive to tea’s quality, production place, and production method. From this perspective, I am interested in how steps taken by TGB would affect customers’ perception of the TGB’s products. Also, I agree with the second potential remedy mentioned in the article, because it is not an application of GMOs and the risk of damaging customers’ perception seems low.
What a great post! I am an avid tea drinker and I had no idea that the drink I enjoy daily could increase in price so dramatically in the near future. It sounds like TGB is taking important measures to combat climate change, especially with its efforts to create tea clones. I do wonder how TGB will approach the marketing of this product if they do indeed release it to the public. One of the benefits many people see in tea, especially in brewing loose leaf, is this idea of it being “natural.” Tea clones could really challenge that perceived benefit, so I am eager to see how TGB combats that issue.