Darjeeling Tea : Tangible Impacts of Geographical Indications on Trade

19th Session of the Inter Governmental Group on Tea 12-14th May,2010,New Delhi

Dr. Tarit Kumar Datta Indian Institute of Management Calcutta Darjeeling Tea

•A GI PRODUCT; •REGISTERED UNDER G.I. ACT OF INDIA; •SINCE 2004. WHY IS IT A GI PRODUCT? name and logo usurpation in the global market since long past: usurpation of the Darjeeling logo and the word Darjeeling is very frequently done to deceive the consumers through contamination and falsification, by blending Darjeeling with non- Darjeeling, to dilute the quality of Darjeeling tea and finally to deprive the real Darjeeling producers. Protection of Darjeeling Tea Quality Signs: (protection of the word Darjeeling and the logo of Darjeeling tea became imperative in the global market. But as per Article 24, clause 9 of the Trips Agreement (to which India is a signatory) on Geographical Indications of the WTO,(of which India is a founding member), the product must be protected in the country of origin, otherwise there shall be no obligation under this agreement to protect any geographical indication. Hence, Darjeeling tea has been registered as a GI under the appropriate act. Assessment of Impacts : •LEGISLATIVE; •MARKETING; •ECONOMIC; •SOCIAL; •ENVIRONMENTAL; Legislative Impacts : •TO PROTECT MISUSING AND MISBRANDING THROUGH NAME AND LOGO USURPATION; •MORE THAN 100 CASES IDENTIFIED & SETTLED; •MORE AWARENESS ; •SET OF GI CODE OF PRACTICES; •CERTIFICATE OF ORIGIN; Marketing Impacts:- •to improve market access, increase value- addition; •product differentiation; •strong and stable positioning; •avoiding market fluctuation, risks, uncertainties etc.; •reflected in reality to overcome the recession; Economic Impacts in Quantitative Terms:

•MORE THAN A DOZEN ECONOMIC VARIABLES •NO. OF PRODUCTION UNITS •VALUE OF PRODUCTION UNITS •AVERAGE YIELD RATE •AREA UNDER PRODUCTION •QUANTITY OF PRODUCTION •AVERAGE PRICE PER KG. IN NATIONAL MARKET •AVERAGE PRICE PER KG. IN INTERNATIONAL MARKET •EMPLOYMENT OPPORTUNITIES •QUANTITY OF EXPORT •NO. OF IMPORTING COUNTRIES •INVESTMENT FOR DEVELOPMENT OF TEA GARDENS •UNPRODUCTIVE OR CLOSED UNIT •LARGE NO.OF OWNERSHIP TRANSFER TRANSACTION NO. OF GARDENS & AVERAGE YIELD RATE OF

DARJEELING TEA GARDENS 800 YIELD RATE

700

600

500

Growth trend –ve till 2001, +ve onwards 400

300

200 of of gardensaverage & yield rate

No. 100

Growth trend –ve till 1996, + ve onwards

1993 1995 1997 1999 2001 2003 2005 2007 1991 Till 1999,Stable afterwards TREND OF GROWTH OF AREA & AREA & QTY OF PRODUCTION OF PRODUCTION OF ORTHODOX DARJEELING TEA DARJEELING TEA 1991 25000 20000 AREA 2008 1992 2007 1993 15000 PRODUCTION 20000 2006 10000 1994

5000 2005 1995 15000 0 2004 1996

2003 1997 10000

2002 1998 . & production & . in '000 kg

2001 1999 ha 2000 in in 5000

AREA Area PRODUCTION 0 Growth trend (area) –ve till 2000, +ve onwards;

Growth trend (production) –ve till 2002, +ve

1994 1997 2000 2003 2006 1991 onwards Auction price of Orthodox Leaf Tea of Different Origins:

250

200

Darjeeling 150 Dooars Assam Terai

100 Nilgiri Price of Leaf Tea Rs./Kg.) ( ofTea Leaf Price

2002 2005 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2003 2004 2006 2007 2008 Growth trend Price (Darjeeling always higher than others) +ve all along , except 2001-03; (Other teas) mixed trend over the years. Employment in Darjeeling Tea Gardens in Different Years along with trend 1993 2009 70000 1994 60000 2008 50000 1995 40000 2007 30000 1996 20000 10000 2006 1997 workers 0 trend 2005 1998

2004 1999

2003 2000 2002 2001

-ve trend till 1998,+ve from 1999, increasing still Quantity of Export & Major Importing Countries:

Annual Investment for Development of Tea Gardens: 1995 35* 2000 70* 2005 220* 1996 37.5* 2001 75* 2006 230* 1997 40* 2002 80* 2007 240* 1998 42.5* 2003 85* 2008 250* 1999 45* 2004 90* 2009 260* * : All values are in INR millions Source: DTA

300

250

200

150

100 nvestment in INRinmillions nvestment I 50

0 Sick, unproductive, or closed unit: Before GI After GI few during 1999-2004, many up to 1998 nil 2004 onwards Transfer of ownership of Tea Gardens: very poor several Price of Darjeeling Tea in the international market: •stagnant for long time; •upward movement of exchange rate helps to survive the industry; •downward movement poses problem to the industry. Value of Production Units(Index Numbers): 1991 70 2000 105 2005 145 1992 72.5 2001 110 2006 165 1993 75 2002 115 2007 200 1994 77.5 2003 120 2008 240 1995 80 2004 130 2009 290 1996 85 2010 350 1997 90 1998 95 1999 100 400

350

300

250

200

150

100

1997 2001 1991 1992 1993 1994 1995 1996 1998 1999 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 GI Impact on Quality Improvement: •Adoption of GAP & GMP has improved the quality. •The Trend is still continuing; •Introduction of Fine Plucking System; contributed Quality Improvement; •Organic Conversion & use of lesser quantity of chemicals. Social Impact of GI: •Prevention of Rural Exodus; •Extension of Socio-economic Benefits to Local Workers. Impact of GI on Environment: •Adoption of GAP & GMP ; •Organic Conversion & Bio-dynamic Transformation •Use of Lesser Quantity of Chemicals in C.T.Es; •Long roots of tea bushes protect the soil erosion. Limitation & Conclusion: •GI is effected in originating country only where 30% product is sold; •To achieve GI effect on 70% product , importing countries are being pursued by TBI; •GI needs more stringent implementation in other destinations too to have greater impact on industry and trade; •India wants all tea produced in the world to be GI products. Thank You