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Nepal National Sector Export Strategy NEPAL NATIONAL SECTOR EXPORT STRATEGY TEA 2017-2021 Government of Nepal This national sector export strategy was developed on the basis of the process, methodology and technical assistance of the International Trade Centre ( ITC ) within the framework of its Trade Development Strategy programme. ITC is the joint agency of the World Trade Organization and the United Nations. As part of its mandate of fostering sustainable development through increased trade opportunities, the ITC offers a suite of trade-related strategy solutions to maximize the development payoffs from trade. ITC-facilitated trade devel- opment strategies and roadmaps are oriented to the trade objectives of a country or region and can be tailored to high-level economic goals, specific development targets or particular sectors, allowing policymakers to choose the solution that meets their needs. The views expressed herein do not reflect the official opinion of ITC. Mention of firms, products and product brands does not imply the endorsement of ITC. This document has not been formally edited by ITC. The International Trade Centre ( ITC ) Street address: ITC 54-56, rue de Montbrillant 1202 Geneva, Switzerland Postal address: ITC Palais des Nations 1211 Geneva 10, Switzerland Telephone: +41 - 22 730 0111 Fax: +41 - 22 733 4439 E-mail: itcreg @ intracen.org Internet: http : / / www.intracen.org Layout: Jesús Alés – www.sputnix.es NEPAL NATIONAL SECTOR EXPORT STRATEGY TEA 2017-2021 Government of Nepal Photo: ITC, Tea plantation, Fikkal, Ilam Nepal INTERNATIONAL TRADE CENTRE III ACKNOWLEDGEMENTS The Tea Sector Export Strategy of Nepal was developed The document benefited particularly from the inputs and under the aegis of the Ministry of Commerce, with the guidance provided by the members of the tea product financial support and technical assistance of the ITC Trust core team that steered the formulation of the sector Fund. Strategy, namely: Name Function Organization Mr. Manoj Acharya Under Secretary Ministry of Commerce ITC Focal Point Mr. Bimal Nepal Deputy Director General Trade and Export Promotion Centre Strategy Navigator Mr. Arjun Baral Under Secretary Ministry of Agricultural Development Mr.Tek Prasad Luitel Senior Agri-Economist Ministry of Agricultural Development Strategy Navigator Mr. Indra P. Adhikari Chief, Ilam/Jhapa Nepal Tea Development Corporation Mr. Deepak Prakash Baskota Chair Himalayan Orthodox Tea Producers Association Mr. Suresh Mittal President Nepal Tea Planters Association Mr. Chandra Bhushan Subba Tea Producer, Himalayan Tea Himalayan Tea Producers Cooperative Ltd Producers Cooperative Ltd member international tea consultant Ms. Shanta Banskota Koirala Executive member of Woman Kanchanjangha Tea Estate Research Centre Tea Entrepreneurs Association of Nepal Producer (Himalayan Orthodox Tea Producers Association member) Mr. Rabin Rai (auxiliary Secretary-General (Chair) Central Tea Cooperative Federation Mr. Govinda Prasad Dahal) Mr. Kamal Raj Mainali Himalayan Shangri-La Director Sales Himalayan Tea Producers Cooperative Ltd and Marketing Mr Rajendra Singh Deputy Director Trade and Export Promotion Centre Senior officials, Dr. Pradyumna R.Pandey (MoAD) and Ms. Mina Aryal (MoC), were actively involved during the inception phase of the project. Mr.Toya Narayan Gyawali, Joint Secretary of the Ministry of Commerce was fully involved in coordinating all the activities in preparation of this Strategy. Technical support and guidance from the ITC was rendered through: Name Function Organization Marion Jansen Chief Economist ITC Anton Said Head Trade Strategy Programme ITC Olivier Marty Adviser, Trade Strategy and Competitiveness – Project Leader ITC Murari P. Gautam Upadhyay International consultant ITC Joost Pierrot International consultant, Coffee and Tea ITC Assisted by Tiantian Xiang and Clariesse Jami Mari Chan IV INTERNATIONAL TRADE CENTRE ACRONYMS ADS Agriculture Development Strategy ITC International Trade Centre AEC Agro Enterprise Centre MoAD Ministry of Agricultural Development AVE Ad valorem equivalent MoC Ministry of Commerce CAGR Compound Annual Growth Rate MRL Maximum Residue Level CFL Central Food Laboratory (India) NARC Nepal Agricultural Research Council CTC Crush, tear and curl NBSM Nepal Bureau of Standards and Metrology CTCF Central Tea Cooperative Federation Ltd NCARP National Commercial Agriculture Research DADO District Agriculture Development Office Programme DFTQC Department of Food Technology and Quality NECTRADE Nepal Enhanced Capacities for Trade Control and Development DoA Department of Agriculture NGO Non-governmental organization EIF Enhanced Integrated Framework NOC No Objection Certificate ETP Ethical Tea Partnership NTCDB National Tea and Coffee Development Board EU European Union NTDC Nepal Tea Development Corporation Ltd FAO Food and Agriculture Organization of the NTIS Nepal Trade Integration Strategy United Nations NTM Non-tariff measure FDA Food and Drug Administration (United States) NTPA Nepal Tea Planters Association FNCCI Federation of Nepali Chambers of Commerce PoA Plan of Action and Industry PPD Plant Protection Directorate HACCP Hazard Analysis and Critical Control Points QM Quality Management HIMCOOP Himalayan Tea Producers Cooperative Ltd R&D Research and development HOTPA Himalayan Orthodox Tea Producers’ RA Rainforest Alliance Association SAOS Soil Association Organic Standard HS Harmonized System SPS Sanitary and phytosanitary IPM Integrated Pest Management STAN Specialty Tea Association of Nepal ISO International Organization for Standardization TEPC Trade and Export Promotion Centre INTERNATIONAL TRADE CENTRE V CONTENTS ACKNOWLEDGEMENTS . III ACRONYMS . IV FOREWORD BY MR . MEEN BAHADUR BISHWAKARMA, HON . COMMERCE MINISTER . XI FOREWORD BY MR . NAR BAHADUR CHAND, HON . STATE MINISTER FOR COMMERCE . XII FOREWORD BY MR . CHANDRA KUMAR GHIMIRE, COMMERCE SECRETARY . XIII FOREWORD BY MS . ARANCHA GONZÁLEZ, EXECUTIVE DIRECTOR, INTERNATIONAL TRADE CENTRE . XV EXECUTIVE SUMMARY 1 THE PRODUCT MAP 3 GLOBAL TRENDS IN TEA 5 THE TEA SECTOR IN NEPAL : VALUE CHAIN ANALYSIS 15 HISTORICAL SECTOR PERSPECTIVE . 15 TEA PRODUCTION . 16 EXPORT PERFORMANCE . 19 MARKET ACCESS CONDITIONS . 21 POLICIES GOVERNING THE TEA SECTOR . 25 DEVELOPMENT ACTIVITIES SUPPORTING THE TEA SECTOR . 29 VALUE CHAIN MAPPING : CURRENT SITUATION . 31 THE TRADE SUPPORT NETWORK . 41 KEY COMPETITIVE CONSTRAINTS AFFECTING THE TEA VALUE CHAIN . 47 THE WAY FORWARD 63 KEY SUCCESS FACTORS FOR THE NEPALI TEA SECTOR IN THE GLOBAL MARKET . 63 THE VISION . 64 THE STRATEGIC OBJECTIVES . 64 LEVERAGING MARKET AND PRODUCT DEVELOPMENT OPPORTUNITIES IN THE DOMESTIC AND EXPORT MARKETS . 67 STRUCTURAL IMPROVEMENTS TO THE VALUE CHAIN . 75 FUTURE VALUE CHAIN . 83 VI INTERNATIONAL TRADE CENTRE REINFORCE INSTITUTIONAL SUPPORT AND TRAINING SERVICES . 85 LEVERAGING INVESTMENT TO DEVELOP COMPETITIVENESS . 86 WAYS TOWARDS GREATER SUSTAINABILITY AND SOCIOECONOMIC DEVELOPMENT . 87 STRUCTURE OF THE PLAN OF ACTION 93 THE PLAN OF ACTION 95 IMPLEMENTATION MANAGEMENT FRAMEWORK 101 APPENDIX 1 : LIST OF PARTICIPANTS IN THE PUBLIC–PRIVATE CONSULTATIONS 104 REFERENCES 105 ANNEXES 109 ANNEX 1 : PRODUCTION DATA ON SMALL FARMERS AND DISTRICTS . 109 ANNEX 2 : PRODUCTION AND PLANTING AREA OF CTC AND ORTHODOX TEAS . 110 ANNEX 3 : PRICES OF ORTHODOX TEA LEAVES . 110 INTERNATIONAL TRADE CENTRE VII LIST OF FIGURES Figure 1 : Global tea imports, 2001–2015 . 6 Figure 2 : Share of tea imports by category . 6 Figure 3 : Black tea imports by region in 2006, 2011 and 2015 ( US $ millions ) . 7 Figure 4 : Green tea imports by region in 2006, 2011 and 2015 ( US $ millions ) . 10 Figure 5 : Production by Nepali commercial and non-commercial producers, 2004 / 05–2014 / 15 . 16 Figure 6 : Tea plantation yields in Nepal 2004 / 05–2014 / 15 . 16 Figure 7 : Map of the major tea plantation areas in Nepal . 17 Figure 8 : Nepal’s tea trade balance, 1999 / 00–2014 / 15 ( value in NPR millions ) . 19 Figure 9 : Map of importing countries for Nepali tea . 20 Figure 10 : Level of Customs duties faced by Nepali exports of tea ( HS 0902 ) . 22 Figure 11 : Value chain map of the tea sector in Nepal . 39 Figure 12 : The Nepali tea sector trade support network . 40 Figure 13 : Collective trademark logos . 43 Figure 14 : Perception of trade and investment support institutions – influence versus capacities . 46 Figure 15 : Tea exports – share of affected companies, NTMs and procedural obstacles faced . 56 Figure 16 : Development of the production volume ( not actually sold ) of the major certifications . 71 Figure 17 : Future value chain map . 84 Figure 18 : Comparison of United States Department of Agriculture National Organic Programme and EU Organic Farming certification areas and degrees of obligation . 88 Figure 19 : Comparison of ETP, SAOS, Sustainable Agriculture Network and UTZ certification areas and degrees of obligation . 89 Figure 20 : Proposed structure for Strategy implementation . 101 VIII INTERNATIONAL TRADE CENTRE TABLES Table 1: Top 10 tea-producing countries in 2015 . 5 Table 2 : Top five exporters and importers of black tea by value ( Harmonized System ( HS ) 090230 and HS 090240 ) . 8 Table 3 : Top five exporters and importers of green tea by value ( HS 090210 and HS 090220 ) . 10 Table 4 : Summary of tea production structure in Nepal in 2014 / 15 . 18 Table 5 : Orthodox tea grading and packing . 18 Table 6 : General price structure analysis for orthodox tea . 19 Table 7 : Major export destinations of tea from Nepal . 20 Table 8 : Investment climate in Nepal and neighbouring countries .
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