Advantages, constraints and key success factors in establishing origin- and tradition-linked quality signs: the case of Darjeeling Tea, India Case study on quality products linked to geographical origin in Asia carried out for FAO by Dr Tarit Kumar Datta Indian Institute of Management Calcutta The views expressed in this information product are those of the author and do not necessarily reflect the views of the Food and Agriculture Organization of the United Nations (FAO) 1 Contents Acronyms……………………………………………………………………………3 List of tables and figures…………………………………………………………...3 Abstract……………………………………………………………………………...4 Introduction …………………………………………………………………………5 1. Institutional context………………………………………………………………5 2. Geographical zone and specific resources………………………………………6 General context Delimitation of the zone Specific resources Constraints and other issues in the zone 3. Product and specific quality……………………………………………………..14 Product specific quality Product specifications: requirements for GI registration Links with other quality schemes and labels 4. Stakeholders and the qualification process……………………………………..22 Actors in the supply chain and collective organization Objectives of the actors regarding GI registration History of the registration process Support of stakeholders external to the supply chain 5. Effective protection of the GI……………………………………………………30 GI registration to prevent misappropriation of the name Certification and control devices 6. Markets……………………………………………………………………………32 Overview of Darjeeling tea production Types of market, current and aspired to Distribution and trade 7. Impact of registration under the GI Act……………………………………..…39 Stakeholders’ perception Economic impact Impact on rural development, economic and social aspects Culture and tradition Environmental impact Costs SWOT analysis 8. Conclusions……………………………………………………………………….48 Lessons learned Recommendations Bibliographical references …………………………………………………………54 Annex: Geographical Indication Act ………………………………………………57 2 Acronyms C Celsius/Centigrade DTA Darjeeling Tea Association FAO Food and Agriculture Organization of the United Nations GATT General Agreement on Tariffs and Trade GI geographical indication GI Act India’s 1999 Geographical Indications of Goods (Registration and Protection) Act ha hectare HACCP hazard analysis and critical control points ISO International Organization for Standardization kg kilogram NGO non-governmental organization Rs Indian rupees TRIPs Trade-Related Aspects of Intellectual Property Rights UNESCO United Nations Educational, Scientific and Cultural Organization US$ United States dollar WTO World Trade Organization List of tables and figures Table 1: Physical characteristics of Darjeeling tea estates Table 2: Estimated average number of permanent workers on Darjeeling tea estates from 1991 to 2008 Table 3: Tea estates, area, production and average yield of Darjeeling tea, 1991– 2008 Table 4: Quantity of Darjeeling tea produced and exported from 2004 to 2008 Table 5: Share of direct sale and auction sale of Darjeeling tea since 1991 (before and after GI registration) Table 6: Impact of GI registration on five variables Figure 1: Evolution of the area, quantity of production, number of estates and average yield rate of Darjeeling tea (between 1991 and 2008). 3 Abstract: India enacted its Geographical Indication of Goods (Registration and Protection) Act in 1999 in compliance with Article 24 of the TRIPs Agreement in order to protect indications connected with geographical origin. More than 100 products are currently registered under the act, including Darjeeling tea, which was the country’s first GI product. The quality, reputation and characteristics of Darjeeling tea are essentially attributable to its geographical origin. As a result of a favourable geo-agro-climatic situation, specific soil characteristics, plantation conditions, traditional human practices and a skilled local workforce, it possesses a specific flavour and a very high quality, distinguishing it from tea grown elsewhere in the world. Darjeeling tea is grown in the region of the Darjeeling hills in 87 gardens at various elevations up to 2 000 metres. The GI production area has been clearly defined by the Tea Board of India. Darjeeling tea benefits from a world-wide reputation and has no problem over market access. The entire production is sold every year, mainly for export. The main objective of all the actors in the supply chain, including the Tea Board of India and the Government of India, is to protect the name “Darjeeling”, which has been misused in various ways in various countries. The name, reputation and logo of this tea are now protected by various legal tools (certification mark, collective mark, geographical indication etc.), depending on the institutional context of each country. Despite these efforts, misappropriation of the name is still harming its market potential. Collective action, with greater involvement of all supply chain stakeholders, is advisable in order to increase the positive economic and social impact of GI registration at the local level. 4 Introduction Darjeeling is a small district in the extreme north of India’s West Bengal State in the Himalayan foothills. Darjeeling tea is famous and popular throughout the world for its high quality, with a reputation based on its aroma, brightness and taste – all attributable to its geographical origin and impossible to replicate. In 2004, Darjeeling tea became the first product in India to be registered under the Geographical Indications of Goods (Registration and Protection) Act of 1999 (hereafter referred to as the GI Act). In the present report, the findings of a research study on Darjeeling tea are presented in sections detailing the following aspects: the institutional context, the geographical zone and its specific resources, the product and its market, the stakeholders and their collective organization, and, in conclusion, an analysis of the impact on rural development of establishing a quality sign. The report has been prepared using currently available information and literature on Darjeeling tea and also incorporates the views of stakeholders involved in the supply chain regarding GI registration, as emerged from personal interviews and focus group meetings. These stakeholders include producers, processors, traders, auctioneers, exporters, public and collective bodies, and domestic consumers. Information from the organizational level in the supply chain was also gathered by organizing five focus group meetings in Kolkata and Darjeeling. 1. Institutional context India is one of the founder members of the World Trade Organization (WTO) and one of the signatories of the General Agreement on Tariffs and Trade (GATT) negotiations (Uruguay round), of which the Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement is a part. Section 3 of the TRIPs Agreement contains three articles concerning geographical indications (GIs): Article 22 provides for the protection of GIs and Article 23 for additional protection for GIs for wines and spirits, while Article 24 is concerned with international negotiations and exceptions – all articles of immense importance to India in this context. India joined with various other countries in calling for the same protection for other products as that envisaged for wines and spirits in the TRIPs Agreement. India enacted its GI Act in 1999 and formulated its Geographical Indications of Goods (Registration and Protection) Rules in 2002 for the protection of goods in the domestic market. The act came into force in September 2003. The main objective of the Indian Government is to develop the production of GI products, leading to increased trade through the creation of new markets for these products. The second objective is to provide a legal framework to protect both products and consumers from fake, false or reproduction products, thereby ensuring fair competition and promoting rural development. 5 In India, the Ministry of Commerce and Industry, the Ministry of Agriculture and Patent and Regional Centres are in charge of GIs. The legal framework applies mainly to agricultural products, processed products, and wines and spirits. Protection is primarily provided by provisions in the 1999 Trademarks Act and the 1999 GI Act. The tools of identification and protection are a collective or certified trademark with geographical indication, appellation or designation of origin, a protected geographical indication, a general quality sign linked to particular area(s), and a sign relating to a general quality linked to a specific country or region of production. The GI Act stipulates that an application for GI registration should contain (see in Annex 1): a statement as to how the GI serves to designate the goods as originating from the area in question; the class of goods to which the GI shall apply; a map of the area in which the goods originate or are manufactured; particulars regarding the appearance of the GI logo, whether it is comprised of words or figurative elements or both; a statement of such particulars by the producers of the concerned goods. More than 100 products have so far been registered in India under the GI Act, but Darjeeling tea was the first. The Tea Board of India is the owner of the Darjeeling tea registered quality sign, while the producers, processors, traders, blenders, packers, brokers, exporters etc. in the supply chain are its users. The Tea Board has prepared and now enforces specific rules and regulations concerning