19th Session of the Inter Governmental

Group on Tea

12-14th May,2010,New Delhi

Darjeeling Tea : Tangible Impacts of

Geographical Indications on Trade

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 Darjeelingis very frequently done to deceive the consumers throughcontamination and falsification, by blending Darjeeling with non-Darjeeling, to dilute the quality of Darjeeling tea and finally to deprivethe real Darjeeling producers.

(protection of the word Darjeeling and the logo ofDarjeeling tea became imperative in the global market.But as per Article 24, clause 9 of the Trips Agreement (towhich India is a signatory) on Geographical Indications ofthe WTO,(of which India is a founding member), theproduct must be protected in the country of origin,otherwise there shall be no obligation under thisagreement to protect any geographical indication. Hence,Darjeeling tea has been registered as a GI under theappropriate act.

Protection of Darjeeling Tea Quality

Signs:

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;

•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

Economic Impacts in Quantitative Terms:

0

100

200

300

400

500

600

700

800

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

GARDENS

YIELD RATE

NO. OF GARDENS & AVERAGE YIELD RATE OF DARJEELING TEA

No

.of

gar

den

s &

ave

rage

yie

ld r

ate

Growth trend –ve till 1996, + ve onwards

Till 1999,Stable afterwards

Growth trend –ve till 2001, +ve onwards

Growth trend (area) –ve till 2000, +ve onwards; Growth trend (production) –ve till 2002, +veonwards

0

5000

10000

15000

20000

25000

19

91

19

94

19

97

20

00

20

03

20

06

AREA

PRODUCTION

AREA & QTY OF PRODUCTION OF DARJEELING TEA

Are

ain

ha.

& p

rod

uct

ion

in '0

00

kg

0

5000

10000

15000

20000

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

TREND OF GROWTH OF AREA & PRODUCTION OF ORTHODOX

DARJEELING TEA

AREAPRODUCTION

0

50

100

150

200

250

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

Pri

ce o

f Le

af T

ea

( R

s./K

g.)

Darjeeling

Dooars

Assam

Terai

Nilgiri

Auction price of Orthodox Leaf Tea of Different Origins:

Growth trend Price (Darjeeling always higher than others) +ve all along , except 2001-03; (Other teas) mixed trend over the years.

-ve trend till 1998,+ve from 1999, increasing still

0

10000

20000

30000

40000

50000

60000

700001993

1994

1995

1996

1997

1998

1999

200020012002

2003

2004

2005

2006

2007

2008

2009

workers

trend

Employment in Darjeeling Tea Gardens

in Different Years along with trend

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

0

50

100

150

200

250

300

Inve

stm

ent

in IN

R m

illio

ns

Sick, unproductive, or closed unit:

Transfer of ownership of Tea Gardens:

many up to 1998few during 1999-2004,

nil 2004 onwards

Before GI After GI

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):

0

50

100

150

200

250

300

350

400

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

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

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