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Provincial profiles of tea in China: Zhejiang province.

Zhejiang province in East China has the largest area of tea fields in China, totalling almost 163,000 ha, or about one-sixth of the total national area of over one million ha. It is also the largest producer of tea in the country, with output in 1990 of 117,000 tons, over 20% of the national output of 530,000 tons. Zhejiang is the bastion of Green tea production in China and the World. Some 65% of China's Green tea exports and 45% of Green tea domestic supplies come from the province.

Zhejiang is also the largest exporter of Green tea in the world, contributing 45% of the world's trade in this commodity, eliciting from African buyers the term |Green tea superman' (lucha juren). In 1989, Zhejiang exported 38,000 tons of tea out of the national export total of 203,000 tons, earning $US93.35 million.

The scale of the tea industry in Zhejiang is large indeed. In 1990 there were 18 large-scale state refineries and over 100 medium and small-scale refineries (including joint crude-refining processing facilities) in the province. Total floor-space of the provincial processing factories was over 700,000 sq. m. and these used over 7,000 sets of refining machinery and production line equipment.

The two major national tea research institutes, the Tea Research Institute under the Academy of Agricultural Sciences and the Tea Processing Research Institute of the Ministry of Commerce are both located in Hangzhou. The Tea Science Department of Zhejiang Agricultural University, also in the capital, trains the largest number of students in the discipline in China, and most of China's tea processing machinery is produced in the province.

Over half of Zhejiang's tea output is exported, 30% supplied to the domestic market, and the remainder consumed in the province. There are four principal tea-growing districts in Zhejiang: the countries of East Zhejiang producing gunpowder tea for sale in Africa; Green tea producing countries in West Zhejiang, again exporting to North Africa; Wenzhou in South Zhejiang selling Black tea to the former USSR; and the rich tea-growing districts around Hangzhou, producing tea for the domestic market and specialist teas such as Longjing and Qiqiang for overseas Chinese communities in places such as Hong Kong.

Tea is also grown in central Zhejiang, with a large Jasmine tea factory in the city of Jinhua. According to geographers, South Zhejiang is the most suitable area for growing tea in the province because of its favorable natural conditions, rich variety of bush types and the quality of the tea.

Historical Background

Zhejiang's tea industry has passed through several phases in its long history. Before the Opium War between China and Britain erupted in 1842, most of the province's tea was produced for the domestic market. From 1842 to 1874, exports sales took off, reaching a peak in the years 1875 to 1897.

From the end of the 19th century until 1932, during which time Japan and the British tea plantations in India and Ceylon forced Chinese tea out of the dominant position it had occupied in the international tea trade, and China was unable, for domestic political and economic reasons as well as due to its weakened international position, to respond to the challenge, the industry experienced a period of decline, followed by almost complete bankruptcy in 1949.

In the mid 30's, before the war against Japan, the area of tea in Zhejiang was 34,800 ha, producing 20,000 tons worth an amount equal to 20 million yuan in today's currency. Exports from the province comprised one-third of all local special products exported from Zhejiang and one-fifth of the value of China's tea exports; 86% of output was Green tea and 14% Black; 21 of the 62 producing counties produced Black tea, and all produced Green. By 1949, after more than a decade of foreign invasion and civil war, Zhejiang's tea output had declined to 6,600 tons, and exports in 1946-47 stood at only one tenth of the pre-1937 total.

But not all that occurred during the last years of the nationalist regime was negative. Improvements in Zhejiang's tea industry were introduced, starting in the famous Pingshui district in Shaoxing, East Zhejiang. This was the traditional center of the industry in the province and the producer of one half of total output. In 1934, the Shaoxing government sent instructors down to the grassroots to supervise the improvement in tea quality and get rid of adulterated and fake tea.

In 1935, the local government set up an institute for improving tea strains. In 1937 the Zhejiang tea research station was established, headed by Wu Juenong, one of China's foremost tea experts. The station began research on the cultivation and processing of tea, and purchased processing machinery from Japan to train personnel. In 1939 another extension station was established in Pingyang county in South Zhejiang. Stations were also established in the east, south and west of the province for the inspection of exports.

Recent History

In the immediate aftermath of the establishment of the PRC in 1949, Zhejiang, in line with the rest of the country, began a program of rehabilitating the industry which had sunk from its former state of glory into a most pitiful state. Zhejiang's tea policy, in line with the national policy of placing the export of tea higher in priority than servicing the domestic market, was to establish tea bases for the export of Black tea. To this end, farmers were encouraged to switch over from Green tea, and given financial incentives to make this change. From 1959 on, there was large-scale development of new tea fields in Zhejiang.

In the mid 60's, during the Cultural Revolution, Zhejiang embarked on an enormous tea planting exercise which saw area increase dramatically over the decade to 1976. In this military-style campaign, tea fields increased from 34,640 ha in 1965 to 144,733 ha a decade later. The area hit a peak of 183,000 ha in 1983 and has declined ever since. Over the decade, the 1979-89 area increased at an average rate of a mere 0.15%, virtually the same as the national average.

Increases in output followed the expansion of tea fields, with production more than doubling over the same period from 15,500 tons to 40,800 tons. The output hit a peak of 107,600 tons in 1982, but did not surpass this figure until 1987. During the decade of the 80's output increased in six of the years and fell in the other four. 1988's output of over 128,000 tons stands as the record for the province. Average annual increases in output from 1979 to 1989 were 5.9%, below the national average of 6.4%.

As a consequence of these ups and downs in output, yields in the 80's fluctuated and seem to have stagnated. Plucked yields hit a peak of 780 kg/ha in 1982, and then declined to 618 kg/ha in 1985. By 1988, yields had risen to 849 kg/ha, only to fall to 774 kg/ha in the following year. Over the decade 1979-89, the average annual increase in yields in Zhejiang at 5.7% was below the national average of 6.2%.

The fall in plucked yields has been the result of several factors associated with agricultural reform in China. First, the break-up of collective tea farms in the province has resulted in the establishment of micro-size tea fields contracted for periods too short to encourage the type of investment needed to replace old bushes, renovate low-yielding fields and use a more scientific approach to farming. The purchase price offered by the state, which remains the largest buyer of tea and sets prices and quality standards, has become crucial to decisions by tea farmers, many of whom are spare-time operators. Seasonal and quality pride differential often determine whether farmers pluck their fields and process the tea, or allow the bushes to grow wild and weeds to take over.

In 1985, China introduced reforms to the state marketing of agricultural products, including tea, by allowing collective, individuals and other government departments to compete with the Ministry of Commerce in buying and selling tea. The ministry's control over the retail market had already fallen from almost 100% in 1978 to less than 70%, but its proportion of tea procurements had remained at almost 90%.

China's tea industry is peculiar in that there are specific varieties of tea produced for discrete specialist markets which can be broadly divided as follows: roasted Green for North Africa, Black for the Middle East and Western markets, Oolong and steamed Green for Japan, compressed brick for minority nationalities in outlying provinces of China, and Jasmine tea for the domestic market. Before the introduction of reforms, production costs and real prices varied greatly across this spectrum, but were disguised by the operation of the command economy. Planned output targets and allocations, both for the export and domestic markets, enabled the authorities to obtain the teas they wanted for each sector of the market.

It was against this background that the government's liberalization policies were introduced. Facing sensitive to possible adverse reaction from the major minority nationalities such as the Tibetans and Uighurs of Xinjiang, whose per capita consumption of tea is much higher than the majority Han people, the government decreed that border tea be exempt from the reform program. Provincial authorities continued to receive targets for export volumes from Beijing, and thus they had to ensure that they could acquire enough tea to fulfil them.

The reform had its greatest impact on the 40% or so of tea left for the domestic Han market. In a situation where the price of this tea was virtually determined by supply and demand, while the price of export and border teasas set by the state, it is little wonder that a battle royal broke out to get hold of the increasingly valuable Green tea which could be processed into Jasmine tea. Supply could not keep up with this demand, resulting in a chaotic market and switches away from Black, compressed and export Green teas into the production of tea for the domestic market.

During the tea war, which raged in China during the mid 80's, the procurement price of tea shot up each year as buyers scrambled to obtain the prized commodity. From 1985 to 1987, average procurement prices rose by 55%. This was in spite of the intervention of the State in 1986, when it introduced guidance prices with a fixed percentage allowed for price floating. Nevertheless, the monopoly of the Ministry of Commerce was broken, as its proportion of tea procurements fell from 88% in 1984 to 72% in 1985, and by 1990 had continued its steady decline to 60%.

By 1988, it was claimed that in Zhejiang the relative procurement price of tea compared to that of grain was the highest since 1949. The net output value of tea per labor day was higher than that of cotton, jute, bluish dogbane, silkworms, wheat, or indica rice. Net output value per unit of area was higher than that for cotton, jute, bluish dogbane, wheat, bamboo and long-grain rice.

The authorities in Zhejiang implemented various measures to prevent control of tea supplies slipping out of their grasp and into the hands of non-State merchants or competitors from other provinces. These included the signing of contracts with tea farmers with the provision of supplies of fertilizers and other inputs in exchange for guaranteed sales of tea. When the supply of exports was threatened the provincial government issued a decree forbidding all buyers except the state commercial system from entering the market until supply targets were met.

In 1988, the province established a tea group under the control of the Tea Import and Export Company to discipline the behavior of producers, processors and marketers, and to constrain their activities with a code of conduct enforced by punitive measures. However, the ferocity of inter and intra-provincial competition was sustained until the Chinese economy was jerked into a recession in late 1988 and demand fell in the following year.

Exports

The traditional strength of Zhejiang's tea industry has centered on the production of tea for the export market (Green teas such as gunpowder and mei), specialist fine teas (Longjing) and Green tea base for the processing of scented teas, principally Jasmine, for the domestic market. In 1974, the planned construction of tea production bases commenced. In the late 70's, in response to changes in the international market, the provincial bureau of finance and other departments approved a report concerning the change in production from Black to Green tea in some of Zhejiang's counties. By 1981, over 90% of the provincial output was Green tea and less than 8% Black. Green teas provide the backbone of Zhejiang's tea export industry.

Traditionally, all of the province's tea exports were shipped via Shanghai (in the case of Green tea) or Guangzhou (in the case of specialist teas). With the establishment of the Zhejiang Tea Import and Export Company in December 1980, the province was given sole charge of the exports of Gunpowder, Longjing and steamed Green teas (to Japan). In the following years, the provincial export company also took over the export of mei Green, Black, scented and other Green teas.

Since the partial deregulation of the market in 1984, the provincial government has pursued a strong interventionist policy to ensure that export procurement targets are met. The supply & marketing cooperative, under the Ministry of Commerce, supplies funds and input materials such as chemical fertilizers at fixed prices to enable the State to purchase sufficient tea to meet, its obligations, both for the domestic and international markets. This strategy has been successful to the extent that the share of social procurements bought by the State commercial sector since 1984 has been consistently higher than the national average.

In recent years, Zhejiang's tea markets have been affected by the intrusion of other Chinese ports trying to sell Green teas into North Africa. Decentralization of export powers to the localities in the mid 80's set off fierce competition between provincial tea companies for foreign currency. Rivals to Zhejiang in North Africa, where Gunpowder and mei (a roasted Green tea) are the major tea varieties, have sought to muscle in on Zhejiang's dominance of the market.

Other export companies use the same code numbers by which tea buyers and sellers have habitually transacted business. These numbers have a long history in the tea industry and were formerly the codes used in telegraphic communications within the tea trade. The numbers are not part of a national or international system, nor do they have an overall system or logic about them, as with postal codes. Rather, they have evolved as trade codes with only limited sequencing. Once a number is quoted, the buyer knows what to expect in the product. However, Green tea from other localities is not necessarily the same as that processed in Zhejiang, resulting in complaints from foreign customers.

Longjing Tea

Zhejiang's capital, Hangzhou, is the home of the best Chinese Green tea--Longjing (Dragon Well) --plucked from the tea fields in the hills to the west of the famous West Lake. One of life's pleasures is to visit Hangzhou in spring and go to the peaceful Tiger Spring in these hills and drink a cup of new season's Longjing with the sparkling fresh water from the spring.

The tea is highly prized because of its scarcity, and is used for state gifts and sent to diplomatic missions abroad. In 1982, the 13 production brigades of Hangzhou's West Lake commune procured a total of 6,000 kg of special grade Longjing tea. This tea is plucked in early April, before the traditional Chinese ceremony of sweeping the graves of one's ancestors (Oingming).

Longjing tea is characterized by four features: color, aroma, shape, and taste. Good quality Longing is a clear light Green in color, has a slightly pungent aroma, is flat and spear-shaped in shape and tastes most pleasing and refreshing, especially, according to Chinese connoisseurs, at the second cup.

The retail price of the tea is high, as in the price paid to the farmers in the hills of Hangzhou. Unfortunately, other districts in Zhejiang as well as in other provinces have tried to cash in on the name, so that we now have Zhejiang Longjing and, for example, Sichuan Longjing. There is, however, only one Longjing tea--West Lake Longjing from Hangzhou.

In 1986, the State Planning Commission chose the West Lake district Longjing tea area as a base for encouraging the production of fine quality agricultural commodities, and the central authorities allocated 100,000 yuan as a loan to support the initiative. By the end of 1988, a thorough survey of the district, soil testing and variety sampling had been carried out, and the area declared as growing authentic Longjing tea was expanded.

Almost half of the total area of fields which were low-yielding was transformed, and the floor space for refining and packaging Longjing was renovated and expanded. Four refining machines were installed, thus enlarging refining capacity to 175 tons. Training classes were held, and West Lake district famous tea company was established as a service company for all aspects of production, marketing and promotion. In 1988, the Hangzhou Tea Factory for the first time laid down quality standards for Longing tea.

Unfortunately, the quality of Longjing tea, as with most Chinese teas, has declined seriously over the past decade or so. Poor quality Green teas tend to be bland and tasteless or, even worse, can be smoky from the wood used as energy in the initial fixation stage of processing, a step taken in order to stop leaf fermentation. The ongoing problem of quality deterioration demands swift action from the authorities.

Foreign Involvement

In 1986, Zhejiang imported sets of equipment from Japan for the manufacture of steamed Green tea in the province. The tea was exported to pay for the plant. The Yuhang State tea experimental farm outside Hangzhou was chosen as the site for this experiment (for further details of this tea farm, see T&-CTJ, February 1990, p. 32-38). Also in 1986 the Zhejiang Sanming Tea Company Ltd was established in Hangzhou with joint equity from a Japanese company, the first joint venture enterprise in the industry in China.

Another Sino-Japanese joint venture was established in Hangzhou in 1990 to produce tea plantation machinery. The aim is to produce sufficient machinery to pluck 330,000 ha by the year 2000, which will cut the cost of plucking by 50%. $US one million has been invested to produce bush trimmers and pluckers, with output targets of 10,000 units by 1995 and 50,000 by 2000. Since 1974, 1,500 items of machinery have been imported by Zhejiang, and it is hoped that the new venture will end this state of affairs.

Conclusion

During the 70's, tea output in Zhejiang grew rapidly as tea fields were renovated and then rapidly expanded after the natural and man-made disasters of the late 50's and early 60's. Production levels stalled by the early 80's, as the benefits of the extensive plantings worked their way through the system. It is clear that field management practices were unable to take full advantage of area increases to raise yields through more intensive farming. By the beginning of the 90's, virtually all of Zhejiang's tea fields should have matured, but in 1989 there was still a gap of 15,000 ha between total and plucked area.

Perhaps because it was first to undertake a program of massive plantings, Zhejiang's tea industry manifested at an earlier date features which are now common to the industry nation-wide: low and stable yields on mature fields with the prospects for future increases in output dependent on wide ranging reforms across the whole industry My colleague, Dr. Dan Etherington, and I have come to this conclusion after four years research on the industry, and our findings will shortly be presented in a book to be published by Oxford University Press.

For political and other reasons Chinese analysts have virtually ignored our findings and, for the most part, have preferred not to debate the issue with us, even when we presented papers at international symposia in Japan and China in 1991. They, in turn, continue to publish projected output figures which, based on past rates of growth, show a steady incremental increase in output extending to the end of the century. We have grave reservations about the validity of their assumptions and the accuracy of their findings. Complacency is the last thing the Chinese can afford when examining the future of the tea industry.

Zhejiang's tea industry, like that of the country as a whole, is possibly at the crossroads. Labor in this relatively developed province is becoming more scarce and expensive, and often has to be brought in from outside. Young people in rural areas prefer to work in the village and township enterprises which have blossomed across the province. Small-scale tea fields cannot be mechanized, nor can the benefits of advances in horticultural practices and processing techniques be demonstrated.

The future may lie in the establishment of voluntary co-operative enterprises combining production, processing and marketing expertise. Fields should be contracted to tea specialists who are prepared to invest in the industry. Government needs to improve extension services so that the benefits of science are brought to the farmer and manufacturer. Only then, will Zhejiang's tea industry be prepared for the next great leap forward.
COPYRIGHT 1992 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Author:Forster, Keith
Publication:Tea & Coffee Trade Journal
Article Type:Industry Overview
Date:Jun 1, 1992
Words:3589
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