History of Nepali Tea: facts, figures and underlying issues

Back in early 2023, I had written this blog so that I could have some content in google to relay the facts about Nepali Tea industry. The blog was mainly FAQ’s. The idea behind was to break through some wrong narratives that the Tea Sellers are spreading about Nepali Tea. I sincerely think that I did a crappy job then. 

As a second generation entrepreneur born and raised in eastern tea gardens of Nepal, I need to do a better job and educate you, the reader in depth. I owe that to my folks and farmers. Thus, the revised version of this blog. 

I will try to share meaningful information about the Nepali tea industry.In this blog I have added official facts and figures as well. 

Introduction to Nepali Tea

If you look into the statistics of global tea trade, Nepali tea industry is relatively young, little known and supplies a small volume of tea around the globe. But the strength of this industry lies with its artisan small farm/producers who can supply some unique orthodox loose leaf teas that can awe the tea connoisseurs . 

Overview of the Nepali Tea Industry

The Nepali tea industry, while smaller than its neighbors India and China, has carved out a unique position in the global tea market. Established in the 1860s, it has grown from a single estate to encompass over 25000 small farmers and numerous small plantations. The industry is characterized by its diversity, producing both CTC (Cut, Tear, Curl) and orthodox teas, with a growing emphasis on organic and specialty varieties.

Key facts about the Nepali tea industry:

Began with the establishment of Ilam Tea Estate in the 1860s

First private tea plantation started in the late 1950s

Small farmers entered the industry in the late 1970s

As of 2021, there were 13589 small farm owners, with 86% owning less than 1 hectare

The industry employs over 3.1 million people, mostly as temporary workers

Significance in the Global Tea Market

Nepal falls in the top 20 tea producers in the world. While Nepal may not be the largest tea producer, its teas are gaining recognition for their unique qualities:

Himalayan Terroir: The high-altitude growing conditions in the Nepali Himalayas impart distinctive flavors to the teas. Higher the altitude means difficult growing conditions, which results in the higher amount of polyphenols in the teas.

Organic Production: A government ban on active pesticides since 2005 has pushed the industry towards organic practices. Majority of the small farm holder’s gardens are not organic certified, but they follow organic production practices. Almost every household raises cattles, which has made it easier to use organic manure as the fertilizer for the tea plants. 

Artisanal Approach: The predominance of small farmers results in more handcrafted, small-batch teas. There are many small batch tea manufacturing factories whose production capacity ranges from 3000-20,000 kg per year. 

Competitive Alternative: Nepali teas, especially those from the Ilam region, offer a high-quality alternative to the famed Darjeeling teas. It is because of the geographic and climatic and taxonomic similarity of plants between Darjeeling and Illam.

Unique Characteristics of Nepali Tea

If you are familiar with Darjeeling Tea, then you will for sure love Nepali Orthodox teas. Most darjeeling teas are commercially produced by large factories. Less than 5% of Darjeeling’s production would be small batch tea. So, the Darjeeling tea that you drink might not be of the supreme quality as you thought. In contrast, Nepali artisans have been honing their craft of making small batch teas, producing exquisite quality in every batch.

Nepali teas are known for their:

Flavor Profile: Often described as delicate and nuanced, with floral notes and a subtle muscatel flavor in some varieties. But no doubt, the industry can also produce strong and Malty teas. 

Diverse Offerings: From robust CTC teas to delicate white teas and complex oolongs. Multiple varieties of Black teas like Gold Tea, Ruby Tea, Greenish Black are produced. Similarly in case of Green Teas, regular green tea, Gunpowder Tea(Pearl Tea) are produced. Higher and more expensive offerings of tip tea are also made depending upon the demand. 

Seasonal Variations: Like Darjeeling, Nepali teas showcase distinct characteristics in different flush seasons. The 4 seasons, variations in microclimate and diversity in the soil, produces multiple variations in the taste profile of tea. An expert tea taster can differentiate the slight variations in these teas even if the type of the tea is the same. 

Ethical Production: Many Nepali teas are produced under fair trade conditions, appealing to socially conscious consumers. One of the core reasons behind ethical production is because of the small farm approach. While “estates” employ tea workers, small artisans work with the small farmers, who are the owners themselves. The farmers supply the tea, and the small tea producers process those teas. This symbiotic relation between the farmer and the artisan is the reason for ethical production in most of the cases.

Historical Timeline of Nepali Tea

It might come as a shock to many, to hear that the seed of Nepali Tea industry was sowed almost the same time as the Indian Tea industry, yet almost 100 years of time remained stagnant on the Nepal side of the border. There was no progress in tea cultivation, let alone production and processing.

The Birth of Tea Cultivation in Nepal (1860s)

Back in 1860’s Nepal’s then Prime minister Jung Bahadur Rana got a gift of tea seeds from China. Those same seeds were used to cultivate Nepal’s first tea plantation, which is in Illam municipality of the eastern region in Nepal. The person noted on the history of Nepal, who planted seeds was General Gajaraj Sigh Thapa. He set up two plantations, Illam and Soktim tea estates. 

Evolution of Private Tea Plantations (1950s-1970s)

Almost 100 years after the first tea seed plantation, the government of Nepal finally started investing in the tea industry. After the first tea processing factory was established in the 1970’s, King Birendra declared Illam, Jhapa, Panchthar, Dhankuta, Terhathum districts as the key tea zones of Nepal. Now although few more districts like Solukhumbu, Kaski etc produce teas, the key tea zone districts produce the largest amount of teas. Jhapa is well known for CTC tea production while Illam is world renowned for its high quality orthodox tea. 

Geography of Nepali Tea Production

The quite interesting fact about Nepali geography is that Nepal’s lowest altitude is less than 100 meters from the sea level, which is in Jhapa district and the highest altitude is Mount Everest at 8848 Meters from the sea level, which is in Solukhumbu. Both of these districts produce tea. So Nepali tea comes from a diverse geography, some from the plains/terai and some from the foothills of the highest peak of the world.

Leading Districts in Tea Cultivation

According to Nepal Tea and Coffee Development board’s statistical Data the following are the tea producing districts and some statistics related to them:

District	Small Farmers(No.)	Small Farmers Area (ha)	Total Production Area (ha)	Production Total (Kg)	Type of Tea
Ilam	8876	5372	7236	6282010	Orthodox
Panchthar	791	462	675	58737	Orthodox
Dhankuta	323	147	383	47950	Orthodox
Nuwakot	250	108	123	24800	Orthodox
Terhathum	356	295	355	20300	Orthodox
Jhapa	2993	4640	10340	19909500	CTC

Data from : https://old.teacoffee.gov.np/teaproduction

Figure: Bar graph of top tea producing districts in Nepal and their area in hectares

Ilam: The Heart of Nepali Orthodox Tea Production

Illam district is the largest orthodox (leaf) tea producer in Nepal. Located on the opposite side of India- Nepal border, this district has similar climate and plant species as Darjeeling. Illam district also boasts itself as the district where the small farmers tea revolution started in the early 1990’s. Now there are around 9000 small farmers in Illam alone.Out of total 7236 hectares of tea plantation 74% is owned by Small farmers. The major cash crop and the backbone of the economy of this district is Tea.This district alone produces around 6282010 Kg of tea a year (Official Statistics 2021/2022). 

In the last 5 years, multiple municipalities in Illam have invested a substantial budget on building soil testing labs, raising awareness in organic tea production and developing tea tourism.

Comparison with Darjeeling Tea Region

Darjeeling and Illam share so many similarities in terms of Geography, Climate, Plant Species and also people. Infact, Darjeeling used to be part of Nepal before the Sugauli treaty. Despite these common things between them, there are stark differences between Nepal Tea and Darjeeling Tea. I have broken them down in bullet points:

• Majority of the tea producers in Darjeeling are estate owners, while in Nepal majority of the orthodox leaf tea comes from smallholders' farms.
• Production and distribution of Darjeeling Tea is controlled by the Tea board, India under the protection act of 1953, whereas  Nepal Tea is not controlled, protected and regulated  by Nepal Tea and Coffee Development board. The board only acts as facilitator.
• The word “Darjeeling Tea” was trademarked back in the late 1900’s whereas the Nepal Tea trademark is relatively new.
• As mentioned above, Darjeeling tea is protected by the government of India and treated as a heritage, while Nepali tea is left in ruins under the hand of different broker organizations.

Types of Tea Produced in Nepal

In broad terms, two types of teas are produced in Nepal. C.T.C, also called Crush, Tear Curl, majority of which is produced in Jhapa district and the rest is Orthodox loose leaf tea, produced in over 20+ districts (maority of those are new cultivations).

CTC vs Orthodox Tea Production

CTC and Orthodox teas are completely different final products in terms of look, taste, quality and health benefits.

CTC employs a method called Crush tear curl where the picked tea leaves are withered, crushed, torn and curled into small micro balls shaped like and dried. The resulting output is suited to create a drink which can be consumed with milk. The method produces strong malty tea, for a substantially lower cost, which is why it is widely consumed all over the world. Indian Chai is one of the renowned tea drinks that uses CTC tea. One crucial thing to note is all CTC Teas are black teas. 

In terms of production of CTC tea, the green leaves are produced from the same plant Camellia sinensis but lesser care is given during tea leaves selection and picking. Often plantations growing tea to produce CTC use machinery to pick tea leaves. Due to larger volume production, often CTC Tea plantations are in areas where flat land is abundant. 

Orthodox tea on the other hand is more sensitive to the growth conditions, quality of raw leaves, processing method etc. Higher the quality of green leaves, better the quality of the orthodox teas. 

Based on the type of tea to be produced, orthodox tea goes through different production phases. A simple breakdown is below:

Black Orthodox tea: Withering- Rolling - Oxidation- Drying

Green Orthodox tea: Withering- Fixation- Drying

White Orthodox tea: Withering- Drying

Wulong/Oolong Tea: Withering- Rolling- Oxidation- Fixation-Drying

Yellow Tea: Withering- Fixation- Wrapped- Dried

Orthodox teas are mostly enjoyed without milk. That is why the flavor profile, taste and the strength of these teas have to be monitored and controlled.

The Economic Landscape of Nepali Tea

As mentioned earlier, tea is the backbone of some of the major tea producing districts of Nepal. In the districts like Illam, the livelihood of the farmers and artisans depends upon how well they can cultivate and sell the tea products. 

In the fiscal year 2021/2022, Nepal exported about NRS 3,437,186,000 worth of tea. This roughly translates into 25 Million USD. Tea in 2022 occupied the top 10 exported items in terms of revenue generated.

Export Markets and Major Buyers

This might come as a shocking fact, but over 95% of Nepali tea is exported to India. According to the official data released by Nepal Tea and Coffee Development Board in 2021/2022, 96.8% of Nepali Tea was exported to India, 1.37% to Russia, 0.67% to Germany. 

Top 10 Major Buyers include: India, Russia, Germany, Japan, USA, Hong Kong, Czech Republic, UAE, China and France. 

A comprehensive list of that data by percentage exported by Country is shown as a bar charts below:

Figure: Bar graph showing major export countries for Nepali Tea

Challenges Faced by the Industry

Nepali tea industry faces multiple challenges including lack of proper market, labor shortage, certification issues, branding issues, technological gaps etc. We shall discuss the individual topics in detail.

Lack of Proper Markets

As indicated above over 95% of Nepal’s total tea production is exported to India. So? What’s the issue? The issue lies in the fact that the majority of these teas end up going to the brokers and the producers only getting dimes for their product. See the official data below which shows that on average (Including CTC and Orthodox), the export value of per kg of tea going to India is less than USD 0.2/Kg. The artisans/producers on average get Nrs 200-300 per kg of tea for Orthodox Tea. This value on average is USD 1.5-2.5/Kg of Tea. When the same products are exported to Europe and North American countries, the revenue generated from these teas are substantially higher. Nepal Hills Tea on average pays USD 17/Kilo to source high quality teas from the artisans. 

Figure: Bar graph showing selling price of Nepali tea to India vs other countries

So, what does this mean: Nepali Tea industry needs to be able to export a higher volume of their products to tea markets than India, if they want to get a good price for their products. 

Certification Issues

There are multiple International Organic certification bodies in Nepal. The key one being CERES. Out of around 130 tea producers less than 20% are organic certified. Most of them are bigger tea producers. A comprehensive list of the certified tea farms certified by CERES is available publicly. 

So, what is the underlying issue here? It’s the cost of certification and the administrative workload on the small artisans. The cost of certification is around USD 8,000-10,000 and the cost to renew remains almost the same. Also, not all small factory owners have the technical ability to meticulously manage all the paperwork required. One option would be to hire people to do that job, but it is an extra cost for them. 

It is often found out that some small artisans get the organic certification and are not able to renew it due to the hefty costs incurred. You can validate this statement by checking the list of companies who are registered with CERES but have not renewed their certification.

Labor Shortages

Another underlying issue (and a big one) is labor shortages. For an agricultural industry to keep thriving, the trade has to be handled from one generation to another. Due to political turmoils, declining financial situation of the country, uncertainties for export and ongoing trend of migrating abroad for better job opportunities, the Nepali industry is facing a huge challenge. The tea industry is not lucrative to the young generation as it was back 20 years ago. On average a tea picker earns less than 4 dollars a day.

So, what is the impact of labor shortage? Well, from picking to processing, it takes a huge deal of human labor. Green leaves picking isa labor intensive job. It requires people to stand, walk for long hours and pick the tea leaves with their hand. When laborers are not available to do that, machines are often used to cut the leaves. This impacts the quality of raw leaf, which inturn impacts the quality of DMT (Dry Made Tea). In the worst case scenario, factories shut down due to lack of raw green tea leaves. 

Branding and Marketing Hurdles

In recent years, Nepali tea has been branded under the “Nepal Tea” brand name. This was an initiative of some private organizations/bodies like HOTPA, Nepal Tea producer Association etc. The trademark is not controlled by a government body and not protected like the Darjeeling brand, which is centrally controlled by the Indian tea board. So, the brand name was merely a stamp to sell the teas produced by larger estates. If the above statement was not true, all small producers would also be incorporated within the wing. 

Since Mid 1980’s Nepali Tea producers started exporting their teas. Various organizations like HIMCOOP, HOTPA, NTA, CTCF were formed over the course of time. Most of these organizations were formed by founders of the tea factories.  Those who had and have political and business connections have been able to market their products internationally while a larger portion of the producers have been left out. 

Every year, there are few marketing events that happen in Nepal but most of them are out of reach for small tea producers. Most attendees for those marketing programs have always been larger tea producers or those with existing political connections. 

Technological Gaps

There have been multiple advances in modern technology related to tea production around the globe. These advances range from tea picking process to processing (machineries, laboratory, tools). Nepali artisans still largely rely on their gut feeling to produce the teas. This requires multiple iterations to produce a new flavor of tea, and does not guarantee consistency. Countries like China and India have invested heavily in Research and development related to teas, while Nepali artisans still have been relying on their gut feeling and tedious hit and trial process.

Potential Solutions to address Issues within Nepali Tea Industry

The writer thinks that the following could be supportive solutions for the betterment of Nepali tea industry:

Centralized Auction of Tea: While the majority of Nepali Tea is exported to India, the Indian people are not the ones consuming it. Nepali teas go to third world countries after rebranding as Darjeeling Tea. A centralized auction of tea in Nepal and export directly from Nepal would ensure that the Nepali producers get the price that they deserve for their products. Although this idea seems unachievable, can be translated into reality if the Government of Nepal takes the command to change the scenario of the Tea Industry. Formal official lobbying should be done with tea partners, bigger buyers and without the involvement of private agencies. 

Organic Certification of the Farms: Organic certification adds a minimum another 25% value to the commodity. We all have seen the price difference between certified organic products and not certified products. This is another initiative that only the Government of Nepal can take. Organic certification not only ensures higher price but healthier work environment for the workforce involved in the tea industry. 

Awareness programs: A larger chunk of Nepali Tea drinkers actually drink something called “Chiya”, a Nepali version of drink similar to Chai. It is crucial to raise awareness in the tea consumer group within Nepal about the benefits of drinking various types of Orthodox Teas. Education and awareness programs can help to increase internal sales.

There are numerous opportunities for Nepali Tea in the broader Global Market. Due to their high quality, Nepali teas are highly prized by tea drinkers and praised by Tea Connoisseurs. If we are able to raise awareness about Nepali teas around the globe, it is possible that Nepal tea can take the share of decreasing Darjeeling Tea yield. 

Cultural Significance of Tea in Nepal

Above 80 percent of Nepali households consume tea. Except Illam and neighboring regions where orthodox tea is manufactured, most of the population enjoys something called “Chiya”.
“Chiya” is Nepali name for Tea. “Kalo Chiya”means Black Tea and “Dudh Chiya” means Milk Tea. The daily ritual starts with either Black tea or Milk tea depending upon the preference of the drinker.

Tea in Nepali Traditions and Customs

If you go to visit a Nepali household, the first thing you would see is a salutation “Namaste” and after a while they will offer tea, I guarantee it. No matter how hot it is, tea is a highly rejoiced drink of Nepali People. 

Picture: Nepali youth drinking orthodox black tea

In Illam, farmers start their day by boiling a kettle of black loose leaf tea, milk is later added and tea is served without Milk. In the terai, they make “Chiya” with CTC Tea and if you go up in higher mountains, there is a Tibettian tradition of making a tea called Butter Tea. It is made with Tea leaves, butter, water and Salt. 

Picture: Boiling Milk over fire on at a Nepali household. Notice a kettle on the side to boil the orthodox black tea

Tea is an integral part of Nepali Culture intricately woven both from daily life and hospitality Customs. 

The Role of Tea Houses in Social Life

There are so many small business owners in Nepal who sustain their livelihood by selling tea. Often called “Chiya Pasal” translating to “Tea Store”. These are small stalls which sell Tea, Smokes and bakery items. You will see all sorts of people from young to old engaging in a lively conversation, drinking tea. The tea culture is also a fabric that helps to hold the Nepali community together. 

How to Support the Nepali Tea Industry

While most of us cannot make a direct impact on the daily livelihood of Nepali Tea artisans and farmers, we can make an indirect impact by buying and drinking Nepali teas. Sharing with your colleagues or family members about Nepali Tea that you loved is one of the ways. If you are a tea seller, either buying tea directly from Nepali artisans or through some sort of intermediary always helps to boost the Nepali tea economy.

Where to Purchase Authentic Nepali Teas

There are multiple companies around the globe who now sell Nepali teas. Among them there are few companies founded by people from Nepali origin, where you can buy Authentic Nepali teas. Some of them in North America are as follows:

Nepal Hills Tea: It is Canada based. Offers a broad range of Nepali teas, both B2C and B2B for affordable prices. Their teas are targeted for daily tea drinkers.  Ships to the USA and some European countries. They offer 5% of their revenue to support their artisans for Organic certification. 

Nepal Tea Collective: It is USA based. It also offers a broad range of Nepali teas at a higher price. Their teas are mostly targeted to people who want Nepali tea experience. 

Nepali tea traders: It is USA based. The company offers a broad range of teas. Retail Prices are a little high for daily consumption. 

Depending upon where you are located, look for companies founded by people of Nepali Origin for Authentic teas. 

Written By:

 

Bhaskar Dahal

 

Frequently Asked Questions about Nepali Tea

• When was Nepali Tea Industry Established?

Tea cultivation in Nepal started in the 1860s with the establishment of Ilam Tea Estate. First Private Tea Plantation started in late 1950.

• When was first factory to process tea established in Nepal?

The first factory to process tea leaves in Nepal was set up in 1978.

• When did small farmers start growing tea in Nepal?

Small farmers started growing teas privately after late 1970's.

• Which district in Nepal is the leader in Orthodox Tea Production?

Illam district (which lies in the bordering Darjeeling region of India).

• Which are main tea producer districts in Nepal?

• What types of Teas are produced in Nepal?

Broadly classifying, Nepal produces CTC and Orthodox (Loose Leaf Tea).

• Which Country is the biggest buyer of Nepali Teas?

India is the biggest buyer of Nepali Teas.

• What are the biggest challenges of Nepali farmers?

• Are Nepali Tea Organically grown?

• Why do we not see all teas from Nepal organic certified?

• How many small farmers/farm owners are there in Nepal?

As per statistics published by Nepal Tea and Coffee board in 2021, there are 13589 small farm owners in Nepal. Out of these farmers 86% farmers have less than 1 hectare tea farm. 

• What is the statistics of farming types of Tea in Nepal?

• What is the demography of  Tea production in Nepal?

• How many tea producing factories are there in Nepal?

• Farmers from which district largely depend on tea as their main income?

Illam, around 67% people from Illam depend on tea industry as the main source of income.

 

References:
https://www.teacoffee.gov.np/oldsite/teainfo/history
https://asia.fes.de/news/nepal-tea-industry
https://pdf.usaid.gov/pdf_docs/PA00KNZT.pdf