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  • Writer's picturejohn snell

What's good for the goose.. the ethics of profit and optics

Every time a story about the marginal returns of tea farmers (not excluding other products but I am a tea chap!) I wonder at how we ever got to a place where we ignore the critical point of commercial sustainability for those that carry better optics for the brands and their consumers.

Don't get me wrong, the current standards applied under certification and verification schemes are vital for social welfare, health and wellness and the environment but only if the businesses they are applied to are viable. In this sense, I wonder whether we do more harm than good or at least miss an important mark, that in some way contributes to the industry's malaise?

My point is very simple, there is a cost to doing the right thing and if things are tight then doing the right thing will not get done, the result of which is to banish said producers from certain markets and/or divert their focus away from potentially profitable markets thereby committing them to the deep, in terms of financial ruin. Very dramatic I know but consider how easily we could correct this by turning our focus from optics to common sense, to provide a business first principle, coupled to other mandates for inclusion.

It's shameful that we excuse our lack of focus on financial viability by patronizing standards that declare, to our customers, that we are doing our bit and yet, truth be told, allow market forces to dictate the prices we pay, irrespective of the knowledge that this does not keep whole farmers and their dependents.

If you are a specialty tea merchant buying exceptional prices for rare teas, good for you (don't get too smug though, you also rarely sell enough to move the needle in terms of trade output and you ignore, no besmirch, those grades that don't meet your chosen format needs, despite their importance to overall returns) but the majority of packaged tea sales are not like this, despite tea only making up about 30% of COG (variable depending on many facets) prices for teas used in these packs are often purchased below a sustainable level. This seems mad when a 20% increase in raw tea prices, filtered down to farmers, would be significant, build brand health and only render an increase of 6% in total COG.... I can hear the shudders in Boardrooms everywhere.

" This lunatic is suggesting we don't focus on cash, what is he thinking?"

Well, I am thinking of your sustainability within the category!

It is not surprising (sadly) that the largest tea brand operator in the world is to shed this "underperforming" sector while smaller entities, focused on quality, champion tea as a wonderfully profitable business. And, before you all say, well it's quality that pays, it has to be noted that, that same company procured some of the fastest growing relevant specialty tea brands in the world so, what's the issue?

We all know the answer to this, really, the tea sector has done little to demand a fair price for tea and it's difficult!

When you have an asset, a tea bush, producing leaf every day, you need to sell this or lose it and so demand dictates prices and irrespective of how sluggish that demand is, we cannot turn off or restrict the flow of product into that market, for now. But, consider the possibilities for tea if the quality and volumes were closely in step with demand, if there were a mechanism for the direct communication of market needs, both short and longer term. A mechanism by which only product of a certain quality could enter a supply chain and only a sustainable price, proportionately shared, could be paid.

Impossible claptrap or aspirational and urgently needed goals for a sustainable industry??

This is not a finger pointing exercise but a plea that agencies that purport to render agricultural sectors sustainable take a good hard look at what they really impact on the trade. It's right that we should insist on regenerative agricultural practices and social welfare norms (among other laudable and necessary improvements to life and environment) but let's consider what the costs of implementing our "first world" priorities are on the survival of agricultural communities in developing countries? It is the right of every individual on the planet to have equal access to education, advancement and all within an equitable environment but the learning required is much easier to bestow on those that are not living hand to mouth on a daily basis.

Is it too much to ask, or distasteful, to ask, that we bestow on others the right to focus on financial security first and foremost?? Can we not accept that people in less fortunate environments are not there for us to empower, with our certainties of their needs, but must be enabled and provided with the necessary education and tools to make themselves whole, financially? It is,, in this very state, that they will absorb and adopt everything else important to them and that you wished for them in the first place.

We must ultimately strive for equality and independence for everyone in the supply chain, to choose, live and thrive as they chose not as we dictate. The critically important issues for environment, social welfare, equality, access to education etc necessarily follows as does adoption of appropriate codes.

So what does this look like and does it require a quantum shift in mindset to get there?

The answer is pretty simple, I think. The tools (DLTs among others) and wherewithal exist, we just have to employ them.

Many facets of today's standards assist the commercial viability of farming, including tea, but these need to be prioritized and assisted through the adoption of generic trustworthy mechanisms which share costs within supply chains. As well, education with respect to markets and channels needs to be made available to ensure that farmers understand the costs of entry and are accepting of supply chain costs, both soft and hard; building that most elusive of values "Trust".

The measurement of financial input and control needs monitoring and aligned to the most efficient use for maximizing qualities, relevant to available markets, to which access also needs facilitating.

In short, any system needs to be symbiotic, a true partnership where education and supportive investment is tied to the production of what the market needs, under conditions that are desirous for both ends of that supply chain.

The tools are available, the trade is full of the right intellect, the NGO community has the capacity and knowledge of how to communicate and implement so it truly only needs an honest and more pragmatic review of what is "Job 1" for the health of the tea industry. And if you still cannot bear to consider a transformation of prioritization then consider the cold hard facts of returns yoy and what that must mean if we cannot mobilize correctly.

In closing, I believe this industry does more than many to support those at the sharp end of our trade. It's not perfect but it is full of good intent, inventive leadership and willing and able partners. We are just running out of time in which to deny the first right of all in the tea industry, to sustain themselves and their family's or to make other arrangements to do so!

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john snell
john snell
Aug 17, 2021

Hi Sivaramakrishnan and thank you for your commentary. You will note that I do state the issue with labour's and this plus the R&D required is important BUT I fundamentally believe that we, as an industry, have had our head in the sand too long. We have believed that we can control our own future through growing and production efficiencies when the truth states otherwise. We need to build a dialogue between quality and price, with consuming markets, to avoid underpriced Nd overproduction tin of the wrong types. This requires a multi-stakeholder commitment from top to bottom of the supply chain.


Sivaramakrishnan Suryanarayanan
Sivaramakrishnan Suryanarayanan
Aug 17, 2021

The issue of the industry is well stated from the consumer perspective by the markets but the real issue is about the actual ground realities of growing and harvesting quality of raw material on the plantations.

With the technological advances in the growing countries, the labour force profile has undergone a major change and the present generation don't seem to fancy any longer the manual work and with the gradual reduction of the old workers due to retirement etc. there is a labour shortage in most of the plantations even where some level of mechaniztion has been done.

The present wage structure and shortage of skilled labour coupled with the poor levels of mechanization of farms /plantations are the mai…

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