SCI Research Study Report Economic, Social and Environmental Impacts and Overall Sustainability of the Tea Manufacturing Industry in Sri Lanka May 2013 Prepared by

Munasinghe Institute for Development (MIND)

Mohan Munasinghe 1, Yvani Deraniyagala1 and Nisitha Dasanayake 2 Acknowledgements Valuable assistance provided by Nishanthi De Silva of MIND is gratefully acknowledged.

1 2

Munasinghe Institute for Development (MIND), Colombo Sri Lanka Carbon Consulting Company (CCC), Colombo, Sri Lanka

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CONTENTS 1. Introduction 1.1 Why do we need this study? 1.2 Previous Studies 1.3 Objective of the Study 2 Background 2.1 Background on tea 2.2 Economic characteristics of tea 2.3 Social characteristics of tea 2.4 Environmental characteristics of tea 3 Methodology 3.1 Stage of tea production 3.2 Indicators 3.3 Steps followed 3.4 Calculations 4 Results and Analysis 4.1 Comparison by stages 4.2 Comparison of Labour, Energy and CO2 emissions 4.3 Comparing stages of the tea product life cycle 5 Conclusions and Policy Implications

4 4 5 7 8 8 8 10 10 11 11 14 14 15 18 18 21 24 30

REFERENCES

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Annex 1: Questionnaire Annex 2: Description of Factories Annex 3: Methodology for Calculations Annex 4: Detailed Results of Study

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Tables Table 2.1: Table 2.2: Table 3.1: Table 4.1:

Figures Figure 3.1: Figure 4.1: Figure 4.2: Figure 4.3: Figure 4.4: Figure 4.5: Figure 4.6: Figure 4.7: Figure 4.8: Figure 4.9 Figure 4.10: Figure 4.11. Figure 4.12:

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Tea Production in Sri Lanka Tea Exports in Sri Lanka Types of factories used for the study. Average Energy Use breakdown for the processing stage

Process map for the tea industry Labour, energy used, and carbon emissions during tea cultivation Labour, energy used, and carbon emissions during tea processing Total labour, energy used, and carbon emissions from cultivation to processing stage. Labour use for different factories. Energy use for different factories. Carbon emissions at cultivation and processing stages Labour use for high/medium and low grown teas Energy use for high/medium and low grown factories. Average Energy by function in processing Carbon emissions for high/medium and low grown factories. Costs at different stages of production Overall labour use, energy use, carbon emissions and costs.

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1. INTRODUCTION 1.1 Why we need this study? Human beings are currently facing both global challenges and opportunities 3.It is expected that in the next 50 years our planet's population will grow from 6 to 9 billion people. At the same time, freshwater sources are diminishing, energy stocks are in decline, carbon is being emitted at rates well above the earth’s absorption capacity, soil is being lost or degraded, and many more of the planet’s resources are being used in an unsustainable manner. Simultaneously, businesses are exposed to more scrutiny and being held responsible for impacts of their whole supply chain, consumers are buying more organic and sustainably produced food, and new markets are emerging for products that embody social good and care for the environment. There is an increasing need to promote agriculture and food supply which maintains and improves the fertility of soil, protects the quality and availability of water, preserves the biodiversity of our planet and is produced and consumed in a manner that is socially, environmentally and economically sustainable 4. The flow of energy and the discharge of waste (including greenhouse gas emissions), involved in production and consumption from farm to fork, need to be within the capacity of the earth’s regenerative capacity. There is an equally urgent need to accelerate the sustainable food movement from niche to mainstream, by harnessing the power of market forces to help transform markets. Purchasing standards and consumer behavior have great leverage. New purchasing specifications by large buyers of food products provide incentives for producers to reduce pesticides and reduce energy consumption. Policy changes are necessary as well, especially with regard to common resources (such as water) where individual incentives do not always align with the common good. There is a need to increase the demand for sustainably produced goods through public sector institutional procurement and purchasing practices and increasing consumer awareness. Tea is the most commonly drunk beverage in the world and has a market of 1.68 million MT per year 5. Because of its importance, research on the sustainability of tea production and consumption will not only provide important information on how to improve the tea industry, but also yield important lessons for a wide range of other agrico-industries. In the specific case of Sri Lanka, the tea industry is the second largest foreign exchange earner and employs millions of workers. Therefore, improvements to the tea sector would contribute greatly to making development more sustainable in Sri Lanka. Overall, this research will enable positive changes in the sector by making policy recommendations to decision makers, generally raising awareness, 3

Munasinghe, M (2010), Making Development More Sustainable, MIND Press, Sri Lanka. Munasinghe, M (2012), “Millennium consumption goals (MCGs) for Rio+20 and beyond”, Natural Resources Forum, Vol.36, p.202-12. 5 th FAO, 2012.Current Situation and Medium Term Outlook for Tea. Committee on Commodity Problems, FAO, 20 th st Session of the Intergovernmental Group on Tea. 30 January – 1 February 2012, Colombo, Sri Lanka 4

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and facilitating multi-stakeholder dialogues with national and international networks of civil society and business organisations in both production and consumption spheres. 1.2 Previous studies Doublet and Jungbluth (2010) 6 have looked at the life cycle assessment of organic and conventional Darjeeling tea. Around 70% of the total impacts are caused by the electricity consumption for boiling the water. Thus it is important that the consumer reduces the excess amount of boiled water and invests in an energy-efficient kettle. Darjeeling tea is still processed in a conventional way to preserve the high-quality the dried leaves. The technology used is old and high in energy consumption compared to new machines used for other black tea. Darjeeling tea leaves are dried on a conveyor belt through which pressured hot air is blown. The latest technology uses a fluidised bed dryer (FDB), where hot air is blown directly into the drier and the process of fluidisation moves the leaves. The fuel consumption per kg of tea is half of that of a conventional dryer. A study by Nigel Melican (2009) shows that that tea’s carbon footprint (measured by the number of grams of carbon dioxide per cup) can vary greatly from over 200g CO2 per cup to -6g CO2 per cup, depending on how the tea is grown, processed, shipped, packaged, brewed, and discarded. On average, a cup of loose tea has about 20g of CO2 per cup. The carbon footprint of a glass of beer is 374g, a can of Coca Cola is 129g and a cup of cow’s milk is about 225g. Hence it is clear that loose tea is a better choice environmentally than any of the other options. Melican found that teabag tea has 10 times higher carbon footprint of loose tea as tea bags require carbonintensive packaging materials like the nylon or paper teabag and its string, the box and the plastic wrap around the box etc. Recycling or re-using tea (as well as its packaging) also improves its carbon footprint. Loose tea often comes in minimal, recyclable or re-usable containers. Composting tea rather than throwing it away or re-using tea leaves as fertilizer for houseplants, to clean one’s home or for skincare, to cook, to clean, and to reduce odors in the home will help reduce the carbon footprint of tea. Heating water for tea is also an important component of the carbon footprint of tea. Gas is the best option as there is only one conversion loss from burning the fossil fuel to produce heat energy to raise the water temperature in the kettle. With electricity, you get four separate losses: 1. turning fossil fuel into electricity, 2. grid losses along the wires (voltage drop), 3. transformer losses as voltage is stepped up and down, and 4. in heating the water in the kettle. Wal (2008) 7 found that tea production has social and environmental impacts. From a social perspective, working conditions on tea farms and plantations are usually poor. Most workers are hired as temporary labor and have very poor safety net in the event that they face some personal issue such as bad health that inhibits them from working. The paper also stresses that tea has a strong impact on biodiversity due to the high levels of deforestation, especially of the forested mountain slopes, for the tea plantations. In addition, pesticides contaminate local water and soil, and can cause potential health risks for local ecosystems. Lastly, most factories use outdated, 6

Doublet G. and N. Jungbluth(2010) Life cycle assessment of drinking Darjeeling tea :Conventional and organic Darjeeling tea. ESU-services Ltd. 7 Wal, van der S. (2008) “Sustainability Issues in the Tea Sector A Comparative Analysis of Six Leading Producing Countries”. Dutch Ministry of Foreign Affairs and Oxfam Novib.

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inefficient technologies and hence energy use is high. Large tea producers facing increased competition due to the increase in costs of production related labor and primary materials, coupled with falling prices due to increased competition. This has led to the closure of many large plantations and has increased the importance of smallholders. This shift causes the challenge of integrating smaller producers into supply-chains and ensuring the quality, social and environmental standards, and traceability. The majority of the profits from tea production are mainly taken by the multinational tea packers and brokers, while the producer is only just able to sustain themselves. These multinational organizations have been slow to adopt Corporate Social Responsibility measure, in comparison to similar industries such as coffee and bananas. A study by Chen (2009) 8 was done on the Chinese tea supply chain to promote the sustainable development in the tea industry through establishing the communication platform among different stakeholders. Drinking tea has become part of life for many people. Only secondary to drinking water in the world, tea has become even more popular than coffee. However, most people have no idea of tea production process from processing, blending, packaging, transportation and sale, as well as the major players involved in this process that spans agriculture, industry and retail, let alone the impact of tea consumption and production upon the tea growers and workers' lives. This project focuses on the tea growers. In China, each tea growing household occupies 2 to 3 mu (1 mu=667 sq m) tea farm. Their average income is only half of average income of farmers, which has caused tea growing to become unattractive to farmers. In addition, the conditions for of tea workers are also very poor. The study revealed that some tea brand owners require tea processing companies to meet human rights, labor and environmental standards as conditions of tea workers in China do not meet these standards. Some suggestions that came out of this study include responsible procurement by the government, forward integration for tea farmers, improving the management structure of cooperatives, encouraging cooperation among all a stakeholders, and the development and implementation of CSR standards. Although this study only looks at the number of labour involved at each stage of the production process, other value chain studies look into the social upgrading of workers (Bernhardt and Milberg, 2011) 9 which involves improvement in the entitlements and rights of workers as social actors, which enhances the quality of their employment (Sen 1999 10, 2000 11). Social upgrading involves the advancement of employment based on decent work and respect for labour standards which might result from economic upgrading (Barrientos et al., forthcoming 12). A study conducted by the Sustainable Energy Authority of Sri Lanka 13 states that to make an ‘energy efficient’ cup of tea the water should be boiled to the boiling point in a closed vessel like a kettle, for, if water is boiled in an open vessel, a considerable volume would evaporate, resulting in considerable energy loss. It was found that the following quantities of energy were

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Chen, W. (2009) From Tea Garden to Cup: China’s Tea Sustainability Report. Social Resources Institute, China. Bernhardt, T and W. Milberg (2011).Economic and social upgrading in global value chains:Analysis of horticulture, apparel, tourism and mobile telephones. Capturing the Gains 2011.University of Manchester, UK. 10 Sen, A. (1999). Development as Freedom. Oxford: Oxford University Press. 11 Sen, A. (2000). ‘Work and rights’, International Labour Review, 139(2): 119-128. 12 Barrientos, S., G. Gereffi and A. Rossi (forthcoming). ‘Economic and Social Upgrading in Global Production Networks: Developing a Framework for Analysis’, International Labor Review. 13 http://www.energy.gov.lk/sub_pgs/save_energy_how_cupoftea.html 9

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used in preparation of a cup of tea - Electricity – 0.021 units (kWh) per cup; LP gas – 1.95 grams per cup; Fuel wood – 0.33 grams per cup 1.3 Objectives of Study The aims of this research study were to: •

identify critical issues in the tea sector (production, processing, export, trade and production regulations) from the perspective of sustainable development (energy use, environmental degradation and social issues)

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analyse opportunities and bottlenecks for the tea industry (production, processing, (retail /packing) and

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draw out policy implications and make suggestions to various stakeholders on how to improve conditions in the (global) tea supply chain

Section 2 gives a background on tea in Sri Lanka including its economic and social importance. Section 3 describes the methodology used in the study and what indicators were used. In section 4 we analyse the results of the study and draw our conclusions and policy implications in section 5.

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2. BACKGROUND 2.1 Background on Tea Tea is the second most popular drink in the world, after water. Consumption of tea (especially green) is beneficial to health and longevity given its antioxidant, flavanol, flavonoids, polyphenols, and catechins content. For a number of developing countries like Sri Lanka, it is an important commodity in terms of jobs and export earnings. Sri Lanka is one of the oldest tea producing countries in the world. Commercial production was started in 1867, and the tea produced, popularly known as “Ceylon Tea”, ranks among the best available teas in the world. In 2007, Sri Lanka was the fourth-largest tea-producing country globally. It produces 318,470 tons of tea in a year that contributes nearly 9.1% of the world’s total tea production 14. Over 221,000 hectares or approximately 4% of the country’s land area is covered in tea. Sri Lankan tea is grown on large plantations as well as on smallholdings. There are approximately 118,275 hectares of smallholdings (Department of Census and Statistics, 2005 15). Of the total land on which tea is cultivated, around 43% is managed by the corporate sector, with a production of about 35%, while the balance of 57% is in the smallholder sector, with a production of 65% of the total. The average productivity in the smallholder sector is substantially higher, at about 1,853 kg/ha compared to the corporate sector productivity of 1,459 kg/ha. Sri Lanka produces tea throughout the year, and the growing areas are mainly concentrated in the central highlands and southern inland areas of the island. They are broadly grouped as high grown tea - ranging from 1200 m upwards, medium grown tea-covering between 600 m to1200 m and low grown tea - from sea level up to 600 m. High grown teas from Sri Lanka are renowned for their taste and aroma. The two types of seasonal tea produced in these areas, Dimbula and NuwaraEliya, are much sought-after by blenders in tea-importing countries. Uva teas from the Eastern Highlands contain unique seasonal characteristics and are widely used in many quality blends, particularly in Germany and Japan. The medium grown teas provide a thick colour variety which is popular in Australia, Europe, Japan and North America. The teas produced in low grown areas are mainly popular in Western Asia, Middle Eastern countries and CIS countries.

2.2 Economic characteristics of Tea Employment The tea sector in Sri Lanka has always been a vital component of its economy. It is also the country's largest employer, providing employment both directly and indirectly to over 1 million people.

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http://www.toptenofcity.com/commerce/top-10-largest-tea-producing-countries-2011.html Department of Census and Statistics, (2005)Census of Tea Small Holdings. Sri Lanka

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Production Sri Lanka produces about 331,400MT of tea per year (Ministry of Plantation Industries, 2011). Table 2.1. Tea Production in Sri Lanka unit

2008

2009

2010

Total Production

Mn. kgs

318.4

291.1

331.4

a. High grown

Mn. kgs

84.2

73.0

79.1

b. Medium grown

Mn. kgs

49

44.8

56.1

c. Low grown

Mn. kgs

185.2

173.3

196.2

Exports Sri Lanka has emerged as one of the world's leading tea exporters, with a share of around 19% of the global demand. With around 315 million kg black tea being exported per annum, the current foreign exchange earnings from tea exports amount to approximately Rs. 155 billion (USD 1376 million). Table 2.2. Tea Exports in Sri Lanka Unit

2008

2009

2010

Mn. kgs

317.2

289.7

314.6

Export earnings Rs. mn.

137,585

136,180

155,608

US$ mn

1270.1

1,184.8

1,376.3

Exports**

Price formation •

Corporate sector: The cost of green leaf depends on the field productivity, cost of other inputs, wages, plucker intake, etc., and usually works out at around Rs 14.50 – 21.50 per kg (or Rs 65 – 90 per kg of made tea).

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•

Smallholder sector: The cost of production of green leaf in the smallholder sector is estimated to be around Rs 16 – 25/= per kg 16. Smallholder leaf is processed mainly in private bought-leaf factories.

The overall cost of production of tea has increased from Rs. 231.49 per kg in 2008 to Rs. 313.17 per kg in 2010. Higher costs for labour, fuel and electricity etc have contributed to this sharp rise.

2.3 Social characteristics of Tea Employment Tea production is labour intensive and the industry provides jobs in remote rural areas. Low prices are affecting the sustainability of the tea sector, with working conditions and the livelihoods of plantation workers and small scale farmers in tea producing countries under pressure. Working conditions for pluckers are often poor, with low wages, low job and income security, discrimination along ethnic and gender lines, lack of protective gear and inadequate basic facilities such as housing and sometimes even drinking water and food. At the same time there is no possibility for tea plantation workers to improve working conditions because trade unions are ineffective or absent and/or are not representing them because most of them are temporary workers. While tea production by smallholders is growing worldwide, their situation is often problematic because the prices they are paid for fresh tea leaves tend to be below the cost of production, among other factors.

2.4 Environmental characteristics of Tea There have been some high-profile changes on the environmental front in Sri Lanka primarily among the big multinational tea companies. Finlays tea estates have adopted a more systematic triple bottom line reporting method which covers the full spectrum of economic, environmental and social impacts. Finlay’s factories are now entirely powered by renewable sources of timber and they are in the process of developing a system of establishing their carbon balance sheet or footprint, with the aim of reducing emissions of global green house gases. Tata Tea, which manages the Watawalla estate, has launched a project of cultivating Caliandra with a view to enriching the organic matter content of the soil through mulching, and to minimizing the use of furnace oils for tea drying. Using calliandra firewood for drying would lead to savings in foreign exchange owing to fewer imports, while providing employment for surplus labour. They have also started hydroelectricpower generation on the plantation, which helps the country to meet its energy needs at low cost and saves foreign exchange through the low consumption of oil. 16

Source: Tea Small Holdings Development Authority

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Similarly, two plantation companies owned and managed by Hayleys, have launched an Ecoproject to protect the fragile eco-system on the up-country mountain ranges. They have now preserved all the naturally generated water resources such as water falls, springs and streams on the Great Western Estate, and have completely stopped the spraying of pesticides, making use of natural pest controllers such as birds.

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3. METHODOLOGY 3.1. Stages of Tea Production The study investigated the sustainability of energy use in the tea industry, starting with smallholder or estate production, factory processing, packaging, marketing, export, transportation, retailing (supermarket), and consumption in homes. A detailed process map is given in figure 3.1 below. Figure 3.1: Process map for the tea industry

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i) Raw Material & Cultivation At this stage we assessed the inputs into planting and growing of the tea leaves including fertilizer pesticide, soil conditoners inputs, water use, diesel for transport, and the amount of labour used. Tea bushes are planted - from 1 metre to 1.5 metres apart. They are often planted on hill slopes and follow the natural contours of the landscape, on specially prepared terraces to help irrigation and prevent erosion. Young plants are raised in nurseries from cuttings for about 12 - 15 months and then planted. A plant will grow a new flush (top1-2 inches of the tree that are picked) every 7-15 days manually. Leaves that are slow in development produce better flavored teas. Plucking requires skill as shoots need to be identified and then broken off by twisting the leaves and bud in the fingers, and throwing them into the carrier baskets on their backs, which are designed to aerate the leaf to prevent heat generation. The leaf if collected on the site and then transported to the factory for processing. ii) Processing and Manufacturing At his stage we assessed the energy use, transport, labour employed, carbon emissions at the different stages of production which included withering, rolling, fermenting, drying, sorting, and packaging. Teas can generally be divided into categories based on how they are processed. There are at least six different types of tea: white, yellow, green, oolong, black, and post-fermented teas of which the most commonly found on the market are white, green, oolong, and black. Withering After picking, the tea leaves soon begin to wilt and oxidize, unless they are immediately dried. Withering may take 10 to 20 hours. The main purpose is to bring down the internal moisture of the leaf, and to initiate chemical reactions in the leaf cell. The reduction in moisture makes the leaf pliable and easier to cut in the next stage. This is one of the most expensive processes of tea manufacture in terms of space and time taken. Fermentation Fermentation is an enzymatic oxidation process caused by the plant's intracellular enzymes which darkens the tea. In tea processing, the darkening is stopped at a predetermined stage by heating, which deactivates the enzymes responsible. This most important stage in the manufacture of black tea, and this process makes it uniquely different from all other teas. Fermentation is carried out in custom-designed fermentation [Type text]

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rooms. Depending on the temperature, maceration technique and the style of tea desired, the fermentation time range from 45 minutes to 3 hours. The characteristic coppery color and fermented tea aroma judge the completion of fermenting. Without careful moisture and temperature control during manufacture and packaging, the tea may become unfit for consumption, due to the growth of undesired molds and bacteria which alter the taste. Tea is traditionally classified based on the techniques with which it is produced and processed.      

White tea: Wilted and unoxidized Yellow tea: Unwilted and unoxidized, but allowed to yellow Green tea: Unwilted and unoxidized Oolong: Wilted, bruised, and partially oxidized Black tea: Wilted, sometimes crushed, and fully oxidized Post-fermented tea: Green tea that has been allowed to ferment/compost

Drying Drying stops fermentation making a stable product with low moisture content between 3.0 to 3.3%.Drying is a crucial process as it seals in all the flavour, aroma and character created during manufacture, that are released by brewing. After drying the teas are then sorted into grades by size and fibre content. The dry tea is exposed to static electricitycharged PVC rollers that pickup the fibres and the open leaf. These separated teas are thereafter sorted by size, and packed. iii) Blending & Packaging Most teas sold in the west and those in tea bags are blends from different estates. Blending may occur in the tea-planting area, or teas from many areas may be blended. Blending tea helps obtain a better taste and higher price. iv) Distribution and Retail This stage includes the transportation from the factory, shipping to destination country, warehousing, transportation to Distribution Centres, transportation to stores etc. v) Consumer Use This stage includes emissions related to consumer using the product such as boiling water to brew the tea. vi) Final disposal This stage looks at the final disposal of the tea by the consumer of the product and product packaging

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3.2 Indicators The data that was collected from the factories included: Economic -

cost price of the product

Environmental -

Energy use Carbon emissions Chemical inputs/outputs (e.g. fertilisers etc.) Environmental management/protection systems in blending, packaging and export.

Social: -

number of employees male/female ratio

3.3 Steps followed The project commenced with a kickoff meeting to develop the research proposal aims and methodologies. The project team met to on several occasions to discuss the variables and indicators that would be used for the analysis. Based on this, a questionnaire/ data sheet was formulated for the earmarked factories (see Annex1). The types of factories that were identified are given in table 3.1 below: Table 3.1 Types of factories used for the study. Type Of Teas Orthodox CTC Green Tea

High Grown X X X

Medium Grown X X

Low Grown X X

Only one green tea manufacturing factory was audited to collect data in the high grown region. There were no factories producing medium or low grown green and white tea. Students from the University of Moratuwa and Thema Private Limited were advised and trained on the questionnaire to carry out the data collecting activities. [Type text]

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A group of six students visited the first factory in Rilhena. Any shortcomings or gaps in the questionnaire were identified, addressed and rectified. The following factories have been visited and data gathered. A brief description of each factory is given in Annex 2: • • • • • • • • • •

Muthhettigama Tea Factory Madulkele Tea factory Kataboola Estate tea factory Imboolpitiya Tea factory Cee Tee Hills Tea Factory Greenfield Bio Plantation (Pvt) Ltd. Abbot sleigh/Watawala Vellai Oya Galathara tea factory Rilhena

The data was then al tabulated into spreadsheets and the calculations were done based on the gathered data and other available data sets.

3.4 CALCULATIONS Although custom made packages such as CCalc 17 are available to calculate the carbon footprint, we developed our own spreadsheet for the calculations (see Annex 3). The study maps the entire lifecycle from the cultivation stage to the factory outlet, blending and packaging, usage and to the final disposal of the tea. Embodied energy for all fertilizers, packaging materials were considered, however where data was not unavailable or lacking assumptions were made (see Annex 3). Final values are presented on the basis of kg of fresh crop and kg of processed tea. Energy consumption is calculated in MJ and carbon emissions as kg CO2e. Energy was separated into 2 categories – fossil fuels and renewables. 1. Raw Material & Cultivation This stage looks at the inputs into planting and growing of the tea leaves including fertilizer and pesticide inputs, diesel for transport, and the amount of labour used. Data collected from the factory includes: The amount of fertilizer, dolomite, pesticides used by the factory, Distance the fertilizer is transported from supplier to the factory;

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www.ccalc.org.uk

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Energy Use  Fertiliser production - Available data sources 18 were used to calculate the amount of embodied energy in fertilizer production.  Fertiliser packaging – It was assumed that 50kg of fertilizer is packed in a 200g polysack. Using available data sources 19, the amount of embodied energy for packaging of fertilizer was calculated.  Fertliser transportation –The distance over which the fertiliser is transported and the mode of transportation was obtained from the factory. Emissions from fertliser transport were calculated using this data and the carbon emissions from diesel as well as the mode of transport obtained from DEFRA 20.  Dolomite use – amount of dolomite used was obtained from the factory. Embodied energy from use of dolomite was calculated by multiplying the amount f dolomite per kg of fresh crop by the embodied energy per kg of dolomite 21.  Dolomite transportation – it was assumed that dolomite was transported the same distance as the fertilizer  Dolomite packaging - Packaging was considered for some plantations according to the data given by estates. For other it was assumed packaging is similar to 50 kg of dolomite in a 200 g polysack  Pesticide use – Amount of pesticides used was obtained from the factory. Embodied energy from pesticide use was calculated by multiplying amount of pesticides used by the embodied energy data 22 per litre of pesticide  Transport of leaves to factory – the amount of fuel used by the vehicles used to transport the tea leaves to the factory, was obtained from the factory. The embodied energy for diesel (same as for fertiliser transportation) was then multiplied by the amount of diesel used to get the total embodied energy for tea leaf transportation. GHG Emissions  Fertiliser production – data on amount of fertilizer used was obtained from the factory. The emissions factor for urea was obtained from data sources 23 to be able to calculate the total emissions from fertilizer production.  Fertilizer packaging - It was assumed that 50kg of fertilizer is packed in a 200g polysack. Using available data sources 24, the amount of GHG emissions from packaging of fertilizer was calculated.  Fertilizer transportation – The upstream and combustion emissions of rigid truck fuel use obtained from data sources 25 which were used to calculate the emissions from transport of fertiliser.  Fertilizer application – 18

http://envimpact.org/node/122 www.victoria.ac.nz/cbpr/documents/pdfs/ee-coefficients.pdf 20 DEFRA 2011 21 Carbon and energy inventory university of Bath 22 Energy in synthetic fertilizer and pesticides 23 ‘A review of greenhouse gas emission factors’ by Sam wood and Annette Cowie 24 Korean LCI database 25 DEFRA 2011 19

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o Direct Emissions - The nitrogen content of each type of fertilizer was obtained from data sources 26. Amount of nitrogen applied to the tea plantation was calculated by multiplying the quantity of fertilizer used by the amount of nitrogen content per kg. Emission factor for direct N20 emissions form managed soils was derived from IPCC 2006 - Guidelines for National green house gas inventories. The global warming potential of N20 was found to be 320 27. Total direct emissions from fertilizer application and the emissions from N2O application were calculated. o Emissions from volatisation and redepositing - Emission factor for N2O emissions from N applied for managed soil was derived from PICK, 2006 data. Hence to calculate the N20 emissions from volatisation we multiply the amount of N applied to the soil by the emission factor. o The N2O emissions from leaching and runoff – The emission factor for leaching and runoff from fertilizer application was derived from IPCC 2006 reports. 2. Processing and Manufacturing – looked at the energy use, transport, labour employed, use at the different stages of production which include withering, rolling, fermenting, drying, sorting, and packaging. 3. Blending and packaging - Embodied enegy and carbon for packing materials, energy use, waste disposal and recycling during blending. Only one packaging factory was used as most teas would be packed in a similar manner, Note that not all teas are packed at the factory. 4. Consumption and Disposal - The calculations for export were based on tea exported by sea freight to the UK. The emissions, labour, energy use for distribution, usage and disposal were calculated.

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U 300 – Cool farm tool U 709 – Factory data T 750 - TRI Sri Lanka fertilizer recommendations 27 DEFRA 2011

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4. RESULTS AND ANALYSIS The data collected for the factories is only for the cultivation and processing stages. Data for the blending, packaging, transport, consumption and disposal stages were taken as an average based on Spider charts for cultivation, tea processing and the total values of all the processes were drawn to assess which factory was the most sustainable in terms of labor, energy and CO2 emissions. A summary of all the data collected is given in ANNEX 4.

4.1 Comparisonby stages At the cultivation stage, the most efficient factory in terms on labour use, energy use and carbon emissions is Muttuhettigama which is a low grown orthodox, being the smallest triangle. Rilhena, which is a mid-grown orthodox tea, is shown to be the most inefficient in terms of carbon emissions and energy use (figure 4.1). Note: Carbon emissions for Cee Tee Hills is high as landuse change was considered in the calculations as the factory and plantation only commenced operations 20 years ago. The land was forested before.

Figure 4.1: Labour, energy used, and carbon emissions during tea cultivation

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At the processing stage, it is apparent that Madulkale, which is a middle grown CTC tea uses the most number of labour for producing 1kg of tea and has the highest energy use as well as carbon emissions per kg of tea produced. Galathara, a low grown orthodox tea, employs the least number of people per kg of tea produced and also has the lowest CO2 emissions as well as energy use.

Figure 4.2: Labour, energy used, and carbon emissions during tea processing

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Figure 4.3: Total labour, energy used, and carbon emissions from cultivation to processing stage.

The most sustainable tea factory is the Muthuhettigama factory closely followed by Galathara which have the smallest triangles closest to the centre of the chart. Both of these factories are orthodox and in the low grown region it could be said that (ignoring other factors) according to this data low grown orthodox tea seems to be the most sustainable combination for tea production. However, it needs to be noted that low grown factories buy the green leaf mainly from small holders and hence these values have not been included in the cultivation stage results. Finding the least sustainable combination is more complicated as different factories have high values for different factors. Kataboola and Madulkale have high values for labour, Madulkale has high values for energy usage and CEE TEE Hills has high values for carbon emissions. If looked at from the environmental aspect alone CEE TEE Hills and Madulkale are the most environmentally unsustainable. As both of these are CTC factories perhaps it could be deduced that CTC factories use more energy, emit more carbon and are therefore less environmentally sustainable than orthodox factories according.

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4.2 Comparison of Labour, Energy and CO2 emissions Labour

Figure 4.4: Labour use for different factories. In general substantially more labour is employed for cultivation than in the processing stages. However, for low grown teas it would appear that less labour is employed for cultivation as most of the green leaf is obtained from small holders in surrounding areas (Figure 4.4). Factories employ more female labour for the cultivation stage as the plucking is done primarily by females. For the processing stage, there is no clear trend in the type of labour used as some factories use more female labour whereas others use more male labour. The process that is most labour intensive seems to be the withering stage, followed by the sorting stage.

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Energy Use

Figure 4.5: Energy use for different factories.

CTC factories for high and low grown tea seem to have the highest energy usage in cultivation mainly due to fertilizer use and the application of soil conditioners to maintain the pH values. Most factories still use renewable energy (i.e. fuel wood) or most of their processing. Hence the energy use in the processing stage, although high, can be considered as sustainable, provided that the fuelwood is harvested in a sustainable manner. Medium grown, CTC tea factories use the highest amount of energy for tea processing. This is because medium grown tea factories consume considerably more energy for withering and drying than low grown and high grown factories. The Madulkale factory had particularly high energy usage for tea processing mainly because of energy used for drying. 28

Carbon emissions Low grown tea has the highest carbon emissions at the cultivation stage (Figure 4.6). Medium and high grown CTC have the highest carbon emissions at the processing stage. Withering and drying were identified as the main contributors to emissions.

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This may be partly due to the small scale of the low grown tea crop.

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Figure 4.6: Carbon emissions at cultivation and processing stages

When comparing Carbon emissions between CTC and orthodox factories it is apparent that Cee Tee Hills yielded different results. While it is apparent that the other two CTC factories have relatively high emissions associated with tea processing and low emissions associated with cultivation, Cee Tee Hills has high emissions during cultivation and relatively low processing emissions. Bio geneic CO2 emissions from burning of biomass have not been considered in the calculations. The Madulkale factory is the only factory whose processing emissions are higher than its cultivation emissions. This was due to its significantly high emissions from the drying of tea and could be result of factors such as inefficient machinery.

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4.3 Comparing stages of the tea product life cycle In order to compare the relative contribution of each process to carbon emissions, energy use and labour, a series of pie charts have been provided. High grown tea and medium grown tea have been grouped into one category as their values were very similar. Labour

Figure 4.7: Labour use for high/medium and low grown teas Figure 4.7 shows that most of the labour in high and medium grown factories is employed for cultivation whereas for low grown tea most of the labour is employed for tea processing. This could be due to the fact that low grown factories own considerably less plantation area and buy most of their produce from other producers.

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Energy Use

Direction of product life cycle

Figure 4.8: Energy use for high/medium and low grown factories. Processing and product use are the largest sources of energy use within the product life cycle (figure 4.8). Processing using large amounts of energy due to the fact that a lot of machinery is used at this stage. Use of the product involves high energy usage because with each teabag used, energy intensive activities such as boiling water are attached. Thus as each teabag contains approximately 2.5g and as the values are given kilograms the energy usage associated with product use is very high. It appears that processing contributes a lot more to energy usage for high and middle grown tea than for low grown tea – but the results may vary according to climatic conditions. The processing stage consumes the largest proportion of energy in the tea life cycle being 35% for medium and high grown tea, and 25% for low grown tea. The main 5 stages of tea processing in a factory includes, withering, rolling (rotor vane operation), fermenting, drying, and sifting/sorting. According to the electrical energy balance of the factory withering, rolling, drying are the major electricity consumers in the factory. However, compared to other tea factories the consumption of energy in withering is somewhat lower and the major energy consumer is the rolling section.

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Table 4.1: Average Energy Use breakdown for the processing stage Process Withering Rolling CTC Fermenting Drying Sifting Sorting Packaging

Renewable 9.39 0.38 0.90 0.12 35.79 0.12 0.37

Energy Use Non-Renewable 0.78 0.47 1.10 0.14 1.21 0.15 0.45 0.20

Total 10.17 0.86 1.99 0.26 37.00 0.27 0.81 0.20

Figure 4.9 Average Energy by function in processing

The drying stage in processing of tea consumes the most amount of energy. However, it is important to note that most of this energy is in the renewable form (i.e firewood). Sustainable extraction of firewood needs to be ensured to prevent deforestation of surrounding areas. Energy consumption of the factories can be reduced further by implementing effective energy conservation measures. Firewood and diesel are been used for the drying and withering processes. Energy consumption, especially in the withering process can vary according to climatic conditions, the quantity and the quality of plucked tea leaves and the spreading conditions of green tea in the trough etc. [Type text]

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Carbon emissions

Figure 4.10: Carbon emissions for high/medium and low grown factories.

Packaging is the main source of carbon emissions in the tea product life cycle (figure 4.10). This is probably because the manufacture of packaging is carbon intensive and because of the fact that tea is packed in tea bags which involves a lot more packaging than loose tea. Use of the tea bag also has a high amount of carbon emissions associated due to the fact that water needs to be boiled per tea cup containing 2.1g of tea. If this is extrapolated per kg of tea the value becomes high. Cultivation also has a high percentage of carbon emissions because of the use and production of fertilizer. Processing has a low percentage of emissions even though it has a high percentage of energy usage as most of the energy used at this stage is renewable. When comparing the two pie charts it is apparent that the relative contribution of different stages to carbon emissions is similar for both low grown tea and middle and high grown tea apart from that of cultivation. Emissions from cultivation for low grown tea are more than twice as high as that of high and middle grown tea.

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The use phase is the single largest source of emissions and energy use and therefore theassumptions used for calculating use phase emissions are the most important in determining total emissions. • • • • • • •

The water is boiled in an electric kettle using UK grid electricity. The energy consumption for boiling a cup of water is 0.02kWh per cup 29 The cup is used once and washed up after every cup of tea. The tea bag or tea leaves are only used once. The weight of loose leaf tea used to make one cup of tea is 2.5g. The cup is washed in a dishwasher, which contains an average of 50 items. The product is transported to and consumed in the UK.

Costs The cost of production per kg of tea is highest in the cultivation stage and lowest in the packaging stage.

Figure 4.11. Costs at different stages of production Labour use is the highest at the cultivation stage due to the high number of people employed for plucking of the tea leaves as this is not mechanized as yet. Energy use is highest in the processing stage as this stage involves the most amount of high energy using machinery especially for drying the fresh tea leaves. The most amount of CO2 per kg of tea is emitted at the packaging stage as each tea bags which is packed separately contains only 2.5g of tea and requires a considerable amount of paper etc for packaging. The highest cost along the

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Based on Carbon Trust 2010

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production line is in the cultivation stage due to the large amount of labour needed at this stage as well as the fertilizer etc which is needed (figure 4.12).

Figure 4.12: Overall labour use, energy use, carbon emissions and costs.

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5. CONCLUSIONS AND POLICY IMPLICATIONS At the cultivation and processing stage, low grown, orthodox tea is the most efficient in terms on labour use, energy use and carbon emissions. CTC factories are found to use more energy, emit more carbon and are therefore less environmentally sustainable than orthodox factories. In general substantially more labour is employed for cultivation than in the processing stages. More female labour is employed for the cultivation stage as the plucking is done primarily by females. The process that is most labour intensive seems to be the withering stage, following by the sorting stage. CTC factories for high and low grown tea seem to have the highest energy usage in cultivation mainly due to use of fertilizers and soil conditioners. Most factories still use renewable energy (i.e. fuel wood) or most of their processing. Hence the energy use in the processing stage, although high, can be considered as sustainable, provided that the fuelwood is harvested in a sustainable manner. Medium grown, CTC tea factories use the highest amount of energy for tea processing. This is because medium grown tea factories consume considerably more energy for withering and drying than low grown and high grown factories. Low grown tea has the highest carbon emissions at the cultivation stage. Medium and high grown CTC have the highest carbon emissions at the processing stage. Most of the labour in high and medium grown factories is employed for cultivation whereas for low grown tea most of the labour is employed for tea processing. Processing and product use are the largest sources of energy use within the product life cycle. Packaging is the main source of carbon emissions in the tea product life cycle. Drying and withering seemed to be the processes involving the most amount of carbon emissions and energy usage. Further detailed research could be carried out to investigate how these processes could be made more efficient or sustainable. Further research could also be carried out to investigate as to whether the climate, topography, or any other similar factors could affect tea processing. It could also be investigated as to whether alternative and or more sustainable methods could be used instead of fertilizer use.

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Some policy implications for reducing the carbon footprint Cultivation Stage • • •

•

• • •

Sustainable agriculture should enable local communities to protect and improve their wellbeing and environments. Producing crops with high yield and nutritional quality to meet existing and future needs, whilst keeping resource inputs as low as possible; Ensuring that any adverse effects on soil fertility, water and air quality and biodiversity from agricultural activities are minimised and positive contribution will be made where possible; The tea is planted using mulch and intercrops, which help increase the levels of organic matter in the soil, while bunds, microcatchments and drainage systems enhance soil and water conservation. No insecticides, or fungicides are used in the tea fields. The program has also addressed the estate’s energy needs by planting fuelwood (mostly eucalyptus) which is used for drying the tea. There’s also a hydro-electric scheme that provides most of the company’s electricity. Tea bushes are a natural and environmentally harmonious carbon sink, benefiting the local and global community Water should be sampled regularly to ensure waterways are free of chemical residues Dam and creek banks could be vegetated to reduce the incidence of soil erosion

Processing Stage • • •

Optimising the use of renewable resources whilst minimising the use of non-renewable resources; Tea dust and other tea waste could be collected and used on the plantation as mulch Lean manufacturing processes can be adopted throughout the factory, minimising the number of production processes and forklift movements e.g. elimination of off-line print and apply, removing additional leaf tea machinery, installing racking at point of use etc

Packaging Stage • • • •

Tea bags could use oxygen-bleached filter paper Tea bags could be sealed with heat instead of glue, to minimise waste and water usage Packaging cartons could be made from recycled materials and could be 100% recyclable Waste cardboard, pallet wrap plastic, used plastic strapping and non-reusable tea pallets could be recycled

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Transport Stage • • •

Should have sustainable warehousing and transport systems to reduce freight All picking and packing could be carried out on-site, minimising freight turnarounds Used engine oil is used (recycling) and storage is in a bounded enclosure for environmental safety

Use and disposal stage • • • • • •

Use efficient kettles for boiling water Only fill kettle with required quantity of water Use gas stove to heat water instead of electric kettle Use loose tea instead of tea bags Composting tea rather than throwing it in the trash. Re-using tea leaves as fertilizer for houseplants or gardens, to clean one’s home or for skincare, to cook, to clean, and to reduce odors in the house.

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References Barrientos, S., G. Gereffi and A. Rossi (forthcoming). ‘Economic and Social Upgrading in Global Production Networks: Developing a Framework for Analysis’, International Labor Review. Bernhardt, T and W. Milberg (2011) Economic and social upgrading in global value chains: Analysis of horticulture, apparel, tourism and mobile telephones. Capturing the Gains 2011.University of Manchester, UK. Chen, W. (2009) From Tea Garden to Cup: China’s Tea Sustainability Report. Social Resources Institute, China. DEFRA 2011, GHG Conversion Factors. Produced by AEA for the Department of Energy and Climate Change (DECC) and the Department for Environment, Food and Rural Affairs (Defra).

Department of Census and Statistics, (2005) Census of Tea Small Holdings. Sri Lanka Doublet G. and N. Jungbluth (2010) Life cycle assessment of drinking Darjeeling tea: Conventional and organic Darjeeling tea. ESU-services Ltd. th

FAO, (2012) Current Situation and Medium Term Outlook for Tea. Committee on Commodity Problems, FAO, 20 Session of the Intergovernmental Group on Tea. 30th January – 1st February 2012, Colombo, Sri Lanka Munasinghe, M (2010), Making Development More Sustainable, MIND Press, Sri Lanka.

Munasinghe, M (2012), “Millennium consumption goals (MCGs) for Rio+20 and beyond”, Natural Resources Forum, Vol.36, p.202-12. Sen, A. (1999). Development as Freedom. Oxford: Oxford University Press. Sen, A. (2000). ‘Work and rights’, International Labour Review, 139(2): 119-128. University of Bath (2008), Inventory of Carbon and Energy (ICE). Prof. Geoff Hammonds and Craig Jones. Sustainable Energy Research Team (SERT), Department of Mechanical Engineering, University of Bath Wal, van der S. (2008) “Sustainability Issues in the Tea Sector A Comparative Analysis of Six Leading Producing Countries”. Dutch Ministry of Foreign Affairs and Oxfam Novib. Wood S. and A. Cowie (2004) ‘A review of greenhouse gas emission factors for fertilizer production’, Cooperative Research Centre for Greenhouse Accounting, Research and Development Division, State Forests of New South Wales. www.energy.gov.lk/sub_pgs/save_energy_how_cupoftea.html www.toptenofcity.com/commerce/top-10-largest-tea-producing-countries-2011.html

www.ccalc.org.uk www.envimpact.org/node/122 www.victoria.ac.nz/cbpr/documents/pdfs/ee-coefficients.pdf www.carbon trust.com

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