Economic Activity Factors Flashcards
Biophysical Factors: temperature, sunlight, rainfall, humidity, region
- regionally concentrated in equatorial, tropical and subtropical locations in Asia and Africa
- average diurnal temperatures between 13 = 28
- average daily maximum of 26 is ideal
- 12-13 hours of daily filtered sunlight (4700 hours of annual photoperiod)
- minimum annual rainfall of 1200mm
- relative humidity should be 75%
- seasonal climates
Biophysical Factors: slope, gradient, soil, altitude
- edaphic conditions: slightly acidic (4.5-5.6)
- well drained, deep and well aerated soil
- deep friable loam soils
- windward side of mountains to capitalised off orographic rainfall
- high quality tea cultivated at higher elevations
- highest tea estate in Western Ghats of India at 2200m
- easterly slope aspect
- gradient of 1:20
Ecological Factors: Traditional
Traditional Tea Production:
- geographically constrained
- labour intensive, polycultures - considered more ecologically sustainable
- manipulation of the landscape through ecosystem simplification - reduce diversity but maintain shade trees, native grasses
- organic fertilisers
- oxen
- Pu’erh tea in Yunnan - 5000+ years
Ecological Factors: Contemporary (blue + green revolution, pesticides)
Contemporary
- less sustainable, mechanised processes, chemical fertilisers, synthetic pesticides, monoculture, higher yields
- Blue: Kenya: use of sprinkler irrigation doubled yields within 3 years of introduction
- most commonly a rain-fed crop (80%)
- Green: synthetic fertilisers - Urea (N), average yield increase from 1t/ha to 3t/ha
- Chemical pesticides: 230 pests in Asia - causing crop losses of 10-15% annually
- glysophate / round up use by 95%
Ecological Factors: Sustainable Production
Intercropping:
- A multiple cropping practice involving 2+ crops in proximity this enhances biodiversity, creating wildlife corridors and buffer zones between plantations and surrounding ecosystems
- Hainan (China) – more than 13 000 ha of rubber-tea intercropping covers the tropical island – 90 plantations cultivate fields of 30% rubber trees alongside 70% tea bushes. Soil moisture improved, soil loss reduced, annual profits per ha increased from $250/ha to $625/ha
- In Sri-Lanka – intercropping is common with tea and coconut trees
Agroforestry
- Combine agricultural and forestry techniques to create more diverse, productive, healthy and sustainable land-use systems – tea grown in biodiversity benefits from ecosystem services provided by sub/tropical rainforests
- Native grasslands in Assam (Mimosa) fix nitrogen in soil, increasing nutrients and decreasing erosion
- Chagusaba method in Japan promotes the conservation of perennial grasslands adjacent to tea plantations – supplying mulch
Organic and Integrated Pest Management
- Organic sector accounts for less than 1.3% of the tea industry (volume)
- Trade at a premium ($10.30 per kg – compared to $3)
- Largest organic harvested areas in China (40 000ha), India (>14000ha) together accounting for 73% of organic tea are a
- Tea board of India pushing organic tea producing by providing 50% subsidy on the cost of organic conversion and certification – which ban the use of chemical fertilisers, synthetic pesticides encouraging biological pest control and manual weeding, a polyculture
- Problems: yield decreases (by 44%), increase in cost of production, takes a minimum of 3 years for a garden to become organic and certified (a costly process)
- China: 795 of all tea is cultivated using traditional organic methods – relatively little is certified
Ecological Factors: Future Factors (climate change)
Future ecological factor: climate change
- Human activities caused 1.0OC of global warming above pre-industrial levels – likely to reach 1.5oC between 2030 and 2050 (International Panel of Climate Change)
- Changes to seasonal precipitation, average diurnal temperatures, sea level rise, pest invasion, more intense and frequent natural hazards
- Predicted to result in a decline in yields in some parts of the world by up to 40-55% by 2050
- Tree deaths increase 15 to 20% for everyone 1 degree C increase
Ecological Factors: Future directions (mitigation)
Sustainable soil water + plant management, use of composting, mulching and shade trees, water conservation, drop irrigation, crop diversification and a systems approach, access to drought and frost resistant tea clones and precision agriculture technologies
Economic Factors: Cashcrop, auctions, world food price crisis (Kenya)
Cash Crop
- traditionally local scale
- labour ($1.84 per worker) constitutes 50% of cost of production
- from 1960 - 70 the price of tea halved from increased supply
Auctions
- 70% of global tea production sold in auctions (Mombasa, Colombo and Kolkata)
- India = $1.62, Sri Lanka ($1.16) and Kenya ($0.84)
World Food Price Crisis
Kenyan tea prices reached $3.97 per kg due to drought
From 2006-2008, the global price of tea rose by 60%, increasing from $1.70 to $2.70 per kg
During the 4-year period of drought in Kenya: the agriculture sector experienced losses of almost USD 11 billion
Economic Factors: imports and exports
Imports and Exports
- Tea production is concentrated in 7 growing countries – accounting for 90% of global tea supply
- Largest tea exporting countries are China (USD 1.6 billion), Sri Lanka (USD 1.5 billion) and Kenya (USD 1.4 billion)
- Largest importing countries are Pakistan (USD 550 million), Russia (USD 525 million) and US (USD 487 million)
- A significant amount of tea is consumed domestically – the amount of tea consumed in China, India and Turkey in 2015 was > all other tea consuming nations combined.
- Most importing countries are unable to grow high quantities of tea due to biophysical restraints – Pakistan has 70% arid / semi-arid climates
- China exports only 15% of the tea it produces
Economic factors: Importance of Economic Activity to Developing Countries = Sri Lanka
Importance of Tea to Developing Countries
Sri Lanka
- Largest producer of orthodox (traditional) tea in the world.
- 4th largest tea producer, but 3rd largest exporter
- Tea export earnings reached USD 1.5 billion in 2011, contributing 15% to the nation’s foreign exchange
- Tea generates 65% of export agriculture revenue – and 2% of overall GDP
- 2 million employed directly and indirectly, 10% of the population depends on tea industry
Economic factors: Importance of Economic Activity to Developing Countries = Kenya
Kenya
- Most valuable export is tea – largest exporter of tea in the world accounting for 22% of total exports.
- Tea industry contributes around 4% of the country’s GDP and 26% of country’s export earnings, worth $1.4 billion annually
- Tea production increases by 18% each year
- 40% of tea grown in Kenya is from large tea plantations that employ over 100 000 workers – the rest is grown by over 600 000 small-scale farms
- 10% of Kenya’s population depend on tea for their livelihood
Sociocultural Factors
- traditional production = average of 2 pluckers per ha
- communal village tea gardens would have a system of reciprocity
- Blang Festival performing rituals outside temple in Yunnan Province
- Japanese Buddhist Tea ceremony - tea masters study for 3 years at tea schools
- 9 million small holder tea farmers in developing world (70%)
- over 1 million Sri Lankans are employed in industry
- Dalits constitute 83% of all workers in plantation
- plantations labour act requires provision of basic services
- 95% are female
- paid as little as 7 rupees per kg, collect minimum of 16kg daily
Political: Subsidies, Quotas and Tariffs
Sri Lankan Subsidies
- Government supports smallholder tea farms with a subsidy for inputs, including fertilisers, to increase competitiveness
- $200 per ha
- Since 2005 – fertiliser subsidy has accounted for 2-2.5% of total government expenditure (therefore very expensive)
Tariffs in Turkey and India
- They apply a 145% tariff on imported black tea to protect their own industry (domestic employment and quality control)
- Raises price of imported tea for consumers
- Quotas: Sri Lanka import only 10 million dollars worth of tea
Politics: World Trade
- World Trade Organisation (WTO) aims to liberalise agricultural trade by removing barriers to free trade
- Example: ASEAN Free Trade Agreement between South East Asian countries
- Bilateral Trade Agreements: 2015, JAEPA (Japan Australia Economic Partnership Agreement), removed tariffs of 17% of tea sold from Australia to Japan
- 2019, JEFTA (Japan Europe FTA) established world’s largest free trade zone (635 million people and 1/3 of the world’s economy)
India - India is part of the WTO but doesn’t include tea as part of free trade deals
- Tea is classified as a ‘sacred product’ – important for domestic economy, rural employment and food security (food import bills)
- Tariffs as high as 110% - prevents chape tea from ASEAN countries flooding Indian market and driving down prices
- aim to maintain consumer safety through defined limits
Political: MRLs
- MRL = Maximum Residue Limits – set max levels of pesticide residue that can be traced in food and food products
European Union: - Has the strongest global MRLS with number of pesticides regulated for tea standing at 454 pesticides
- 5.1 % of tea imported to the EU from China was above MRLS and thus rejected
UN GLOBAL COMPACT
- 10 universally accepted principles in areas of human rights, labour, environment, and anti-corruption
- world’s largest sustainability initiative with 9500 companies, including DIlmah
