In today's Finshots we see why two countries rejected tea shipments from India

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The Story

You probably know about the economic crisis brewing in Sri Lanka. It’s pretty bad. But it has offered India a tiny opportunity. Back in the glory days, Sri Lanka’s tea exports brought home $1.3 billion annually. Tea exports from the country alone accounted for over 50% of the global tea trade. But with the economic crisis plaguing the island nation, exports have hit a 23-year low — creating a deficit in the global market. Meanwhile, India happens to be the world’s second-largest producer of tea and everyone kind of expected us to step in and fill the void.

But there’s been a setback of sorts.

It seems two separate countries, Iran and Taiwan have rejected India’s export consignments citing phytosanitary issues. They also said that they found pesticides beyond the permissible limit. And it’s creating a bit of a reputational crisis for tea exporters in India. But before we get to the technicalities, we need to discuss how India became a tea-growing behemoth in the first place.

Tea is a common beverage in India. But it was only introduced by the British during the 18th century. They shipped it from China and later set up massive tea plantations across the country. The idea was to break the Chinese monopoly on tea i.e. to grow the beverage in India and ship it back to Britain. And to this end, they offered land in Assam to any European who agreed to cultivate tea for export. Now bear in mind, historians argue that people in India were already accustomed to tea, even before the British popularized it. But commercial production only took off in the 18th and 19th centuries. And tea became a popular beverage among the masses only after Independence — largely thanks to the efforts of the Tea Board — who aggressively advertised the product.

In fact, its popularity soared so quickly that tea growers had a tough time keeping up with demand. And when the mismatch became too obvious, plantation owners resorted to the indiscriminate use of pesticides to improve crop yields.

You can understand why they’d do this.

Tea growers in the country incur crop losses ranging from 5%-55% due to pests, diseases and weeds. And while these issues aren’t new to plantation owners, the problem has been accentuated in the recent past — some of it due to climate change. In Assam for instance, rising temperatures have had a veritable impact on pest lifecycles. Some of them can now survive winter, giving them more time to reproduce and attack tea plants during summer. So to deal with the pest issue, they are increasingly resorting to potent plant protection formulations — a cocktail of pesticides used to improve crop yield and quality. This, in turn, increases plant toxicity. It may become dangerous for consumption. For instance, a study conducted by Greenpeace in 2014, found that branded packages of tea samples from 8 of the top 11 companies that dominated the Indian market contained a cocktail of toxic pesticides. These samples contained compounds such as DDT, and Monocrotophos — even though they have been banned from use in agriculture.

And this finally brings us to the export consignments. Iran and Taiwan rejected the shipments citing phytosanitary issues. Phyto — meaning plant, sanitary — meaning general hygiene and health. The point here is that the tea exports did not meet certain very specific sanitary conditions — possible related to food additives, pesticide residue, heavy metals, mould, microbiological contamination, decomposition, filth or dirt.

However, in this case, it seems the issue was largely specific to pesticide residue. Exporters noted that 95% of all shipments were rejected because the tea consignments had excess Quinalphos residue — beyond the permissible limit. For the uninitiated, Quinalphos is a pesticide used widely across tea plantations. Excess Quinalphos consumption can cause multiple organ failures. Obviously, that’s not to say that drinking tea laced with traces of Quinalphos will suddenly induce organ failure. There’s a permissible level for everything. A level at which the compound poses no (or very little) health risk to humans. But the issue here is — Different countries have different standards and it can be hard to comply with every standard out there. Taiwan is very strict with its assessment whereas other countries may have a higher tolerance band.

And tea exporters believe that this is the root cause.

However, that explanation does not fully suffice.

The Federation of All India Traders Association found out that tea auctioned domestically failed to meet parameters set by the Food Safety and Standards Act and Regulations. The tests conducted by FAITTA revealed significant failure rates in the range of 15–40% — especially due to high pesticide residues.

So now the Tea Research Association, an organisation that oversees 70% of Indian tea production’s research and development is working in tandem with the Ministry of Health and Family and Ministry of Agriculture to bring in new MRL-compliant (Minimum Residue Level) chemicals for the tea sector. Reason — The tea industry doesn’t want to miss out on the massive export opportunity.

Will they succeed? We don’t know. But we really hope it all works out in the end.

Until then…

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