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Small-scale tea factories in Ilam growing despite shortage of tea leaves for production

Ilam, March 23, 2017: The number of small scale tea factories in the eastern Nepali district of Ilam is growing, generating more employment opportunities, albeit shortage of tea leaves is posing a threat to sustainability of these budding manufacturing units.

Ilam currently has 24 large and 60 small scale tea factories. Another nine tea factories are coming into operation soon in the district. These factories are: Siddhapokhari in Nayabazar, The Mountain Range and Ilameli Chiya Sahakari in Phikkal, Sanimai and Nepal Organic Tea in Sulubung, Barboteli in Barbot, Greenhill Sahakari and Uchchapahadi Shakhejung in Shakhejung and Siddhadevi in Phakphok. These factories are currently under construction and are likely to start processing green tea leaves very soon.

New tea factories are cropping up in the district due to support extended by a programme called Unnati funded by the Danish government and implemented by the Ministry of Agricultural Development.

The programme, introduced to enhance capacity and improve product quality of tea factories, aims to extend grants to 77 tea factories in seven hilly districts of the East. These grants have been made available to 63 tea factories, including 53 from Ilam, two from Tehrathum, five from Panchthar and one from Dhankuta.

The programme is investing a total of Rs350 million in the tea sector, while a matching fund of Rs280 million will be contributed by farmers.

The support extended by the Unnati programme has helped small tea farmers to set up their own factories. “The assistance extended by the programme did help us,” said Sharad Subba, who operates a tea factory in Jasbire.

Yet people like Subba still do not have adequate capital and skills to export their products, which could help them generate more revenue.

Small farmers are keen on setting up their own factories because, they claim, big manufacturers fail to understand their problems. Nonetheless, the domestic tea market, especially orthodox tea market, is not big enough to absorb products manufactured by factories here.

“Nepal’s tea industry is drifting off,” said industrialist Udaya Chapagain. “Lack of production of organic tea leaves, on the one hand, is preventing us from raising exports to the Western markets, while, on the other hand, growing number of tea factories is likely to make the competition stiff.”

Another problem faced by the tea industry in Ilam is shortage of tea leaves. Different tea factories in the district process 15,000 kg of green tea leaves per day. During the peak production season, the number goes up to 100,000 kg.

While production of green tea leaves has remained almost stagnant, the number of tea factories has expanded. This has intensified competition among factories to claim a stake in the pie, whose size has not increased. As a result, many factories are not getting sufficient tea leaves.

What has further worsened the problem is export of green tea leaves to India, farmers said.

Despite growing shortage of tea leaves, prices of these green produce have not gone up, which, according to farmers, is “disappointing”.

By Biplav Bhattarai