The rolling hills looked like a manicured green in a golf course. As we came nearer, terraced slopes revealed the rows of tea shrubs. The village is 85 kilometers from Hanoi, and can be reached in a two-hour leisurely car ride. Despite the short distance from the main market, farmers in the area earn less from their products for the simple reason that they sell immediately during harvest.
Consider the price of freshly harvested tea leaves at VND 800,000 ($40.00) per ton. Consolidators buy the leaves on the day of harvest and send it to tea processing centers which is less than an hour travel from the village. The price may even be lower during the harvest season months of June to August.
Some farmers do have equipment to dry the leaves. The processing has an average recovery rate of 20%, transforming one ton of fresh leaves to 200 kilos of processed tea leaves. A kilo of processed leaves is sold at VND80, 000 ($4.00) giving a value of VND16million ($800.00) for the processed tea leaves.
There is a big difference between the price of the freshly harvested and processed tea leaves, but for the farmers, the concept is simple – they have cash after the harvest is taken from them. Processing will mean additional labor and cost, and they will have to look for buyers of processed tea.
There is still a third stage in the value chain. Branded tea products are sold at an average of VND200, 000. ($10.00) per kilo. So if additional efforts will be done in further processing, quality control, packaging and branding, the 200-kilo harvest can roughly amount to $2,000 in the market.
This is rough computation shows how productivity of the farmers can be enhanced. It does not mean pushing the farmers to do marketing which is not their line of work. Let the farmers do farming, but efforts can also be done to consolidate the resources of the farmers for them to be able to “hire” professionals who can do the marketing or even the product development for them.