Constant temperature and humidity are ideal conditions for tea plant growth. These conditions can be found in tropical and subtropical climatic regions of Asia where more than 60% of the world’s Tea in Indonesian is produced. The cold highlands are the best places to produce high-quality tea leaves.
The tea plant can be harvested for the first time after reaching the age of approximately four years. When harvesting, only young leaves are selected, implying that manual picking is more efficient than using machine tools. Hence, tea production is a labor-intensive business.
The two countries that dominate global tea production are China and India. Together these two countries contribute to almost half of the world’s tea production.
Biggest Tea Producing Countries in 2021
- 1 Biggest Tea Producing Countries in 2021
- 2 Tea Production and Export Indonesia
- 3 Indonesian Production & Exports
- 4 Have a lower selling price
- 5 The large tea plantations in Indonesia
- 6 Future Prospects of the Tea Industry
- 7 The Indonesian Ministry of Agriculture announced
- 8 Another concern is infrastructure
|4. Sri Lanka||338,032|
Tea Production and Export Indonesia
Indonesia is currently the seventh-largest tea producer in the world. However, due to the lucrative business prospects of oil palm, tea production has declined in recent years as some tea plantations have been converted to oil palm plantations, while other tea plantations have stopped production to produce vegetables or other agricultural products more profitable.
Despite the decrease in land area, the amount of tea production remained relatively stable. This indicates that the remaining tea plantations are becoming more productive.
Indonesian Production & Exports
(in metric tons)
(in metric tons)
The provinces that produce the most tea in Indonesia are:
- West Java (accounting for about 70% of national tea production)
- Central Java
- North Sumatra
Almost half of Indonesia’s tea production is exported abroad. Its main export markets are Russia, UK, and Pakistan. Indonesian tea exported mainly comes from large plantations in the country, both state-owned and private (usually producing high-quality or premium tea), while the majority of smallholders are more oriented towards the domestic market (because the tea produced is of lower quality and therefore lower in quality).
Have a lower selling price
These small farmers, who mostly use old technology and simple farming methods, usually do not have processing facilities. The domestic tea market is not large, as reflected by Indonesia’s low per capita tea consumption level. In 2014, Indonesians consumed an average of 0.32 kilograms of tea per person per day (the world average was 0.57 kilograms in 2014, while Turkey was clearly the largest consumer with 7.54 kilograms).
The large tea plantations in Indonesia
The large tea plantations in Indonesia are usually managed by State-Owned Enterprises (eg Perkebunan Nusantara). Some examples of large private tea cultivators are Kabepe Chakra and Gunung Selamat. Consumer good company Unilever Indonesia purchases its tea raw materials from state-owned or private plantations to produce its tea products.
Compared to other major tea producing countries, Indonesia’s yield (per hectare) is low as most smallholders lack the financial capacity and expertise to optimize production, while most of Indonesia’s tea is grown from seeds rather than from tea leaf cuttings.
Indonesian tea is known for having the highest content of catechins (natural antioxidants) in the world. Most Indonesian tea production is black tea, followed by green tea.
Similar to other commodities, Indonesia relies on exports of primary (upstream) tea products. The underdevelopment of the Indonesian tea downstream industry reduces the competitiveness of the Indonesian tea industry in the international market. Exports of downstream tea products account for only about 6% of total tea exports.
Future Prospects of the Tea Industry
Global tea consumption is projected to increase by almost 3% annually over the next decade. Although Indonesia’s domestic tea consumption has grown exponentially over the past decades, per capita tea consumption has remained low (especially since Indonesia’s urban middle class is increasingly developing a “coffee consumption lifestyle”).
However, consumption of cold tea drinks has grown strongly in recent years. Tea imports, although coming in small quantities, have increased in the Reformation period (especially from Vietnam). Such imports are seen as a threat to local producers’ sales and profit margins and are therefore important to boost tea production in Indonesia.
The Indonesian Ministry of Agriculture announced
The Indonesian Ministry of Agriculture announced in 2021 that it would double the budget to revitalize the country’s tea plantations (especially in West Java as around 60% of Indonesia’s tea plantations are located there) in order to boost Indonesia’s tea production. This budget will be used for an intensification program (which includes distribution of fertilizers) for 1,700 hectares and a rehabilitation program (which includes distribution of seeds and fertilizers) for 1,500 hectares of tea plantations.
Although labor costs are still relatively low in Indonesia, the minimum wage has grown rapidly over the last few years. As a labor-intensive industry (picking is usually done manually), labor costs are the largest component of tea producers’ operational costs. Therefore, the rapid increase in the minimum salary is cause for concern.
Another concern is infrastructure
Indonesia has weak infrastructure characteristics (both quantity and quality). This situation causes logistics costs to rise sharply, making the cost of transporting tea from plantations to processing facilities and then to retail outlets more expensive than they should be.