Argentine Tea Book

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Base Scan on Sustainability Issues in Argentine Tea Industry

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BASE SCAN OF SUSTAINABILITY ISSUESBASE SCAN OF SUSTAINABILITY ISSUESBASE SCAN OF SUSTAINABILITY ISSUESBASE SCAN OF SUSTAINABILITY ISSUESBASE SCAN OF SUSTAINABILITY ISSUESIN ARGENTINE TEA INDUSTRYIN ARGENTINE TEA INDUSTRYIN ARGENTINE TEA INDUSTRYIN ARGENTINE TEA INDUSTRYIN ARGENTINE TEA INDUSTRY

TTTTTé Argentinoé Argentinoé Argentinoé Argentinoé Argentino

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Té ArgentinoBase Scan of Sustainability Issues in Argentine Tea Industry

by

Josefina EiseleProgramme Assistant, Solidaridad Regional Expertise Centre for SouthAmerica

Research Coordinator:Jeroen Douglas, Director, Solidaridad Regional Expertise Centre for SouthAmerica

ISBN: 978-81-908155-0-5

© 2009, Edition - first

Published by

Prakruthi43, 2nd Cross, Ramaya LayoutSt. Thomas Town PostKammanahalliBangalore 560 084, Indiawww.prakruthi.org

on behalf ofSolidaridad Regional Expertise Centre for South & SE Asia

Design and Layout by Rajesh MVPrinted at National Printing Press, Bangalore

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Table of ContentsTable of ContentsTable of ContentsTable of ContentsTable of Contents

Foreword 1 7

Foreword 2 9

Executive Summary 11

SECTION I – OverviewSECTION I – OverviewSECTION I – OverviewSECTION I – OverviewSECTION I – Overview

General Overview 15

Historical Overview 17

Stakeholder Representation 19

Production Aspects 20

Influencing Factors 28

Assessment of Critical Issues 31

Trade Aspects 32

Economic Aspects 44

Legal Aspects 50

CSR Aspects 60

CSR in Argentina 67

Opportunities 70

SECTION II – Summary of Problems and SWOT AnalysisSECTION II – Summary of Problems and SWOT AnalysisSECTION II – Summary of Problems and SWOT AnalysisSECTION II – Summary of Problems and SWOT AnalysisSECTION II – Summary of Problems and SWOT Analysis

General Summary of Problems 73

SWOT Analysis 76

SECTION III – Conclusions and RecommendationsSECTION III – Conclusions and RecommendationsSECTION III – Conclusions and RecommendationsSECTION III – Conclusions and RecommendationsSECTION III – Conclusions and Recommendations

Conclusions and Recommendations 81

References 84

Annexure: ILO International Labour Standards 86

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Foreword 1Foreword 1Foreword 1Foreword 1Foreword 1Zipping from the silver straw placed in my hot mate gourd, I realize theirony of writing some opening words on this insightful report on theArgentine tea industry. Virtually the entire nation drinks yerba mate,a strong herbal, grassy reminiscent of green tea, and the production ofmate is five times greater than the nation’s green tea sector. Both teatrees grow in the same northeastern Misiones province, in the proximityof the spectacular Iguazú Waterfalls at the frontier with Brazil andParaguay. Virtually all green tea is exported. The Argentines ratherprefer their mate drinking ritual.

As green tea is the little brother, this may be the explanation why theArgentine sector has not yet taken any serious steps towards corporatesocial responsibility (CSR) and improved farm management practices.On the social side, the sector’s main concern is mere survival. The teasector is underfinanced, in some cases obsolete, with unsecure incomeand no investments whatsoever in improving the overall low to averagequalities. Workers quite often do not receive social benefits, as they arenot registered. Clusters of family farmers – organized in exporting co-operatives – have poor bargaining powers in relation to mighty buyers’corporate clout. This is a classical problem of dependency, so oftenregistered by Solidaridad in agricultural chains of custody. In fact, theaspiration to eliminate the coyotes – the middlemen – was the primereason for Solidaridad to launch the Fairtrade label way back in 1987.

On the agricultural side performances at most tea farms are sub-optimal.A future Solidaridad tea support program – in combination with theGood Inside label of Utz Certified – can make a marked difference.Planting density could be doubled, pruning techniques modernized,quality selection and homogeneity improved, processing conditionsmade relatively easy, and access to finance can be facilitated. Throughan integral support effort, the better part of the sector can increase itsoverall output, including sales and marketing to higher market ends inEurope and the US. Together with the already existing organic tea, anew round of CSR certification can give a more solid future to severalthousand families.

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My colleague Josefina Eisele – after the writing of this excellent baseline– is ready to implement Solidaridad’s better tea program.

Jeroen DouglasDirector, Solidaridad Regional

Expertise Centre for South America

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The tea smallholdings have been a challenge for all certification andcode-setting bodies with most of the certifications focusing mainly onthe large estates. This is in spite of the fact that the smallholders, unlikebig estates, are not covered under different laws. Previous researchesby Solidaridad have shown that the information flow and sharing ofmarket demands, such as knowledge about quality, price, sustainabilityissues and good farm practices, is limited for smallholders. It alsohighlighted the low level of organisation through cooperatives and otherdedicated institutions. This hinders smallholders’ representation inrelevant institutions, knowledge and skill sharing and ultimately theirbargaining position. However, from the sector sustainability point ofview, the smallholder segment needs to be addressed with some prioritybecause they represent a major stakeholder group. Hence, theSolidaridad tea programme specifically focuses on smallholders issuesto ensure access to and benefits from certification schemes and marketsfor smallholders and workers.

Argentina is the ninth largest tea producer in the world and the sixthbiggest exporter of black tea. More than 80 per cent of the holdings arewith smallholders and yet their contribution to the overall volume issignificantly low – a trend which is so similar to India or other tea-producing countries. Argentina is also the third largest supplier of blacktea to Netherlands and Dowe Egberts is the biggest importer inNetherlands with its ten per cent of total tea imports coming fromArgentina. Yet, there is scant information or a detailed analysis on theenvironmental, social and economic impact of tea production andprocessing in Argentina.

The present study prepared by Josefina Eisele under the coordinationof my senior colleague Jeroen Douglas fills up that void. The presentbase scan is an assessment Solidaridad is conducting on sustainabilityissues in tea smallholdings of India, Sri Lanka, China, Indonesia andVietnam which has never been done before. By facilitating thepublication of this research we hope that the findings would provide

Foreword 2Foreword 2Foreword 2Foreword 2Foreword 2

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crucial information for Solidaridad and other organizations to initiatesupport programmes for sustainability in the tea smallholdings.

Shatadru ChattopadhayayDirector, Solidaridad Regional

Expertise Centre for South and SouthEast Asia

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Executive SummaryExecutive SummaryExecutive SummaryExecutive SummaryExecutive Summary

The aim of this report is to provide a base scan research identifying keysocial, economic, environmental and quality issues in the tea industryin Argentina. The base scan will provide a preliminary assessment ofthe tea chain in the country.

The topics addressed will allow us to characterize the situation of thesector in general and the product in particular, as a starting point foridentifying problems that hinder tea sector development in Argentina.

Our work is broken down in three sections, firstly, we analyze the sectorwithin the national and international context, the structure of thecultivated area, production, process development, trade market, pricesand margins; putting particular emphasis on farms run by smallproducers.

This first section is also represented by the legislative and policyframework and an analysis of the certification systems and newinitiatives that are being considered regarding international standards.

It will then proceed to evaluate the critical issues that conspire to thedetriment of progress of the tea sector, both at each link in the foodchain as to the articulation of them and their interaction with the contextaround it.

The second section is based on the identification of the sectorweaknesses, where we seek to develop proposals and alternatives toimplement actions to ensure a sustainable development of the teaindustry.

Finally, in the third section we will suggest courses of action, aimed atstrengthening productive integration patterns in the argentine tea chain.

The formulation of proposals seeks to shoot a debate about the variousoptions to improve the social, economic and environmental conditionsin the Argentine tea industry to enhance its competitiveness.

The period studied covers the beginning of the productive activity inthe Argentine tea industry, from the mid 50s until the year 2007/8,representing more than 50 years of history of this economic sector.

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Initial ConsiderationsInitial ConsiderationsInitial ConsiderationsInitial ConsiderationsInitial Considerations

The information available for the analysis was scattered and broken.

The absence of an organism in charge of constant monitoring andinformation gathering makes it difficult to perform an accurate analysis;therefore some data is the result of deductions through indirectestimations.

FindingsFindingsFindingsFindingsFindings

Argentine tea is considered low/medium quality and BT (Broken Tea orFibre), with good colour but without much flavour and its owncharacteristic; properties that makes it suitable for mixing with highquality teas, flavoured iced tea or dietary fibres.

However, due to the low quality product the export prices areconsiderably low compared to international prices. In addition, exportcompanies do not focus on improving the quality because of the fact ofthe existing high demand of “low price and low/medium quality” teafrom US and other international markets. As a result, primary teaproducers are paid for their tea substantially low prices that make italmost impossible to maintain the plantations. Furthermore, theproducer has to face the costs of harvesting, pruning, weed control andmites, as well as inputs such as fertilizer, pesticides and herbicide whichhave increased significantly over the last two years.

In addition to this, there are a large number of producers with lack ofcapital, low yields per hectare due to the age and low density planting,with an unfeasible production from an economic point of view. Incontrast, producers with high level of productivity, that can managethe productive capacitive of their properties and have replaced manyseed origin plants by clonal plants, face depressed prices due to theinfluences that generates high volumes of low quality raw materials.

On another point, there is a high concentration of estates in small holders,estates with less than 10 ha represent more than 80%, however theirparticipation over total planted area is 53%. Participation of middlemenor consignment agents represent 23,51% due to the lack of means forsmall scale producers to afford high costs of harvesters and transport.

Needless to say that by its delicate social situation, high level offragmentation of plantations, lack of information, and reduced level ofindividual production, these producers has no bargaining poweropposite to contractors and manufacturers, additional factor thatdiscourages the possibility of obtaining better prices.

Finally, it was observed a new trend in international recognizedcertification schemes (Rainforest Alliance) in exporting companies.Organic tea trend has also increased over the last five years; several

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companies have been certified in order to sell their tea to the Europeanmarket mainly. Nevertheless, small scale producers have not seen thisimpact yet, as in general export companies have certified their ownplantations. But awareness is starting to expand, for this reason a goodopportunity is presented for Solidaridad to do a market interventionin the Argentine tea industry, in order to encourage small holders touse Better Agricultural Practices, evaluate the finance for thereplacement of old seed plants, and increase awareness of exportingcompanies in their role of Socially Responsible Actors.

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Section ISection ISection ISection ISection I

OverviewOverviewOverviewOverviewOverview

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Argentine Tea : General OverviewArgentine Tea : General OverviewArgentine Tea : General OverviewArgentine Tea : General OverviewArgentine Tea : General Overview

The Tea plant (Camelia Sinensis) has grown in Argentina since the beginningof 20th century

In the International tea market, Argentina is ranked as the 9th Producer and the6th Export country

Argentina produced around 70.000 tons of tea in 2007

Argentina exports between 85 - 90 % of its total annual production

Tea exports mostly consist of black tea, as green tea only averages 1, 04% oftotal exports. The average export price for 2008 is USD 0.784 FOB/kg, althougheach destination country pays a different price.

Misiones is the first Argentine province that produces around 93 % of the totalproduction; Corrientes province concentrates the remaining 7%.

Argentina exports mainly to: USA, Chile, Germany, Holland, U.K., Poland, andRussia.

The domestic consumption of tea is very low; it represents 5% of total production.

Contribution to National Economy: Tea represents 0,001% of Argentine GDPand 0.01% of total exports.

Argentina sells mainly two types of tea:

Off grade, low price tea, used for the production of iced and soluble tea.

Main grade, classified tea intended for consumption or mixtures.

Argentine tea is mainly sold for the production of iced and mixed teas.

Argentina represents 1.76% hectares implanted worldwide by the year 1990and 1.61% by 2004.

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HISTORICAL OVERVIEWHISTORICAL OVERVIEWHISTORICAL OVERVIEWHISTORICAL OVERVIEWHISTORICAL OVERVIEW

The first tea plantations in Argentinawere made in 1924 through thegovernment initiative, but they began tohave economic importance after the tradebalance crisis in the year 1952.

Before 1950 domestic demand for tea wasentirely satisfied by imports, being aproduct consumed primarily by upperstrata of society. Since the deep recessionof 1952 the government faced the need formajor reforms in the policiesimplemented and restricted the use offoreign currency for the importation ofluxury goods such as tea and the inabilityto import this product at the officialexchange rate. This generated a significant

increase in the domestic price of tea and gave sustenance to the start oftea production.

As a consequence, in the years between 1953 and 1955 the hectaresimplanted grew explosively in 30,000 hectares, 780 per cent rise(reaching 45.000 in total) with a average annual growth of 625 hectares,but with many problems concerning the selection of plants, inadequatedensities and other issues which impacted in the quality of the finalproduct. Similar problems were experienced in the later stages of thechain, mostly in the dryers which were not built in an appropriateway to generate a good quality of tea processing and classification.

This rapid pace of planting did not allowed to select high quality seedplants, or the employment of the right techniques. All these featuresand technology generated a high negative impact to the sector heavilyindustrialized and conditioning quality factor.

The same crisis that gave incentive the tea production prevented theimport of machinery suitable for processing. Consequently needed toundertake adjustments to machinery, which reproduced models of other

Argentina

South AmericaSouth AmericaSouth AmericaSouth AmericaSouth America

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countries, with the aim of prosecuting the recent amount of rawmaterial

The volume of tea exported, acquired importance since the 60s. Sincethen, the activity devoted most of the production to external markets.

Between 1960 and 1965 several prototypes were developed and built.

Due to cost production cuts together with the genetic quality ofplantations has led to international consideration of Argentine tea as agood color product and a low middle quality without its owncharacteristics, which make it suitable for mixing with tea of goodquality.

Public policies were relevant to the activity from the mid-70s. Theimplementation of national policies, such as rebate payments toexporters, and pre-export financing led to a sustainable growth of thetea industry. The cooperative sector also received support throughfavourable credit lines.

Since the mid-’80s changes in the destiny of productions were generated.U.S. became the main country of destinations followed by the UnitedKingdom and Chile.

Nowadays, 50 per cent of shipments are still destined to United States.The quality demanded by this country is identified as containing thenames of BT, BT1, BT2, and so on. It is characterized by its high fibrecontent and good colour, suitable for dispensing iced tea or for theproduction of soluble tea. Such demand even led to the development ofcutting light at the end of the harvest, with the consequent lower quality.

This situation continues until the present with an increase of the totalproduction of 70 per cent on average, despite a 25 per cent reduction inarea under the crop generating a strong degradation of the country’simage as an exporter of tea.

In 2007 the national production of dry tea, reached 73 thousand tonswhich value reached 55 million USD. For the 2008 campaign and giventhe agro-climatic conditions and international market demand, it isestimated that the dry tea production will increase up to 79 thousandtons (equivalent to about 355,000 tons of green tea buds).

According to the 2002 census, in the province of Misiones there are6.108 tea producers and 23 in the province of Corrientes, with an area of35,000 hectares located in Misiones and 1,760 hectares in Corrientes. Itis estimated that since then there are an average of 8.000 producers intotal.

Misiones main producing areas are located in the departments of Oberáwith 13,000 hectares followed by Cainguas with 10,000 hectares.

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Exports for 2007 came to 73,000 tons the larger volume in history, at anexport value of 0.70 U $ S / kg which represents a 40 per cent to 50 percent of the average price of world exports.

STAKEHOLDER REPRESENTATIONSTAKEHOLDER REPRESENTATIONSTAKEHOLDER REPRESENTATIONSTAKEHOLDER REPRESENTATIONSTAKEHOLDER REPRESENTATION

In the Argentine Tea sector, the major stakeholders are:

Trade UnionsTrade UnionsTrade UnionsTrade UnionsTrade Unions

UATRE (Unión Argentina de Trabajadores Rurales y Estibadores)

Rural Workers Union of Jardín America

Rural Workers Union of Santo Pipo, Misiones

Rural Workers Union of Oberá (SUTA)

Rural Workers Association of Campo Viera (ATRAM)

Rural Workers Union of El Dorado, Misiones (SUOR)

Rural Workers Union of Puerto Libertad (Misiones)

Delegación Regional de Misiones de la Confederación General delTrabajo

Tea Planters AssociationsTea Planters AssociationsTea Planters AssociationsTea Planters AssociationsTea Planters Associations

Argentine Tea Camber (Cámara Argentina de Té)

Tea Small Growers AssociationsTea Small Growers AssociationsTea Small Growers AssociationsTea Small Growers AssociationsTea Small Growers Associations

APAM: Association of Agricultural producers of Misiones (Asociaciónde Productores Agropecuarios de Misiones)

Agricultural Movement of Misiones (Movimiento Agrario)

INDES Institute for Social Development and Human Promotion(Instituto de Desarrollo Social y Promoción Humana)

MAPO: Argentine Movement of Organic Producers (MovimientoArgentino de Productores Orgánicos)

CooperativesCooperativesCooperativesCooperativesCooperatives

COINAGRO Inter-cooperative Agricultural Confederation(Confederación Inter-cooperativa Agropecuaria)

Federation of Cooperatives of Misiones (Federación de Cooperativasde Misiones)

Association of Cooperatives of Misiones (Asociación de Cooperativasde Misiones)

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Factories’ AssociationsFactories’ AssociationsFactories’ AssociationsFactories’ AssociationsFactories’ Associations

CETA: Argentine Chamber of Tea Manufacturers (Cámara deElaboradores de Te de Argentina)

CIPA: Chamber of Manufacturers of Food Products (Cámara deIndustriales de Productos Alimenticios)

Government ActorsGovernment ActorsGovernment ActorsGovernment ActorsGovernment Actors

Secretary of Agriculture, Livestock, Fishery and Food ( itsabbreviation in Spanish, SAGPyA): Food Department (Dirección deAlimentos)

Ministry of Agriculture and Production of Misiones (DirecciónGeneral de Yerba Mate y Te)

Ministry of Labor and Social Security

RENATRE (Workers Registry)

Secretary of Commerce and Integration (Subsecretaria de Comercioen Integración), Misiones Government

INTA: National Institute of Agro Technology (Instituto Nacional deTecnología Agropecuaria)

OtherOtherOtherOtherOther

CoProTe (Provincial Tea Commission)

Tea Producers Cluster of Misiones (Aglomerado Productivo del Téde Misiones). Project Improvement of Competitiveness of theProductive Chain of Tea in Misiones IP-TEC MI 06 FONTAR MinCyT

Argentine Export Chamber (Cámara de Exportadores de la RepúblicaArgentina)

Misiones International Trade Chamber (Cámara de ComercioExterior de Misiones)

PRODUCTION ASPECTSPRODUCTION ASPECTSPRODUCTION ASPECTSPRODUCTION ASPECTSPRODUCTION ASPECTS

The Argentine tea region is located between 26 ° and 28 ° latitude south,becoming the world’s southernmost tea region.

According to the International Tea Committee, Argentina is the ninthtea producer in the world and the sixth exporter.

Dry Tea production in 2007 was approximately 79.716 tons accordingto the Secretary of Agriculture, Livestock, Fishery and Food (SAGPyAin Spanish Secretaria de Agricultura, Ganaderia, Pesca y Alimentacion)

The area under cultivation today comprises 40,000 ha, representing 80per cent of the production of tea in South America.

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The province of Misiones concentrates 93 per cent of the plantations inthe country; the remaining 7 per cent is derived mostly from North-eastern Corrientes.

The main factors influencing the crops and explaining the highproduction in the area are:

Height of around 300 meters, the tropical climate with no dryseason.

Soil that contains a high percentage of iron oxide.

The height is a variable that affects particularly on the properties of Tea,the final product characteristics improves with the height of the crop.

The climate is subtropical moist, rainfall ranging from 1800 to 2200mm annually. With these conditions the crop develops its harvest periodbetween October to May.

Main characteristics of primary productionMain characteristics of primary productionMain characteristics of primary productionMain characteristics of primary productionMain characteristics of primary production

Tea is a perennial crop which has a productive life of 30 to 50 years.Since its planting the first productive years are the third or fourth yearsand has its peak in the sixth or seventh year.

The harvest takes place in periods of 10 to 15 days depending on thesprouting and the level at which the sprout is cut, affecting the qualityof the raw material.

Argentine tea harvest period is between October and May.

The main tasks are represented by the management of weeds, pruningand fertilization.

Producing regions in Argentina can be divided into four zones, accordingto agro-ecological and economic criteria (total area and diversification):

1. The South Centre Zone, which covers the departments of Oberá,Leandro N.

Alem and San Javier, constitutes the most important region with41.5 per cent of the total area planted. It is characterized by a highdegree of diversification of its exports, where the main perennialscrops are besides the tea: the yerba mate, forest resources and to alesser extent, the tung. This region has the highest degree oftechnology adoption in terms of fertilization, pruning, harvestingand use of clonal varieties.

2. The North Central Zone with 29.8 per cent of the total area under teain Argentina, including the departments of Cainguas, Guarani and25 de Mayo. There are a significant number of farms that accompanythe tea, although this is the only perennial crop that develops in thearea.

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3. The Alto Parana area with 16.2 per cent of the area is located in thedepartments of Monte Carlo, Libertador Gral. San Martin and to alesser extent in Iguazu and Gral. Belgrano. It has diversified holdingswith yerba mate, citrus and forest, in recent years has undergone aprocess of regression in the progress of forestry projects.

4. The zone of Campo concentrates 12.5 per cent of the area and includesthe departments of Apostles and Concepcion de la Sierra, Santo Tomee Ituzaingó (the last two in the province of Corrientes). In general,this area has experienced a regressive process in the departments ofMisiones, by contrast, a very good productive level in thedepartments of Corrientes, thanks to high technology adoption.

Types of tea production and volumesTypes of tea production and volumesTypes of tea production and volumesTypes of tea production and volumesTypes of tea production and volumes

Although there are several types of tea which the people usually drink,there are all made with the same shoots, leaves and ripe from the plantof tea (Camellia sinensis (L.) O. Kuntze).

The variety in the flavours of tea depends on the botanical sinensisvarieties, Assam or its hybrid, forms of cultivation, age and type ofharvesting and processing.

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On this last point, there are three categories of tea:

Green or not oxidized

Semi-oxidized, known as Oolong

Black or oxidized

Ninety-nine per cent of Argentinian tea is produced as black tea.

Green tea exports and production participate only with small volumes(1 per cent). In 2004 the highest green tea export was registered (2.4 per cent).

Argentina produces and commercializes different grades of black tea:primary and secondary types according to international classification.

Off grades (used in the composition of various products of the food andbeverage industry) are also commercialized. In 2007 off gradesrepresented 18 per cent of total exports.

International Denomination of Tea TypesInternational Denomination of Tea TypesInternational Denomination of Tea TypesInternational Denomination of Tea TypesInternational Denomination of Tea Types

The following are the various types of tea:

Primary: FP (Flowery Pekoe); P (Pekoe); FBOP (Flowery brokenOrange Pekoe); BOP (Broken Orange Pekoe); BOPF (Broken OrangePekoe Fannings); BOPD (Broken Orange Pekoe Dust).

Secondary: BM (Broken Mixed) PF (Pekoe Fannings); PD (PekoeDust); FD (Fine Dust).

There is an expected increase in annual export to 100,000 tonnes of drytea, with a ratio of 40 per cent of BOP, Fannings and Dust and 60 per centof BT (Broken tea).

CATEGORIZATION OF PRODUCTION UNITSCATEGORIZATION OF PRODUCTION UNITSCATEGORIZATION OF PRODUCTION UNITSCATEGORIZATION OF PRODUCTION UNITSCATEGORIZATION OF PRODUCTION UNITS

Approximately 8,000 producers cultivate tea in the province of Misionesand in the north-western province of Corrientes.

In Misiones a high concentration of estates are found in small scaleproductions, estates with less than 10 ha represent more than 80 percent however their participation over total planted area in the provinceis 53 per cent.

Table 1Stratification of Tea Plantations

Hectares 0.1 5.1 10.1 20.1 30.1 40.1 > 50to 5 to 10 to 20 to 30 to 40 to 50

Concentration 67% 18% 13% 1% 0% 0% 1%ParticipationPlanted Area 30% 23% 24% 6% 2% 2% 13%Source: National Agricultural Census 2002, INDEC

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Another important variable to take into account is the producer’srelation with the drying plants and there are five types of relationships:

1 Estates that belong to the dryers (vertical integration), but are notsupplied 100 per cent by their own plantations (15 to 20 per cent ofthe area).

2 Producers that belong to cooperatives delivering their productionto their dryers (10 to 15 per cent area).

3 The most common type of relationship are the verbal agreementsbetween producers and drying plants for the delivery of the outputof the campaign. These arrangements are generally respected yearafter year due to the strength bonds between the actors.

4 Farm leasing, the outsourcing to third parties or drying plants isalso an important form of relationship, especially in periods of lowprices.

5 Finally, there are farms without a defined structure relation,switching between different forms and seeking access to betteropportunities.

It is difficult to quantify the way they are connected but anapproximation reaches figures where 15 to 20 per cent of the area locatedin Misiones belongs to totally integrated companies and these estatesdo not exceed 3 per cent of total estates.

Between 10 per cent and 15 per cent of the area is related (has some kindof relationship) to cooperatives, 4 per cent and 8 per cent overall smallscale producers.

The remaining percentages (65 to 75 per cent of the area and 90 per centof small scale producers) are connected with scheduled deliveriesthrough private drying plants or cooperatives; outsourcing work orcombining forms of trading.

ManufacturersManufacturersManufacturersManufacturersManufacturers

Green Leaves Processors: This group does the drying process but theydo not do the sorting. They sell their product to drying plants whichare in charge of sifting and classifying leaves. Their equipment is veryvaried in obsolescence.

Processors and Classifiers: This group does the drying and sortingprocess. Their sales consist only on classified tea. Their technology isnot advanced, as they usually use machines that previously belongedto more advanced dryers.

Processors, Classifiers and Exporters: These business groups constitutethe economic stages of drying, classification and distribution of tea.They sell classified tea to the domestic and exporting market. Thesecompanies usually work throughout the entire year.

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Domestic market processors: In addition to large exporting companiesthere are a number of companies that outsource or completelyintegrated activities and produce fractioned tea for final consumption,mainly domestic.

Location of dryersLocation of dryersLocation of dryersLocation of dryersLocation of dryers

The dryers need to be close to the primary production due to theperishable nature of the tea buds; therefore distribution in the dryer’sterritory is dependent on the location of primary production, andmainly in the core production area.

The concentration of business is principally in the departments of Oberáand Cainguás.

SizeSizeSizeSizeSize

Depending on the type of processing plant, “leaves or classifiers” theirannual process goes from 500 tons (about 2,500 tons of tea buds) up to2,000 tons of dry tea. Usually the smaller plants belong to the “leavesprocessors” and the larger plants to the manufacture exporters.

Small Plants hire between 1 to 10 employees, medium up to 20, whilelarge plants employ over 100 people (P. Henry, 1999)

Technical SpecificationsTechnical SpecificationsTechnical SpecificationsTechnical SpecificationsTechnical Specifications

There is no information regarding status of the technological level ofmachinery and infrastructure of the different plants; we can only referto larger enterprises,

mainly exporters, who have the best technological capacity. The restpresent some industrial delay, they utilize local manufactured machine,machinery replaced by big companies and in some cases new machinery.

According to a survey made to a group of producers their vision of thetechnological state of their plants was “not obsolete and sufficient forthe activity being done” (“The chain of tea business in Misiones”, 2005).

It is important to mention, that almost 95 per cent of the machinery usefirewood as source of energy to generate heat.

CompaniesCompaniesCompaniesCompaniesCompanies

The largest manufacturing company is the Establishment Casa FuenteSA, with their dryers located in the central province of Misiones, withprimary production, sorting and export fully integrated.

Other major firms in the province of Misiones are El Vasco SA, DonBasilio S.A., Las Treinta S.A., Ceticom SRL, EXA S.A, Koch TschirschSACIFEI, Picada Libertad Cooperative Ltda., Compañía Argentina deTe, and Yerbatera of NE.

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In Corrientes with a fully integrated production, designed primarily tothe domestic market are the Establishment Las Marías SA andEstablishment Diez Hermanos Hrenuk SA. Theire representation is theexport market is very little.

Outside the basin producing “Fraccionadoras” and packagingcompanies such as La Virginia SA in Santa Fe; Cabrales SA, IG PadillaSA, J. Llorente SA are located in the City of Buenos Aires, and theProvince of Buenos Aires,

Sol de Acuario is in charge of the distribution of certified organicproducts.

OthersOthersOthersOthersOthers

The other players are: Coop. Agrícola Ltda. Ruiz de Montoya; AlfredoLinz; Hreñuk S.A.; Kraus S.A.; Empresa ABC SRL.

CooperativesCooperativesCooperativesCooperativesCooperatives

Cooperatives are farmers organizations constituted to lower their costsand have better insertion in the market, buy inputs, shared technicalassistance and training, sell their production as a whole, increase thevolume and improve the price, and initiate processes of transformationof primary production.

The association of agricultural cooperatives through federations,confederations, leagues or unions of cooperatives strengthens theposition of cooperatives in the first degree and allows them to providenew and more sophisticated services of an economic-financial(workshops or factories, nurseries, etc.. )

Argentina has a highly developed agricultural cooperative movement,composed by major states and expanding.

Agricultural Cooperatives increase and regularize the income ofproducers, especially because they can sell their products in moreappropriate amounts, they have access to more distant markets ordesirable, offer their products in the form of conservation or processmore suitable, replace individuals and eliminate superfluousmiddlemen.

It also allows those farmers who have fewer resources or are moreadversely located, to perform in a satisfactory manner, as long as theymeet the minimum requirements set by agricultural cooperatives andare within their respective area of operations. They promote regionaldevelopment and industrialization of areas (General, not only of tea).

In the Argentine agriculture sector:

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120,000 producers associated with agricultural cooperatives.300,000 permanent and temporary workers in these agriculturalunits.

40,000 jobs are directly in the agricultural cooperatives.

20,000 additional jobs that depend on these cooperatives in anindirect way by the outsourcing of transportation services anddistribution.

More than 500,000 people depend directly on the complexagricultural cooperative that expands from small communitiesin which they operate directly to the gondolas of the supermarketsand ports.

The agricultural cooperatives billed more than $ 7,500,000,000 per yearand its exports exceed $ 3,000,000,000 annually, accounting for 6 percent of Gross Domestic Product (GDP). This about 9 per cent of the totalfood industry.

Argentina sold approximately 22 per cent of all agri production fromthe field, while tea accounted for 30 per cent of production.

EVOLUTION OF PLANTED AREAEVOLUTION OF PLANTED AREAEVOLUTION OF PLANTED AREAEVOLUTION OF PLANTED AREAEVOLUTION OF PLANTED AREA

The evolution of the planted area can be observed in three main stagesin the chart below.

Hectares under plantation

The first stage is reflected between 1953 and 1955 where the increaseshot up by 29,000 hectares, representing a 780 per cent rise compared

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with 1953. This explosive growth generated problems concerning theselection of plants, inadequate densities and other issues which impactedin the quality of the final product. Similar problems were experiencedin later stages of the chain, mostly in the dryers which were not built inan appropriate way to generate a good quality of tea processing andclassification.1

The second phase is between 1956 and 1975. Peaking at 45,000 hectares,it reached the highest point of planted area in tea history according toITC.

At this stage, although there were years of some slight decrease, thearea increased at the rate of 1.58 per cent per annum.

In the third stage, until the year 2006, a fairly shallow drop of 8,100hectares can be seen with an annual fall of 0.65 per cent resulting in36,300 hectares by the year 2004 according to ITC.

This development marks the slump (stagnation) of the plantations andlittle renovation of them, which, corresponds to the internationaloverview. By 1990 there were approximately 2,350,000 hectares in theworld and towards 2004 there were 2,250,000 hectares, this indicates adecrease of 4 per cent between those years.2 Internationally, Argentinaapportioned 1.76 per cent of world’s tea plantations by the year 1990and 1.61 per cent by 2004.

The area under cultivation today comprises 40,000 hectares,representing 80 per cent of the production of tea in South America.

INFLUENCING FACTORSINFLUENCING FACTORSINFLUENCING FACTORSINFLUENCING FACTORSINFLUENCING FACTORS

AgeAgeAgeAgeAge

Information regarding the planted area is very important to estimatefuture production. However, tea production depends as well on otherfactors besides the planted surface, such as the age of plantations whichplay an important role in production and yields. It is important toidentify the new planted areas and the reasons why some others areeliminated or have been abandoned, leading to changes in thedistribution of ages within the total stock.

The area of tea plantations represents an average age of 35 years andthat situation has improved in recent years with new plantations.

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Table 2

Distribution of total hectares by age category

Total < 5 5-14 15-29 > 30 Notyrs yrs yrs yrs categorised

Hectares 36.660 751 3.659 10.384 21.463 404 %age 2 10 28 59 1

Average Age 33.58 2.50 9.50 22.0 45.0Source: National Agricultural Census, 2002

Density, Management, Genetic and ClimateDensity, Management, Genetic and ClimateDensity, Management, Genetic and ClimateDensity, Management, Genetic and ClimateDensity, Management, Genetic and Climate

Another important factor is the density of plantations with differentyields, as well as aspects of crop management, genetic and climaticfactors.

Producers: In order to avoid uncertainty in the investment decisionprocess, more accurate information is needed to at least be able toestimate the performance of the investment in potential extremesituations.

Machinery: In the province of Misiones there are 2.511 tea harvesters.According to the National Agricultural Census of 2002, small-scaleproducers own 2,300 of them over an area of 19,000 hectares. The estatesthat have a harvester possess an average 8 ha. of tea and estates thatdoes not have this have average of 4 ha.

The average age of the fleet of harvesters is quite considerable, 76 percent of the park presents an age of over 15 years.

Intermediary AgentsIntermediary AgentsIntermediary AgentsIntermediary AgentsIntermediary Agents

Storages or Consignees: They are called “storages” (acopiadores) – thoseindividuals or corporations who are in charge of searching sources ofproduction of tea, agree on the terms of the transaction and carry theload until the dryers. These intermediaries have very good knowledgeof the producing area, and their respective paths. They also have themeans to transport the crop. They work on commission and aredependent on the fee they fixed with the dryer.

It is a player that has declined in importance in recent times, althoughaccording to the census of 2002, there were 864 small scale producersthat used this medium for trading. If we add to this the number ofconsignment agents, we reach the provincial level of 1436 smallproducers that use this method, that being 23.51 per cent of all small-scale producers.

Pruning and Harvesting Contractors: New forms of associations haveemerged in order to reduce costs and expand gross margins. It surges in

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this way, the use of machinery and transport shared by producers, theimplementation of plans to swap value product for fuel, agriculturalchemicals and fertilizers by the storages/ processors and the leasing oftea plantations by contractors.

Brokers: Another important factor, but this will be dealt with in thetrade section in more detail.

PRICE VARIATION IN DIFFERENT TYPES OF TEA PRODUCTIONPRICE VARIATION IN DIFFERENT TYPES OF TEA PRODUCTIONPRICE VARIATION IN DIFFERENT TYPES OF TEA PRODUCTIONPRICE VARIATION IN DIFFERENT TYPES OF TEA PRODUCTIONPRICE VARIATION IN DIFFERENT TYPES OF TEA PRODUCTION33333

Green sproutGreen sproutGreen sproutGreen sproutGreen sprout

The green sprout is the raw material that is delivered to “acopiadores”(“tea collectors”) or directly to dryers. Values are agreed between theproducer and the industry, which at present is US $ 0.08 per kilogram,delivered at the dryer. This price is agreed by CoProTe; ProvincialCommittee of Tea; formed by actors of all sectors, government, largeand small producers, trade unions, cooperatives and the INTA (NationalInstitute of AgroTechnology).

Dry teaDry teaDry teaDry teaDry tea

This designation applies to black tea after the drying process. Its valueis measured in dollars as it is mainly designated for internationalmarkets. The average price during the August 2008 period was US$0.83 FOB per kilogram.

Retail domestic price of black tea bagsRetail domestic price of black tea bagsRetail domestic price of black tea bagsRetail domestic price of black tea bagsRetail domestic price of black tea bags

Considering the value of the box of 50 pieces of black tea in bags in thelocal market, it is noted that while there have been increases every yearsince 2001 the proportion of the increase has been declining.

The largest increase occurred between 2001 and 2002 (56.5%) and lowestamong the years 2004 and 2005 (4.2%). During 2008 the average pricehas been AR$ 3.18 (US $0.95) per pack .

International PricesInternational PricesInternational PricesInternational PricesInternational Prices

Tea prices are set through auctions in various countries of globalrelevance in terms of production and export of the product.

These prices are taken as reference for international businesstransactions and also setting the trends of behaviour of the markets.

Between 2005 and 2007 the average export prices for Argentina showpositive trend, following the trend of prices at auctions in Colombo (SriLanka) and Calcutta (India).

By contrast, prices in the auction in Mombasa (Kenya) recorded negativetrend between 2006 and 2007, due to social conflicts that prevented the

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normal development of the crop, the determination of prices andcommercialization in the country.

In Argentina, during to the first quarter of the year, the average exportprice retracted 6 per cent. The exporting companies negotiate the pricedirectly with the trader, broker or buying companies overseas.

NUMBER OF WORKERS INVOLVEDNUMBER OF WORKERS INVOLVEDNUMBER OF WORKERS INVOLVEDNUMBER OF WORKERS INVOLVEDNUMBER OF WORKERS INVOLVED

The number of producers involved in tea production totals 8000,concentrating 89.5 per cent in holdings of up to 50 ha and an averagesize of 3 to 5 ha. of tea.

Despite the efforts, we have not found precise information regardingthe percentages of legal workers in tea plantations; it is very commonto find workers getting paid “under the table.” However, after severalconversations with people from the industry, we came to the conclusionthat mainly big companies and cooperatives have legal workers, smallproducers cannot afford hiring in legal terms, therefore they work withhelp from their neighbours’ farms and family, or they hire casual workerspaid in cash (not declared).

ASSESSMENT OF CRITICAL ISSUES IN TEAASSESSMENT OF CRITICAL ISSUES IN TEAASSESSMENT OF CRITICAL ISSUES IN TEAASSESSMENT OF CRITICAL ISSUES IN TEAASSESSMENT OF CRITICAL ISSUES IN TEAPRODUCTION IN ARGENTINAPRODUCTION IN ARGENTINAPRODUCTION IN ARGENTINAPRODUCTION IN ARGENTINAPRODUCTION IN ARGENTINA

Integration between primary production and manufacturersIntegration between primary production and manufacturersIntegration between primary production and manufacturersIntegration between primary production and manufacturersIntegration between primary production and manufacturers

The link between primary production and processing was balanceduntil the late 1990s by the intervention of the state mediator andregulatory action of two cooperatives, which came to have a flow ofmovement of raw materials, of between 40 to 50 per cent of productionin the Province of Misiones.

At present both the national and provincial government andcooperatives have ceased to have the influence of previous decades.Given this fact, new players have emerged in the industrial and servicesectors, large manufacturers, exporters and contractors pruning andharvest.

So among the primary producers, processors and contractors haveemerged new associative forms in order to reduce costs and expandgross margins. Surge the use of machinery and transport shared byproducers, the implementation of plans to swap value product for fuel,agricultural chemicals and fertilizers by the processors and the leasingof tea areas by the contractors.

In order to establish a more balanced integration, it is desirable toidentify the strengths and weaknesses of primary producers, processorsand contractors, and strike a match consensus.

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Primary productionPrimary productionPrimary productionPrimary productionPrimary production

In order to strength integration it is appropriate to establish certainparameters, such as:

Feature quality of the raw material defendant;

Payment deadlines set;

Security in the collection;

Setting a price range for each quality.

Manufacturers require:

Homogeneity in cultural practices;

Proper handling of raw materials in the collection, storage andtransfer stages;

Uniform quality in raw material.

TRADE ASPECTSTRADE ASPECTSTRADE ASPECTSTRADE ASPECTSTRADE ASPECTS

The commercialization of the product is a fundamental issue for abalanced development of the chain, since the possibility of obtaininggood prices will impact positively not only the industrial but also forthe producer and in general, for all the players directly or indirectlywith the activity.

This necessarily implies strongly attacking the factors that determinethat Argentina receives prices significantly lower than other producingcountries. While many of these factors are purely agronomic,environmental or organizational, the morphology of the marketingstructure prevailing in the sector could constitute a restriction for thefull exploitation of the gains in efficiency and productivity that areexperiencing the primary and industrial sectors.

Briefly, the operations of sale in the producing area are conducted mostlythrough brokers or traders who represent or interact with majorinternational companies. The biggest local exporting companies, manytimes trade directly with the company overseas. These transactionsare carried out using as a reference framework for the so-calledStandards of Marketing, a system that classifies the product in differentquality levels in line with the parameters set

Supply ChainSupply ChainSupply ChainSupply ChainSupply Chain

The buyers are either companies such as Unilever or other teawholesalers worldwide, that process the Argentine tea sold in big bagsof 600 kg. These companies process them either as tea bags, iced tea orblend it with other processed tea form other countries.

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Consumers buy the final product in different types of presentations.

Processing Factories (Drying Plants)Processing Factories (Drying Plants)Processing Factories (Drying Plants)Processing Factories (Drying Plants)Processing Factories (Drying Plants)

At the time of seeking information on the existence of drying plants itwas scarce, so the values presented should be considered as estimations.The following Table also shows an approximation of the quantity andtype of drying in the production area. The concentration of business ismainly in the departments of Oberá and CaInguás.

The data presented is reduced if we consider companies with morethan one plant (about five); these companies have between two and

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four plants located in different areas and are mainly exportingcompanies.

Table 2Types and amount of dryers

Type of dryers

Leaves Processors 68 52%

Processors and Classifiers 14 11%

Processors, Classifiers and Exporters 38 29%

Classifiers 3 2%

Others 9 7%

Total 132Source: CNA02, Enrique 1999, Dirección de saneamiento ambiental Gobiernode Misiones

The problem with tea is that it is a very perishable commodity bothbefore and after processing. Producing high quality tea relies on smoothtransport and other infrastructure networks to get the tea quickly toand from the processing factories. The green tea leaf cannot be storedfor longer than six hours without damaging its quality, and it isrecommended that there is a maximum of three hours interval betweenharvesting and processing for good quality tea. Likewise processed teahas a shelf life of only a year before experiencing a serious drop in quality.The longer the tea is kept the higher transaction costs are as the tea mayneed repeated quality assessment and grading.

The fact that small holders grow their tea in geographically dispersedareas makes it difficult for the marketing system to move the teaefficiently and quickly. The small producers sometimes have very littlechoice in whom to sell their tea to, and in such cases they are forced tosell to whichever buyer can process it relatively quickly.

Bearing the brunt of higher costsBearing the brunt of higher costsBearing the brunt of higher costsBearing the brunt of higher costsBearing the brunt of higher costs

Increasing costs are particularly hard on smallholders. On one hand,they pay more for inputs such as fertilizer as they do not buy in bulk,and on the other hand they have poor access to infrastructure andmarket information necessary to increase productivity, with the resultthat they have much lower yields than big plantations.

The average yield per hectare for small holder farms is currently around70 per cent or less of those of big plantations. Small scale plantationhave an average yield of 4.000 kg/ha while big plantations have 20.000kg/ha.

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For farmers with a small amount of land, yield can make the differencebetween a satisfactory income and poverty. They therefore need trainingand advice, but this demand is only inadequately met by tea boardswho consider them too small to worry about.

Main playersMain playersMain playersMain playersMain players

Exporters

Casa Fuentes SACIFI; Don Basilio; El Vasco S.A.; Las Treinta S.A.; KochTschirsch S.A.C.I.F.e.I

Local Players

Establecimiento Las Marías S.A. (Taragüi); J. Llorente S.A.; Café LaVirginia S.A.; Cabrales S.A.; I.G. Padilla S.A.; Establecimiento 10Hermanos S.A.; SANESA

Cooperatives

Cooperativa Agrícola Ltda. Ruiz de Montoya; Cooperativa AgrícolaLtda. Picada Libertad; Cooperativa Agrícola Ltda. de Oberá;C.O.P.E.T.E.G.L.A.; Cooperativa Agrícola Mixta de Montecarlo ;Cooperativa Agrícola Los Colonos Ltda.; Agrícola de la Colonia LiebigLtda

Others

Emprendimiento Exportador Agroforestal EXA S.A.; Alfredo Hinz;Hreñuk S.A.; Kraus S.A.; Empresa ABC SRL; Luis Gabrouski; SchuchardtHarry Enrique; Empresa Tealera Dos de Mayo- Baum; Ceticom SRL;Compañía Argentina de Te; Empire Tea SRL; Ernesto y Mario BarbaroS.A (La Obereña); Koch Tschirsch SACIFEI; Pech Hermanos S.A; TeKairiyama

Main Brokers

Buddemeyer C E; Van Rees; Soleven; Jorge Barbaro; Spider

Small farmers

Owners of 5 to 25 Ha farms

Trends in concentration and ownership characteristicsTrends in concentration and ownership characteristicsTrends in concentration and ownership characteristicsTrends in concentration and ownership characteristicsTrends in concentration and ownership characteristics

Most of the companies are owned by argentine people. Companies as ElVasco and Don Basilio have Spanish origins, from the first teasettlements, but at the moment they all belong to local people.

Multinationals like Unilever, buy their tea from these companies orthrough brokers.

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Value chain analysisValue chain analysisValue chain analysisValue chain analysisValue chain analysis

Small farmers sell their crop to plantations, middlemen or to factoriesthat buy up the raw tea, process it and then sell it. In some cases it is thefactory that collects the leaf directly from the smallholder, with whomthere is usually a contract, or in other cases the producer is in charge ofdelivering it to the factory absorbing transport costs.

Prices paid by factories to small holders are set nationally or regionallyby government and reviewed regularly (AR$ 0.27 cents, US$ 0.08delivered in the dryer). Prices for small holder tea tend to be lower thanprices for big plantation of tea because of the generally lower quality.Compared to large plantations with access to the latest technicalinformation, small holders lack the knowledge of how to harvest andstore the leaves properly, and how best to treat the bushes and theland. This situation is exacerbated because they often do not have thecapital to be able to afford the necessary technical inputs like fertilisersand pesticides.

Supply Chain Analysis: CostsSupply Chain Analysis: CostsSupply Chain Analysis: CostsSupply Chain Analysis: CostsSupply Chain Analysis: Costs

Yield 4.000 8.000 14.000 7.000 14.000 24.000

Technology Level Low Med High Low Med High

Fertilization None Nitrogen Total None Nitrogen Total

Plant Type Seed (%) Clonal (%)

Labour Force 18.1 14.5 10.5 8.8 6.7 4.8

Pruning & Fertilization 6.3 5.1 3.7 5.8 4.5 3.2

Inputs 10.6 16.5 27.1 9.9 14.6 23.6

Harvest 12.2 12.2 10.7 14.2 13 9.3

Transport 11.8 18.9 24 19.2 29.2 36

Amortizations 37.66 30.1 21.8 39.1 29.6 21.4

Administrative Costs 1.4 1.1 0.8 1.3 1 0.7

Taxes 2 1.6 1.1 1.8 1.4 1

If we assume that large-scale companies have medium to hightechnology and use mostly clonal plants and some seed plants we wouldhave the following distribution:

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Harvest Cost (Large Scale Company)

If we assume that small scale companies have mostly seed plants withlow to medium technology and some clonal plantations with lowtechnology, we would have the following graph:

Production Cost (Small Scale)

Dry Tea Production Costs for Small and Large Scale PlantsDry Tea Production Costs for Small and Large Scale PlantsDry Tea Production Costs for Small and Large Scale PlantsDry Tea Production Costs for Small and Large Scale PlantsDry Tea Production Costs for Small and Large Scale Plants

Updated and detailed data is not available. It is important to note thatdue to argentine high inflation, tea cost raised up to 30 per cent,especially in inputs such as the urea fertilizers.

Cost of production unit of black teaCost of production unit of black teaCost of production unit of black teaCost of production unit of black teaCost of production unit of black tea

Manufacturing and classifying plant: 1.500 ton annual capacity; yield23.2 per cent (Grades and BT).

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There is no available data regarding production costs for small scalecompanies.

PricePricePricePricePrice

The price is fixed by CoProTe. (Provincial Commission of TeaRepresentatives). Producers by law should get a fixed price for theirtea, however this is hardly respected.

According to market conditions, processors pay the price they considerappropriate.

After devaluation in Argentina, when exporting became a betterbusiness, prices were adjusted, but inputs prices raised as well, so itbecame even harder for the producer to get profit from his production.

Source: INTA Cerro Azul/Private Company Data

Large Scale

Variable Costs

Item %

Labour Force 7.14

Energy 15.99

Packaging 9.67

Others 1.00

Total Variable Costs 33.80

Fixed Costs

Item %

Labour Force 6.00

Amortizations 15.42

Maintenance 5.41

Administration 16.08

Cost and Freight Bs. As. 22.29

Others 1.00

Total Fixed Costs 66.20

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Since the arrival of Rainforest Alliance, some producers are receivingthe price fixed by the government while the others receive from AR$0.22 to AR$ 0.25.

Export figures and trendsExport figures and trendsExport figures and trendsExport figures and trendsExport figures and trends

The market for Argentine tea is medium/low quality; it is exportedmainly to USA.

Trends are still increasing, but due to world economy crush and beingUSA their main market companies are waiting to see what happens.

According to interviews made to the major tea companies it is believedthat tea consumption is not going to decrease. But on the other hand, ifUSA reduces their tea imports it would be a big problem for argentineproduction as it represents such large volumes that it would be hard toallocate it in other markets.

During the Falklands War Argentine companies have a similar problemwith UK, but they were able to sell their production to Pakistan due totheir conflict with India, so they replaced Indian tea for Argentine tea.

The volume of Argentine production has low impact on theinternational market. Argentina is located in the 9th position as aproducer and as the 6th-producing country exporter. The export volumerepresents just over 90 per cent of annual production, and 3.6 per centof world trade.

During the 2007 campaign 52,030 tonnes of black tea were sorted andbagged; bags of 50-60 kg were exported, with 33,361 tonnes and 5,964 tothe U.S. and Chile respectively. The rest was distributed between theRussian Federation, United Kingdom, Germany, Kenya, Paraguay andthe Netherlands.

The total value of shipments reached 38,783 million dollars.

Regarding the evolution of exports during the period 1995/2001 grewin volume by nearly 26 per cent, while the value of these increased by22 per cent. The difference originates centrally exposed to the greatestdegree of participation in secondary or BT Total shipments.

The average value per ton of exported black tea fluctuated in the span ofreference from 940 to 740 U.S. dollars. For the same period Sri Lankaearned an average of US$ 2.450, India 2317, Kenya 1824, 1209 Indonesiaand Malaysia 811.

Green tea had in the past decade, a growth of 2.6 per cent annually in itsproduction and of 9.2 per cent per annum in volume in the internationalmarket. Main producers-exporters are located China, Vietnam andIndonesia, while their older buyers are Morocco (24.3%), Japan (8.3%),USA (5.3%), Germany (5.1%), France (3.6%) and Canada (1.7%). Argentinaexported only 1 per cent.

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Argentine export companiesArgentine export companiesArgentine export companiesArgentine export companiesArgentine export companies

The largest exporting company is the Establishment Casa Fuentes S.A,fully integrated. Other major firms in the province of Misiones, alsointegrated, are El Vasco S.A, Don Basilio S.A, Las Treinta S.A, KochTschirsch SACIFEI, Campania Argentina de Te, EXA SA.

There are no auctions, exporter trades via brokers, directly with theforeign company, or in some cases with importer companies.

Argentine tea is exported to various markets worldwide. Between 2000and 2007 tea was sold at an average of 39 foreign markets. This showsboth the presence of the product worldwide, as the search for newmarkets by the domestic tea sector.

Export Countries (2007)(In thousand tons/in millions U$ FOB)

Participation

Country Volume Value

United States 64.4 55.6

Chile 9.7 15.6

Germany 5.8 5.2

Holland 5,0 4.9

UK 4.9 6.4

India 2.0 2.2

Kenya 1.7 3.9

Poland 1.6 1.9

Others 4.8 4.3

USA paid in august 0,96 USD FOB/kg, Chile 0,50 USD/kg, Poland, Holland,China, UK, Canada, India paid values under 0,80 USD FOB/kg

USA market profileUSA market profileUSA market profileUSA market profileUSA market profile

According to a report made by the Tea Association of the USA “, tea isthe most consumed beverage in the world along with water, and can befound in 80 per cent of households. It is the only drink that is served hotor iced, at any time, place and for any occasion. Any day, more than 127million Americans are taking tea. In 2005, it was consumed in the UnitedStates over 50,000 million cups of tea and the estimated value of the tea

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market reached U.S. $ 6.160 million dollars. 87 per cent of all teaconsumed is black tea and 12.5 per cent green tea.

Approximately 85 per cent of tea consumed in the U.S. is iced tea, ahabit not common in other countries.

Over the past 10 years, the pattern of tea “Ready-to-Drink” (bottled teaready to take) has grown almost 10 times: in 2005 sales under thisprocedure were estimated at USD 2410 million.

65 per cent of tea served in the U.S. during 2005 was in tea bags. Instanttea is declining, while the loose-leaf tea is gaining popularity, especiallyin sectors gourmet and business expertise.

As to the level of sales, 2005 marked the fourteenth consecutive yearthat sales to consumers rose. Only sales in supermarkets exceeded USD1,900 million dollars. The consumption outside the home has been risingat least 10 per cent annually over the last decade.

The experts anticipate a strong and sustained growth in the tea industryin the next five years. This growth will come from all sectors driven byconvenience, by the interest in the healthy properties of tea, and thediscovery of gourmet varieties of tea. In 2005 Argentina exported teavalued at US$ 35 million.

Imports of Argentine highlighted the sale of black tea made otherwisewith a total of US$ 33,611,000 during 2005 that put their country firstranking of imports of that product.

The ports of entry where they were registered during 2005 65 per centof imports under tariff positions considered in this profile are listed indescending order: New York, NY; Los Angeles, CA; Norfolk, VA and SanFrancisco, CA.

Entry requirements and documentationEntry requirements and documentationEntry requirements and documentationEntry requirements and documentationEntry requirements and documentation

The import of herbal tea is regulated by the U.S. Customs Service(www.customs.gov) and the Food and Drug Administration or FDA(www.fda.gov).

The main factors to take into account are:Provisions set by FDA in the “Law on import of tea” (Tea ImportAct), which sets standards for purity and quality so that the teais fit for human consumption.

In the case of products entering the country packaged for retailsale, it must follow the rules on labelling of foods FDA, accordingto the law called the Fair Packaging and Labelling Act. Amongother data, the package must include: name of the product, nameand place of operation of the manufacturer, packer or distributor;ingredients, spices, flavours and colours; portion sizes andnumber of servings per package.

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Imported products regulated by FDA can be inspected at time ofadmission. If FDA does not require inspection of samples, it emits a“proceed with the import,” with which the shipment is free fromrequirements of this body. On the other hand, if it indicates a “notice ofspecimen”, the products will be analyzed by FDA before being allowedentry into the U.S. market. Those shipments that do not comply withthe laws and regulations will be retained, amended so as to complywith, or to destroy or re-exported.

There are no non-tariff restrictions.

According to the instructions issued by the Customs Service thedocuments required for entry of goods to the U.S. are as follows:

Income Manifest (Customs Form 7533), or Application and Permitfor immediate delivery (Customs Form 3461)

Evidence of the right products to enter the country, such as a billof lading or air waybill)

Commercial Invoice or pro forma

List /s packaging (if appropriate)

Summary of income (Customs Form 7501)

Any other documents necessary to establish that the cargo canbe admitted legally in the country.

Evidence of payment guarantee (in English, Surety Bond)

Certificate of Origin is not required but helps the office of the U.S. torelieve the burden more easily, as well as to ensure the properapplication fee included in the GSP as appropriate. For this reason it isrecommended to have it.

Any other production certificates, specifications, quality certificates orother similar remain under negotiation between buyer and seller. Theoffice of the United States takes no part of such requirements.

Bond, a warranty or guarantee required by U.S. Customs, is required atpre-determined slab rates. If the value of the merchandise is less thanUS $ 8,000 the bond value would be US $ 45 and if the market valueexceeds US $ 8,000, it is US $ 4.50 for each US $ 1,000 for each import.

Bioterrorism ActBioterrorism ActBioterrorism ActBioterrorism ActBioterrorism Act

The Bioterrorism Act of 2002 changed the pattern of trade with theUnited States, as regards the entry of food from foreign countries.

The main elements of this new legislation are the requirements forregistration and notification. In this sense, ALL producer, importer and

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distributor of food regulated by FDA, either domestic or foreign, mustregister with the agency of the U.S. government. Any other agent that isin direct contact with food during the elaboration process and deposit/ storage of foods should also be registered.

This registration must be carried out unfailingly between October 16,2003 and Dec. 12 of that year, and then shipments of food will be held inthe port of entry. It also must give prior notification to FDA electronicallyof any shipment of food. All documentation must be accurate and reflectthe true nature of each shipment. Not to complete this requirement, theshipment will be held in a warehouse in the port of entry and the cost ofstorage will be charged to the importer, and there are also a possibilitythat has been refused entry to the country’s shipping directly

Chilean MarketChilean MarketChilean MarketChilean MarketChilean Market

Phytosanitary Requirements And Entry Conditions

Res. 3801/98 of Agriculture and Livestock Service provides theClassification of Goods Plant under the category of plant health riskand sets the conditions for entry into the country.

According to the resolution, Tea is in Category 1, which means that isexempt from the requirement to enter the country under an officialphytosanitary certificate from the country of origin.

Category 1 of health risk is the vegetal origin product whose rawmaterial has been subjected to one or more manufacturing processes orindustrialization, involving some transformed of their naturalcharacteristics, as a result of which they are not capable of being affecteddirectly by pests (www.sag.cl Agricultural Area).

Also, the Food Sanitary Regulation sets out the conditions that mustadhere to production, processing, packaging, storage, distribution, saleand importation of food (Decree 977 Ministry of Health OJ 13.05.97).

The aforementioned regulations set for tea the following requirements:

These three types of tea (green, red and black) must meet the followingrequirements:

Up to 20 per cent of stems; 12 per cent humidity; 8 per cent of totalash and 1 per cent ash insoluble in 10 per cent hydrochloric acid,both expressed in dry basis. It should contain a minimum, expressedin dry weight, of: 1 per cent of caffeine

24 per cent of aqueous extract of black tea; 28 per cent of aqueousextract in green tea.

It is for the Health Services to run the Sanitary Control of food (of everykind), toxic substances and hazardous for the health, pharmaceuticals

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products, medical use food, cosmetics, drugs and psychotropicsubstances. (Of.Circ. 604 D.N.A-15.10.82).

With regard to labelling and packaging, it is suggested to visit the websitewww.tecnoalimentos.cl.Note: See decree www.sesma.cl: Decree 977/199

England-Germany-HollandEngland-Germany-HollandEngland-Germany-HollandEngland-Germany-HollandEngland-Germany-Holland

This group represents one of the major importing markets of the world.Argentine imports may come to England and / or triangles with theother two countries. These three countries account for 15 per centArgentine tea exports.

The product exported to these markets is composed of two grades: Thehighest quality and the called “de corte” (fractionize) that presents alow price and is used by their colour to be mixed with other high-quality teas in order to obtain a product for specific markets.

ECONOMIC ASPECTSECONOMIC ASPECTSECONOMIC ASPECTSECONOMIC ASPECTSECONOMIC ASPECTS

Costs of Production of Green TeaCosts of Production of Green TeaCosts of Production of Green TeaCosts of Production of Green TeaCosts of Production of Green Tea

The cost varies according to the Type of production and technologylevel.

It is considered useful to contemplate first two important aspects thatdefine the potential yield: plantations originated from seeds and cloneplantations.

Subsequently, and according to the technological level used three levelshave been established: low, medium and high.

The physical and technical coefficients as well as other aspects oftechnology used to define them are shown in Table 1.

The economic results that are described above pertain to the 2007-2008campaign, which has defined an operating model based on data fromthe National Agricultural Census 2002.

It is important to note that 92 per cent of the tea EAP´s (small scaleplantations, 5 Ha) also produces Yerba Mate. This characteristic means

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Table 1Physical parameters of production in small plantations with different

levels of technology, in seed and clone plantations.

Seed CloneTechnology Level Technology Level

Total productionArea (Ha) 43 43 43 43 43 43Tea cultivated area (Ha) 5 5 5 5 5 5Tea Yield (Kg/Ha) 4.000 7.000 14.000 7.000 14.00022.000Distance to theDryer (Km) 15 15 15 15 15 15Plantation system Seed Seed Seed Clone Clone ClonePlantation density(Kg/Ha) 100 100 100 _ _ _Plantation density(0,60 x 2 m) Pl/Ha _ _ _ 8.333 8.333 8.333InputsFertilizer use: No Yes Yes No Yes YesUrea (Kg/Ha) 0 200 300 0 200 300Double Nitro (Kg/Ha) 0 0 300 0 0 300Herbicide (L/Ha) 1,5 1,5 2 1,5 1,5 2Acarus pesticide (L/Ha) 0 0,5 1 0,5 0,5 1Labour forceManual Un-herbage(Daily Wage/Ha) 2 2 2 2 2 2Fertilization(Daily Wage/Ha) 0 0,5 1 0 0,5 1Pesticide Pulverization(Daily Wage/Ha) 0 0,75 1,5 0,75 0,75 1,5Herbicide Pulverization(Daily Wage/Ha) 0,75 0,75 1,5 0,75 0,75 1,5Mechanical Harvesting(2h/ha) 2 personsDaily Wage/Ha 3,5 4 5 4 5 5,5Harvests per Year 8 8 8 8 8 8

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Table 2: Gross margin and operating results of theplantations with different levels of technology.

Seed CloneConcept Technology Level Technology Level

Low Med High Low Med HighAR$/Ha AR$/Ha

GrossIncome (+) 880,0 1.540,0 3.080,0 1,540,0 3.080,0 4.840,0Direct Costs (-) 1.225,6 2.249,2 3.837,6 1.531,7 2.671,9 4.322,5Gross Margin -345,6 -709,2 -757,6 8,3 408,1 517,5StructureExpenses (-) 94,4 107,5 130,0 103,7 115,0 133,7OperatingResults -440,0 -816,7 -887,5 -95,4 293,1 383,8

Table 3. Economic indicators for the small plantations with differentlevels of technology without considering the labour force of the

producer and his family.

Seed CloneConcept Technology Level Technology Level

Low Med High Low Med HighAR$/Ha AR$/Ha

Gross Income (+) 880 1.540 3.080 1.540 3.080 4.840Directs Costs (-) 479 1.346 2.672 664 1.678 3.048Gross Margin 401 194 408 876 1.402 1.792Structure Expenses (-) 94 107 130 104 115 134Operating Result 307 86 278 772 1.287 1.659Amortization (-) 328 379 558 420 453 542Net Income -21 -293 -279 352 834 1.116Unpaid LabourForce (-) 738 905 1.166 868 1.016 1.275Capital Income -759 -1.198 -1.445 -516 -181 -159Profitability -3,73% -5,22% -4,53% -2,06% -0,68% -0,51%

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that these EAPs (mainly the larger ones) have mechanical traction(around 40 per cent) for their cultural work. 82 per cent of these EAPshave a total area of less than 50 ha. In the same order, 90.5 per cent of teaplantations have less than 10 ha, which represent 58 per cent of thetotal area under tea cultivation in the province.

Some important aspects of the technological level indicate that 49 percent of EAPs are using fertilizer, 13 per cent applies acaroids and 52 percent make use of herbicides that in area represent 62 per cent, 29 percent and 72 per cent respectively. The fertilizer mostly used is urea

Economic performance

The gross income results belong to the yields reported in Table 1multiplied by the price of green tea leaves for $ 0.22 / kg. Table 2 showsgross margins of EAPs with different levels of technology.

EAPs with tea plantations of seeds in all cases are not enough to coverthe structure expenses, so that the operating result is negative at levelsof up to $ -887 / ha. These results are modified in tea plantations of cloneorigin of middle and high technology, since even the clone plants withlow technological level have negative operative results.

Direct costs include inputs identified in Table 1, plus the wages requiredin the various tasks, assigning the wages of rural workers establishedby the National Agrarian Labour Commission according to the latestcurrent resolution.

Since in these production systems, labour is provided by the farmerand his family, the gross margin could be made without consideringthe workforce as a direct expenditure, obtaining the results of the Table3.

These results improve substantially from the previous ones, with grossmargin and positive operating results in all cases, though much higherin plantations of clone origin. However, in the case of seed plantationsthese values do not reach to cover amortizations, so the net income isnegative. This is not the case with clone plantations that in all casesshow positive net income.

But these net revenues are not enough to reward back the workforce ofthe producer and his family for what the capital income ends upnegative in all cases and profitability returns are in the order of -3 to -5.

The fact that this analysis suggests is to show that probably theproducer is resigning his workforce paid to the legal values as a strategyto carry through this activity.

It should also be noted that the largest proportion of the plantations inproduction have planting seed origin, as the values of the 2002 Census

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Pp*= Price of tea sprout per kgPf*= Pf.Y. (1-K)Pf = export price of dry teaY = Yield of tea sprout in dry tea: 1/4.5 = 0, 2222K = % of industrial losses per kg of tea sprout 10%=0.5 kg

can corroborate where about 75 per cent of the area belong toplantations of more than 15 years old, being that the clone plantationshave started in the past decade.

The above Tables show that the fixed price of $0, 22 of last campaignwas not enough to cover production expenses. Most plantations haveseed origin, it is calculated that the price should be at least $ 0,34 tocover the costs. Only clone plantations, with high technology get realprofits. Small Holders in general have seed plantations, while the onlyactors that can afford buying clone plants are big companies. This showsthe how inequitable is the value chain.

Other CalculationOther CalculationOther CalculationOther CalculationOther Calculation

According to INTA (National Institute of Agro Technology) calculationsto estimate the cost of tea for each player, the mathematical operation isas follows:

The Liquid Margin is going to be considered, and also the price of someadjustments that refer to industrial losses.

Formula: LMc = Pf* / Pp* x 100

Pf*

Example with current prices:

Pp* = 0.27 AR$; Y = 0.2222; K = 10%; Pf = U$ 0.83 x 3.35 = AR$ 2.7805

Pf* = 2.7805 x 0, 2222 x (1- 0.1) = 0.556

LMc = (0.556 - 0.27) / 0.556 x 100 = 51,.438 %

In this way the industrial sector accounts for 51.438 per cent of the finalprice and the primary producer the other 48.562 per cent for those whoface up to their costs and profits.

Taken parameters of industrial performance and losses of the aboveexample and the price series in constant pesos of the green leaf and drytea for export show the number of LMc.

According to this formula 48.562 per cent goes back to the producer.But as we have seen before, costs are higher than incomes, and the age,and low yield of seed plantations that most of the producers have, showthe lack of profit that the small holders receive with this marketconditions. Moreover, the fixed price is never respected, even though it

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is defined by law. Producers usually receive 3 or 5 cents less thanestablished prices.

ArgentinaArgentinaArgentinaArgentinaArgentina

ExportsTotal exports Argentina: 50 bn USDTotal tea exports (2007): 55,5 million USD FOBTea represents 0.01% of total exportsGDPGDP Argentina (2007): 240 Bn USD (world bank 608,8 mil millones usd2007??)Contribution of tea industry to Argentina GDP: 0,001 %

MisionesMisionesMisionesMisionesMisiones

ExportsTotal Exports of Misiones (2007): 439 million USDTotal Tea Exports of Misiones (2007): 51.9 million USDContribution of tea exports to Misiones Economy: 12%GDPMisiones GDP: (2007, not official data available, estimated) USD 1,900millionsTotal tea production Misiones: 55 million USDContribution of tea production to Misiones GDP: Between 2/3%The production of tea in Missions represents between 2% and 3% ofthe province GDP.In Misiones most export consists in forestation.GDP based on purchasing-power-parity (PPP): (2007) 523.739 bn USDInflation rate (consumer prices): 9% is the official rate for 2007.Real rate is 20%

WagesWagesWagesWagesWages

Wages in the tea plantation sector are quite low comparing to otherindustries. In Argentina, official government figures for average dailyearnings indicate that a tea estate worker (and all rural workers in thecountry) earns AR$.61.82 (US$ 18) a day, while the average payment ofemployees registered in the commercial sector is AR$ 101.40 (US$31.2)a day and a metallurgical industry worker earns AR$ 80 (US$25) a day.

General minimum wage in Argentina is going up 27 percent, first fromto 980 pesos a month to 1,200 pesos a month in August 2008 and thenup to 1,240 pesos (US$ 400) a month in December. This increase was

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negotiated between labour unions, industry leaders, and thegovernment. Despite the fact that the government calculates the annualinflation at around 9 percent, independent analysts believe that it priceshave been increasing around 20 to 25 percent. The decision to increaseminimum wage so much more than the reported inflation perhapsreflects the general awareness in Argentina of the high inflation.

LEGAL ASPECTSLEGAL ASPECTSLEGAL ASPECTSLEGAL ASPECTSLEGAL ASPECTS

Labour Regulatory Framework:Labour Regulatory Framework:Labour Regulatory Framework:Labour Regulatory Framework:Labour Regulatory Framework:

Argentine Labour Laws are a Set of Public Laws

Labour activity is highly regulated

Governing principle is the protection of the Employee

Trade Unions representatives are protected by Law

Argentina’s Law structure is based on the European Union Systemwhere almost every activity has its position represented in one TradeUnion.

The Collective Bargaining Agreement Act and Trade Unions Act followthe above mentioned system. (Ref. ILO Convention 87 on Freedom ofAssociation) (Ref. ILO Convention 98 on Right to Organize and CollectiveBargaining)

Union representation depends neither on the Company’s will nor onthe Employee’s will. It depends on the type of function or task renderedby the Employee. (i.e., an employee working for a glass company andmanufacturing glass bottles will be represented by the Glass TradeUnion).

There exists two types of Unions, legally-recognized Unions and notlegally-recognized Unions. The legally recognized are those with rightsto claim on behalf of the Employees.

Labour and Working ConditionsLabour and Working ConditionsLabour and Working ConditionsLabour and Working ConditionsLabour and Working Conditions

Enforcement of Argentinian legislation relative to labour and workingconditions is an institutional responsibility of the Ministry of Labour,Employment and Social Security. The National Administration of SocialSecurity (Administración Nacional de la Seguridad Social – ANSES) reports tothe Ministry of Labour, Employment and Social Security.

In January 2000 a Federal Pact on Labour Conditions was ratifiedbetween the Federal Government and all provincial governments andthe Government of the City of Buenos Aires. This pact creates the FederalLabour Council which has institutional strengthening of labouradministration by the public sector as its main goal. The Federal Labour

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Council is headquartered at the Ministry of Labour, Employment andSocial Security.

In August 2000, the National Commission for Eradication of ChildLabour was created. Federal Decree No 719/00 establishes that thiscommission will be headed by the Ministry of Labour, Employmentand Social Security. (Ref. ILO Convention 182 on Worst Forms of ChildLabour).

Law No 25877/04 establishes general work conditions and regulationsaffecting administration of labour and labour conflicts. Among otheraspects, this law creates the National System of Labour Inspection andSocial Security (SIDITYSS) with responsibility for supervision andenforcement of compliance with labour and social security legislationon a national basis.

The Argentinian Constitution of 1994 includes provision for dignifiedand equitable work condition for all citizens, including limited workschedules, guaranteed minimum salary, remunerated rest and holidays,equal remuneration for equal tasks, profit sharing and participation inproduction control, protection against unjustified dismissal and theright to organize collectively in a free and democratic way. Workerrepresentatives are granted guarantees in order to be able to fulfil theirfunctions without risk of loss of employment. The Constitution furtherestablishes compulsory social security to be administered by nationaland/or provincial labour administrations with independent budgetallocations. This must avoid redundancy of payroll contributions andretirement entitlements.

The main federal laws affecting labour rights and conditions at workinclude:

Law No 25877/04 establishes general work conditions andregulations affecting administration of labour and labourconflicts.

Law No 25212 (November 1999), which establishes the FederalPact on Labour Conditions (ratified in January 2000) andinstitutes the Federal Labour Council.

Law No 25191 (November 1999), which among other aspectsestablishes special conditions for rural workers.

Law No 24467 (March 2005) deals with promotion anddevelopment of small and medium scale enterprises and includesa chapter on special working conditions at such establishments.

Law No 24013 (December 1991) is the National Law ofEmployment and includes provisions for unemploymentcompensation, for punishment of irregular labour practices

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(mostly informal labour), for assurance of compliance withminimum wage requirements and for enhancement of labourproductivity, among other aspects.

Law No 20744 (updated in 1989) regulates the work contract andworker relations.

Based on the aforementioned legislation, most pertinent aspects oflabour relations and conditions at work in Argentina are as follows:

Minimum wages are fixed by the government and are currentlyset at $1.200 pesos (approximately US$ 370.00 per month).

Work regime totals 48 hours per week (Monday throughSaturday), where small and medium enterprises (up to 40employees) are allowed to operate on a flexible regime of up to 12hours per day without alteration of the 48-hour weekly total.(Ref. ILO Convention 1 on Hours of Work)

Minimum working age is 18 years, though children over 14 canlegally work if independent from parents or tutors. (Ref. ILOConvention 182 on Worst Forms of Child Labour).

Holidays are remunerated and are progressive, totalling 14 daysper year for workers with up to 5 years in the firm.

All workers have a right to 13 salaries per year.

All rural workers, whether permanent or temporary, are issueda Worker Identification Card with register of all contractuallabour relations.

Labour contracts with pre-set duration (i.e. temporary labour)are allowed for periods between 6 and 18 months.

Discrimination based on sex, race, nationality, religion, politicalorientation, worker leadership or age is explicitly vetoed by law.

Severance pay corresponds to one month’s salary per year in thecompany and is calculated on the basis of the highest or lastsalary.

Unemployment compensation is paid by the government for upto one year after severance and is subject to a descending scale.

All workers are entitled to insurance for risk at work and duringtransport to work, life insurance and a health plan whose cost isshared between worker and employer.

Trade UnionsTrade UnionsTrade UnionsTrade UnionsTrade Unions

Although there tends to be a high rate of unionization unions also tendto be highly politicized around different parties, which can affect the

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nature of negotiations of collective agreements. In Argentina, unionsare weak, fragmented and inactive. They are also alleged to be ‘puppetsof management’, severely restricting their ability to represent theinterests of the workers.

In Argentina the only union recognized nationally by the rural workersis the Argentine Union of rural workers (UATRE), so that on policymatters, wage and other agreements, only one union, the ACMS,represents nearly 850,000 workers. The freedom of movement foractivists of other trade unions is severely restricted, and there are certaingardens where they cannot enter even during the daytime.

The Union of Rural Workers, UATRE, allowed the merging of unions:SUTA, United Trade Union of Agricultural Workers of Oberá; ATRAM,Association of Rural Workers Misiones, Campo Viera, and SUOR, SingleUnion of Rural Workers of El Dorado.

EnvironmentEnvironmentEnvironmentEnvironmentEnvironment

The Constitution of Argentina (last revised in 1994) provides for a highdegree of autonomy for the provinces regarding the environment.Article 41 of the Constitution states that: “It is incumbent upon thenation to establish the standards containing the minimum protectionprovisions and it is incumbent upon the provinces to establish therequired standards to complement them, without altering localjurisdictions.” National and provincial have the duty of ensuringrational use of natural resources, protection of cultural property,biological diversity conservation and access to environmentalinformation. .

At national level, environmental matters are the institutional respon-sibility of the Secretariat for the Environment and Sustainable Devel-opment, whose main executive departments include: (i) Department ofEnvironmental Planning and Policy; (ii) Department for the Promotionof Sustainable Development; and (iii) Department of Coordination ofEnvironmental Policies.

It is important to note that since the Constitution delegates much au-tonomy on environmental matters to provincial authorities, many fed-eral environmental laws limit themselves to establishing guidelines tobe further detailed in provincial laws providing the necessary opera-tional regulations. Thus, some federal environmental laws cannot beapplied in the absence of provincial regulations. Furthermore, manyprovinces have not yet enacted all necessary environmental regula-tions as there is usually a significant lag time for this to happen afterenactment of federal rules. As a result, provinces frequently “use” theregulations of other provinces as a reference standard, when own stan-dards are missing.

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In spite of the above, during initial years after the 1994 revision of theConstitution almost only provincial laws providing environmentalstandards were enacted. At the federal level, the main laws in placeduring a considerable period were Law No 20284 (05/73) regulating airquality and air pollution and Law No 24051 (07/92) relative toHazardous Wastes.

In 2002 several general environmental laws were passed by the NationalCongress, including the National Environmental Code (Law No 25675).Application of this law is the responsibility of provincial institutions,though matters affecting more than one jurisdiction are dealt with atthe federal level.

The National Environmental Code (Law No 25675) institutes the FederalEnvironmental System with the purpose of coordinating thedevelopment of sustainable development policies between the federal,provincial and City of Buenos Aires governments via the FederalEnvironmental Council (COFEMA). Regulation of the FederalEnvironmental System is established in Decree No 2413 – 02.

The Federal Environmental Council is composed of the Assembly, theExecutive Department and the Administrative Department. TheAssembly is the highest level body of the council and concentrates thepower of decision on general policies and implementation plans. ThisAssembly is the central element of the Federal Environmental Systemand the provincial institutions responsible for environmental mattershave a seat in it.

An Environmental Compensation Fund is administered by thecompetent authority of each jurisdiction for the purpose of ensuringenvironmental quality, impact prevention and mitigation of harmfulor dangerous effects on the environment; as well as response toenvironmental emergencies, and the protection, preservation,conservation or compensation of ecological and environmental systems.

Responsibility for environmental permitting, lies with the FederalEnvironmental Council (COFEMA) in projects with internationalimpacts or with impacts on more than one jurisdiction. On projectswith local impacts permitting responsibility lies with the provincialgovernment.

As per Law No 25688 on Management of Water Resources, theDepartment of Coordination of Environmental Policies of the Secretariatfor the Environment and Sustainable Development is responsible formanagement of water resources and issuance of water use permits andregisters.

Control of solid wastes of industrial origin is the responsibility ofprovincial environmental agencies, as per Law No 25612 /2002.

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Law No 20284 (05/73) regulates air quality and air pollution on a nationalbasis. Under the terms of this law, it is the responsibility of local SanitaryAuthorities to establish the maximum limits for emissions from varioustypes of fixed sources for each zone, determine their presence and verifycompliance with the corresponding Plan for Prevention of CriticalAtmospheric Contamination situations.

Local Sanitary Authorities also have the responsibility for establishingmaximum limits for different types of movable source emissions, exceptfor visible emissions, and for establishing the correspondingmeasurement methods. The manufacturers of movable emission sourcesmust conduct testing programs to certify that the manufactured unitscomply with the requirements of the law.

Regarding deforestation, on November 28 2007 the new Law forMinimum Environmental Protection Requirements for Native Forestswas enacted. This establishes a uniform procedure to authorize forestclearing to be adopted at all provinces. Before this law was enacted,authorization for clearing was a very simple and expedient procedureand each province followed different rules. The application authorityof this new law on a federal level will be the Secretariat for theEnvironment and Sustainable Development.

The National Secretariat of Agriculture and Livestock Breeding isresponsible for application of Law No 22428 relative to conservation ofagricultural soil.

Health and SafetyHealth and SafetyHealth and SafetyHealth and SafetyHealth and Safety

Health and Safety regulations for the entire country are governed byLaw No 19587 (04/28/1972). Under the terms of this law, all employershave the responsibility of putting into practice adequate hygiene andsafety measures to protect the life and integrity of the workers. Whenlabour is outsourced, health and safety responsibility is shared withthe outsourcing party.

Its provisions are applicable to all establishments regardless of thepurpose of their economic activities.

The federal entity responsible for enforcement of Law No 19587 is theMinistry of Health.

Main aspects to be highlighted with regards to Law No 19587 include:

All companies are required to implement internal safety andoccupational hygiene units as well as worker medical monitoringand assistance services.

Safe work procedures must be developed for all high-riskactivities.

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Environmental conditions in work environments must becontrolled.

Distinction between normal and high-risk activities is requiredand restrictions of age or others must be clearly defined.

Accident classification and investigation procedures must beestablished.

Accident statistics must be maintained according to a standardformat.

When the provision of services is executed by third parties, the thirdparty will be jointly liable for compliance with the provisions of the Law.

In Argentina the Regulations on Health and Safety for AgriculturalActivities came into effect on 7 July 1997. These regulations address anumber of aspects of the safety and health of agricultural workersincluding: General obligations (Title I); Infrastructure (Title II);Machinery, Tools (Title III); Pollutants (Title IV); Electricity risks (TitleV); Materials handling (Title VI); Fire prevention (Title VII); Vehicles(Title VIII); Forestry (Title IX); Animals (Title X) and Training (Title XI).The regulations were developed because it was acknowledged thatexisting safety and health laws in Argentina, although general in theirscope, did not adequately address the specific risks of agriculturalactivities.

Argentina has also established a tripartite National Commission forAgricultural Work — which is part of the Ministry of Labour — tosupervise the implementation of the law.

Consumers and Quality: ArgentinaConsumers and Quality: ArgentinaConsumers and Quality: ArgentinaConsumers and Quality: ArgentinaConsumers and Quality: Argentina

According to a survey made by the Universidad Nacional de Mar delPlata (Quality Warranties and Food Products in Argentina. What doConsumers Believe in? By M. Berges and K. Casellas) Consumers´perceptions about high quality products in Argentina are more relatedto brand names than seals and certifications in labels. This hasconsequences upon the competitiveness of domestic food market.Argentinean food industry has a heterogeneous degree ofmodernization. While large processors and retailers, especiallymultinational firms, have improved their products quality along thesupply chain converging to international standards, small firms arevery far from this quality level.

Not all consumers are interested in improving their quality foodinformation and they minimize costs by trusting brand names. Qualitycertification and seller’s reputation are quality warranties restrainedonly to certain domestic market niches. These mechanisms acceptanceis related to the degree of information consumers have acquired and

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their level of trust in private firms, public authorities and theinstitutions. Building trust in brands, certifications and reputation asthe best warranty for food quality is strongly associated to theenvironment in which consumers make decisions. The household’ssituation and occupational status seem to be more complex variablesthat resume the interaction between attitudes, information-processingand actions. Social capital, proxy by consumers´ occupation appears tobe more related to the way consumers choose food quality productsthan individual capital proxy by age or experience and education.

Labor Issues: Trade UnionsLabor Issues: Trade UnionsLabor Issues: Trade UnionsLabor Issues: Trade UnionsLabor Issues: Trade Unions

In Argentina, there is a health insurance and unemployment fundoperated by UATRE (Unión Argentina Trabajadores Rurales y Estibadores).More recently, the union’s initiative to extend protection to largenumbers of unregistered and unprotected agricultural workers has beenformalized in national legislation. The programme received politicalbacking after a long process of negotiations and social dialogue involvingUATRE and the agricultural employers.

“RENATRE” – An initiative to reach unregistered agricultural“RENATRE” – An initiative to reach unregistered agricultural“RENATRE” – An initiative to reach unregistered agricultural“RENATRE” – An initiative to reach unregistered agricultural“RENATRE” – An initiative to reach unregistered agriculturalworkersworkersworkersworkersworkers

An important trade union initiative has recently passed into nationallaw in Argentina addressing the situation of up to 1.2 millionunregistered agricultural workers, who have no contracts and no socialbenefits. (LAW Nr. 25.191)

UATRE (Union Argentina de Trabajadores Rurales y Estibadores) initiated theprocess in some provinces in the early 1990s, but lengthy negotiationswere required. By March 2003 a National Registry of AgriculturalWorkers and Employers (RENATRE) had been established byParliamentary Decree, and all employers and workers are to beregistered, a veritable “DNA of the agricultural sector”. Direction andmanagement of RENATRE comprises four directors from UATRE andfour directors representing the main agricultural associations, includingcereal producers, agricultural cooperatives, small and medium-sizedproducers and livestock landowners.

UATRE membership has grown during the last decade and it currentlyadministers a health insurance scheme for 300,000 members, who areworkers with contracts and thus registered for health benefits (20 percent are women). RENATRE anticipates that women agriculturalworkers will become more “visible” as registration proceeds. It isestimated that about 40 per cent of the unregistered workers aredomestic migrants, and 15 per cent are migrants from other countries,who come mainly from Bolivia, but also Paraguay and Uruguay, toprovide family labour on tobacco plantations and onion farms. The

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registration process will thus also include migrant workers; however,it is unclear to what extent benefits are to be extended to migrants.

In tea plantations unregistered workers mainly consist on domesticmigrants from neighbour districts or provinces, or local workers thatwork both in tea and yerba mate according to the season.

An unemployment fund has been created through the programme, withemployers contributing 1.5 per cent of a worker’s gross salary. RENATREplans to canvass workers and employers in preparation for thedevelopment of a comprehensive system of unemployment benefits toinclude permanent and non-permanent agricultural workers and willmake its proposal to the Ministry of Labour, Employment and SocialSecurity in the near future.

Provincial Committee of Tea (CoProTe)Provincial Committee of Tea (CoProTe)Provincial Committee of Tea (CoProTe)Provincial Committee of Tea (CoProTe)Provincial Committee of Tea (CoProTe)

The legislation (Act 24.13 created by the Provincial Committee of Tea[CoProTe] governs the activity in the province) set out in Article 5,which is conferred to the Ministry of Agriculture and Production, “seton an annual basis,” the price guarantee “of the sprout of tea ..., whereit has not been fixed by agreement of the parties concerned.”

The Ministry of Agriculture and Production fixed the price guaranteefor the green leaves of tea for this harvest in the sum of 27 cents (U$ 0,08), according to the powers given by law 2413. Through the sameresolution, the 337, the price of produced tea (not classified), for thecurrent harvest in the amount of 1.45 pesos (U$ 0, 43)

The CoProTe is formed by:

Ministry of Agriculture and Production: Ziegler, Semeguen y GautoProcessors Representative: Ladislao KallusProducers (APAM Asociación de Productores Agropecuarios deMisiones): Hugo Sand y Eugenia Kasalba (Suplentes: Carlos Minouray Ramon Martin Enriquez)Cooperatives: Alfredo KallusUATRE (Unión Argentina de Trabajadores Rurales y Estibadores):Raúl Morinigo (Suplente Jose Cardozo)Subsecretaría de Comercio e Integracion: Maria Marta Oria, GabrielaGotschalkINTA (National Institute of Agro Technology): Humberto PrimoFontana /Suplente: Sergio Dante Prat Kricun)

Also Participates

IFAI (Instituto de Fomento Agrario e Industrial)

Diputado de la Provincia de Misiones Alberto Hein

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Ministry of Agro y Producción de Misiones: Especialistas en te:Helmuth Kümritz

Organic LawOrganic LawOrganic LawOrganic LawOrganic Law

Argentina is one of the few countries in the world that has a NationalOrganic Act. This law began to be engendered in the year 1997. Severalmembers of MAPO collaborated in developing the rationale andobjectives of this Act.

Subsequently SENASA officials, from other government agencies,political parties and members of the MAPO also worked in thepreparation and drafting of this important tool

National standards and regulationsNational standards and regulationsNational standards and regulationsNational standards and regulationsNational standards and regulations

In 1992 SENASA published national legislation on organic production,which set out the minimum requirements for organic farming inArgentina (Decree No. 423, 3 June 1992).

The initial legislation contains 13 Articles, and describes what ‘organic’stands for, requirements for organic imports, elaboration and packingrequirements and describes the control system.

During the following years, adjustments to this initial legislation havebeen made, as international standards have also developed.

It should be noted that Argentina was among the first countries in theworld with legislation on organic animal production. The Argentinerules are in general equivalent to the EC Regulation (Regulation (EEC)No 2092/91.

Apart from the national legislation, each inspection body publishes itsown private production standards on organic production, which donot have a legal status. In assessing the inspection bodies, SENASAchecks whether these private standards meet the minimumrequirements of the legislation (EC, 2000).

For organic materials, which are exported in bulk, the containers areaccompanied by identification documents that can be inspected by theSENASA officers in the ports. The products have to be labelled as“Producto de agricultura orgánica”, and have to display the label of theinspection body and its registration number, as well as a batch numberidentifying its origin, as defined in Article 9 of Decree 423/92 (SENASA,1992).

Training and other types of governmental supportTraining and other types of governmental supportTraining and other types of governmental supportTraining and other types of governmental supportTraining and other types of governmental support

The National Institute of Agro Technology (INTA) dictates trainingseminars to improve the production and processing in the industry. Ithas a specialized team in the activity whose engineers in charge are Mr.

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Prat Kricun and Mr. Fontana. The province also has a specialist in thearea of Campo Viera called Helmut Kumritz, an agricultural engineer.But producers constantly complain about the lack of support in thefield from these organisms.

The National Agency for Promotion of Science and Technology, throughthe Argentine Technology Fund (FONTAR), called for the presentationof technological innovation projects for the award of Non-RepayableContributions (ANR 600) intended to finance technological developmentprojects presented by companies within the IP-TEC of Tea Cluster thatmeet the project objectives PITEC No. MI001/06 under the TechnologyModernization Program III, Loan 1728-BID OC-AR.

As a result of this Call, four projects were approved. Three of them wererelated to machinery improvements, and the other to research anddevelopment of soluble tea.

There is almost no real economic support for producers by thegovernment. There are programs but are not very effective.

CSR ASPECTSCSR ASPECTSCSR ASPECTSCSR ASPECTSCSR ASPECTS

Certifications – Certifications – Certifications – Certifications – Certifications – Voluntary initiativesVoluntary initiativesVoluntary initiativesVoluntary initiativesVoluntary initiatives

Voluntary initiatives in the form of labels and codes of conduct areintended to privilege goods and services produced under fair andequitable working conditions. The initiatives are “voluntary” soproducers or retailers who place a label on a product or service oradopt a code of conduct do so by choice, rather than in response togovernment legislation or import restrictions, and the consumer freelychooses to purchase the labelled or coded item. Aimed at consumersand/or potential business partners, social labels may be affixed toproducts, displayed at retail sites, or assigned to enterprises, whilecodes of conduct are written statements of principle intended to serveas the expression of a commitment to specific enterprise conduct. Suchcodes may be adopted unilaterally by enterprises, negotiated betweenmanagement, workers and/or NGOs, or influenced in some way byshareholders.

Depending on the market they are selling they have to follow theirrules. For example, US market has Food and Drugs Department thatcontrols tea products imported in the country. They do randominspections in those countries.

In Argentina all companies follow the Argentine Alimentary Food Codeby law but certifications are voluntary.

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Conditions for industry establishments are specified in Chapter II ofthe Argentine Alimentary Food Code (Law N° 18.284/69, Decree N° 2126/71).

Conditions for tea in its different types are specified in the same Code,Chapter XV.

The Standards and Resolutions mostly used in the market are:

ISO 3720 (implemented by IRAM Standard) Black Tea. Definitionand basic requirements. For manufacturing stage.

IRAM Standard 20650-1. Black Tea. Good Manufacturing Practices(GMP). General Recommendations.

IRAM Standard 20650-2. Black Tea Good Manufacturing Practices(GMP). Best Farm Management Practices (BFMP)Recommendations on the product.

IRAM Standard 20650-3. Black Tea. Good Manufacturing Practices(GMP).

Recommendations on manufacture.

IRAM Standard 20620 – Black Tea. Vocabulary.

Resolution No. 80/96 MERCOSUR GMC. GMP in food. QualityProtocol of Black Tea (Premium). Secretariat of Agriculture,Livestock, Fisheries and Food (SAGPyA)

“Argentine Food a Natural Choice” (Alimentos Argentinos una ElecciónNatural) seal was created for agri-food that complies with SAGPyA´sprotocols with the purpose to highlight them as Premium.

The resolution 392/2005 defines the creation of a seal, distinguishing anational image through it, allowing the positioning of food in markets,encouraging their placement and marketing.

Any producer or legal entity involved in the chain which complieswith good agricultural practice (GAP) and manufacturing (BPM) canapply for this seal. However, the seal is for the product, not the companyor the producer.

The Quality Protocol of Black Tea though, is not yet defined; thesecretariat is working on it. It is expected to be ready for March 2009.

The Ministry of Economy and Production through SAGPyA grants theseal “Argentine Food”

IRAM (Argentine Institute of Standards and Certifications)IRAM (Argentine Institute of Standards and Certifications)IRAM (Argentine Institute of Standards and Certifications)IRAM (Argentine Institute of Standards and Certifications)IRAM (Argentine Institute of Standards and Certifications)

Through the National Executive Decree No. 1474/94 the National Systemfor Standards and Quality Certification was created, thus regulatingthe activities of standardization and conformity assessment withinthe strictly voluntary scope. This system is structured on the basis of aNational Standards and Quality Certification, comprising

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representatives of the various areas of the national governmentconvened by the enforcement authority of this Decree, the Ministry ofIndustry, Commerce and Mining of the Nation (SICyM ). This organismis assisted by an advisory committee including representatives of allnon-governmental sectors involved.

Immediately below this level of political decision are the two agenciesresponsible for carrying out the operational management of the entiresystem:

The standards body (IRAM)

The accreditation body (OAA)

The first is responsible for centralizing the study and adoption oftechnical standards, essential part of any national system of quality,and the second is in charge of accreditation of certification bodies, oftesting laboratories and calibration, and The audit, which shouldcontinue patterns of evaluation based on those recommended in ISO /IEC guides involved.

At the beginning of the year 1995 the SICyM signed an agreement withthe Argentine Institute of Standardization (IRAM) by which it wasdesignated as Argentine Agency for Standardization, for theimplementation of Decree 1474/94.

For the purpose of filling the position of the protagonist ArgentineAccreditation Agency within the framework established by Decree1474/94, was founded at the beginning of 1996, the OAA, in the form ofa civil association non-profit. Its regulations for the accreditation ofcertification bodies, laboratories and auditors match as indicated byinternational standardization bodies in their guides (ISO-IEC). Thisimportant fact gives the opportunity to achieve mutual recognitionagreements with similar organizations in other countries, which wouldensure that a single certification granted in Argentina is recognized inother countries in the world.

Within this system the National IRAM intervenes at all three levels:

at level 1 as a permanent member of the National QualityStandards and Certification;

at level 2 as Argentine Agency for Standardization;

at Level 3 as one of the Certification Bodies

ISO 3720ISO 3720ISO 3720ISO 3720ISO 3720

A survey of the adoption of ISO 3720 was undertaken by FAO inNovember 2007. From the responses it was apparent that furtherprogress had been made in terms of the numbers of countries whose

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national standards institutions had accepted ISO 3720. These countriesinclude Argentina, Bangladesh, India, Indonesia, Kenya, Malawi,Mauritius, Sri Lanka, Turkey and Uganda and account for 80 percent ofblack tea trade.

While ISO 3720 has been widely accepted by national standardsinstitutions, it should be noted that such standards are voluntary andoptional, as it was mentioned before.

Exporting countries having formally adopted national qualitystandards which match or do not deviate significantly from ISOstandard 3720 now account for about 85 percent of world exports ofblack tea compared to about 80 percent in the mid-nineties. Thesecountries are Argentina, Bangladesh, India, Indonesia, Kenya, Malawi,Mauritius, Papua New Guinea, Sri Lanka, Turkey and Uganda.

Other initiatives promoted by the governmentOther initiatives promoted by the governmentOther initiatives promoted by the governmentOther initiatives promoted by the governmentOther initiatives promoted by the government

The INTA (Instituto Nacional de Tecnología Agropecuaria, NationalInstitute of Agro Technology), from Misiones has developed a GAMP(Good Agricultural and Manufacture Practices) Guide in order to meetthe demands of local and international markets regarding the qualitysanitary and organoleptic of tea products.

IRAM and ISO certifications were created for manufacturing processes.INTA has developed GAMP owing to the lack of standards designed forprimary production practices in the tea industry. In addition to this,the SAGPyA is formulating The Black Tea protocol, which is intended toaddress agricultural issues as well.

In that sense all public and private efforts that are made to ensure thisqualitative leap, are rewarded by the direct benefits on the consumer.The GAMP guide not only adopts standards, but implement,disseminate and train in actions that ensure compliance, continuityand improvement.

The recommendations for primary producers, collectors, processors,sorters, transporters, distributors, exporters, not aim to unify methodsor techniques, but to guide them in achieving consistent quality in theproduct.

Other International voluntary initiativesOther International voluntary initiativesOther International voluntary initiativesOther International voluntary initiativesOther International voluntary initiatives

Some of the major and well-known initiatives are:

The Ethical Tea Partnership (ETP) works to make the picturetransparent – to monitor living and working conditions on tea estates,with the aim of making sure that the tea bought from the members ofETP has been produced in a socially responsible way.

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In Argentina they have already monitored 17 estates.

The UK-based Ethical Tea Partnership is an alliance of major UK,European, and North American tea companies (including Twinings,Tazo, and Lipton’s parent company, Unilever) that independentlymonitors tea estates around the world to ensure that they follow locallaws, trade union agreements, and some international standards. Butthey do not have a label, they just monitor estates.

Fair Trade: No certifications registered in Argentine tea industry.

Rainforest Alliance: It is important to note that Rainforest Alliance isdoing an intensive job in the Argentine tea industry.

Casa Fuentes, one of the main Argentine tea exporters, as well as LasTreinta, El Vasco and Koch Tschirsch S.A, has Rainforest Alliancecertification. The reason why they decided to get certified was becauseUnilever, one of their main buyers, solicited.

In 2007, Unilever, which buys close to 12 percent of the world’s blacktea supply, committed to purchasing all of its tea from sustainable,ethical sources to protect crops and improve conditions of plantationworkers. Unilever’s major tea labels are Lipton, the world’s best-sellingtea, and PG Tips, the most popular tea in the UK.

Unilever has asked the Rainforest Alliance to start auditing its teasuppliers with immediate effect. The first tea farm to apply forcertification will be Unilever’s own tea estate in Kericho, Kenya, whichhas pioneered sustainable tea production for many years. Other teafarms, in Kenya, Tanzania, Malawi, Indonesia, India, Argentina and SriLanka, will follow. Eventually, certification will extend to thousands offarms in Africa, South America and South East Asia.

UTZ Certified: No certifications registered in the Argentine tea industryyet.

International Federation of Organic Agriculture Movements (IFOAM)to encourage organic production;

Environmental and social concerns are addressed by the abovementioned initiatives.

ILO Conventions Nos. 87 and 98 on freedom of association and collectivebargaining figure explicitly, except in IFOAM, which, being moreconcerned with the environment, recommends in general that all ILOConventions with respect to labour welfare be observed. Workers’ rightto organize is asserted by the other four, as well as the imperative toallow workers’ representatives to carry out their functions freely. Allfour require that the legal minimum wage be respected, SA 8000 and

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ETI adding a proviso that the minimum wage should be sufficient tomeet basic needs and provide some discretionary income. FLO requiresthat a “social premium” be paid to producers out of the final price.

Following the success of campaigns against child labour in certain exportindustries, the first social labelling initiatives were introduced in the1990s as a supplementary means of attempting to totally eliminatechild labour from any role in the production of the labelled product andimproving the situation of child workers. Later initiatives haveencompassed other issues such as international labour standards onforced labour, freedom from discrimination, freedom of association andthe right to collective bargaining, and issues relating to conditions ofwork with respect to wage levels, social benefits and working hours.Protection of the environment is an even more recent addition.

Organic ProductsOrganic ProductsOrganic ProductsOrganic ProductsOrganic Products

Argentina has the largest area under organic production, with anestimated area of around 3 million hectares (including pastures in theSouth which are certified organic but are not under production).Although only 234 thousands belong to organic agricultural area.

Misiones province shows the largest percentage of certified estates (30%)due to an increasing number of producers that belongs to cooperativesand one of the lowest scale of surface (43 ha average).

In total 28 different certified tea products were exported during 2007.European Communion and Switzerland were the main importers.

In 1992 a fundamental enhancement of the sector was realized, whenthe Government through the “Instituto Argentino para la Sanidad y CalidadVegetal” (IASSCAV) (Argentine Institute for Plant Health and Quality)and the “Servicio Nacional de Sanidad Animal” (SENASA) (National Servicefor Animal Health) established guidelines for the “National System ofControl for Organic Products”. These national rules, based on existingguidelines by IFOAM and the European Community (EC), were in mostcases equivalent and in some cases more demanding than IFOAM andEC rules.

In mid-1992, Argentina submitted a request to the EuropeanCommission to be included in the equivalence list of third countriesprovided for by Article 11 (1) of EC Council Regulation No 2092/91.After verification of the equivalence of the inspection system andproduction rules for organic farming, Argentina was officially includedin the EC list of equivalent third countries, on 26 March 1996(Commission Regulation (EC) No 522/96) (EC mission report).

The fact that Argentina was included in the EC list was not only thanksto the level of applied standards, although it is of course a basic pre-

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condition, it was also thanks to EC recognition of reliable nationalcertifying bodies and their procedures and control mechanisms. Detailson this system are provided in Section 3.

Once the third country status was obtained, organic exports to the EC,traditionally already one of the main export markets for Argentina,grew strongly, and now account for almost 80 percent of organic exports.The expansion of the organic sector accelerated, with annual growthrates of over 100 percent during the second half of the nineties.

Argentina is considered a reliable country by the strictest organicmarkets in the world. This is due to the professionalism andresponsibility shown by the country in establishing organic productionregulations in accordance with the strictest ones in the world.

Standards and Regulations concerning the National System of OrganicProduction were created in Argentina between 1992 and 1993. Thisstrict normative system is officially recognized by the European Union.

Institutions active in the organic sectorInstitutions active in the organic sectorInstitutions active in the organic sectorInstitutions active in the organic sectorInstitutions active in the organic sector

Farmer organizations

The oldest farmer organization is MAPO (Movimiento Argentino para laProducción Orgánica -Argentine Movement for Organic Production).

MAPO has, together with SENASA, played an important role in theformulation and implementation of the National Programme for theDevelopment of Organic Agriculture in Argentina.

In 1998, Cámara Argentina de Productores Orgánicos Certificados(CAPOC) was established. This umbrella organization has beenconstituted to promote organic activity, defend the interests of organicproducers, represent producers during fairs and exhibitions, createawareness among consumers and collaborate with governmentauthorities as technical partner.

Government agencies

The competent authority for the inspection system of organicproduction in Argentina is the “Secretaría de Agricultura, Ganadería, Pesca yAlimentación” (Ministry of Agriculture, Animal Husbandry, Fisheries andNutrition), through the “Servicio Nacional de Sanidad y CalidadAgroalimentaria” (SENASA) (National Agrifood Health and QualityService).

SENASA approves and supervises private inspection bodies.

Other organizations and companiesOther organizations and companiesOther organizations and companiesOther organizations and companiesOther organizations and companies

SENASA approved twelve inspection bodies of which three areapproved for inspection and certification activities of products for exportto the EC:

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ARGENCERT S.R.L. (Instituto Argentino para la Certificación y Promoción deProductos Alimentarios Orgánicos),

OIA (Organización Internacional Agropecuaria) and LETIS S.A.

The first two inspect 80 percent of the total volume of domestic organicproduce, while Letis is significantly smaller. It obtained its equivalentstatus recently (October 2000).

All certifiers are private companies, without any support from thegovernment. They have inspection activities in organic farmingthroughout Argentina and a few certifiers also have activities in otherSouth American countries.

Argentina has the ideal framework to make profit of its comparativeadvantages such as:

Large extensions of virgin lands and naturally fertile soils.

Climate diversity and ecological aptitude for all sorts of crops.

Counter seasons with respect of main consumption centres.

Organic production is mainly designated for exports. Local people arenot very aware of the advantages of organic production, so most of it isexported.

United StatesUnited StatesUnited StatesUnited StatesUnited States

The National Organic Program (NOP) develops, implements, andadministers national production, handling, and labelling standards fororganic agricultural products. The NOP also accredits the certifyingagents (foreign and domestic) who inspect organic production andhandling operations to certify that they meet USDA standards.

Argentine certifying Agents accredited by USDA are Argencert S.R.L.;Food Safety S.A.; LETIS S.A. and International Agricultural Organization(OIA)

CSR in ArgentinaCSR in ArgentinaCSR in ArgentinaCSR in ArgentinaCSR in Argentina

The Ministry of Labour has a CSR area, aimed to improve the quality ofemployment generating partnerships between universities, businessesand the state emphasizing on training, employment and production.

When we asked the companies about the knowledge of this Area in theMinistry Labour, none of the interviewed companies had heard of it.

But although certain initiatives like this, Argentina lags a long waybehind other countries in CSR development. It is noted that the conceptof CSR is still focused on Social Aid, but not in Sustainability issues.

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Cultural reasons

Economy instability: Short-term policies, lack of planning. In general,CSR policies to be effective in a company take at least 3-5 years to beimplemented.

Lack of a culture based on trust and cooperation. Individualism andself interest predominates. Mistrust or quick lost of trust due to negativepast experiences.

Argentina does not have a culture based on dialogue, mutual trust andseek to achieve consensus.Lack of example from the government. Patronage system, corruptionand authoritarian proceeds in hand with a chronic lack of vision andambition in the field of CSR and sustainability.However, the government is not the only responsible stakeholder forthe development of CSR.

Argentine entrepreneurs have limited personal commitment andpassion for the topic of CSR in the vast majority. There are almost noleaders committed themselves personally and together with thecompany to a sustainable strategy and practices.

Another obstacle is the lack of social pressure. Compared to Hollandwhere 4 million out of 16,4 million inhabitants are member of anorganization for nature or the environment. Consumers in Argentinado not use their power to demand companies’ sustainable practices.

But not all are negative issues. Argentina has an important source forCSR and sustainability: human capital that is exhibited both in thecircle of relatives and friends. If the warmth, love, loyalty, care, trustand support that are there could be translated to the Argentineinstitutions, the structural approach of CSR would then be much easier.

Promoters of CSR in ArgentinaPromoters of CSR in ArgentinaPromoters of CSR in ArgentinaPromoters of CSR in ArgentinaPromoters of CSR in Argentina

Since the socio-economic crisis until now the Argentine companies havebeen slowly getting involved in social issues in a reactive way, to coverthe basic needs that both employees as society needed. From thereemerged a new civil society organizations (Argentina Institute of CSR,IARSE, etc.) to promote the issue. Other actors like universities,journalists and the state also came into action. These are called“promoters of CSR”.

Education: There isn’t yet a specific Master or MBA in CSR. However,many universities are incorporating the subject in their Study Plan.

For example the public University of Buenos Aires has an area dedicatedto study and investigate CSR (CENARSECS).

Some NGOs in combination with universities offer seminars and coursesfor professionals or entrepreneurs.

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Journalism: Sunday Magazine from La Nacion, one of the most popularargentine newspaper, on July 28 had in its cover an article called “Greenlife: how to be a leading figure of a sustainable planet”

There are also television programs such as “TN Ecologia” that devotesa central space to explain and publicize cases at national andinternational level for the environment and sustainability.

NGOs and Civil Society

International Standards and Rules

Drivers: interest of tea companies to go for CSR programmesDrivers: interest of tea companies to go for CSR programmesDrivers: interest of tea companies to go for CSR programmesDrivers: interest of tea companies to go for CSR programmesDrivers: interest of tea companies to go for CSR programmesor certification schemesor certification schemesor certification schemesor certification schemesor certification schemes

Many argentine companies have the ISO or IRAM certification for themanufacturing processes. Nevertheless, there is scarce knowledge onsustainable certifications such as Fair Trade, UTZ and RainforestAlliance. Their driver to get certified is when important clients, such asUnilever, implied it. But in the local tea industry, companies do not getcertified by their own incentive.

After interviewing companies that had the RAS certification, they allagreed that the benefits were higher than the costs. Moreover, they allsaid that at the beginning they rejected as they could not imagine thereal benefits for the company. But after being certified for almost 6months they said the costs were not high, and that the benefits onbetter yields, and fair prices was a great initiative.

However, Argentine tea companies are still a long way from being awareof their responsibility as social actors in the country. Economyinstability is one of the main reasons, they cannot think on long termpolicies, they are aware of the unfair prices small producers are receivingfor their tea, but on the other hand they believe it is not theirresponsibility to change the market conditions. They blame thegovernment, the low quality of productions received by small holders,so they think they are trapped under those conditions. But that is theidea, if we generalize. After Unilever initiative of certification with RASowners of these companies are more aware of the problem. We notice along way to

Scope of impact of CSR initiatives and RASScope of impact of CSR initiatives and RASScope of impact of CSR initiatives and RASScope of impact of CSR initiatives and RASScope of impact of CSR initiatives and RAS

After RAS intervention, small holders have not seen a significant impact.

Companies pay higher prices to certified states (they respect the AR$ 0,27, while non certified are being paid AR$ 0, 25 or less), but we notedthat RAS only require for 50 per cent of total production certified, sothese companies are certifying first their own estates, which include alarge part of their production. Las Treinta, for example, have only certified

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8 producers. They all have over 50 ha, so we can see that small producershave not yet seen any impact. Las Treinta said they were aware of theneed of certifying more producers of the chain, but they have notadvanced much on this topic.

OpportunitiesOpportunitiesOpportunitiesOpportunitiesOpportunities

From the above mentioned reasons, and the fact that RA is growingsubstantially in the market, it would be a great opportunity if UTZcertification do a market intervention. Traceability is one of the mainissues in the market, and with UTZ, companies will see the benefits ifthey can track the origin of the leaf delivered. I noted interest ontraceability, and open entrepreneurs for new ideas and certifications.

The certification consciousness is just starting in Argentina. Solidaridadcould create consciousness on companies of their social responsibilitiesas important actors in the argentine society. Solidaridad could explainthe new concept of CSR, as it is a new idea that Argentina has a lot tolearn.

Smart shoppers everywhere, not so much yet in Argentina, are lookingfor eco-labels and demanding products from responsibly managedfarms. Trendsetting food companies and supermarkets are interestedin knowing more about how their products are grown, where and bywhom and with what social and ecological consequences. There is agrowing consensus that certification is an effective way to ensure theestablishment and enforcement of management practices that protectthe environment, the rights of workers and the interests of localcommunities. Certifications are raising public awareness about theinterdependence between conservation and agriculture. AlthoughArgentina is advancing on this concept, we believe there is still a longway to go.

The Rainforest Alliance Certified seal stands for sustainability. Onceused primarily among conservation groups and development agencies,the term “sustainable” has now seeped into the public consciousnessas shorthand for all the things that we do to fight poverty and pollutionand protect the Earth’s resources today for the benefit of our children.Sustainability describes a means of reducing costs and improving profits.As this “people, planet and profits” message spreads throughout themarketplace, demand for goods from sustainable farms will continueto grow.

The rewards of sustainable tea farming are not only environmental,but also economic. A key benefit of the certification program is to enablegrowers to obtain higher prices for their tea, thus raising their incomesand significantly improving their quality of life.

Awareness of these benefits are starting to grow in local companies.

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Section IISection IISection IISection IISection II

Summary of ProblemsSummary of ProblemsSummary of ProblemsSummary of ProblemsSummary of Problemsand SWOT Analysisand SWOT Analysisand SWOT Analysisand SWOT Analysisand SWOT Analysis

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GENERAL SUMMARY OF PROBLEMSGENERAL SUMMARY OF PROBLEMSGENERAL SUMMARY OF PROBLEMSGENERAL SUMMARY OF PROBLEMSGENERAL SUMMARY OF PROBLEMS

PRIMARY PRODUCTIONPRIMARY PRODUCTIONPRIMARY PRODUCTIONPRIMARY PRODUCTIONPRIMARY PRODUCTION

The low prices of green leaves, makes the primary productionunattractive because the producer has to face up to the harvest costof lightweight or heavy pruning, weed control and mites. In the caseof low performance planting seeds, effects are increased transformingthe activity uneconomical.

Lack of Quality Standards for the raw material and differential prices

Lack of a proper training and technical transfer, affecting productionefficiency and better use of resources. Although, INTA Cerro Azul isworking on this, there is still a long way to go.

Existence of a significant number of farms abandoned by low yields,small size, isolation or abundant weeding by low density.

The continued use of harvesters with inadequate systems for cuttingand harvesting, with intervals exceeding 45 days, promote theproduction of large volumes of low quality tea.

Low density of plantations, affects the small producers profits. INTAestimates that 90% of plantations of tea are low density. Plantationshave 3,000 to 5,000 plants per hectare when 10,000 plants per hectareis common internationally.

Great heterogeneity of plantations as a result of the use of seed fromdifferent backgrounds. Buds obtained are usually small and withhard leaves, which results in the development of low quality tea.

Light and heavy pruning are carried out in an inappropriate mannerin time and form, an effect that reduces the production, health andlongevity of the plantation.

The improper handling, packaging and transport of the outputcollected, produce the compaction, bruised, and burned withwarming with the consequent impact on the quality of the product.

Lack of use of the technologies available at INTA, in addition to theabsence of knowledge of the international market progresses.

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Quality: Due to the high demand of “medium quality and low pricetea” from US markets, companies do not focus on improving thequality of tea.

High increase in inputs cost.

Prices paid for green tea are very low. Although CoProTe sets a price,it is not respected by the manufacturers, as the law is not respected;it is only a referential price for them.

During the pasts years it has been a high trend of outsourcing stepsof the production due to high production costs.

Lack of long term policies from the government.

The Government of Argentina does not grant any subsidies orincentives to agricultural production, including organic production.

Production constraints: Due to lack of access to credit, especially forsmall farmers, it is virtually impossible since actual rates are rangingbetween 25 percent and 40 percent annually.

“Economies of Scale Crisis”: Producers have very small areas thatdo not justify the fixed costs that are require producing.

Conflict of Interest: The Government is influenced by differentinterests. Small scale farmers do not feel represented by thegovernment.

MANUFACTUREMANUFACTUREMANUFACTUREMANUFACTUREMANUFACTURE

Process development without the specific knowledge of biologicalcharacteristics, transforming the various stages in a routine andmechanized activity.

The lack of Health and Safety Systems during the collection process,handling and manufacturing. Only big companies exporting respectthem.

Lack of Quality assurance systems during the above mentionedprocess. The buds that has suffered damage due to improperpractices, suffer profound changes that adversely affect on the finalproduct.

Lack of adjustment to international standards for the equipmentused during the withering and enrolling stages

Obsolescence of the existing generators and heating systems, withthe

consequent low efficiency, high costs and contamination of theproduct.

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CLASSIFICATION AND MIXINGCLASSIFICATION AND MIXINGCLASSIFICATION AND MIXINGCLASSIFICATION AND MIXINGCLASSIFICATION AND MIXING

Lack of integration of the screening and mixing stage in processedplants, resulting in increasing cost and loss of quality during thetransportation of the tea leaf (not classified).

High production of dust during the rolling process, to obtainsecondary degrees and BT.

Great heterogeneity in the specific density of the various lots, forlack of standards in receiving raw material. No traceability.

Obsolescence of the current generation systems and heat transfer inthe stage of drying. Most of the dryers use wood fire as a heatingsource, which generates high cost of maintenance in the heatexchangers and the constant presence of ash in tea due to flaws inthe exchange systems.

The lack of internal monitoring of black tea lots compared with theArgentine Food Code or IRAM-ISO 3720 standard; does not providean adequate framework for product control, as well as security andtransparency for the commercialization.

INTEGRATIONINTEGRATIONINTEGRATIONINTEGRATIONINTEGRATION

The fragile link between processors, exporters and primaryproduction, threatens the possibility of improving thecompetitiveness of the sector. Although there are standards onproduct and process (GMP, Good Manufacturing Practices) andmethodology for POES and HACCP (Hazard Analysis Critical ControlPoints) systems, it does not prevail in the whole spectrum ofproducers, processors and exporters in the sector. Therefore, theyare pending matters to optimize the quality of the product.

On the other hand, it is believed that companies that are integratedthrough the whole chain are those who are getting all the profits, leavingproducers out of the “chain”.

Cooperatives: Instead of being the “thermometer” of the activity byregulating competitiveness in the sector, due to mismanagement,fraudulent business, outrageous managerial salaries and excessiveemployees, they lost importance giving all the power to bigintegrated exporting companies.

Cooperatives: They all receive subsidies from the government thatthey usually mismanage, ending up owing favours and tiedpolitically to them. The industry sees the cooperatives as a politypolicy where the politic acting party receives votes and good reviewsfrom the affected farmers

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ORGANICORGANICORGANICORGANICORGANIC

There is no Government or private sector sponsored activitiesdesigned to educate and encourage consumers to purchase organicproducts. However, in September 1998, the Argentine AgriculturalSecretariat (SAGPyA) launched the National Program for theDevelopment of Organic Production (PRONAO). This programme,which does not exist anymore, aimed to promote organic productsin the domestic market, increase the number of organic producers,capture new markets and educate consumers (FAS, 2000a).

Although the organic sector has increased strongly, it is still arelatively young and inexperienced sector. There is hardly anyresearch on appropriate organic farming methods under localconditions and extension assistance is virtually absent. Therefore,many producers start producing organically on a ‘trial and error’basis, and adjust their farming methods every season until theyreach an acceptable and (more) stable level of output. Some producersexpressed during interviews that the costs of low yields due tounforeseen problems in especially the first few years of productionare the highest costs they face, much higher than other costs, such ascertification and inspection. Small farmers will have difficultybearing such costs.

Although conventional agriculture has been extensive in many partsof the country, other parts need a three-year conversion period beforefull organic status can be obtained. No government support existsduring those years of conversion, a practice that is common forexample in many European countries in order to provide incentivesto farmers to convert.

LEGALLEGALLEGALLEGALLEGAL

Non registered workers due to the high employment costs

Lack of monitoring of the accomplish of the law

Lack of long term and legal policies from the government

SWOT ANALYSISSWOT ANALYSISSWOT ANALYSISSWOT ANALYSISSWOT ANALYSISSTRENGTHSSTRENGTHSSTRENGTHSSTRENGTHSSTRENGTHS

The production of tea has a long tradition in the producing region,which entails a comprehensive identification of the population withthe food chain.

Already established as a worldwide consuming product. It is afterwater, the most consumed beverage in the world in its varieties ofhot tea, cold, soluble, flavoured, and so on.

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Suitable agro-ecological conditions, which together with moderntechniques of cultivation, may result in an economic,environmentally and socially sustainable activity.

Natural product, with antioxidants and without additives.

Existence of advanced technology in the stages of rolling, drying,packaging and distribution of the product, with standards similarto top establishments globally.

The current installed capacity would permit incorporating orderedincreases in production.

Core entrepreneurs with good exporting profile.

WEAKNESSESWEAKNESSESWEAKNESSESWEAKNESSESWEAKNESSES

Lack of reliable, timely and relevant information on planted area,abandoned, harvested, yields, estimated harvest, raw materials andprocessing costs, local and international prices, stock andconsumption.

Raw materials supply highly split and concentrated processorsdemand.

Use of inadequate harvesters and collection ranges from 45 to moredays result in a low quality raw material.

Lack of a standardized system for the domestic market to allow adifferential price for the quality of the raw material.

Annual and regular pruning in an inappropriate manner and badtimed. As a result of these cultural practices it affects productivityperformance, which results in the abandonment of variousplantations.

High costs and inadequate traditional transport of raw material.

Companies with obsolete equipment and facilities used in thewithered, rolling and drying process.

Lack of Health and Safety Systems in tea production.

Absence of a common policy in the food chain for the institutionalpromotion of the product and opening of new markets. There are nomechanisms of coordination between producers, processors andexporters.

High cost of logistics for being a product of low value / volume

Unexplored domestic market.

Low proclivity of producers to change over clone varieties withhigh yield and quality.

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Lack of Farm Credit System for the sector

Absence of integration between the Ministry of Agriculture of theprovinces involved and the National State.

OPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIES

Continued growth in international demand for regular and highquality tea.

Internationally recognised Certifications schemes are emerging,which represents a good opportunity for Solidaridad to introducenew schemes and cooperate with the implementation of goodagriculture practices of small scale producers

Significant reduction in the participation of China and India in theinternational market due to the constant increase of their domesticconsumption.

Available technology and clone varieties tested, which can beincorporated into new development projects.

Possible forms of diversification development, such as green tea (notoxidized), Oolong tea (slightly oxidized), decaffeinated, soluble, andso on.

New niche markets for high added value tea, such as organic,functional foods, and so on.

Potential markets to explore in the Arab countries of Asia and Africa.

Instability of volumes produced in African countries participatingin the global tea market.

THREATSTHREATSTHREATSTHREATSTHREATS

Production growth in the Eastern African countries (Kenya, Malawi,Uganda, Tanzania and Zimbabwe), with the subsequent expansionof their sales in argentine traditional international markets andpotentials.

High concentration of exports into the U.S. market, with a qualityproduct or lower middle BT.

Low quotation and international prestige of our product.

Trade barriers or difficulties for lack of control in establishedregulations in the Argentine Food Code, ISO-3720 IRAM,bromatology conditions or agrochemicals waste.

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Section IIISection IIISection IIISection IIISection III

Conclusions andConclusions andConclusions andConclusions andConclusions andRecommendationsRecommendationsRecommendationsRecommendationsRecommendations

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CONCLUSIONS AND RECOMMENDATIONSCONCLUSIONS AND RECOMMENDATIONSCONCLUSIONS AND RECOMMENDATIONSCONCLUSIONS AND RECOMMENDATIONSCONCLUSIONS AND RECOMMENDATIONS

One of the main difficulties noted in the tea sector is the existence of alarge number of producers with lack of capital, low yields per hectaredue to the age and low-density plantings, and unfeasible productionfrom an economic point of view. However, in a context of supply of rawmaterials of poor quality, middlemen such as contractors surge, but itis noted that their action contributes to increasing the scant income ofthese primary producers.

However, the producers are still dependant on these contractors as inthe case of small areas they cannot afford the operating costs. So thatany nominal income let them sustain and continue the activity, butlogically, without the possibility of overcoming the conditions ofdependency.

In this way, a productive pattern is originated, harmful for both theprimary producer for lack of incentives as well as for the contractorthat in an effort to reduce costs introduces into the crop cutting systems,intervals and frequency inadequate and the processor has to process araw material of low quality, which requires an expensive reprocessinglater.

Needless to say that by its delicate social situation, high level offragmentation of holdings, lack of information, reduced level ofindividual production, these producers have no bargaining powercompared to contractors and manufacturers, additional factor thatdiscourages the possibility of obtain better prices.In contrast, producers with a high level of productivity, which workshard to manage the productive capacities of their property, facedepressed prices due to the influence that generates high volumes oflow-quality raw materials.Accordingly, in this situation the market cannot adequately fulfil itsrole of self-regulatory mechanism, to achieve a balance between supplyand demand, determine prices rewarding appropriately to thoseproducers that produce raw materials of high quality and handle withgreater economic rationality their land.

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As a result of this process an inevitable consequence arises, the need forthe Federal and Provincial Governments in addressing some kind ofjoint intervention to overcome the vicious cycle of raw materialproduction of low-quality black tea without their own characteristicsand low international prices; leading the primary producers to itsstagnation and poverty. Solidaridad could help in this intervention.

This intervention is certainly linked to the aforementioned need to begina process of integration of small holders (primary producers) inconsortiums, for the purpose of practising greater negotiating powerwith suppliers, contractors and processors. These producers could makethe pruning, harvesting, transport and supply of raw material jointly,as well as the procurement of services, purchase of inputs, agriculturalchemicals and machinery. The implanted area of each consortiumshould reach 100 to 200 hectares, located within a radius of no morethan 5 km. For the purpose of increasing yields, uniformity and qualityof raw materials, according to market demands, each consortium mustimplement a plan for annual renewal of 5 to 10% of the common teaseed with clone varieties. .

The consortium would be composed by an estimate of about 5,750producers and a planted area of 23,800 hectares, with an initial offer of95 to 100 thousand tons, which quickly according to the organizationand technological impact may reach 190 to 200 thousand tons.

The industrial sector (drying plants), faces a fragmented offer andabsence of logistics, they lack of mechanisms to regulate the entry ofgreen leaves to the dryer being an important factor that jeopardizes thequality, as well as the strict control that the handling of green leaf shouldhave between harvest and the entry into the dryer.

With regard to abandoned plantations, which are estimated to reachover 6,000 hectares, they should be replaced by clone varieties or if it isnot possible, alternative crops.

This intervention is certainly linked to the aforementioned need to begina process of integration in production, allowing producers to reducecosts, increase yields and initiate new plantations with clone varieties,and at the same time receive the necessary support necessary from theconsortium. This program will require planning and implementationof different components of technological, credit and organizationalassistance, as well as a future certifications.

Pushing forward this initiative would permit achieving greaterefficiency in the productive areas. It will also help to recover degradedor abandoned plantations, order the agricultural structure and improvethe development of the region’s economy, given the growing demandfor tea in the international market and outstanding quality.

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A second phase of this program must include a technological upgradeof the existing mechanical harvest systems and the reengineering of thecarriage and transport of the product in the farm. As a consequence aquality improvement and less deterioration of the raw materials willbe noted, as well as a reduction of labour and lower freight costs.

Moreover, the existing machinery and facilities devoted to the elabora-tion process, classification and mixing, by technological obsolescencemust undergo through a profound process of updating its design andengineering, accompanied by the development of systems of Health &Safety in the processes (GMP, HACCP), and in the product (ISO-3720IRAM).

The realization of both goals will improve quality and reduceproduction costs, currently affected by methods of harvesting, haulingand freight which are expensive and unsuitable for preserving thequality of the raw material. With regard to the processing plants, theprocess will be made accordingly to their biological type and healthrequirements, assuring foreign markets a good quality product.

The main challenge now is to ensure the broad based and efficient adop-tion of Best Farm Management Practices and sustainability guidelinesin order to come to an integral approach in implementing sustainablechain management related to production, processing and trade of tea.Tools and strategies will need to be developed to reach in particular thethousands of small scale farmers and farm workers and to draw theminto the mainstream planning and implementation of this drive to-wards sustainable and socially responsive commodity development.

The overall goal is formulated as follows:

Provide support to small scale farmers and farm workers in the teasector applying Better Farm Management Practices for adding valueto a certifiable and sustainable supply chain.

RECOMMENDATION TO SOLIDARIDADRECOMMENDATION TO SOLIDARIDADRECOMMENDATION TO SOLIDARIDADRECOMMENDATION TO SOLIDARIDADRECOMMENDATION TO SOLIDARIDAD

It is suggested further research towards the pilot program for CSR andBMP, maybe together with UTZ, building an alliance with someproviders who wish to step into the UTZ program matchmaking withmarket parties, starting in Europe.

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ReferencesReferencesReferencesReferencesReferencesCadena Alimentaria del Te (Camellia Sinensis) Diagnostico de la RegionTealera. Secretaria de Agricultura, Ganaderia, Pesca y Alimentacion,Direccion Nacional de Alimentacion, Marzo 2001. Luis Alberto DeBernardi,Sergio Dante Prat KricunVariables de Mercado, Sector Tealero Argentino, Lisiak Emiliano. Julio 2007INTA: Exportaciones de Te en Argentina, Lysiak Emiliano. Enero 2008INTA: El Sistema Agroindustrial del Te. Lysiak Emiliano. Agosto 2008INTA, Cerro Azul: Documento Pragmatico Estrategico: TéINTA: Guia de Aplicacion de Buenas Practicas Agricolas y de Manufactura.Ing S.D. Prat KricunINTA: Economia de los cultivos industriales. Algodón, Caña de Azucar, Te,Yerba Mate, Tabaco y Mani, Rodolfo BongiovaniINTA: Te negro Practicas de Cultivo y Manufactura, Noviembre 2007The Tea Market, A Background StudyE. Inglesias: Trabajo decente en la agricultura: Situación en América Latina desde elpunto de vista sindical, background document prepared for ACTRAV, Mar.2003. 2 The Rural Workers’ ActEl Tango de la Sostenibilidad – El desafío de la Responsabilidad SocialEmpresaria”. Editorial Temas.La cadena empresarial del Té en Misiones (Argentina). Un enfoqueestrategico- Carlos M. Fernandez Jardon, Xavier Martínez Cobas, RobertoS. Gutawski, María Susana Martos, María Claudia Dekún.SAGPyA, Secretaria de Agricultura, Ganadería Pesca y AlimentaciónGobierno de la Provincia de Misiones, Ministerio de Agro y Producción,Dirección InfusionesInfoleg, Centro de Información y Documentación del Ministerio de EconomíaArgencert SA, Productos orgánicos, web pageIndex Mundi WebPageFAO WebpageWikipediaMinistry of Labour Web pageMinistry of Economy, Informe Coyuntural del Te, Patricia [email protected]

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Debilidades y Desafíos Tecnológicos del Sector Productivo (UIA, SECYT,PROFECYT)Misiones Online NewspaperSAGPyA, Direccion nacional de Alimentos, Direccion de IndustriaAlimentaria:INFUSIONES EN ARGENTINA: DESEMPEÑO 2000 - 2007 Y PERSPECTIVAS.Ing. Agr. Patricia A. ParraArgentina TradeNetArgentine Foods WebPageInterviews: Casa Fuentes SA (Alberto Fernández Espinosa), Las Treinta SA(Guillermo Lillieskold), Cooperativa Agrícola Picada Libertad ( Mr.Wollemberg), INTA Misiones Cerro Azul (Prat Kricun and Emiliano Lysiak),Alberto Tomas Re (ex Secretary of Tea Industry in the Ministry of Productionin Misiones), María Elena Parra INAES (National Institute of SocialDevelopment), Hugo Sand (small scale producer and President of APAM),Carlos Ortt (small scale producer and member of APAM), Victor Rosenfeld(INDES), Jorge Hultgren (J.Llorente y Cia), Cooperative IndusTea (CampoViera, Argentino Almeida, Tito Feltan, Jorge Bashniuk, Javier Arsivenko),House of Misiones in Buenos Aires, Fundacion Exportar.

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Convention Ratification Statusdate

C1 Hours of Work (Industry) Convention, 1919 30.11.1933 ratifiedC2 Unemployment Convention, 1919 30.11.1933 ratifiedC3 Maternity Protection Convention, 1919 30.11.1933 ratifiedC4 Night Work (Women) Convention, 1919 30.11.1933 denounced

on 03.03.1992C5 Minimum Age (Industry) Convention, 1919 30.11.1933 denounced on

11.11.1996C6 Night Work of Young Persons (Industry)Convention, 1919 30.11.1933 ratifiedC10 Minimum Age (Agriculture)Convention, 1921 26.05.1936 denounced on

11.11.1996C11 Right of Association (Agriculture)Convention, 1921 26.05.1936 ratifiedC12 Workmen’s Compensation (Agriculture)Convention, 1921 26.05.1936 ratifiedC14 Weekly Rest (Industry) Convention, 1921 26.05.1936 ratifiedC17 Workmen’s Compensation (Accidents)Convention, 1925 14.03.1950 ratifiedC18 Workmen’s Compensation (OccupationalDiseases) Convention, 1925 24.09.1956 ratifiedC19 Equality of Treatment (AccidentCompensation) Convention, 1925 14.03.1950 ratifiedC21 Inspection of Emigrants Convention, 1926 14.03.1950 ratifiedC22 Seamen’s Articles of AgreementConvention, 1926 14.03.1950 ratifiedC26 Minimum Wage-Fixing MachineryConvention, 1928 14.03.1950 ratifiedC27 Marking of Weight (Packages Transportedby Vessels) Convention, 1929 14.03.1950 ratifiedC29 Forced Labour Convention, 1930 14.03.1950 ratified

AnnexureAnnexureAnnexureAnnexureAnnexure

ILO International Labour standardsILO International Labour standardsILO International Labour standardsILO International Labour standardsILO International Labour standards

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C32 Protection against Accidents (Dockers)Convention (Revised), 1932 14.03.1950 ratifiedC33 Minimum Age (Non-Industrial 14.03.1950 denouncedEmployment) Convention, 1932 on 1.11.1996C34 Fee-Charging Employment Agencies 14.03.1950 denounced onConvention, 1933 19.09.1996C35 Old-Age Insurance (Industry, etc.)Convention, 1933 17.02.1955 ratifiedC36 Old-Age Insurance (Agriculture)Convention, 1933 17.02.1955 ratifiedC41 Night Work (Women) Convention(Revised), 1934 14.03.1950 ratifiedC42 Workmen’s Compensation (OccupationalDiseases) Convention (Revised), 1934 14.03.1950 ratifiedC45 Underground Work (Women)Convention, 1935 14.03.1950 ratifiedC50 Recruiting of Indigenous WorkersConvention, 1936 14.03.1950 ratifiedC52 Holidays with Pay Convention, 1936 14.03.1950 ratifiedC53 Officers’ Competency CertificatesConvention, 1936 17.02.1955 ratifiedC77 Medical Examination of YoungPersons (Industry) Convention, 1946 17.02.1955 ratifiedC78 Medical Examination of Young Persons(Non-Industrial Occupations) Convention, 1946 17.02.1955 ratifiedC79 Night Work of Young Persons(Non-Industrial Occupations) Convention, 1946 17.02.1955 ratifiedC80 Final Articles Revision Convention, 1946 14.03.1950 ratifiedC81 Labour Inspection Convention, 1947 17.02.1955 ratifiedC87 Freedom of Association and Protectionof the Right to Organise Convention, 1948 18.01.1960 ratifiedC88 Employment Service Convention, 1948 24.09.1956 ratifiedC90 Night Work of Young Persons (Industry) Convention (Revised), 1948 24.09.1956 ratifiedC95 Protection of Wages Convention, 1949 24.09.1956 ratifiedC96 Fee-Charging Employment AgenciesConvention (Revised), 1949 19.09.1996 ratifiedC98 Right to Organise and CollectiveBargaining Convention, 1949 24.09.1956 ratifiedC100 Equal Remuneration Convention, 1951 24.09.1956 ratifiedC105 Abolition of Forced LabourConvention, 1957 18.01.1960 ratifiedC107 Indigenous and Tribal Populations denouncedConvention, 1957 18.01.1960 on 03.07.2000

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C111 Discrimination (Employment and Occupation)Convention, 1958 18.06.1968 ratifiedC115 Radiation Protection Convention, 1960 15.06.1978 ratifiedC124 Medical Examination of Young Persons(Underground Work) Convention, 1965 20.06.1985 ratifiedC129 Labour Inspection (Agriculture)Convention, 1969 20.06.1985 ratifiedC135 Workers’ RepresentativesConvention, 1971 23.11.2006 ratifiedC138 Minimum Age Convention, 1973 11.11.1996 ratifiedC139 Occupational Cancer Convention, 1974 15.06.1978 ratifiedC142 Human Resources DevelopmentConvention, 1975 15.06.1978 ratifiedC144 Tripartite Consultation (InternationalLabour Standards) Convention, 1976 13.04.1987 ratifiedC150 Labour Administration Convention, 1978 20.02.2004 ratifiedC151 Labour Relations (Public Service)Convention, 1978 21.01.1987 ratifiedC154 Collective Bargaining Convention, 1981 29.01.1993 ratifiedC156 Workers with Family ResponsibilitiesConvention, 1981 17.03.1988 ratifiedC159 Vocational Rehabilitation and Employment(Disabled Persons) Convention, 1983 13.04.1987 ratifiedC169 Indigenous and Tribal PeoplesConvention, 1989 03.07.2000 ratifiedC177 Home Work Convention, 1996 31.07.2006 ratifiedC182 Worst Forms of Child LabourConvention, 1999 05.02.2001 ratifiedC184 Safety and Health in AgricultureConvention, 2001 26.06.2006 ratified

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Argentine Tea Book

Documents

Transcript of Argentine Tea Book