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An Exploratory Value Chain Analysis

for Burmese Pickled Tea (LAPHET)

A thesis presented in partial fulfilment of the
requirements for the degree of

Masters of AgriCommerce

in
Agribusiness

Institute of Agriculture and Environment
MASSEY UNIVERSITY
Palmerston North, NEW ZEALAND

SO PYAY THAR
2016

i
ABSTRACT

Laphet (pickled tea) is a well-known traditional cuisine of Myanmar consisting of
tea leaves fermented into a pickle. It has a unique taste different from tea used for
drinking and has health benefits. Despite the fact that pickled tea is a popular food
in Myanmar, no research has been done to analyse its value chain and evaluate its
potential in the global market.
This study is an exploratory research and aims to examine the value chain of
pickled tea from production to the final consumer and to evaluate how to improve
the quality in the value chain. In addition, the improvements to the integrity to the
pickled tea value chain are addressed.
The value chain analysis revealed the major actors in the pickled tea value chain
and described the process as tea leaves pass through several intermediaries with
value being added at each stage before reaching the end consumer. The chain is
governed by wholesalers and manufacturers who have capital advantage over the
other chain actors. Therefore, farmers get the lower share of the price margin.
This study shows the domestic pickled tea value chain and it describes the
upgrades to the chain if it is to be upgraded. Pickled tea is a profitable industry and
has high potential in the global market. However, there are considerable
weaknesses and challenges to developing a sustainable pickled tea industry from
both farm and market perspective. Supply issues such as availability of tea leaves,
quality and consistency of the pickled tea, and effective grading along the value
chain were addressed. Food safety and traceability is also a key area of concern.
ii
The study recommends that value chain upgrading can help improve the
effectiveness and efficiency of the chain. Generally, the findings suggest that
strategies aiming to strengthen the linkages within the value chain, collective
marketing, and improved processing technologies can enhance the development of
the pickled tea value chain in Myanmar. Therefore, policy aiming at increasing
farmers’ access to modern technology and inputs, developing infrastructure,
cooperative development, and improving extension systems are recommended to
accelerate the chain’s development.

iii
ACKNOWLEDGEMENTS

It is a pleasure to thank those who have helped to make this thesis possible.
First of all, I am deeply grateful to my supervisors Walter Glass, for his
encouragement, guidance, supervision, advice and support in undertaking this
research and to Nicola Shadbolt who has given me guidance and invaluable and
constructive feedback. Next, I owe my deepest gratitude to my program director,
Iona McCarthy, for her encouragement and support throughout the study year. I
also wish to express my thanks to Brian Wilkinson for his help in testing the pH
level of the pickled tea prior to the taste test, even though taste testing was not
able to be conducted in this study. I am also thankful to Denise Stewart and Fiona
Bardell for their valuable help and support.
My sincere gratitude also goes to the staff at the International Student Office for
being supportive, understanding, and welcoming throughout the whole study
program. Special thanks to Jamie Hooper and Dave Broderick.
I am also very grateful to the New Zealand Development Scholarship that
supported financially to pursue my Masters at Massey University and gave me this
marvellous opportunity to study and experience this wonderful country, New
Zealand.
Thanks to all the value chain participants and restaurants who assisted
enthusiastically in the interviews. I greatly appreciate the valuable time they gave,
sharing their opinions and ideas to be part of the study.
Special thanks also go to Uncle Tin Win and Uncle Win Kyaw who accompanied me

iv
to the survey sites and linked me with pickled tea farmers, traders, and
wholesalers, in addition to giving information about pickled tea. I also wish to
convey special thanks to Uncle Htun Myaing for his invaluable knowledge and
information on the recent updates on pickled tea exports to the United States.
I must extend my deepest gratitude to my beloved parents for their enormous
support in every step of my life and help making me who I am today. I hope I made
them proud. I also appreciate my sister for giving time to go through my thesis and
for her suggestions and advice and my brother for his encouragement and support.
I also wish to express my love and gratitude to my partner for his endless love and
support, throughout the duration of my study.
Lastly, I offer my heartfelt gratitude to all of those who supported me in any
respect during my studies.
TABLE OF CONTENTS

ABSTRACT ........................................................................................................................ i
ACKNOWLEDGEMENTS ................................................................................................. iii
List of Tables ................................................................................................................. viii
List of Figures ................................................................................................................ ix
GLOSSARY ...................................................................................................................... xi

CHAPTER 1 ...................................................................................................................... 1
INTRODUCTION .............................................................................................................. 1
1.1 Background of the Study .................................................................................................. 1
1.2 Objectives of the Study ..................................................................................................... 4
1.3 Scope and Limitations of the Study ................................................................................. 4
1.4 Significance of the Study .................................................................................................. 5
1.5 Outline of the Study .......................................................................................................... 6

CHAPTER 2 ...................................................................................................................... 8
LITERATURE REVIEW .................................................................................................... 8
2.1 Introduction ...................................................................................................................... 8
2.2 Context ............................................................................................................................... 8
2.2.1 Tea ...................................................................................................................................... 8
2.2.2 World Tea Production ..................................................................................................... 9
2.2.3 Tea in Myanmar .............................................................................................................. 14
2.2.4 Varieties of Tea ............................................................................................................... 23
2.2.5 Changing Consumer Demands ..................................................................................... 26
2.3 Value Chain Concept ....................................................................................................... 27
2.3.1 Value Addition and Value Chain Upgrading .............................................................. 30
2.3.2 Value Chain Study Approaches .................................................................................... 33
2.3.3 Value Chain Approach for Agricultural Products .................................................... 35
2.3.4 Application of Value Chain Analysis on Tea .............................................................. 39

CHAPTER 3 .................................................................................................................... 42
METHODOLOGY ............................................................................................................ 42
3.1 Introduction .................................................................................................................... 42
3.2 Research Design .............................................................................................................. 42
3.3 Description of the Study Areas ...................................................................................... 43
3.4 Research Methods ........................................................................................................... 45
3.5 Data Collection ................................................................................................................ 46

vi
3.6 Data Analysis ................................................................................................................... 50

CHAPTER 4 .................................................................................................................... 52
RESULTS ........................................................................................................................ 52
4.1 Introduction .................................................................................................................... 52
4.2 Pickled Tea Value Chain ................................................................................................. 52
4.2.1 Tea Picking ...................................................................................................................... 53
4.2.2 Producers and Processors ............................................................................................ 56
4.2.3 Traders ............................................................................................................................. 68
4.2.4 Wholesalers .................................................................................................................... 68
4.2.6 Retailers ........................................................................................................................... 72
4.2.7 Consumers ....................................................................................................................... 73
4.2.8 Other Participants and Organisations ....................................................................... 73
4.3 Margins and Benefit Shares of Participants ................................................................. 77
4.4 Potential of Pickled tea in the International Market ................................................... 77
4.4 Pickled Tea in the United States Market ....................................................................... 86
4.5 Constraint to Research—Rationale for not Taste-Testing Myanmar Pickled
Tea in New Zealand ............................................................................................................... 87

CHAPTER 5 .................................................................................................................... 90
DISCUSSION AND RECOMMENDATION ....................................................................... 90
5.1 Introduction .................................................................................................................... 90
5.2 Weaknesses in the Value Chain ..................................................................................... 91
5.2.1 Weak link 1: Inputs ........................................................................................................ 92
5.2.2 Weak link 2: Tea plantations ....................................................................................... 93
5.2.3 Weak link 3: Processing, Trading, and Wholesaling ............................................... 95
5.2.4 Weak link 4: Manufacturing and Retailing ................................................................ 97
5.2.5 Weak link 5: Consumers ............................................................................................... 98
5.3 Upgrading the Value Chain ............................................................................................. 98
5.4 Recommendations ........................................................................................................ 100
5.4.1 Government strategies ................................................................................................ 100
5.4.2 Branding ........................................................................................................................ 101
5.4.3 Packaging and Food Safety ......................................................................................... 103
5.4.4 Product Differentiation .............................................................................................. 104

Chapter 6 ..................................................................................................................... 106
SUMMARY AND CONCLUSION .................................................................................... 106
6.1 Summary and Conclusion ............................................................................................. 106
6.2 Suggestions for Future Research ................................................................................. 108

REFERENCES ............................................................................................................... 111

vii
APPENDICES ................................................................................................................ 131

APPENDIX-1: Laphet Value Chain Questionnaire - Farmers ................................. 131
APPENDIX-2: Laphet Value Chain Questionnaire - Wholesalers, Retailers,
Manufacturer (Company) .......................................................................................... 136
APPENDIX-3: Laphet Value Chain Questionnaire - Govt. / Organization ............ 145
APPENDIX-4: Laphet Value Chain Questionnaire - Restaurants ...................... 148

Page viii

List of Tables

Table 1: World Tea Production (thousand tonnes) ...................................................... 10
Table 2: World Tea Exports (thousand tonnes) ............................................................ 11
Table 3: World Tea Consumption (thousand tonnes) ................................................... 12
Table 4: Tea Production in Myanmar ............................................................................. 17
Table 5: Tea Production of the Different Types of Tea in Myanmar in tonnes. .......... 19
Table 6: Prices of Different Types of Tea in Myanmar .................................................. 20
Table 7: Export and Import of Tea in Myanmar ............................................................ 22
Table 8: Tea Picking Seasons in Myanmar ..................................................................... 54
Table 9: Prices Received by Each Participant in the Value Chain and the Price
Margins for Pickled Tea made by Low Quality Leaves and Good High Quality Leaves.
............................................................................................................................................ 79
Table 10: Number of Restaurants Surveyed by Country .............................................. 82
Table 11: Total Number of Pickled Tea Leaf Salad Dishes sold per Restaurant and the
Prices sold at Different Countries ................................................................................... 84
Page ix

List of Figures

Figure 1: FAO tea composite price (Food and Agriculture Organization Statistics
(FAOSTAT), 2015). ........................................................................................................................... 13
Figure 2: Statue of King Alaungsithu giving tea seeds to the people (located in Mt.
Lwal Sal, Northern Shan State) ..................................................................................................... 15
Figure 3: First tea plant in Myanmar located in Mount Lwal Sal, Northern Shan State.
................................................................................................................................................................. 16
Figure 4: Tea producing areas in Myanmar (Note: Myanmar Department of

Agriculture and Irrigation, 2013). .............................................................................................. 18
Figure 5: High fluctuation in the prices of different types of tea in Myanmar. ............ 20
Figure 6: Pickled tea leaf samples in a lacquerware tray (Ord, 2013). .......................... 24
Figure 7: Pickled tea leaf salad (Honn, 2014) ......................................................................... 24
Figure 8: Supply chain and value chain (Fredendall & Hill, 2000). ................................ 29
Figure 9: Typical agricultural value chain and associated business development

services (Anandjaysekeram & Gebremedhin, 2009) ........................................................ 36
Figure 10: Stages of value-addition to fresh tea leaves (Ariyawardana, 2001). .......... 39
Figure 11: Map of Myanmar showing Shan State and the study areas of Namsan and
Pindaya townships. .......................................................................................................................... 44
Figure 12: Data collection framework. ...................................................................................... 49
Figure 13: A typical pickled tea value chain. .......................................................................... 53
Figure 14: Tea picking in the Northern Shan State. ............................................................... 55
Figure 15: Scattered tea plants along the mountain slopes which require filling up
and tall tea plants which require pruning for efficient picking of tea leaves. ............. 55
Figure 16: Value chain of pickled tea exported to the U.S. market. ................................. 57
Figure 17: Step-by-step processing of green tea leaves into pickled tea. ...................... 59
Figure 18: Comparison of pickled tea processing .................................................................. 60

x
Figure 19: Step-by-step processing of green tea leaves into pickled tea ....................... 62
Figure 20: Storage of pickled tea: in plastic bags; in pits; and in steel tanks. .............. 65
Figure 21: Production and market flow map of pickled tea. .............................................. 67
Figure 22: Pickled tea value chain .............................................................................................. 69
Figure 23: Pickled tea prices (prices as of July, 2015). ........................................................ 70
Figure 24: Prices of pickled tea sold at different stages in the value chain .................. 78
Figure 25: Difference in the prices of poor and high quality pickled tea received at
each level of the value chain by the participants. .................................................................. 80
Figure 26: Increase in prices of pickled tea sold at each level of the value chain ....... 81
Figure 27: A typical dish of pickled tea served as a salad. ................................................. 82
Figure 28: Pickled tea leaf salad before being mixed (Burma Superstar Tea Leaf
Salad) ................................................................................................................................................... 83
Figure 29: Importance of certification on a Likert scale of 1-7. ........................................ 85
Figure 30: Weak links in the pickled tea value chain. .......................................................... 91

Page xi

GLOSSARY

Laphet Pickled tea
FAO Food and Agriculture Organization
FAO IGG Food and Agriculture Organization Intergovernmental Group
FAOSTAT Food and Agriculture Organization Corporate Statistical

Database
CTC Crush, Tear and Curl tea
USAID US Agency for International Development
USD United States Dollar
VCA Value Chain Analysis
GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit
HACCP Hazard Analysis Critical Control Point
FCL Full Container Load
FSA Food Safety Activities
GHP Good Hygienic Practice
UNODC United Nations Office on Drugs and Crime
IRC International Rescue Committee
JICA Japanese International Cooperation Agency
SADC Swiss Agency for Development and Cooperation
DOA Department of Agriculture
PTPA Palaung Tea Producing Association
MFVPA Myanmar Fruits and Vegetable Producers Association
MOAG Myanmar Organic Agriculture Group

* All values in this document are expressed in USD ($) for the purpose of
consistency and clarity.

1
CHAPTER 1
INTRODUCTION
1.1 Background of the Study
Tea is the second-most-widely consumed beverage throughout the world, and it is
consumed by a wide range of people in different age groups in all levels of society
(Hicks, 2009). As tea is cultivated worldwide, there are several varieties of tea that
compete in the global tea market; however, pickled tea—also known as laphet in
Myanmar—is the form of tea that is eaten. Laphet consists of tea leaves which have
been fermented into a pickle. It is a well-known traditional cuisine of Myanmar,
which is one of the very few countries in the world where tea leaves are eaten.
Pickled tea (laphet) has been eaten in Myanmar for hundreds of years and the
tradition has been handed down from generation to generation, so it has become a
traditional food and plays a prominent role in the culture and daily lives of the
Myanmar people. It has a unique taste, different from tea used for drinking, and
remains popular in Myanmar due to its status as a national food, and for its
purported health benefits. During ancient times, it was served only in royal
ceremonies. Nowadays, it is normally eaten at the end of each meal as a
supplement for satiety, as well as at special occasions, such as festivals, funerals,
and weddings.
In Myanmar, there has been very limited research regarding pickled tea. Little, if
anything, has been done to explore the potential of international appeal for pickled

CHAPTER-1 2 INTRODUCTION
tea or the value chain that might be applied. In regards to this, this study provides
a planning insight into the potential for pickled tea (Laphet). Therefore, the
specific objective of this research is to study the value chain of pickled tea in
Myanmar and explore the opportunities for various channels that would be
available for the Myanmar pickled tea industry, domestically as well as for the
overseas market.
The Myanmar tea industry is facing a range of issues, including low investment in
agricultural research; a lack of skilled technicians and labour; weak links between
the extension services and farmers; insufficient capital for smallholder tea farmers;
and a lack of technology for the cultivation, processing and packaging of pickled
tea (Naing, 2011; Cho, 2013). These issues have hindered the development of
Myanmar’s pickled tea value chain and have hence restricted exports. There is a
need for the development of new, innovative end products by utilizing increased
commercialisation and technological application at a local level which will lead to
value-added products. Efficient value chain analysis is a prerequisite in the
development process of any economy (Hellin, 2006). Farmers’ incomes can be
increased not only by improving productivity but also through efficient and
effective value addition. Vanhaverbeke and Cloodt (2006) stated that the
difference between prices paid by consumers for value-added products and
farmers’ realisation has been increasing rapidly. Value addition has the potential to
generate more local jobs, better income, and better services (Ravald & Gronroos,
1996). Therefore, value addition of pickled tea could play an important role in
improving income and generating employment in certain rural areas of Myanmar

Despite the fact that pickled tea is very popular in Myanmar, it is not well-known
outside of the country. However, due to ongoing policy reforms, Myanmar is
gaining worldwide interest for business investments and tourism. With the
worldwide increase in tourism, immigration, and international trade, the role of
provenance has become more important not only in business and consumer
behaviour (Rossiter & Chan, 2004), but also in food culture and the food industry
(Lee et al., 2014). According to the Myanmar Department of Hotels and Tourism
(2014), Myanmar has now become a very popular destination for tourists, and
many people around the world are becoming familiar with Burmese cuisine. This
has led to the build-up of demand for pickled tea as it is one of the most popular
dishes in Myanmar. This research is important as it may help find a place for
pickled tea in the global market and make Myanmar and its traditional cuisine
becomes more well-known throughout the world.
Moreover, pickled tea is also beginning to gain popularity in countries with
significant Burmese populations, such as the United States, Singapore, Thailand,
Western Europe, and Australia, where 75% of Burmese migrants live (UN Census
Data, 2013). According to Statistics New Zealand (2014), the Burmese ethnic
group in New Zealand has also increased by 26.7% between 2006 and 2013, with
83.5% of Burmese migrants living in the North Island. However, pickled tea is still
not well-known in New Zealand. In regards to the changing consumption habits
and eating behaviour, the introduction of pickled tea into New Zealand would
likely to impact on the eating patterns.
This study will assess the potential of pickled tea in countries such the United
States, Singapore, Australia, Thailand with high Burmese population and also in

New Zealand. In addition, this research will also look at the critical aspects of the
Burmese pickled tea and examine the performance of the industry chain along
with the weaknesses hindering the industry and the improvements to the integrity
to the value chain.
1.2 Objectives of the Study
The general objective of the study is to analyse the value chain of pickled tea in the
study area. The specific objectives of this paper are:
(i) to describes the value chain of the Burmese pickled tea (laphet) and
examine the performance of the participants in the value chain;
(ii) to identify the weaknesses that hinder the development of the pickled
tea industry;
(iii) to address the improvements to the integrity to the pickled tea value
chain
1.3 Scope and Limitations of the Study
This thesis describes an exploratory approach to the value chain of pickled tea
specifically in the Shan State, which is the main tea-producing state in Myanmar.
Pickled tea has received very limited attention in the tea sector as the processing
of pickled tea is not widely known, as it has been embedded in Burmese traditional
culture and village life. This research on the value chain involved the collection of
primary and secondary data. Primary data was collected through a survey of

different tea farmers, pickled tea processors, urban and rural wholesalers, as well
as other secondary and tertiary participants along the value chain. Interviews were
also conducted with Burmese restaurants, either by personal visits or through
phone or email, to study the potential of marketing pickled tea in New Zealand,
Australia, Singapore, Thailand, and the United States.
As this study is the first to look at the value chain of pickled tea, it is limited by the
lack of other detailed investigations which could reinforce understanding of the
whole system, especially in regards to the demand side and consumption
preference studies. Hence, due to time and financial constraints, the study was
narrowed down to concentrate on the pickled tea value chain in the Shan State.
Other tea products are not included. Moreover, this research is predominantly
exploratory in nature and the survey results are used to draw only broad
generalisations about the potential of pickled tea in the international market.
However, further detailed studies are required to thoroughly test the feasibility of
pickled tea internationally and to obtain a fully representative result.
1.4 Significance of the Study
The study analysed the value chain of pickled tea from input supplier to consumer.
It also provides analysis of the existing challenges, opportunities, and weaknesses
in the pickled tea value chain. Therefore, it could suggest ways to enhance the
production and utilisation of pickled tea at a larger scale to bring about economic
development in the study area. Moreover, the study also examines the potential of

the product in five different countries, and the preferences and requirements for
the product to be sustainable in these niche markets.
The information generated could aid a number of research and development
organisations, government and non-government organisations, traders, producers,
and policy makers to assess their activities and ultimately influence the design and
implementation of policies and strategies. This research contributes towards
profiling the performance of pickled tea farmers and identifies ways that can be
explored to incorporate farmers into formal markets and enable them to
contribute to the economy. It could also help different participants in the value
chain to identify and analyse new ways of stimulating innovation.
1.5 Outline of the Study
The thesis is organised as follows: the purpose of the study, along with the
background, objectives, and limitations to the study, is set out in this first chapter.
In the second chapter, the literature of the study is reviewed.
The third chapter provides the research techniques and the methods used to
analyse the value chain of pickled tea in Myanmar, followed by the methods used
to investigate the potential for the introduction of pickled tea to New Zealand and
four other countries: The United States, Australia, Singapore and Thailand. In this
chapter, an overview of the study areas is given, along with the sources of primary
and secondary data, data collection, data analysis, and constraints to the study.

The fourth chapter provides the main findings of the study, followed by the fifth
chapter which is the discussion of the results and recommendations.
The final chapter presents a summary of the research findings, conclusions, and
suggestions for future research, followed by a list of references at the end of the
thesis.
CHAPTER 2
LITERATURE REVIEW
2.1 Introduction
This chapter reviews the literature on tea production, export, and consumption
around the world and in Myanmar. It also addresses the health benefits of pickled
tea, and different ways of eating it. A comparison of the market prices for normal
tea and pickled tea is also given in this chapter. As pickled tea is a new area of
study, there is little specific existing literature on this type of tea product;
therefore, value chain concepts and value chain approaches for the general tea
sector are discussed, as this forms the closest comparison to the pickled tea
industry.
2.2 Context
2.2.1 Tea
Tea is a beverage made by processing the leaves of a plant, Camellia sinensis (Hills,
1998). It is known to be the most consumed drink after water (Muktar & Ahmad,
2000; Walter & Wiederecht, 2006) and one of the oldest medicinal beverages in
the world (Dufresne & Farnworth, 2000). According to Kindon-Ward (1950), tea
originated within the fan-shaped area extending from the Assam/Burma border in
the west of China to the east, then south from this line through Burma and
Thailand to Vietnam. Hicks (2001) also stated that even though China is credited
with introducing tea to the world, the evergreen tea plant is in fact native to
southern China, northern India, Myanmar, and Cambodia.
There are two main varieties of tea: C. sinensis var. sinensis (China tea), which
predominates in China, Japan and Taiwan; and C. sinensis var. assamica (Assam

CHAPTER-2 9 LITERATURE REVIEW
tea), widely grown in South and Southeast Asia (Adiwinata et al., 1989). Tea plants
are highly sensitive to changes in growing conditions and therefore the production
is limited to a few areas of the world (Carr, 1972). They grow best in tropical and
subtropical areas with adequate rainfall, good drainage, and slightly acidic soil
(Awasom, 2011). Its specific requirements are temperatures ranging from 10°C to
30°C, minimum annual precipitation of 1250 mm, and high elevations up to 2000
m (Graham, 1983). In plantations, tea is planted at a density of 5000-10,000 plants
per hectare and maintained as low shrubs of 1-1.5 m in height through regular
pruning during harvesting (Chan et al., 2007).
2.2.2 World Tea Production
Drawing from the Food and Agriculture Organization Corporate Statistical
Database (FAOSTAT) in 2013, world tea production increased significantly by 6%
due to the increased output of the major tea-producing countries in Asia and
Africa, with an increase in other tea-producing countries in the Middle East, Latin
America and the Caribbean. Over the years, India had always dominated global tea
production, until 2006 when China boosted its tea production. In 2013, 5.07
million tonnes of tea were produced worldwide, with China having the largest tea
production of 1.9 million tonnes, accounting for 38% of global tea production. This
is followed by India, the second-largest producer, with 1.2 million tonnes, and
Kenya and Sri Lanka with 436,300 tonnes and 343,100 tonnes respectively.
Production in other Asian countries such as Indonesia and Bangladesh also
showed increases in tea output, with the exception of Vietnam, which showed a
7.5% decline. Tea production has also risen in Africa, with slight increases in
Burundi, Zimbabwe and South Africa (see Table 1).

Table 1: World Tea Production (thousand tonnes)
2006-08 2009 2010 2011 2012 2013

WORLD 3891.2 4040.0 4364.7 4627.0 4784.5 5063.9
Far East 2892.3 3089.7 3280.3 3579.1 3573.3 3965.6
Bangladesh 56.8 60.0 60.0 59.6 62.5 66.2
China (Mainland) 1150.5 1344.4 1475.1 1623.2 1789.8 1924.5
India 986.4 982.1 970.3 1119.7 1129.0 1200.4
Indonesia 150.3 156.9 156.6 150.8 150.9 152.7
Sri Lanka 311.3 291.2 331.4 327.5 328.4 343.1
Vietnam 158.0 177.3 192.0 202.1 200.0 185.0
Others 78.9 77.8 94.8 96.2 92.7 93.8
Africa 535.9 520.5 616.1 591.7 580.2 649.5
Burundi 6.6 6.7 6.9 7.0 8.7 8.8
Kenya 345.2 318.3 403.3 383.1 373.1 436.3
Malawi 44.9 52.6 51.6 47.1 42.5 46.5
Rwanda 19.1 20.5 22.2 24.1 24.7 25.2
South Africa 3.5 2.0 2.1 2.2 2.2 2.5
Tanzania 32.6 32.1 31.6 33.0 32.3 32.4
Uganda 42.4 51.0 59.4 56.3 57.9 58.3
Zimbabwe 12.4 7.3 8.6 8.4 8.5 8.5
Others 29.0 30.0 30.2 30.6 30.4 30.9
Latin America and 97.7 89.8 107.4 107.8 98.3 95.0
Caribbean
Argentina 79.6 73.4 90.7 91.2 81.3 78.9
Brazil 8.5 7.6 7.7 7.7 7.8 7.0
Others 9.7 8.8 8.9 8.8 9.2 9.1
Near East 255.2 238.2 262.0 251.1 251.5 253.5
Iran, Islamic Rep. 41.4 39.6 27.0 29.5 26.5 26.5
Turkey 213.7 198.6 235.0 221.6 225.0 227.0
Oceania 7.1 7.2 7.2 6.6 6.4 6.5
Japan 94.7 86.0 83.0 82.1 85.9 84.7
Commonwealth of 8.3 8.4 8.4 8.5 8.6 8.9
Independent States
Developed 113.7 103.8 101.0 99.5 103.3 102.0
Developing 3777.5 3936.2 4263.6 4527.5 4681.2 4961.0
Note. From Food and Agriculture Organization Intergovernmental Group (FAO IGG)
Secretariat. (2014).

2.2.2.1 World Tea Export
In 2013, the total world export of tea increased 5% from 2012, reaching 1.77
million tonnes. Kenya was the leading tea exporter. Sri Lanka, China, India, and
Indonesia have all increased their tea exports, while exports from Bangladesh,
Vietnam, Malawi, and South Africa have dropped (see Table 2). According to Nasir
& Shamsuddoha (2012), this drop in exports is mainly due to an increase in
internal demand resulting in increased local auction prices, as well as other
external factors.
Table 2: World Tea Exports (thousand tonnes)
2006-08 2009 2010 2011 2012 2013

WORLD 1570.7 1544.7 1638.0 1674.8 1684.0 1768.5
Far East 1014.0 1008.8 1036.4 1051.9 1064.8 1077.9

Bangladesh 7.9 2.1 0.9 1.5 0.6 0.5
Sri Lanka 303.5 279.9 305.8 303.2 306.1 311.0
China (Mainland) 291.0 303.0 302.4 322.6 321.8 329.7
India 200.2 180.5 182.7 205.3 199.1 209.2
Indonesia 91.7 92.3 87.1 75.5 70.1 70.8
Vietnam 108.2 134.1 138.4 122.6 145.0 133.5
Others 11.5 17.0 19.1 21.4 22.1 23.1
Africa 462.8 449.1 542.9 519.4 525.7 596.4

Kenya 301.0 281.1 362.3 347.5 349.9 415.9
Malawi 42.9 46.8 48.9 44.9 41.8 40.5
Zimbabwe 9.1 4.5 5.1 5.7 5.9 5.9
Rwanda 17.4 18.8 21.5 23.2 23.0 23.5
South Africa 5.6 5.3 5.0 2.7 2.8 5.2
Tanzania 26.4 24.2 26.1 27.1 27.8 26.2
Uganda 39.6 47.9 53.7 47.9 52.3 56.7
Others 20.8 20.3 20.3 20.3 22.3 22.5
Latin America and
79.7 72.7 89.2 89.0 79.3 76.2
Caribbean
Oceania 7.0 7.8 7.4 6.7 6.1 6.6
Developed 16.7 17.5 17.2 14.5 13.7 18.1
Developing 1554.0 1527.2 1665.7 1660.2 1670.3 1750.4
Note. From FAO IGG Secretariat. (2014).

2.2.2.2 World Tea Consumption
The trend for tea consumption continued to rise in 2013, influenced by the rapid
growth in per capita income levels in China, India, and other emerging economies.
In 2013, the total consumption of tea increased by nearly 5% to 4.84 million
tonnes. China has maintained the highest total consumption of tea, consuming 1.61
million tonnes, while consumption in India also expanded to reach 1 million tonnes
in 2013 (see Table 3).
Table 3: World Tea Consumption (thousand tonnes)
2006-08 2009 2010 2011 2012 2013

WORLD 3714.9 3916.0 4180.3 4449.6 4626.8 4842.1
DEVELOPED 826.0 792.1 818.8 834.4 827.8 814.8
South Africa 18.8 24.0 25.1 23.5 23.5 22.8
EU 259.7 228.5 230.3 246.6 238.0 242.0
France 14.6 13.9 15.3 14.9 15.1 15.2
Germany 23.2 19.0 24.9 25.9 29.9 28.9
Ireland 9.2 10.7 10.2 8.6 6.7 7.0
Netherlands 13.8 11.8 10.9 14.2 7.0 12.2
Poland 23.7 15.8 17.2 19.8 19.9 15.0
UK 134.0 121.0 119.8 129.3 125.2 116.2
Other EU 41.2 36.2 31.9 33.9 34.2 47.5
Japan 139.4 124.1 124.0 121.9 121.9 119.1
United States 109.6 108.2 123.8 124.6 122.7 127.4
Russian Federation 172.4 176.2 177.8 182.2 173.3 159.1
Others 114.7 107.1 112.7 112.1 125.0 121.6
DEVELOPING 2889.0 3123.9 3361.5 3615.1 3798.9 4027.3
China (Mainland) 867.0 1045.3 1188.5 1314.5 1481.7 1614.2
India 786.9 822.1 818.3 922.2 939.2 1001.4
Turkey 214.6 202.4 241.9 227.4 227.2 228.0
Egypt 81.1 82.3 68.5 95.7 95.4 99.0
Pakistan 107.3 85.7 120.3 126.2 131.3 126.6
Iran, Islamic Rep. of 76.8 86.1 89.6 80.2 80.3 83.4
Indonesia 56.1 56.8 59.9 61.1 63.3 64.9
Bangladesh 46.4 53.7 57.3 59.3 59.5 61.9
Vietnam 25.5 27.5 27.9 29.3 30.3 31.7
Morocco 51.4 54.8 53.9 65.0 54.1 56.7
Kenya 17.3 18.1 18.7 20.0 23.0 26.6
Others 558.6 589.0 616.6 614.2 613.7 632.9
Note. From FAO IGG Secretariat. (2014)

2.2.2.3 World Tea Prices
According to the FAO Tea Composite Price, which is an indicative price for black
tea, international tea prices has consistently increased from 2002 to 2012 (see
Figure 1). In 2013, the average price dropped by 2.5% to US$2.79 per kg, and
continued to drop further to US$2.65 per kg in 2014. The Food and Agriculture
Organization Intergovernmental Group (FAO IGG) Secretariat stated that the
decline in tea price in 2013 and 2014 was exclusively due to the weak prices for
Crush, Tear and Curl (CTC) tea while Orthodox tea prices increased firmly,
underpinned by strong demand in traditional orthodox tea.
FAO Tea Composite Price
Figure 1: FAO tea composite price (Food and Agriculture Organization Statistics
(FAOSTAT), 2015).

2.2.3 Tea in Myanmar
Myanmar is one of several Asian countries that have cultivated tea since the early
nineteenth century (Naing, 2011). In Myanmar, tea production is thought to have
originated from the Palaung people on the Shan Plateau, parts of which are more
than 6000 feet above sea level (Milne, 1924).
Palaung is one of the oldest hill tribes in Myanmar (Howard & Wattana, 2001).
Palaung people refer themselves as Ta-ang (Leach, 1964) and are also known as
Tai Loi or Kun Loi, meaning a kind of person who follows a lifestyle typical of Tai
speaking groups (such as Shan, Lao and Thai); lives in the lowlands; and practices
Buddhism (Enriquez, 1923). Palaung are scattered throughout Shan State. Others
are located in Yunan province in China and in Chiang Mai province in Thailand
(Naing, 1962). They have their own language and literature, a distinctive Ta-ang
(Palaung) traditional culture, and their own territory (Milne, 1924). British reports
from the late nineteenth century noted that the Palaung were the first in Myanmar
to cultivate tea (Maule, 1991).
Burmese legend suggests that tea was first introduced into the country by King
Alaungsithu of Pagan (1112-1167) who gave tea seeds to the people to cultivate.
The people of the region accepted the tea seeds with one hand (La-ta-phat in
Burmese language) and from there the term La-ta-phat, or Laphet, was used for tea
in Myanmar (see Figure 2).

Figure 2: Statue of King Alaungsithu giving tea seeds to the people (located in Mt.
Lwal Sal, Northern Shan State)
According to a famous Myanmar poet, U Ponnya (1812-1867), the first tea seeds
were given to the Palaung while they were still living in what is now western China
over 2000 years ago. Regardless of its origins, the Palaung people have cultivated
tea for their livelihood since its introduction. People also began eating tea together
with rice in their daily meals. In order for tea to last for longer, they began storing
it in pits, where the tea was covered and allowed to ferment, thus discovering
pickled tea (Mulae, 1991). Pickled tea is now very common in Myanmar and the
word laphet, which means “tea”, is commonly used to describe pickled tea in the
country. Only rarely did people in traditional times drink, rather than eat, tea—
drinking tea only became popular in Myanmar in colonial times (Singhanetra-
Renard, 2004).
The first tea plant, which is now over a thousand of years old, is still in existence on
Mount Lwal Sal in the northern Shan State of Myanmar (see Figure 3). In 1937, the
British official Maurice Collis visited the original tea tree and commented that “the
vale is one vast tea garden”, cultivated by Palaung (Maule, 1991).

Figure 3: First tea plant in Myanmar located in Mount Lwal Sal, Northern Shan
State.

2.2.3.1 Tea Production in Myanmar
Tea has been cultivated in Myanmar for centuries. The British formalised tea
production in the early nineteenth century, as they did in India; however, since
independence in 1948, the political situation in Myanmar has not encouraged tea
production on any scale (Howard & Wattana, 2001). Opportunities for
international exports were also limited in the tea industry as the Myanmar
government tightly controlled economic policies which restricted international
trade using various trade barriers (Palaung working group, 2011). As a result,
smallholders cultivate tea only for domestic consumption.
Tea production remains relatively low compared to major tea-producing countries
like China, India, and Kenya. However, according to the FAOSTAT (2012), tea

production in Myanmar has increased from 10,900 tonnes in 1991 to over 30,000
tonnes in 2012 (see Table 4).
Table 4: Tea Production in Myanmar
Production Yield Area harvested

Year
(tonnes) (Hg/Ha) (Ha)
2000 19000 2839.72 66908
2001 21300 3174.98 67087
2002 22800 3311.4 68853
2003 22840 3225.99 70800
2004 24640 3435.97 71712
2005 25000 3453.04 72400
2006 26000 3513.51 74000
2007 27700 3639.95 76100
2008 29000 3771.13 76900
2009 30255 3880.09 77975
2010 31060 3944.33 78746
2011 31000 3943.82 78604
2012 32000 4050.63 79000
Note. From Food and Agriculture Organization Corporate Statistical Database

(FAOSTAT), 2012.
Starting in 2000, the government began to encourage tea production as a means of
eradicating opium poppy fields. They did this by distributing seeds, introducing
modern varieties, and by providing a regular pest and disease monitoring service
for tea fields. This increased the average annual yield of tea from 0.31 tonnes/ha in
2000 to over 0.45 tonnes/ha in 2012 (FAOSTAT, 2014).
A large number of small and marginal farmers, especially those living in the hilly
regions of Myanmar, depend on tea for their livelihood. According to the Union of
Myanmar Federation of Chambers of Commerce and Industry, commercial
cultivation of tea in the Shan State and Chin State accounts for 90% of total tea

production, with the remaining 10% of production in Sagaing, Mandalay, and
Magway divisions and in Kachin, Kayah, Kayin, and Mon States (see Figure 4).
(1.55%)
(3.87%)
(8.71%) (81.24%
(3.6%) )
(0.44%)
(0.01%)

(0.45%)
(0.14%)
Figure 4: Tea producing areas in Myanmar (Note: Myanmar Department of

Agriculture and Irrigation, 2013).
In Myanmar, there are three types of tea variant: green tea, black tea, and pickled
tea. Green tea accounts for 56% of total tea leaf production; black tea is 28%; and
pickled tea is 16%. In terms of production, green tea accounts for 22%, black tea
19.44%, and pickled tea for 85% (see Table 5). Green tea and black tea are

produced for domestic consumption by growers, government, and private
companies on both a small and medium scale. Pickled tea is largely produced for
domestic consumption in the form of pickled tea leaf salad, and it is produced only
on a small scale but has a substantially higher value.
Table 5: Tea Production of the Different Types of Tea in Myanmar in tonnes.
Black tea production Green tea production Pickled tea production
Yield Usage of Usage of Usage of

(fresh Fresh green Fresh green Fresh green Total
Year Black Tea Green Tea Pickled Tea
green leave for leave for leave for Yield
leaves) Production Production Production
black tea green tea pickled tea
production production production
2000-
2001
62459 34977.0 7695 17488.5 3400 9994.0 8494 19589
2001-
64303 36009.6 7922 18004.8 3500 10288.6 8745 20167
2002
2002-
69796 39085.7 8599 19542.8 3799 11167.5 9492 21890
2003
2003-
74239 41573.8 9146 20786.9 4041 11878.3 10097 23284
2004
2004-
77092 43171.5 9498 21585.7 4196 12334.8 10485 24179
2005
2005-
80545 45105.2 9923 22552.6 4384 12887.2 10954 25261
2006
2006-
84348 47234.9 10392 23617.4 4591 13495.7 11471 26454
2007
2007-
2008
88078 49323.7 10851 24661.8 4794 14092.5 11979 27624
2008-
91397 51382.0 11260 25591.1 4975 14624.0 12430 28665
2009
2009-
93963 52619.3 11576 26309.6 5115 15034.1 12779 29470
2010
Note. From Myanmar Department of Agriculture and Irrigation (2012).
2.2.3.2 Price Comparison of the Different Types of Tea in Myanmar
Prices of tea vary depending on the type and flavour. According to the Myanmar
Tea Association, 1 kg of fresh green leaves is equal to 0.75 kg of pickled tea and

0.25 kg of green tea or black tea. This means that it takes about 4 kg of fresh green
tea leaves to make 1 kg of green or black tea, whereas only 1.3 kg of fresh green tea
leaves are required to make 1 kg of pickled tea. The price of pickled tea is
significantly higher than other types of tea due to the high level of value addition,
despite the fact that fewer tea leaves are required to make pickled tea. This is due
to the cost of processing.
The high fluctuation in the prices of the different types of tea is dictated by the
unstable market conditions in the Myanmar tea sector (see Figure 5). Table 6
represents the prices of the different types of tea in Myanmar.
Prices of Different Types of Tea

16
14
12
10
0
2009 2010 2011 2012 2013 2014
Fresh tea leaves price (USD/kg) Pickled tea price (USD/kg)
Black tea price (USD/kg) Green tea price (USD/kg)

Figure 5: High fluctuation in the prices of different types of tea in Myanmar.
Note. From Myanmar Tea Association (2015).

Table 6: Prices of Different Types of Tea in Myanmar
Fresh tea leaves Pickled tea price Black tea price Green tea price
price (USD/kg) (USD/kg) (USD/kg) (USD/kg)
2000 0.84 3.96-4.29
2001 0.63-0.68 3.17-3.50
2002 0.68-0.78 0.95-1.05 4.22-4.39
2003 0.70-1.05 5.25-5.95
2004 0.95-1.16 1.76 6.70
2005 1.14 1.86 7.38
2006 1.38-1.73 2.42-2.59 8.99-9.68
2007 1.73-2.94 17.98 13.14-15.22
2008 3.45-3.79 16.55 15.51-17.93
2009 2.07 2.93 6.90-10.34 12.07
2010 2.76 3.45 7.58
2011 3.10 3.45 8.62
2012 3.51 4.22 10.54 12.65-16.87
2013 1.19-2.14 2.97 8.33 11.42
2014 1.80-2.71 4.51 10.15 8.80-11.95
Note. From Myanmar Tea Association (2015).
2.2.3.3 Marketing and Trade of Tea in Myanmar
Tea is a high value product that Myanmar is already exporting. The Myanmar tea
industry has been making its way into the global tea market and the prospect of
exporting more tea looks promising because western countries have lifted
economic sanctions and the government has committed to supporting foreign
trade (USAID, 2013). The government has started to concentrate more on the
export of tea. Even though exports have steadily increased from 307 tonnes in
2002 to 569 tonnes in 2011 (FAO, 2012), tea production has been steady and
relatively controlled (see Table 7).

Table 7: Export and Import of Tea in Myanmar
Year Export Export value Import Import

quantity (1000 USD) quantity value
(tonnes) (tonnes) (1000 USD)
2000 0 0 600 325
2001 0 0 540 650
2002 307 97 744 903
2003 548 142 1310 1664
2004 392 214 1987 2899
2005 612 267 1624 2714
2006 508 327 768 1061
2007 688 565 1114 1604
2008 412 627 1609 2345
2009 729 946 2392 4178
2010 579 884 2701 6886
2011 569 807 2295 7282
Note. From Food and Agriculture Organization Corporate Statistical Database

(FAOSTAT), 2012.
Myanmar’s tea export performance does not have a major effect on world prices
because the overall amount is very low compared to leading exporting countries
such as China, India, Kenya, and Vietnam. A report from Tea 2030 (2014) stated
that Myanmar has a comparative advantage in tea production as the pressure on
land availability globally has led the tea sector to search for new places to grow
tea, with tea growing shifting to new countries like Congo and Myanmar.
Myanmar’s tea exports are mainly in the form of bulk tea (raw
material/commodity tea) with the value-adding processing—such as packaging,
quality checks, and health checks—done in other countries. However, no official

exports of pickled tea have been established yet in Myanmar. Therefore, pickled
tea has only been exported unofficially, by individual families or stores.
2.2.4 Varieties of Tea
There are various types of tea in the global tea market, with the major types being
non-fermented/aerated green tea, semi-fermented (oolong) tea, and fermented
black tea (Reeves et al., 1987). However, different processing techniques and
growing conditions have allowed for the diversification of tea into specialty teas
such as white tea, flavoured teas, decaffeinated tea, herbal teas, organic tea, and
various blends (Karori et al., 2007). There are other types of pickled tea besides
laphet, such as Miang from the northern provinces of Thailand (LeBar, 1967;
Phromrukachat et. al., 2010) and Miam or Suancha from the southern part of
Yunan district in China (Chu, 1997). These teas are made from tea leaves which are
fermented into a pickle and processed into an edible form.
2.2.4.1 Consuming Ways of Pickled Tea
Burmese pickled tea can be eaten in two ways. The first way is traditionally served
in a lidded shallow lacquerware tray called a laphet ohk, which is divided into
small compartments. Pickled tea is dressed with sesame oil in a central
compartment, and is surrounded by other ingredients such as crispy fried garlic,
peas and peanuts, toasted sesame seeds, crushed dried shrimp, and preserved
shredded ginger (see Figure 6).

Figure 6: Pickled tea leaf samples in a lacquerware tray (Ord, 2013).
The second way to prepare pickled tea is as a green tea salad, typically by mixing
the same ingredients as above, but also possibly include tomatoes, green chilli,
shredded cabbage, or a squeeze of lime (see Figure 7).
Figure 7: Pickled tea leaf salad (Honn, 2014)
Pickled tea can also be eaten as a snack. According to research on popular snacks
conducted by Aung et al. (2005), pickled tea leaf salad was found to be one of the
most-consumed midday snacks in Myanmar. It was also found to contain the
highest protein content among other traditional snacks because it is combined
with a variety of beans in the salad. Their study also pointed out that traditional

Myanmar snacks are more nutritious and healthier, as well as cheaper, compared
to Westernised snacks.
2.2.4.2 Health Benefits of Tea and Pickled Tea
Tea is a popular beverage which has been widely consumed around the world for
many years because of its attractive aroma, exceptional taste, and its health
promoting and pharmaceutical potential (Gramza-Michalowska, 2014). Even
though there have been some studies that have suggested there are disadvantages
to drinking tea, most studies support the idea that there is no harm in drinking too
much tea and that tea consumption is associated with positive health impacts
(Vuong, 2014). Various studies have investigated the roles of tea constituents in
human health and found that the major tea constituents, including flavonoids,
caffeine, and thiamine, are linked to various health benefits (Graham, 1983; Khan
& Mukhtar, 2007; Basu et al., 2010). Chacko et al., (2010) did a review on the
beneficial effects of tea and stated that tea can protect against several diseases,
including cardiovascular diseases, cancer, and dental and bacterial infections. It
has also been asserted that eating tea can increase lifespan for many years
(Trevisanato & Kim, 2000).
According to a study conducted by Maung et al. (2012), pickled tea contains high
polyphenols which are beneficial for human health. Studies conducted by Yang et
al., (1993, 1999) have proven that tea polyphenols have the ability to inhibit
tumour formation in the lungs, skin, oesophagus, stomach, liver, duodenum, small
intestine, and pancreas in animal models Moreover, in a case-control study
conducted in Taxiing Jiangsu province in China, it was reported that drinking green

tea decreased liver cancer by 78% among alcohol drinkers and 43% among
cigarette smokers due to tea polyphenols and pigments in tea (Mu et al., 2003).
Another study conducted by Maung and He (2013) showed that pickled tea
contains double the amount of flavonoid contents as fresh tea leaves. They also
found that all tea products from the Camellia sinensis plant, such as black, green,
oolong, and white teas, naturally contain between 100-300 mg of flavonoids per
serving. Flavonoids are dietary compounds which contribute significantly to taste
and colour, as well as helping to maintain certain body functions including anti-
allergy, anti-inflammatory, antiviral, anti-proliferative and anti-carcinogenic
activities (Yao et al., 2004). Khan and Mukhtar (2007) review the recent findings
on the medicinal properties and health benefits of tea with special reference to
cancer and cardiovascular disease. Their review stated that tea catechism is one of
a fraction of flavonoids that may reduce the risk of skin cancer, liver cancer, lung
cancer, gastrointestinal tract cancer, pancreatic cancer, bladder cancer, and breast
cancer. Therefore, it can be stated that pickled tea has the potential to prevent
many health problems.
2.2.5 Changing Consumer Demands
In the last few years, there have been many changes in consumer demand,
lifestyles, and eating patterns driven by demographic shifts, economic factors,
rising ethnic diversity, and consumers’ evolving tastes and preferences (Kinsey &
Senauer, 2006). Nowadays, consumers are becoming more aware of quality, food
safety, nutritional benefits, convenience, and animal and environmental welfare
(Huang, 1996; Abdalla & Shaffer, 1997).

There has been an increase in purchases of food which require minimal
preparation as consumers have moved their preferences to convenient “mealtime
solutions” (Kinsey, 1998); coupled with increased demand for products that
enhance health benefits, are low in fat and calories, and help to lower cholesterol
(Davis & Stewart, 2002). This suggests there is potential for growth in the pickled
tea market.
2.3 Value Chain Concept
Value chain is a market-oriented approach that can be used to explain and find
ways to overcome the trade barriers faced by the rural poor (Mitchell et al., 2009).
This approach has been used in this study to examine the pickled tea industry in
Myanmar as it provides an overall view of the pickled tea chain from conception to
consumption. In addition, this study focuses on identifying the weaknesses and
opportunities in the chain that have an impact on tea productivity.
A “value chain” is the collection of activities that a firm performs in order to design,
create, build, and deliver a valuable product or service to the market (Porter,
1985). It describes the full range of value-adding activities that participants
undertake to bring a product or service through the different stages of production
(involving procurement of raw materials and other inputs, assembly, physical
transformation, acquisition of required services such as transportation) to deliver
the product to its final consumer (Kaplinsky & Morris, 2001; Pietrobelli & Saliola,
2008). Porter (1985) indicated that value can be created by product differentiation
through activities and services along every step of the value chain. These activities

include production, marketing, distribution, and support to the final consumer
(Cunningham, 2001). The product reaches the final consumer having passed
through a number of intermediaries, each of whom is said to add value to the final
product (Kaplinsky, 2000). Therefore, the total value delivered by the participants
at the end is the total sum of the value builds up throughout the chain, and the end
customer pays the total price for the final product including a certain amount of
profit (Fredendall & Hill, 2001).
A value chain resembles a supply chain in that both chains provide goods or
services to the final consumers (Handfield & Nichols, 2002). However, the key in
the concept of value chain is the idea of value addition or value creation – typically
by means of innovation in products or processes and marketing (Webber and
Labaste, 2010). This is what distinguishes “value chains” from “supply chains”
which focus on the logistical aspects of a commodity transfer (Dunne, 2001). In
addition, a value chain incorporates product transformation and value addition at
each stage of the chain (Sanogo, 2010). The chain of activities as a whole gives the
product more added value than the sum of independent activities (Hempel, 2010).

Figure 8: Supply chain and value chain (Fredendall & Hill, 2000).
Figure 8 illustrates the difference between a supply chain and a value chain. The
diagram shows the supply chain as a sequence of arrows moving from raw
materials to the final customer, passing through different phases. Each phase
states an individual firm adding value by performing own value chain activities.
However, in this diagram only one firm demonstrates the core function for value
addition in the overall supply chain. In the example, marketing, operations
management and purchasing are shown as the added value to the chain. In general,
each firm in the supply chain network has their own internal functions that add
value to the product or service until the end of the supply chain (Fredendall & Hill,
2000).
A successful value chain depends on the relationships between the members and
the attitude of the participants; this leads to improvement in efficiencies and

greater value creation (Ilyas et al., 2007). The communication from the final
consumer is also important for the successful flow of the physical goods
throughout the chain (Fredendall & Hill, 2000). In 1990s, Gereffi developed the
global commodity chain, which concluded that the overall character of many value
chains are characterised by the dominant participants of the chain which are
responsible for upgrading possibilities, transfer of knowledge, and interaction
coordination within the value chain (Humphrey, 2004). According to Bammann
(2007), there are three important levels of the value chain:
1. Value chain participants: participants in the chain who deal directly
with the product (i.e. producers, processors, traders, etc.).
2. Value chain supporters: actors who do not deal directly with the
product, but who provide services which add value to the product (i.e.
input suppliers, industry associations, researchers).
3. Value chain influencers: actors or services which have a big impact or
influence on the product (i.e. the regulatory framework, policies, policy
makers, infrastructure).
2.3.1 Value Addition and Value Chain Upgrading

This value addition to a product is the firm’s competitive advantage to establishing
the goal to deliver the product with maximum value to the end user for the least
possible total cost to the company, thereby maximizing profit (Porter, 1985).
Porter (1985) distinguished two important value-adding activities of an
organization: primary activities (inbound logistics, operations, outbound logistics,

marketing, and sales), and support activities (strategic planning, human resource
management, technology development, and procurement).
The size of the value added depend on the end customers’ willingness to pay and
the opportunity to add value depends on various factors such as market
characteristics and technological capabilities of the actors (Trienekens, 2011).
According to Kaplinsky (2000), participation in global value chains aiming at
markets which demand products with high added value is required in order to
access high income yielding activities, with high added value.
For specialty products, branding and adding additional value has become a
conditional strategy to gain market share (Gereffi1999). This branding and
labeling, however, is constrained for developing countries producers due to the
private-label policies of many Western supermarket chains (Seth & Randall, 2005).
Safety and quality of the product is also highly focused value added food products
(Holleran et al., 1999). Quality can be defined in terms of intrinsic characteristics
(e.g. color, taste, and tenderness) of the product itself and extrinsic characteristics
(e.g. organic or fair trade production) of the process which cannot be measured on
the product (Trienekens, 2011). To safeguard the quality and safety of end-
products, since the 1990s, Western retailers have defined various standards for
the production and processing of food and because of these standards access to
these markets for small and medium size producers is difficult and in many cases
impossible (Dolan and Humphrey, 2000). Certification according to these
standards implies high costs for producers and also high monitoring costs for
buyers (Jahn et al., 2004). Although, in some cases, there is now an inclusion of

smallholders in modern quality schemes either through cooperative governance
forms or through retail or food industry programs (e.g. tea production in Kenya for
Unilever; coffee production for Nescafe in Brazil) (Trienekens, 2011).
Upgrading of value added in products is related to (potential) demands in a market
(Laufenberg et al., 2003). Pietrobelli and Saliola (2008) define the following
upgrading options: entering higher unit value market niches, entering new sectors,
undertaking new productive functions and in all cases enlarging the technological
capabilities of the firms. Trienekens (2011) describes the upgrading of value added
production is various forms; upgrading of products (and packaging), upgrading of
processes, functional upgrading (insourcing production or distribution functions)
and inter-sectorial upgrading (where chain actors introduce value adding
processes from other sectors to offer new products or services: e.g. a farmer who
enters into tourism activities).
Product differentiation is another means of value creation to upgrade the value
chain (Priem, 2007). However, it is not very suitable for the upstream part of the
value chain in food production, as in most food chains heterogeneity of raw
materials upstream in the value chain is not exploited for serving market
heterogeneity downstream in the chain (Trienekens, 2011). Raw materials are first
made homogeneous and are differentiated again in processing and distribution
stages (e.g. through packaging), because of the high costs of separating and
controlling various materials flows upstream in the chain (Grunert et al., 2005).
Therefore, in many cases the upstream part of the value chain is located in
developing countries explaining why only little value added production in these
chains takes place in developing countries in international value chains

(Trienekens, 2011). This however, creates an opportunity for specialization in fair
trade and organic products from developing countries.
The study conducted by Choudhry & Lister (1997) addressed a number of
problems with respect to product differentiation. They stated that the weak
differentiability of a product in the global market, for example tea, will increase
competitive intensity among rival tea-producing countries. Fonseka (1997) also
stated that the intense rivalry among existing firms in Sri Lanka is also due to lack
of differentiation. Pickled tea however, is a form of tea that is eaten and not drunk
in most cases so this may provide sufficient product differentiation to stand out in
the global food market. Trienekens (2011) also stated that for traditional
commodity chains there is an increasingly tendency for production differentiation.

2.3.2 Value Chain Study Approaches

Value chain analysis (VCA) normally describes the weak linkages and identifies
many potential upgrading strategies (Anadajayasekeram and Gebremedhin, 2009).
Kaplinisky and Morris (2002) argue that there is no correct way to conduct a value
chain analysis; rather, the approach taken fundamentally depends on the
particular question. In this study, the approach suggested by Kaplinsky and Morris
(2001); Van dan Berg (2004); Herr and Muzira (2009) in analysing agricultural
commodity has been adopted. This comprises four aspects of the value chain
analysis.
• Value chain mapping
VCA maps the actors participating in the value chain (production,
distribution, processing, marketing and consumption). This helps to

understand the characteristics of the chain participants and the
relationships among them, including the flow of product through the
chain to its destination of either the domestic or foreign markets.
• Identifying the distribution of benefits of actors in the chain
VCA defines the margins and profits within the chain to determine who
benefits from participating in the chain and who requires support to
improve performance. This is important in the context of developing
countries and agriculture in particular given that the poor are
vulnerable to the process of globalization.
• Examining the role of upgrading within the chain
VCA examines the role of upgrading within the chain by identifying the
constraints and weaknesses. Upgrading involves improvement in
quality, product design which enable the producers to gain higher value
or through product differentiation. An analysis of the upgrading process
includes an assessment of the constraints that are currently present for
the chain actors.
• Role of governance in the value chain
VCA also describes the governance role which supports participants in
the value chain. Governance in a value chain refers to the structure of
relationships and coordination mechanism between actors in the value
chain. This is important in improving capabilities and increase value
addition in the sector and corrects distributional distortions.

2.3.3 Value Chain Approach for Agricultural Products
Various studies have applied value chain concepts to agricultural commodities
(Humphrey & Memedovic, 2006; Cromme et al., 2010; Emana, & Nigussie, 2011;
Woldegiorigis, 2011; Wang, 2012; Woldesenbet, 2013). The concept of agricultural
value chain includes the full range of activities and participants involved in moving
agricultural products from input suppliers to farmers’ fields linking to the next
stakeholder and finally to the consumers in order to form a viable chain (Singh et
al., 2013). Food value chains comprise all activities required to bring farm
products to consumers, including agricultural production, processing, storage,
marketing (including exports), distribution, and consumption (Gomez et al., 2011).
Value addition results from a wide range of activities; for a typical agricultural
value chain; this would involve production, transporting, processing, trading,
retailing, and consumption (Anandajaysekeram & Gebremedhin, 2009). Value
chains are also channels for which finance (credit, revenues, and capital) moves
from consumers to producers; technologies, trainings and assistance are
disseminated among producers, traders, processors and transporters; and
information on consumer preference and demand are transmitted from consumers
back to producers, processors and other service providers (see Figure 9).

Figure 9: Typical agricultural value chain and associated business development

services (Anandjaysekeram & Gebremedhin, 2009)

It has been argued that linking of farmers to the markets through efficient value
chains would reduce the use of intermediaries in the chain, and strengthen the
value adding activities by better technology and inputs, upgraded infrastructure
and processing and exports (Miller & Jones, 2010; Pabuayon et al., 2009). Emana &
Nigussie (2011) stated that it is also important to link value chain with innovation
system perspective in agricultural research for development so that one re-
enforce the other.
Farmers involved in the supply chain functions have less negotiating power and
make little money having to incentive for improving their product and this creates
a great deal of risk for the traders who buy only low-quality produce (Emana &

Nigussie, 2011). However, Faida (2006) stated that if farmers can negotiate a deal
with a trader who buys a certain amount of high-quality product and the trader in
turn has a contract with the end users/ consumers, this makes the chain to
function smoothly and develops a sense of benefiting all actors from having a
smooth supply of top quality products in a sustainable manner. This function
through which each actor is prepared to invest and support other actors to
maximize the benefit from the chain performance is known as a value chain.
A study of the potato value chain conducted by Joshi & Gurung (2009), analyzed
the context of potato production, mapped chain actors and were able to identify
the factors affecting value chain and chain relationships. The farmers identified
seasonality in demand and inconsistent price information as major marketing
problems. Wang (2012) conducted a value chain study on organic vegetables and
discussed product upgrading to bring new varieties of products, process upgrading
to shift to anti-season vegetable and improve the deep processing, functional
upgrading to integrate the actors and functions in the chain and build the producer
oriented structure to shorten the link before producers and consumers. She also
suggested contract farming in order to share more profit from the emerging and
increasing organic market and to overcome the cost for certification and improve
bargaining power and access to market.
Similarly, a potato value chain study conducted in Kenya has shown that contract
farming can be used to reduce transaction costs and risks, and to improve the
organization and governance of value chains by creating stable business
relationships (Kirumba et al., 2004). The study also indicated that potato value
chain is constrained by a number of market and institutional failures. The potato

chain in Kenya is fragmented, characterized by little cooperation and integration,
high transaction costs, large number of middlemen in the marketing system, poor
product handling and packaging, price inefficiencies and quality losses. The study
recommended short-term and long term infrastructural and institutional
innovation to reduce the above challenges.
In the maize value chain analysis study conducted by Woldegiorigis (2011), the
importance of cooperatives was also highlighted to improve bargaining power,
reduce transaction cost for farmers to get higher, stable income to ensure food
security. Ponte (2002) also used a value chain analysis to explain the impact of
market liberalization and deregulation and examines the effect of new
consumption patterns and evolving corporate strategies in the global coffee chain
on coffee exporting countries. It was concluded that the coffee chain was becoming
buyer-driven and the study recommended to promote regulations requiring
buyers to pay higher price for higher quality coffee and to facilitate the
establishment of farmer groups and producer associations and of direct links
between them and consumers.
Value chain studies are also used to identify the weak points in an industry
(Lambert & Cooper, 2000). Kindeya (2010) identified the major constraints to the
production and supply of butter and then analyzed the production and marketing
support services such as extension, credit and marketing. The study has shown
that the number of extension visits and the amount of credit received has direct
positive influence on market participation and sale volume. Similarly, study
conducted by Holloway et al. (2000) has also proven that the visits by extension
agents improve participation and volume of sales.

2.3.4 Application of Value Chain Analysis on Tea

Value chain analysis can be used to assess the tea industry’s competitiveness
(Asopa, 2004). Tea production is part of a value chain with strong potential for
reducing poverty (Simbua, 2006). Tea is planted mainly by small-scale farmers in
poor areas; it requires few inputs; and is labour-intensive (Loconto & Simbua,
2012). Moreover, the risk of crop failure is fairly low (Groosman, 2011). Farmers’
incomes can be increased not only by increasing productivity but also through
efficient and effective value addition (Trienekens, 2011). The tea value chain
involves various stakeholders controlling and adding value along the chain. Value
addition to tea is possible through optimising processing, grading, blending,
packaging, and branding (Loconto & Simbua, 2012). Similarly, as pickled tea is a
unique tea product, value can be added through the processes of processing,
grading, packaging and branding.

Tea Plantation

Fresh Tea Leaves Orthodox tea
CTC tea
Green tea
Primary Processing Oolong tea
Organic tea
Ortho-CTC tea
Auction

Blended tea
Secondary Processing Instant tea
Favoured tea
Tea packets Others
Tea bags Packaging
Gift packs
Others
Finish Production Distribution
Consumer
Figure 10: Stages of value-addition to fresh tea leaves (Ariyawardana, 2001).

According to a study conducted by Onduru et al. (2012), which reviewed the value
chain of tea production in Kenya, the main challenge faced by tea farmers is the
lack of knowledge regarding the value chain of the tea plantation. The tea value
chain in Vietnam was analysed by Khoi et al. (2015) with the aim of finding out
where value could be added along the tea value chain to increase the livelihood of
the poor tea farmers in Vietnam. Their study suggested that farmers should firstly
change their cultivation technique with a view to increase tea yield and quality of
the tea product. The study also showed labour shortage during seasonal months
and improve proper cultivation techniques and the adoption of new technology
can reduce the need for labour.
In 2006, USAID has conducted a similar study on tea production in Uganda by
mapping the tea value chain in order to quantify the costs of the supply chain.
These studies have shown that value chain analysis is important in upgrading the
value of a commodity.
Hazarika and Subramanian (1999) explain the technical efficiency of production
factors in the tea industry in India using the Stochastic Frontier Production
Function Model. Their study concentrates on the productivity and production
factors. This study does not adopt a value chain method, which is generally thought
of as an essential analytical method for the tea industry.
Odoch (2008) researched the competitiveness of the fair trade value chain in
relation to conventional value chains among smallholder tea producers in Kabrole,
Uganda. The study concluded that improvement of the fair trade value chain is
necessary to strengthen the market function of the organisation. The study also

showed the need for the fair trade value chain processor to introduce measures
that counter the influence of conventional middlemen on smallholder farmers,
thereby making recommendations to increase the supply of tea leaves in the fair
trade value chain. Therefore, fair trade certification could be considered as
improving the tea value chain in Myanmar and potentially this might be extended
to pickled tea.

42
CHAPTER 3
METHODOLOGY
3.1 Introduction
There are a wide range of teas available in the global market, including green tea,
black tea, white tea, and oolong tea. There are, however, a lot of opportunities in
the tea industry that have not yet been explored. Pickled tea, in particular, has not
been well studied. This research is exploratory in nature and the purpose is to
study the value chain of pickled tea and the potential of the product in the
international market. This chapter describes the methodology of the study,
including research design, the location of the study area, and the overall research
processes including data collection, data analysis, and problems faced in the study.
3.2 Research Design
This research aims to examine the present state of pickled tea production and to
suggest improvements to the quality of pickled tea in the value chain.
This study will be in a form of exploratory research, as pickled tea is relatively
unknown outside of Myanmar and a very few neighbouring countries. Therefore,
this research will not attempt to establish or test any theory or hypothesis. This
research study is exploratory in nature as it “generates information about
unknown aspects of phenomena” (Teddlie & Tashakkori, 2009, p. 25). In this case,
the potential of pickled tea in five international markets—New Zealand, Australia,
Singapore, Thailand and the United States—was explored.

CHAPTER-3 43 METHODOLOGY
3.3 Description of the Study Areas
Field observations for value chain analysis of pickled tea in Myanmar were
collected in the Shan State, which is the main tea-producing area in Myanmar with
80% of Myanmar’s total tea production grown there. The study was undertaken in
Namsan township, in northern Shan State, and in Pindaya township, in southern
Shan State. These areas are known to be the two major pickled tea-producing areas
within the Shan State (see Figure 11).
Namsan township: Namsan township is one of the main tea producing areas in
Myanmar. It is bordered by Thibaw township to the east, Moe Mate township to
the west, and Kyout Me’ township and Namatu township to the south and north
respectively. Data from the Myanmar Settlement and Land Records Department
States that the total area of Namsan township is 1444.13 square km (557.58
square miles) and it is comprised of six urban towns and 26 village tracts, with a
total of 123 villages. It has approximately 13,213 households, with a population of
77,455, of which the majority of the villagers are tea growers. Namsan township is
situated 1625.19 m (5332 ft) above sea level and receives an average rainfall of
76.14 mm per annum. The yearly average temperature ranges from 9°C to 26°C. It
has sandy soil with a pH of 4.5-5. Other crops produced in Namsan include rice,
maize and vegetables such as radishes and potatoes (Myanmar Department of
Settlement and Land Records, 2014).

Pindaya township: Pindaya township is located within the Taunggyi district in the
southern Shan State. The Myanmar Settlement and Land Records Department lists
28 village tracts with 137 total villages in Pindaya township, with a population of
about 77,183. The total area of the township is approximately 657.86 square km
(254 square miles) and it is situated 1182.62 m (3,880 ft) above sea level. It has
yearly average temperatures of 9°C to 32°C and receives an average rainfall of
43.70 mm per annum. Tea is one of the major crops grown in the area, but other
crops, such as rice, maize, wheat, pulses, potato, oil crops, and spices, are also g
rown in the area (Myanmar Department of Settlement and Land Records, 2014).
Namsan Township
Shan State
Pindaya Township
Figure 11: Map of Myanmar showing Shan State and the study areas of Namsan and
Pindaya townships.

Wholesalers and pickled tea manufacturing companies located in Yangon and
Mandalay were also interviewed. Yangon is the former capital city of Myanmar, but
it remains the largest city and main centre for business, industry, trade, real estate
and entertainment; while Mandalay is the second-largest city as well as the major
trading and communications centre for northern and central Myanmar.
To study the potential of pickled tea in the international market, five countries
were selected based on the relatively high population of Burmese migrants living
in the country according to UN Census Data (2013). The countries studied were the
United States, Singapore, Thailand, Australia, and New Zealand.
3.4 Research Methods
Two types of research methods are widely used in collecting data; namely,
quantitative and qualitative methods (Ghauri et al., 1995). Quantitative methods
are related to numerical interpretations, where data is collected and transformed
into numbers which are tested to see if a relationship can be found so that
conclusions can be drawn from the results gained (Bryman & Bell, 2007). On the
other hand, qualitative methods do not rely on statistics or numbers and
emphasise understanding, interpretation, and observation in natural settings
(Ghauri et al., 1995). Poblete & Grimsholm (2010) stated that qualitative methods
include less structured protocols and interactive interviews, and produce an
overall picture of the results in a more effective way than quantitative methods. In
most studies, qualitative methods can either be used alone or in combination with
quantitative approaches (Creswell, 2014). Ha (2006) used a qualitative research

method to analyse the tea production industry in Vietnam and was able to identify
the factors that encouraged the competitiveness of the Vietnamese tea industry. He
also analysed the major changes in the tea industry and defined the main
advantages and constraints of the competitiveness of the tea value chain in the
economic integration, especially with Vietnam joining in the World Trade
Organisation. Moreover, Commins & Sampanvejsobha (2008) also conducted a
case study to qualitatively analyse the development of the Thai tea industry.
Therefore, in this research, a qualitative approach has been used to describe the
development of the pickled tea value chain in Myanmar. Particular focus was given
to the situation of small-scale pickled tea farmers and the distribution of their
product in the market. A qualitative approach is more appropriate for this
research, as mapping the value chain involves collecting information on the
process of material flows, information flows, and relationships within and between
participants in the value chain, from tea farmers to the final consumer. However,
secondary data have also been used in this research in order to measure the
industry growth and assess the potential of pickled tea in the international market.
Moreover, given that there has been no studies done on the value chain of pickled
tea or even pickled tea in particular, this research will be exploratory in nature.
3.5 Data Collection
The methods used for data collection are from two sources: primary sources
where the information is required to be collected and secondary sources where the
required information is already available and need only to be extracted (Kumar,

2005). It is appropriate to use both sources to obtain more quality and reliable
information for the study (Maylor & Blackmon, 2005).
For the primary sources, Maylor & Blackmon (2005) stated three main methods of
data collection; observation, interviewing and questionnaires. Among these three
methods, a semi- structured interview is assessed as the most appropriate method
to examine the performance of the participants in the pickled tea value chain. This
is because interview is the most appropriate approach to study complex and
sensitive areas and it is useful for collecting in-depth information as the
interviewer can explain complex questions in person to avoid wrong
interpretation from respondents (Kumar, 2005).
In this study, the primary data were gathered by interviewing a total of 30 sampled
pickled tea farmers: 15 from Namsan township and 15 from Pindaya township.
These farmers were selected with the help of locals and extension staff working in
the area, as it is difficult to distinguish between tea farmers producing pickled tea
and other type of teas, such as green tea and black tea. Face-to-face interviews
were conducted with a semi-structural questionnaire. This structural
questionnaire involved collecting socio-economic data, such as farmers’ ages,
education levels, and farming experience, and whether they are members of any
tea organisations. In addition, technical data was also gathered, including
information on the status of technologies and their availability, institutions and
support services used by the farmers, sources of income, and other relevant
demographic information. Furthermore, information on the use of chemical
fertilisers and tea yield, the processing of pickled tea, storage, marketing
information, along with challenges and issues faced by the famers, and their

opinion on the pickled tea sector were collected (see Appendices). The survey was
conducted through physical visits to respondents’ localities and face-to-face oral
interviews.
Wholesalers and pickled tea manufacturing companies located in Yangon and
Mandalay were also interviewed to form the basic structure of the value chain and
the interrelationships in it, as well as to understand the step-by-step value
addition of pickled tea. Personal interviews with wholesalers and manufacturing
companies were undertaken to find out more about the current situation of pickled
tea and the position of their brand in the domestic market, as well as their plans
for export. In addition, semi-structured interviews were conducted with
government extension staff, members of the tea association, and international
organisations, such as Deutsche Gesellschaft für Internationale Zusammenarbeit
(GIZ), which is currently working on certification and exporting of pickled tea.
Interviews were used to allow the researcher to obtain information for accurately
mapping the value chain of the investigated product and to gain a clear picture of
the industry network.
To study the potential of pickled tea in the international market, 30 Burmese
restaurants located in New Zealand, Australia, Thailand, Singapore and the United
States were interviewed. The interview questions related to the supply and
demand side of the product, such as the source of the pickled tea, how the pickled
tea was served in the restaurants, major customers and customer preferences, as
well as information on price, sale frequency, and certification of pickled tea. These
interviews were conducted by personal visits to the restaurants in New Zealand,

Australia and Thailand. Interviews with restaurants in Singapore and the United
States were done through phone calls and emails.
Secondary data was obtained from different government agencies, including
Myanmar Agricultural Service (MAS), which is now known as the Department of
Agriculture (DOA), and Myanmar Agricultural Produce Trading (MAPT), under the
Ministry of Agriculture and Irrigation (MOAI); relevant organisations, websites,
and tea associations in Myanmar.
Sources of data collection

Primary sources Secondary sources

Face-to-face interviews Phone/email interviews Reports/ Tea Websites
journals Associations

Value chain Potential of PT
study study in the
global market

Figure 12: Data collection framework.
The proposed study was to conduct a taste testing of pickled tea in the Manawatu
region which is the fourth region with the highest amount of Burmese population
in the North Island of New Zealand (Statistics New Zealand, 2014). Three different
brand samples of pickled tea are imported from Myanmar to be used in a
preliminary taste-testing exercise as part of this research. Groups according to

ethnicity are identified as Burmese, East Asians (mainly Chinese), West Asians
(mainly from India, Sri Lanka, Nepal, Bangladesh, etc.), Australian/ New
Zealanders, Mori and others. Additional groups are to be included not only to have
a broader sample selection but also to obtain data about their acceptance to
pickled tea. Blind folded test was to be conducted to eliminate any bias in the
result caused by respondents’ pre-conceived ideas about the product. Pickled tea
was to be sampled on its own and in combination with nuts as a salad.
3.6 Data Analysis
In this study descriptive analysis has been done to analyse the value chain of
pickled tea in Myanmar using data collected through a survey with participants
from all stages of the value chain.
Value chain analysis was used to analyse the data collected from pickled tea
farmers, producers, wholesalers, manufacturers, restaurants, and consumers. As
the pickled tea moves through various stages in the chain, transactions take place,
where money and information are exchanged between multiple participants and
value is progressively added. The proposed steps by Kaplinsky and Morris (2001);
Van den Berg (2004); Herr and Muzira (2009) in analysing value chain were
applied to this study.
• Mapping the pickled tea value chain and describing the functions of
participants in the value chain in the selected intervention sites. Major
activities of each participant, product flow and other relevant details
were assessed based on the data collected.

• Defining the margins to determine who benefits and by how much from
participating in the pickled tea value chain and who will benefit from
additional support to be provided.
• Identifying the constraints and weaknesses in order to assist in
upgrading the pickled tea value chain.
• Describing the governance role which supports participants in the
value chain.

52
CHAPTER 4
RESULTS
4.1 Introduction
This chapter presents an analysis of the data and discusses the results obtained
from the study. It has four main sections: the first section describes the pickled tea
value chain, which includes the value chain map, participants and their activities,
and roles involved in the value chain. The second section presents the margins and
benefit shares of participants as the product moves along the value chain. The
third section presents the potential of pickled tea in the international market. The
final section deals with pickled tea in the U.S. market.
4.2 Pickled Tea Value Chain
The pickled tea value chain comprises a step-by-step process in which the
products progress from cultivation all the way to consumption by final consumer.
The major participants in the pickled tea value chain include tea pickers, tea
farmers, pickled tea producers/processors, brokers/traders, wholesalers,
manufacturing companies, and retailers. The value chain progresses in stages,
from production (pruning, picking), to processing (steaming/boiling, pressing,
cooling/spreading, rolling, mixing), storage, distribution, wholesale, retail, and
consumption; where each stage adds value to the tea leaves along the chain (see
Figure 13).

CHAPTER-4 53 RESULTS
Manufacturers
Broker/
Producer Processor Trader Wholesaler Retailer Consumer
-Planting Processing Storage and - Grading - Packaging

into pickled distribution - Branding
-Maintenance - Packaging
tea
-Picking - Adding
nuts
Figure 13: A typical pickled tea value chain.

Note: There is another informal extension in which consumers may be local but export to
other countries by means of unregistered ways such as personal export or private
dispatch.

4.2.1 Tea Picking
In Myanmar, the tea plants are named according to the picking or harvesting time.
Tea picking season starts from the middle of March and continues until the end of
November. The best quality tea leaves are picked from the middle of March to
early April and are called Shwe Phyi Oo (meaning “very first harvest”), while tea
leaves picked in late April are called Shwe Phi Moe Lut (meaning “early harvest just
before the rainy season begins”). These types are considered the highest quality
tea leaves as they are picked during the summer months just before the rainy
season, so they do not have any handling or storage problems. Tea leaves picked
during the rainy season require greater care in handling and storage to prevent
rotting due to mould. Table 8 shows the types of tea leaves categorised according
to the picking season and frequency they are normally picked.

Table 8: Tea Picking Seasons in Myanmar
Tea picking seasons Dates Picking frequency

Shwe Phi
Shwe Phi Oo 15 Mar – 15 April 2
Shwe Phi Moe lut/ Shwe Phi lar 16 April – 15 May 2
Kar Kant
Kar Kant Oo 16 May – 15 June 3
Kar Kant Lar 16 June – 31 Aug 2
Hnin Tat 1 Sept – 15 Nov 2
Tea leaf picking in Myanmar is done manually by hand picking with hired labour
(see Figure 14). It can be done individually or by picking groups, which are groups
of 8 to 15 people with a ratio of 7:3 women to men. Picking requires skill and
experience as the tea fields in Myanmar are cultivated along mountain slopes.
During Shwe Phi Oo, labour shortages become a major problem for most tea
farmers. In previous years, labourers from other parts of the country came during
seasonal months but this has stopped due to the recent ethnic civil unrest in the
area. Moreover, as a consequence of war, people within the regions have also
migrated to other countries, causing labour shortages in the tea fields, with the
consequence that tea leaves are being picked too late in the season, which reduces
the quality of the tea leaves and delays the blooming for the following season. Due
to the shortage of labour the labour cost for picking increases for tea farmers.
Picking rates vary depending on the slope of mountains and height of the plants.
The normal rate for tea pickers is between USD$1.02 to $1.42 per kg (including a
meal), or the farmer can give half the amount of harvested fresh tea leaves to the
picking group. There is also exchange picking between farmers, where farmers

exchange labour between families. This method is economical for large families. A
single person can pluck up to 22-33 kg per day, depending on the location and
height of the tea plants. Therefore, for efficient picking and high quality tea leaves,
tea plants need to be planted closely, pruned and well looked after (see Figure 15).
Figure 14: Tea picking in the Northern Shan State.
Figure 15: Scattered tea plants along the mountain slopes which require filling up
and tall tea plants which require pruning for efficient picking of tea leaves.

4.2.2 Producers and Processors
There are two types of pickled tea-producing firms in Myanmar. The first type
involves small-scale farmers producing tea alongside other crops. These farmers
own the tea fields but picking is done with hired labour. They do not have any
formal linkages with other chain participants and sell solely through market-based
relationships. Fresh tea leaves can be sold to other farmers, either in the same
village or nearby villages, who then process the tea leaves into pickled tea.
Depending on quality and supply, the price of fresh leaves varies between $1.02
and $2.84 per kg. This equates to the cost of tea picking and therefore, some
farmers mentioned they preferred to leave their tea leaves on the tree rather than
hiring labour.
More commonly, however, the tea leaf farmers will process pickled tea themselves
at home and then sell the pickled tea to brokers/traders or direct to wholesalers or
manufacturers. However, fresh green leaves must be processed into pickled tea on
the same day that is picked; so if the farmer intends to sell the fresh tea leaves, it
must be done immediately after picking.
The second type of pickled tea-producing firm involves contract farmers who are
linked to the standard pickled tea factory, situated in Namsan township. These
farmers supply all or a large proportion of their output to the standard factory. The
contract farmers must have organic certification for the factory to purchase their
tea leaves; however, the factory provides them with stable demand, technical
training, and offers ten percent more in price for their product.

The factory in Namsan township was established by the Myanmar Tea Association
together with the Palaung Tea Association in February 2013. It has about 12 staff
in the pickled tea processing section that are all trained by the Control Union for
food safety and quality control. The factory itself has Hazard Analysis Critical
Control Point (HACCP) certification and certification from the Control Union; and it
only works with farmers who have received organic certification. Inspections are
undertaken annually and the products from this factory are focused for export into
the United States.
The value chain of pickled tea for the U.S. market has five segments: production of
tea leaves, processing into pickled tea, grading and packaging, export, and testing
and re-packaging in the United States (see Figure 16). Pickled tea is exported by
ship and is marketed to supermarket and restaurant chains in the United States.
MYANMAR
U.S. Market
Processing Grading &

Production of Distribution Testing
into bulk EXPORT
Tea Leaves Re-
Pickled Tea Packaging (FCL)
Packaging
Tea Standard Wholesale Retail

Farmers Factory Packaging Packaging
Organic
Certification HACCP
Certification,
Control Union
Certification

Figure 16: Value chain of pickled tea exported to the U.S. market.

4.2.2.1 Classification of Pickled Tea Producers
The pickled tea sector is comprised of tea growers with different characteristics.
The average land holding size of tea farmers is about 2.61 ha, with typical land
holdings ranging from 0.81 ha to 6.88 ha. The farmers from northern Shan State
possess more land for tea cultivation than farmers from southern Shan State.
However, the farmers from southern Shan State are usually engaged in
diversification of crops, such as pulses (groundnut, peanut), wheat, maize, and
mango, while the farmers in northern Shan State specialise in tea production.
About 93% of farmers from northern Shan State are members of the Palaung Tea
Association, while only 13% of the farmers in the southern Shan State engage with
the local tea association. One main reason is because the Pindaya Tea Association,
an association based in the southern Shan State, has only recently been organised.
The main benefits for members of the Palaung Tea Association is that farmers are
given training on proper cultivation techniques, including cutting, pruning, and
cultivating tea plants along the contour lines.
Most Pindaya households are headed by a male, with 20% of households being
female-led. This reveals that women are becoming increasingly involved in tea
farming. The age distribution of tea farmers shows that most are economically
active, with most aged between 27 and 55 years. With respect to educational
status, about 87% of tea farmers have completed primary and secondary
education. This implies that most tea farmers are able to read and write. However,
about 13% of farmers have never been through formal education, and instead
were educated in a monastery.

The major source of income for households in Shan State is crop sales. About 95%
of households generate their income from crop sales, of which 90% is from pickled
tea, followed by sales of other crops and other small business operations.
4.2.2.2 Pickled Tea Processing
The value addition of pickled tea begins in the processing stage. Pickled tea
processing requires a step-by-step value addition, as shown in Figure 17.
Green tea Steaming/ Cooling Rolling

Storing Mixing Packaging
leaves boiling of leaves leaves leaves
Steamed with Cooled by Rolled by Pressed Packed in

Mixed
boilers or spreading mixing in and large
again
manual boiling the leaves rollers or stored plastic
with
in wood fired on bamboo by bags
rollers a
pans mats or manual
sorted for
steel tanks rolling
grading
with
hand
Figure 17: Step-by-step processing of green tea leaves into pickled tea.
The processing of pickled tea differs slightly depending on the location (see Figure
18). In southern Shan State, the fresh tea leaves are boiled in hot water for about
five minutes before being pressed and spread for cooling. Over-boiling of the tea
leaves can cause damage to the leaves, resulting in low quality pickled tea.
Conversely, in northern Shan State, the fresh tea leaves are withered first to
remove moisture from the leaves. The withered leaves are withered either by
spreading on bamboo mats or placed in steel tanks with fans blowing into the

tanks. The tea leaves are then transferred into boilers for steaming. The steaming
process takes three to five minutes depending on the quality (colour) of the leaves.
As with over-boiling, over-steaming can also result in damaged leaves. The
steamed tea leaves are also allowed to cool down in steel tanks or bamboo racks
for about two to three minutes.
Fresh Green Leaves

Northern Shan State Southern Shan State
Withering Boiling
Steaming Pressing
Grading/ Sorting
Cooling Spreading
Rolling Rolling

Pressing
Storage Used as
shampoo or Storage

black hair
dye
Mixing Mixing
Grading/ Sorting
Pickled Tea Pickled Tea

Figure 18: Comparison of pickled tea processing
Once the tea leaves have cooled, the process is continued by mixing the leaves with
a roller. The traditional way of rolling is by hand, which requires a lot of time and
effort; nowadays, a roller is typically used. The tea leaves are normally rolled 20 to
25 times.

After the tea leaves are rolled, they are pressed and stored for at least 20 days, but
sometimes for many years, to allow the natural anaerobic fermentation process to
occur. The tea leaf extracts that are produced from pressing the tea leaves are used
as black hair dye, shampoo, or as a hair coating. These extracts are believed to have
a positive effect on hair growth, but further research is recommended to
substantiate this claim.
After the tea leaves have been fermented and stored under pressure for a
minimum of 20 days, the leaves become pickled tea. The pickled tea leaves are
then mixed again with rollers and are sorted for grading. After the pickled tea
leaves are graded, they are then packaged into large plastic bags and are ready for
distribution (see Figure 19).


Withering Steaming Rolling Storage Mixing Packaging

Cooling

Figure 19: Step-by-step processing of green tea leaves into pickled tea

One of the biggest challenges to processing is food safety and sanitation standards,
especially if the pickled tea is to be exported. During 2008-2009, pickled tea was
banned in Singapore due to the presence of Auramine O. Auramine O is a colour dye
restricted for use in food products because it has been found to inhibit growth and
liver and kidney function (Bhat & Mathur, 1998). This issue has its roots at the
wholesaler stage where traders or wholesalers intentionally or unintentionally
make use of Auramine O to make the tea leaves look fresh and consistent.
Domestically, firms are regulated by rules issued by Food Safety Activities (FSA) of
Myanmar and must follow Good Hygienic Practice (GHP) and strict quality control.
In 2009, a total of 458 samples of pickled tea in the local wholesale markets in
Yangon and Mandalay were tested, with the results showing that 253 samples
(55.24%) were found to contain Auramine O. The results were highly publicised in
newspapers and contaminated products were destroyed by township food and
drug supervisory committees. Health education was given to the public through
media and workshops and seminars were given to pickled tea manufacturers. In
September of the same year, a total of 667 samples were tested again and all the
tested samples showed a negative result for Auramine O.
4.2.2.3 Storage
Tea leaves are stored in various ways (see Figure 20).
1. The rolled tea leaves are placed into large plastic bags and are stacked on top of
the other. Bags should be stacked no more than four high, as too much pressure
on the bags can result in a lower weight as the water will be drained from the

tea leaves. This method of storing affects appearance because the black liquid
(tannins) from the pickled tea stains the bags, making the bags look dirty. This
does not affect the quality of the pickled tea leaves inside or the visual appeal to
the wholesaler or manufacturer as they repackage the product.
2. The rolled tea leaves are buried inside pits dug in the soil—this is the
traditional manner of storing tea leaves.
3. It can also be stored in steel or wooden tanks. This method is widely used in
the region.
With the latter two methods, two or three layers of plastic bags are used to line the
sides of the pit or tank. In the bottom, some people use a layer of bamboo racks,
followed by a layer of ferns, banana leaves, or plastic sheets. Ferns can be a hazard
when taking the tea leaves out as it can hurt or scratch hands. The rolled tea leaves
are then placed inside the pit or tank and are covered by a layer of plastic cover or
a wooden rack. Rocks are placed on top of it to add pressure. Alternatively, tanks
filled with water can be used; however, this has its disadvantages, such as when
new rolled leaves are added to a part-filled tank, the water needs to be drained and
refilled.
Pickled tea is stored anywhere from 20 days to many years, depending on the
demand in the market. Storing the pickled tea for longer reduces the bitterness of
the taste; however, one of the major constraints when it comes to storage is
adequate space.

Figure 20: Storage of pickled tea: in plastic bags; in pits; and in steel tanks.
4.2.2.4 Distribution
Production of pickled tea takes place in geographically dispersed locations, which
has implications on availability and accessibility of pickled tea in Myanmar. Shan
State and Chin State together account for 90% of the total tea production in
Myanmar, with Shan State—the major location for pickled tea production—
accounting for about 80%. Shan State is a mountainous region with high altitudes,
deep slopes, excellent soil conditions, and an ideal climate for tea plantations.
After harvest, the fresh tea leaves are transported from the tea fields to farmers’
houses or pickled tea processors. Transportation is mainly by foot, bullock carts,
horses, or motorcycles; rarely, tea leaves are transported by car. Undeveloped
roads and infrastructure results in losses in both quantity and quality of tea leaves,
due to loss of product in transit or the carrier not being able to deliver the product
to the processor within the required one-day period.
After the tea leaves are processed, large amounts of pickled tea from both Shan
and Chin States are sold to wholesalers or manufacturing companies located in

large cities, such as Mandalay and Yangon. The pickled tea is then packaged into
smaller parcels and distributed to retail outlets throughout the country.
Transportation to retail outlets is by trucks or buses.
The transportation cost of pickled tea is high and it is normally covered by the
seller. Transportation for one bag (80-100 kg) of pickled tea ranges from $1 - $5
depending on the location and means of transport. When a pickled tea seller is
profiting $1.02/kg for low quality pickled tea, if he has to pay $0.5/ kg for
transport (considering $5/bag) that will mean transportation costs 50% of his
profit which is considerably high. In terms of high quality pickled tea the profit is
$2.46/kg so the transportation costs 20%; however, it is still high. Figure 21 shows
the geographical dispersion of domestic pickled tea production in Myanmar.

Major Production Area (Wholesale)

Major Distribution Area (Wholesale/ Retail)

Trade Flow

Large Flows
Small Flows

Figure 21: Production and market flow map of pickled tea.

4.2.3 Traders
Traders act as a bridge to connect the tea farmers to pickled tea processors or,
where the farmer is also the processor, they connect them to wholesalers. They
buy large amounts of pickled tea from different pickled tea farmers and sell the
product to wholesalers in the big cities.
They also control and fix prices, therefore creating price symmetry and making
extra profit from the process. This allows the traders to control the price to both
farmers and wholesalers.
4.2.4 Wholesalers
The second stage of value addition takes place at the wholesalers, where the
pickled teas are graded by sieving (see Figure 22).

FARMERS

Plucking

Pickled Tea
(Sieved)
WHOLESALERS Tea stalks
and
Grading wastage Fertilizer
2 leaves, Low Quality…………………………………….…Premium
Tea Plant 1 bud

Storage Cut Packaging Packaging/
(6-7 months) Branding
Shu Shae’
TRADERS TRADERS Sun Drying
Pickled tea sprouts

Pickled Sun
Dry Green Tea
PICKLED TEA RETAILERS CONSUMERS

PROCESSOR
Grading….Premium
Pickled Tea(Premium)

Fresh Green Tea MANUFACTURER
Leaves Pickled tea
1 Addition of oils, salt,

flavor, nuts, etc. Chili,
Figure 22: Pickled tea value chain Ginger
based on information gathered
Pickled tea
*Shu Shae’ Packaging/ Branding
sprouts

*Shu Shae’ is a type of pickled tea where low quality tea leaves are cut and chili and other flavouring are
added.

Depending on the quality of the tea leaves, five groups of pickled tea grades can be
identified: premium quality, top quality, medium quality, top medium quality, and
low quality. The tea farmers who produce pickled tea can also act as wholesaler.
Some of the attributes used to grade the pickled tea are based on the maturity of
leaves, appearance of buds and top two leaves, size of leaves, and region of origin.
Pickled tea leaves which come from the village of Zayan, located near Namsan
township, have the highest prices, followed by the village of Pindaya. These pickled
teas have higher prices due to the fact that these regions are well-known for
growing the highest quality pickled tea in the country because of the environment
in which the tea plant is grown. Low quality pickled tea leaves from Zayan have a
similar price compared to pickled tea leaves from other regions such as Moe Gote,
Pin Lone and Kyout Me in other states. Prices can vary from USD$3.05 to $8.13 per
kg, depending on quality (see Figure 23).

Kyout Me’
$3.25/kg
ZaYan (high
quality)
$8.13/kg
Pindaya
$5.28/kg

Shu Shae
Pin Lone
$3.05/kg
$3.66/kg

Moe Gote
ZaYan (low quality) $3.66/kg
$3.05/kg

Figure 23: Pickled tea prices (prices as of July, 2015).

Premium quality pickled teas are sold to retailers as pickled tea sprouts either
with or without brand names. Low quality tea leaves, which remain on the top of
the sieve when grading, are ground into smaller pieces. These can be used to
produce a particular type of pickled tea called Shu Shae, which is made by adding
chili, flavouring, ginger and oil; otherwise, the ground small pieces of low quality
tea leaves are sold to manufacturers who add value to the product and sell under a
particular brand.
Another way to use the low quality pickled tea leaves is to make pickled sun-dried
green tea. This is made by re-storing the low quality pickled tea leaves left on top
of the first sieve back into bags, tanks, or pits with pressure on top. The pickled tea
leaves are left under storage to ferment for about six to seven months. The leaves
are then sun dried and ready for drinking. Farmers or wholesalers normally
practise this method when the pickled tea market price reduces. This type of tea is
popular in the Ayeyarwardy district.
The wholesale market mainly sells to the domestic market. The domestic market
for pickled tea mainly goes through two local channels: the wet market, which is an
open marketplace where various food products are sold, or small retailers.
4.2.5 Manufacturers
Manufacturers buy premium quality pickled tea directly from the farmers. Value is
added by the addition of other ingredients, including oils, salt, flavour, nuts, and
beans, to the pickled tea (see Figure 21). The manufacturers also produce Shu Shae

when they get a supply of chopped low quality leaves from the wholesalers. The
pickled tea is then packaged into packets with various designs with their own
brand name. The manufacturers have their own distribution channels based in big
cities, which are mainly through the supermarket chains. They also supply to
wholesalers and retailers in the domestic market with their specific brand name.
The export market for pickled tea has yet to be developed; however, a US-based
importer recently began taking full container loads of bulk pickled tea for
repackaging. Because this business is in its infancy, it is too early to consider it an
established supply chain and this could be an area for future research.
4.2.6 Retailers
Retailers are one of the main participants in the pickled tea value chain because
they are the last link between producers and consumers. The involvement of
retailers in the value chain includes buying pickled tea, transporting it to retail
shops, repackaging, displaying, and selling to consumers. The domestic market for
pickled tea mainly goes through restaurants, traditional retailer shops and
supermarkets. Traditional retail shops buy pickled tea from wholesalers and
repack into smaller quantity while supermarkets get the supply of pickled tea from
manufacturers. Supermarkets are gradually replacing purchases of pickled tea
from small retailers because of the transparent price as well as safety of products
and the convenience for consumers living in urban areas. However, in the rural
areas small retail shops still occupy the market for pickled tea.

4.2.7 Consumers
The downstream pickled tea chain ends with the consumption of pickled tea by the
consumers, mostly in the domestic market. However, the export of pickled tea to
the global market would add another step to the downstream supply chain, but is
yet to be developed in Myanmar.
It has been reported that very little information regarding with preference with
the different tastes in pickled tea from consumers has been reported back to the
wholesalers, manufactures, and to the pickled tea producers. The preference of
pickled tea by Burmese has mainly been influenced by historical factors and other
agents over a period of time.
4.2.8 Other Participants and Organisations
4.2.8.1 Input Suppliers and Finance
Inputs (fertilisers and herbicides) can be procured and supplied to the growers on
credit terms by factories (Hlaing, 2008); however, this research found no usage of
fertiliser in tea cultivation in the study areas. The primary reason for this was
because farmers cannot afford to utilise fertilisers and pesticides. Therefore,
Myanmar tea can be regarded organic tea or close to it. Chen (2007) stated that
organic food these days are known to be free from contamination carrying
additional risk of food poisoning, and contain more nutrients than conventional
foods Consumers also consider organic food to be healthier and are willing to pay
higher value for it (Grankvist & Biel, 2001).

Tea plantation loans are provided by the Myanmar Agricultural Development Bank
(MADB). It is the major source of institutional credit for small farmers, and is
owned and supervised by the Ministry of Agriculture and Irrigation. MADB
finances loans depending on the performance of the plantation, with a grace period
of three years, after which the farmer pays three instalments over the next three
years. Tea processing and production loans are also given by MADB to farmers
who have successfully cultivated tea and require working capital to process their
tea products (Win, 2013).
4.2.8.2 Supporting Organisations
Tea cultivation in Myanmar is supported by various organisations. These
organisations are important to the tea value chain because they give financial and
technical support to the tea farmers in Myanmar. These organisations include the
United Nations Office on Drugs and Crime (UNODC), International Rescue
Committee (IRC), Japanese International Cooperation Agency (JICA) and Swiss
Agency for Development and Cooperation (SADC).
According to the UNODC, Myanmar is the second largest producer (after
Afghanistan) of opium in the world, with 90% of opium poppies grown in Shan
State. Therefore, global, national, and local-level support has been given to phase
out opium production; tea cultivation has been promoted as a substitute crop as it
grows well in Shan State (Dawson & Barlow, 2006). The necessary support has
been provided by various organisations by distributing tea seedlings, introducing
modern cultivation techniques for tea, and providing tea cultivation

demonstrations, as well as delivering sustainable livelihood improvements to poor
tea-producing smallholders in northern Myanmar by developing sustainable
linkages between smallholder farmer groups and processors, and between
processors and higher-value domestic, regional, and international markets.
On a national scale, the government of Myanmar has developed a thirty-year long-
term tea production development programme, and has assured market access for
alternative crops (i.e. tea), as well as freedom of movement and transit for farmers
to transport and sell their crop at market. The Ministry of Agriculture distributed
tea seeds worth K 123.762 million (USD$121,335) free of charge from 2000 to
2011 (Myanmar Agriculture Service, 2012), and collaborated with Sri Lanka to
introduce modern tea varieties, upgrade research and development programmes,
improve resources and investment, and establish research stations and technical
cooperation. The plant protection division under the Department of Agriculture
(DOA) is also taking a major role in pest and disease management by giving
information on shifting from chemical-based production to integrated pest
management controls designed to eliminate toxic chemicals, as well as inspecting
and regularly monitoring tea fields. On a local scale, the Palaung Tea Producing
Association (PTPA) was established on 22 May 2013 at Mumton township in
eastern Shan State, with the objective of developing tea plantations and tea
production. Despite the support from both international and national
organisations, the opium problem still exists and tea production remains low in
Myanmar.

Tea farmers in the study area reported that there is no direct support from the
Government, so it is unclear if there are no support mechanisms provided by the
government or if the farmers are not informed of existing programmes.
In 2009, the Myanmar Fruits and Vegetable Producers Association (MFVPA)
created a private sector association named the Myanmar Organic Agriculture
Group (MOAG) to support the development of organic agriculture in the country.
MOAG contains about 100 members (December 2011), most of which are
individuals, with only four private companies. MOAG provides organic certification
services and technical advice to interested producers. The private sector has
developed national organic standards and certification services were initiated in
late 2010. However, the government of Myanmar has no policies and regulations
on organic agriculture yet.

4.3 Margins and Benefit Shares of Participants
Pickled tea passes through a number of channels before reaching the end
consumer (see Figure 24). This implies that there are possible operational losses,
including transport, labour, packaging, storage, and other transaction costs, which
result in a higher food cost to the consumer. This is because of the geographical
dispersion of the markets and the absence or limited availability of adequate
appropriate institutions to shorten the value chain.
From the price point of view, the tea farmers and pickled tea producers are getting
prices based on the quality of the tea leaves and the quality of pickled tea. After the
pickled tea reaches the producer stage, it goes through two channels either to the
wholesalers or to the manufacturers. Both the high and low quality pickled teas are
sold to the wholesalers while only the high quality pickled teas are bought from
manufacturers. The difference in pickled tea prices between wholesaler and
manufacturer is mainly due to the value addition to the product. The
manufacturers add value by adding other ingredients, including oils, salt, flavour,
nuts, and beans, to the pickled tea, as well as packaging, branding, certification in
order to sell it at a higher price. On the other hand, the wholesaler only grades the
pickled tea to low and high quality products and sells it to the retailers.
The pickled tea products from the manufacturers and wholesalers go to two
separate retailers. The products from manufacturers are sent to supermarkets and
focus on high level income consumers and export while the pickled tea from
wholesalers are sold to domestic retail shops or markets focusing for domestic
consumption.


Tea Farmers

Pickled Tea Producers

Wholesaler

Manufacturer
(Ingredients are added)
Supermarket

Domestic
Retailer

Figure 24: Prices of pickled tea sold at different stages in the value chain
The prices received by the main pickled tea producers is less compared to other
traders in the value chain due to lack of control over the market and the low

bargaining power of farmers, caused by lack of information about the market price
and the power of brokers. Table 9 shows the average prices received of pickled tea
by each respondent group of the value chain and the price margins for pickled tea
made with both low quality leaves and good high quality leaves. The average
margin that each participant receives in each channel depends on the buying price,
selling price, and the cost involved. It can be seen that the price increases
considerably as the pickled tea product moves from different participants up the
value chain, with the manufacturers receiving the highest price margin due to the
value addition to the high quality pickled tea products.
Table 9: Pickled Tea Average Prices for Value Chain by Respondent Groups
Low quality leaves High quality leaves
Respondent Price received Price received

Price Margin Price Margin
Groups ($/kg) ($/kg)
Farmer $1.02 $2.44

$1.01
$3.23
Producer $2.03 $5.67
Wholesaler $3.05 $1.02 $8.13 $2.46
Domestic $2.02
$5.07 $13.82 $5.69
Retailer

High quality leaves
Respondent
Price received ($/kg) Price Margin
Groups
Farmer $2.44
$3.23
Producer $5.67
Manufacturer $20.31 $14.64
Supremarkets $27.44 $7.13

The manufacturers make the highest margin of $14.64 per kg (72% price margin)
as they purchase good high quality pickled tea direct from the producers at $5.67
per kg then re-brand, package and sell at $20.31. The higher price margins indicate
that high quality tea leaf production is an efficient and stable business. This
suggests that product quality and value addition is a key factor in the value chain.
For example, for the high quality pickled tea products, the wholesaler buys the
pickled tea at $5.67 per kg and sells at $8.13 per kg, receiving a margin of $2.46 per
kg; while the manufacturers who buy direct from the producer at the same price of
$5.67 per kg and sell at the higher price of $20.31 per kg make a higher margin of
$14.64 per kg. All participants in the value chain make some margin; however, the
manufacturers benefit more depending on how much value they add to the
product. In order to make a higher margin, there is a need to concentrate on the
quality of the pickled tea along with reducing unnecessary costs which lead to
increased costs in the value chain. Figure 25 shows the differences in prices of low
and high quality pickled tea received at each level of the value chain.
Prices between low and high quality pickled tea

30
25
20
15
10
5
0
Farmer Producer Wholesaler Domestic Retailer Manufacturer Supermarket
Figure 25: Difference in the prices of poor and high quality pickled tea received at
each level of the value chain by the participants.

Moreover, the high quality pickled tea sold in the local market for $27.44 per kg is
sold at the price of $17.55 for 8 ounce on Amazon; so the pickled tea is sold for
$77.38 per kg (not including shipping). This indicates that $50 margin per kg will
be gained when pickled tea is exported through Amazon. This sale margin of
$50/kg across the supply chain represents hundreds of percent margin in certain
levels so it is the building of value. If a manufacturer were to export 1000 kg per
week, they could potentially receive US$50,000 profit per week (US$200,000 per
month).
Figure 26 shows the increase in prices of pickled tea sold at each level of the value
chain. Market prices help to identify the cost and profit of different participants in
different points in the value chain, and also aid in identifying strategies which
could be implemented to improve the pickled tea market. The trend of increasing
the total cost of the final pickled tea product shows that as the quality increase and
more value is added to the product the more margins are gained and in order to
increase the farmer’s share for fresh green tea leaves the quality should be
maintained.
Increasing Trend in the Price of Pickled Tea

30 based on quality
25
Price (US$)
20
15
10
5
0
Farmer Producer
Wholesaler Domestic Retailer
Manufacturer Supermarket

Figure 26: Increase in prices of pickled tea sold at each level of the value chain

4.4 Potential of Pickled tea in the International Market
A total of 30 Myanmar restaurants located in New Zealand, Australia, Thailand,
Singapore, and the United States were interviewed for this study. Table 10 shows
the number of restaurants surveyed for each country.
Table 10: Number of Restaurants Surveyed by Country
New Australia United Singapore Thailand Total

Zealand States
Number of
restaurants 1 7 10 5 7 30
surveyed
It was observed that all the Myanmar restaurants surveyed have pickled tea on
their menu, either as a side dish or a main meal to be eaten along with rice. This
supports the assertion that pickled tea is a unique ethnic food of Myanmar which
represents the traditional Burmese culture. Pickled tea in restaurants is served as
a salad mixed with nuts, lettuces and tomato (see Figure 27).
Figure 27: A typical dish of pickled tea served as a salad.

One restaurant in San Francisco served pickled tea salad with nuts and other
ingredients separately on a plate; the server identifies each component then mixes
the dish in front of the customer (see Figure 28).
Figure 28: Pickled tea leaf salad before being mixed
(Burma Superstar Tea Leaf Salad)
Another restaurant in Perth sells pickled tea to take away in containers with small
compartments for pickled tea, peanuts, fried garlic, and sesame, designed to be
mixed and eaten by the customer. About 95% of the restaurants stated that pickled
tea salad is a very popular dish among customers.
Major customers vary depending on the country. In New Zealand, the major
customers are from Asia (both East and West Asia). In Australia, the major
customers are mostly Australians (45%) with a few East Asians (33%) and
Burmese (22%). A wide range of pickled tea customers exist in the US with 50%
Americans, 22% other ethnicities (tourists including Caucasians), 17% West
Asians, and 11% East Asians. Singaporeans are the major customers for pickled tea
in Singapore with a few tourists and East Asian customers. Burmese customers are

very few in both Singapore and Thailand as pickled tea can easily be bought in
small retail shops. In Thailand, the major customers for pickled tea are tourists
who want to try the taste of Burmese food.
With regards to sales, seven restaurants stated that that pickled tea sales have
increased; six of these restaurants are in Australia. Ten restaurants stated that
sales remain stable without any increase or decrease, and the remaining 13
restaurants could not answer the question as they have only been open for less
than 6 months. The total number of pickled tea dishes sold is described in Table 11,
together with the prices for each plate in each country.
Table 11: Total Number of Pickled Tea Leaf Salad Dishes sold per Restaurant
and the Prices sold at Different Countries
Number of plates sold per day * Price of pickled tea salad
Minimum Maximum Average Minimum Maxi

Average USD
mum
NZ n/a n/a 10 n/a n/a NZ$12.00 $8.11
Australia 5 10 8 AU$7.50 AU$16.90 AU$13.45 $9.67
USA 15 100 43 US$5.00 US$14.00 US$9.61 $9.61
Singapore 10 30 22 SG$5.00 SG$12.50 SG$8.75 $6.26
Thailand 5 10 7 THB30 THB75 THB52.5 $1.50
Note: Based on Exchange rates as of 28th Oct, 2015.
Supply of pickled tea varies for each country and difficulty of access also depends
on the importing country. In New Zealand, Australia, and the United States,

restaurants can only get pickled tea through online shops or by travelling to
Myanmar. For some restaurants, families living in Myanmar would send pickled
tea through DHL or post; however, this way of shipping is very expensive and this
can explain the higher prices of the pickled tea dishes in these countries, compared
to other countries like Singapore and Thailand where there are small retail chains
where the restaurants can easily get the pickled tea from.
Restaurants in New Zealand, Australia, and the United States stated that it is very
important for the product to gain certain certifications for hygiene and quality as
customers are very aware of food safety; whereas in countries like Thailand and
Singapore the importance of certification is slightly lower, yet still important (see
Figure 29).
Not Important Important Very Important
Singapore Australia New

Zealand
Thailand
United States
1 2 3 4 5 6 7
Figure 29: Importance of certification on a Likert scale of 1-7.

4.4 Pickled Tea in the United States Market
According to the United States Census Bureau projections in 2010, the U.S.
population has become more diverse, with the Asian population currently
estimated to be 4.6%. In 2011 the ethnic food market continued to grow, with $3
billion in sales and 5-6% annual growth; it is expected that sales will reach $3.9
billion in 2016 (Mintel Group, 2012). There has been a dramatic increase in
demand for ethnic cuisine, and ethnic restaurants have become more mainstream
in the United States (Po, 2007).
Moreover, since the 1970s, U.S. consumers have become more health conscious,
especially concerning their intake of fat, sodium, calories, and cholesterol (Choi,
2000). In addition, according to the American Spice Trade Association, a taste for
highly spiced food has developed and the consumption of hot spices has increased
more than 73% in the last two decades (Tainter & Grenis, 2001). As the demand
for ethnic food in the United States increases along with the changes in
consumption patterns for healthier food products, there is an opportunity for
pickled tea to enter the U.S. market.
“Burma Superstar”, a Burmese restaurant in San Francisco, received Sunset
Magazine's 2013 “Best of the West Award” for their famous “Pickled Tea Leaf
Salad”. The dish was nominated for the “Big Dish” contest from a number of past
stories in the magazine as well as from travel and food writers in various regions.
It was also selected as the winner for the salad category with the highest number
of votes among the ten nominated dishes (C. Ryan, Senior Editor of Sunset
Magazine, personal communication, April 22, 2015).

Not many people in the United States, however, are familiar with the Burmese tea
leaf salad, or even with Myanmar in general, as the country have been closed from
the rest of the world by its military regime. People who are interested in Asian
food, health food, or food which have been pickled or fermented may be interested
in pickled tea. Primarily, because of the current challenges of importing it directly,
there are a few tea companies in the United States which would consider carrying
such a product if it were to be certified organic under the USDA National Organic
Program and made available through a wholesaler in the United States (J. Lopatin,
co-founder of Arbor Tea, personal communication, April 15, 2015).

4.5 Constraint to Research—Rationale for not Taste-Testing Myanmar
Pickled Tea in New Zealand
Initially three samples of pickled tea were imported from Myanmar for use in a
preliminary taste-testing exercise as part of this research. The New Zealand
Ministry of Primary Industries required a pH test of the samples for Clostridium
botulinum as a precursor to the taste testing. My thesis supervisor, Walter Glass,
asked that I request Professor John Bronlund and Associate Professor Brian
Wilkinson of Massey University; both recognised specialists in food and bioprocess
technology, to advice and co-ordinate on this part of the research.
Three different brands of pickled tea were sent from Myanmar to be tested. The pH
results showed 4.35, 4.45, and 4.7 for the respective brands.
Because one of the brands had a value of pH 4.7, which is greater than the New
Zealand Ministry of Primary Industries’ limit of pH 4.6, it would have been illegal
to use this product for taste testing under New Zealand law. This product had also
been held at room temperature since picking and had not undergone a full thermal
process to neutralise Clostridium botulinum (Fo=3).
Although the two other brands were within the acceptable range, it was decided
that given the cost and work involved, it would be preferential to do a full
statistically-robust taste testing, rather than an indicative product acceptance
evaluation. A full taste-test also required substantially more time and money, and
these resources were limited for this research. Moreover, the pickled tea product
has been readily accepted in markets like the USA and Singapore and private

samples have been imported to New Zealand, so market acceptance was able to be
proven to some degree.
Professor Wilkinson anticipated that the cost of taste testing would be over
NZ$5000 per product, and there would be a requirement to ensure that any
Clostridia that were picked up in the packs was not Clostridium botulinum. Both
Professors Bronlund and Wilkinson have advised not to progress with the taste
testing at this point. This taste testing was noted as an area for further research, as
this is a unique product with global marketing potential but a paucity of research.

90
CHAPTER 5
DISCUSSION AND RECOMMENDATION
5.1 Introduction
In this chapter, the constraints and weaknesses are discussed in terms of
the entire value chain; and recommendations are given to improve the integrity of
the pickled tea value chain and upgrade the chain to benefit chain participants,
especially pickled tea farmers.

CHAPTER-5 91 DISCUSSION AND RECOMMENDATION
5.2 Weaknesses in the Value Chain
Various weak links exist in the pickled tea sector of Myanmar, as shown in
Figure 30.

Trading Trading
Wholesaling

Input Tea Pickled Tea Retailing Consumer
s Plantation processing s
Manufacturing
Weak Link 1 Weak Link 2 Weak Link 3 Weak Link 4 Weak Link 5

• Lack of resources • Labour shortages • Unreliable • Packaging • Certification

such as credit • Underdeveloped electricity • Unavailability of

• Low investment in roads • Unhygienic market
research on tea • Inconsistent quality processing information
• Limited or lack
• Inadequate of tea leaves conditions
extension staff and • Lack of knowledge of • Space of registered
weak support
value addition at difficulty bodies such as
services source for storage tea associations
• Limited technology • Low yield due to lack • High or auctions
of knowledge transport centres
regarding tea costs and
cultivation—pruning, underdevel

filling up oped roads
• Lack of profit margin

Figure 30: Weak links in the pickled tea value chain.

5.2.1 Weak link 1: Inputs
During the study, respondents mentioned the lack of credit facilities as the main
obstacle to expanding land for tea farming. Farmers are willing to increase the area
of land used for tea farming, but do not have the resources to do so. Access to
credit for land acquisition for tea cultivation is an issue with most farmers.
Kindeya (2010) stated that the more credit farmers received leads to more
production and thereby signals greater propensity to sell. Therefore, the amount
of credit received has a positive impact on market participation and sales volumes.
Low investment in tea research and development has been one of the main
weaknesses of the Myanmar tea sector. On average, Myanmar spends only $0.06 of
every $100 in agricultural output on agricultural research, compared to $0.41 by
its Asian neighbours (Stads and Kam, 2007). As a result of these funding
constraints, the Ministry of Agriculture and Irrigation (MOAI) currently conducts
research mainly on rice, pulses, maize, cotton, sugarcane, and oil seed (Cho, 2013),
with very limited research on improving varieties of tea. Increase investment in
agriculture has been targeted as an engine of economic growth especially in low
income countries which can orient production along more sustainable pathways
(Garnett, et al., 2013). Ariyawardana (2001) also mentioned that Sri Lanka is
encouraging to increase agricultural investment within the country as a whole and
within the tea industry with foreign involvement. He stated that foreign
involvement in the value added tea production can have positive and negative
impacts on the tea industry but this will lead to achieve growth in industrial
output.

A study by Holloway et al. (2000) has shown that visits by extension agents
improve participation and volume of sales. The agricultural industry in Myanmar,
however, is constrained by weak extension services. The ratio of extension staff to
farmers is about 1:500 (Wilson, 2006). Extension staff is inadequate not only in
number but also in quality, due to insufficient budgetary resources which prevent
frequent field visits and hinder efficient and effective knowledge dissemination in
tea growing areas..
Myanmar has abundant water resources (FAO-Aquastat, 2013); however, the lack
of knowledge and technology to use water efficiently and poor water control
systems remains an issue for the agricultural sector. This limited investment in
irrigation and lack of technologies is mainly due to the limited research and
technology transfer as described in the maize value chain in Ethiopia
(Woldegiorgis, 2011).
5.2.2 Weak link 2: Tea plantations
Labour shortages are a major problem for tea farmers, especially during Shwe Phi
Oo. In previous years, labourers from other parts of the country came to tea-
growing regions during seasonal months, but this has stopped due to the recent
ethnic civil unrest in the area. Moreover, as a consequence of war, people within
the regions are migrating to other countries, causing labour shortages in the tea
fields and resulting in tea leaves being picked too late, thereby reducing the quality
of the tea leaves. Due to the shortage of labour, the labour cost for picking rises for
tea farmers. Some farmers mentioned they preferred to leave their tea leaves on

the tree rather than hire labour due to the high picking cost. Shortage of labour is
also mentioned by Khoi et al. (2015) in the tea value chain in Vietnam where
improved cultivation techniques and the adoption of new technology is needed.
Underdeveloped roads not only reduce the quality and quantity of tea leaves
through loss of product in transit, but also extend the period taken for the tea
leaves to arrive at the processing houses. Similar issues are found in the butter
supply chain in Ethiopia highlands where the distance causes marketed surplus to
decline (Kindeya, 2010).
The inconsistent quality of tea leaves is a major concern in making pickled tea.
Similar to any tea, the quality of the pickled tea depends highly on the quality of
the tea leaves. For various reasons, including lack of skilled labour and less
productive crops, farmers or processors sometimes mix tender flush (high quality)
with mature (low quality) leaves, reducing overall quality and therefore affecting
price at market. Traders and wholesalers consequently spend more time on
sorting and grading the pickled tea leaves and therefore sell it at a higher price.
Farmers use traditional cultivation practices which are often less efficient and
more time-consuming; their production could be improved by using more modern
techniques, such as pruning the tea leaves to make it easier to pick or filling up the
space where the tea plants die. Lack of knowledge of organic farming practices, a
lack of awareness of local tea associations, and no direct support from the
government also contribute to reduced efficiency of production.
The study also suggests that there is low price margin for farmers. Referring back
to the Porter (1985) in chapter two, it is important to maximize profit to farmers

to establish and develop the pickled tea industry as lack of profit to farmers can
drive them to alternate uses to the land. This research suggests that if more money
taken at the retail end is transferred to the production end of the value chain, then
a higher quality product could be produced. This can be achieved through
improving cultivation practices, understanding market needs, increasing farmers’
knowledge and skills and investing in research and development.
An example to consider here is the cooperative marketing structure of Fonterra.
Fonterra Co-operative Group Limited is farmer owned co-operative dairy
company. It has a unique co-operative structure where every shareholder must be
a farmer. Fonterra sources milk from farmers and collects billions litres of milk
overseas through farmers and joint ventures and processes the milk into many
different products, ranging from milk powder to butter to ice-cream. In order to
cater the demand of different markets around the world, a wide variety of brands
are established (Fonterra, 2013). Similar structure has been described by
Trienekens (2011) and it can also be applied to the pickled tea industry. This could
enable the pickled tea farmers to gain a higher price margin.
5.2.3 Weak link 3: Processing, Trading, and Wholesaling
Electricity is a prerequisite for growth and development of any industry and
therefore the unreliable electricity remains an issue for the tea industry in
Myanmar. According to the Ministry of Electric Power, the electricity supply was
only about half of projected demand; less than a quarter of people in Myanmar had
access to electricity in 2011. Therefore, there is a risk of sudden outages and an

increase in blackouts even in the major cities of Myanmar (Dapice, 2012). As the
tea leaves are picked during the daytime and pickled tea needs to be processed the
same day the tea leaves are picked, farmers have to use small generators to ensure
a constant supply of electricity, which increases the cost of production. Processing
tea at night can also lead to unhygienic processing conditions, because there are
more insects and a greater risk of contamination.
Moreover, during storage when the pickled tea is put in white plastic bags the
black juices from the tea leaves can make the bags look dirty, thereby reducing its
aesthetic appeal. However, this weakness can be resolved by using darker
coloured plastic bags.
During the processing of pickled tea, the tea leaves need to be stored for
fermentation, so storage becomes a major problem for farmers as it requires a
large space. Therefore, some farmers have to sell their pickled tea to trader or
wholesalers directly after a shorter period of fermentation, without being able to
store the pickled tea for longer to wait for a higher price. This issue is most
common in developing countries where due to lack of access to storage facilities,
smallholder farmers are poorly served by small traders, making local market thin
and less competitive (Mitchell et al. (2009).
The high cost of transportation and logistics in Myanmar—as a result of many
decades of underinvestment, heavy regulation, and limited infrastructure (Wong &
Wai, 2013)—also acts as a weakness for the pickled tea sector as well as other
agricultural sectors in Myanmar. Apart from the cost of transportation, the roads
are also underdeveloped, making it difficult for farmers to get their products to

market, especially for tea farmers living in remote areas. Therefore, they have to
sell their products to traders and wholesalers, resulting in prices being
suppressed. These weakness and constraints are similar to the potato value chain
in Kenya studied by Kirumba et al. (2004) and similar short-term and long term
infrastructural and institutional innovations are recommended to reduce the
above challenges.
5.2.4 Weak link 4: Manufacturing and Retailing
Proper packaging of pickled tea is only available when it goes through the
manufacturing chain. In the retail chain, it is simply processed into smaller
quantity plastic bags with fewer added values. The retailers have limited
packaging capacities and a lack of systematic knowledge of branding and
marketing. Market information is neither adequate, accurate nor timely and there
are no information dissemination centres for tea retailers; even local market
information is not readily available. The above weaknesses are also addressed in
study of the performance of value added tea producers in Sri Lanka
(Ariyawardana, 2001). In the case of Sri Lanka, the Tea Promotion Bureau is
responsible for developing the packaging industry and market information
transfer. In Myanmar, there is also lack of registered bodies such as tea
associations or auctions centres to distribute information or handle large volumes
of pickled tea.

5.2.5 Weak link 5: Consumers
Certification is an important consideration for any food product. This research also
supported the studies by Holleran et al. (1999), Dolan & Humphrey (2000) and
Jahn (2004) on the importance of food safety and certification where all
restaurants in the countries surveyed stated that certification is a very important
factor. Due to the relatively high cost for certification, however, pickled tea farmers
cannot afford to certify their product. In addition, farmers do not have enough
knowledge about the complex regulations surrounding certification and
accreditation systems. This can be resolved through cooperative governance forms
as described by Trienekens (2011).
5.3 Upgrading the Value Chain
The value chain model by Fredendall & Hill (2000) presented in chapter two
shows that the strength of the value chain depends on the degree of trust,
relationships, and communication that exists among different participants. In the
case of the pickled tea value chain in Myanmar, it can be seen that information
sharing between participants is very poor, and that some participants behave in
ways that undermine the activities of the others. Therefore, the value chain is
underdeveloped and largely inefficient. In general, the pickled tea value chain goes
only one way and consumer demand is not taken into consideration. A substantial
consumer survey across various retail outlets would provide a clear understanding
of what consumers would like, thus giving a better idea of demand, as well as
enabling better targeted product differentiation strategies to be put in place by

individual businesses in the industry. Moreover, for producers with inconsistent
information and market access, forming pickled tea cooperatives to update timely
information and creating market access may minimize the marketing problems.
According to Van der Vorst et al. (2007), the key to a successful value chain is to
build direct links between participants to shorten the intermediate processes, such
as collection and wholesale, and ensure that farmers can access retailers such as
supermarkets directly. A more direct value chain could have prompt supply of
product and lesser loss in both quality and quantity during transit. There is also a
growing demand to increase mainstream distribution channels, such as
supermarkets, for pickled tea. However, as Giovannucci et al. (2010) stated, it is
not easy for small farmers to sell their product to supermarkets. However, small
farmers alone might lack the capability to build such links, and collective action
with public and private support is strongly needed.
If pickled tea farmers can sell to consumers, this can shorten the supply chain,
thereby reducing losses and saving on transportation and other costs. Another
option is supply chain integration, where large companies conduct the main work
of the supply chain—such as tea production, pickled tea processing, transport,
packaging, retail and so on—to integrate different sectors along the chain and
achieve enterprise operation and management of the chain.
Aigelsperger et al. (2007) stated that a company-based approach with contract
farming can solve a number of value chain weaknesses by providing farmers with
the necessary knowledge and inputs and helping to fulfil a smoother chain linkage,
which is necessary to successfully bring a product to the market. Contract farming

is a system by which contracting entities agree to buy all produce that meets
contract standards from smallholders. In this arrangement, a contractor obtains
the relevant certification and ensures that the contracted farmers meet
certification standards, often by supplying technical assistance and inputs (Bennett
& Franzel, 2009). Similar structure was seen from the pickled tea standard factory
where the pickled teas from the factory are maintained with good quality and
safety measures to export to the United States. Contract farming is also strongly
recommended by previous studies on value chain described in chapter two. Wang
(2012) gave a recommendation on contract farming for organic vegetables to
share more profit for the emerging and increasing organic market and to overcome
high the certification costs.
5.4 Recommendations
5.4.1 Government strategies
Local government intervention is necessary to increase support for public
investment in infrastructure, road development, research, and increasing the
capacity of the agricultural extension system. It is also essential to develop a strong
and stable strategic plan to encourage the development of high yield cultivation
and value-added manufacturing of cash crops such as tea in the agro-based sectors.
This requires investment of capital in research and extension to increase the
potential business in Myanmar. Increased focus on exporting pickled tea can also
promote farmers’ livelihoods within a market-oriented economy; therefore, more
emphasis should be placed on research.

Research findings should then be disseminated to farmers to improve cultivation
and processing technologies, which will help to increase yields and improve the
quality of tea leaves. Regular pruning of tea plants should be encouraged, as
pruning allows easier and quicker picking of tea leaves to cope with the shortage of
labour. The Myanmar Department of Agriculture is the ideal organisation to
educate tea farmers on agricultural farming techniques. Farmers also need to be
introduced to more hygienic ways of processing pickled tea.
The development of a market information centre to provide information to value
chain participants is very important. This centre should focus on providing
information about the domestic and foreign markets, consumer tastes, types of
pickled tea, packaging needs, and other general inquiries relevant to the industry.
This will enhance the strategic planning process and the overall competitiveness of
the firm.
5.4.2 Branding
As stated in the literature review chapter, branding is considered to be an
important step to upgrade the value chain and to development of a strong national
brand name for pickled tea. This will aid in capturing a greater share of the market
margin from exports rather than marketing under private brand names. An ideal
example is ZESPRI, a successful kiwifruit brand from New Zealand which created a
strong national brand through its branding and commercialisation. Similar
techniques could be employed by the Myanmar pickled tea industry.
Martin & Luxton (2004) stated that effective branding requires the development of

an integrated marketing strategy, rather than merely a reliance on brand
knowledge (both brand awareness and brand image), along with other marketing
strategy components, such as packaging, price, and promotion, to position the
brand into the higher levels of the brand typology.
Moreover, there should also be promotional assistance programmes targeted at
small- and medium-scale producers to improve their brand awareness. Due to a
lack of financial strength in promoting pickled tea, most of the small- and medium-
scale producers produce under their own brand name. The Myanmar Government
could play a considerable role in assisting pickled tea producers to create a
cohesive brand and increase brand awareness.
High quality control programmes are required to promote Myanmar pickled tea as
a mark of quality. As Myanmar is currently the only producer of pickled tea, this
creates an opportunity for Myanmar to become a single origin of pickled tea in its
own right. In regards to this a logo should be developed for quality identification
and uniqueness. This will create a good reputation for the quality and reliability of
Myanmar pickled tea, which has a potential to create an overall competitive
advantage in an international market and could directly influence consumer
loyalty. In order to achieve this, there should be a strict monitoring process and
action should be taken against producers for displaying the logo without
permission. For example, Sri Lanka uses a lion logo as the key symbol in promoting
its tea for quality-conscious consumers. Ariyawardana (2001) stated that 70% of
the value-added tea produced in Sri Lanka uses the lion logo on their product,
creating a cohesive and easily identifiable brand.

5.4.3 Packaging and Food Safety
Food safety is an essential factor in consumers’ purchasing decisions (Davis &
Stewart, 2002). Over the past few years, there has been a rise of food safety
concerns in the food chain due to improper handling and preparing of food
(Redmond & Griffin, 2003). This study also stated the importance of certification
for the exported pickled tea products. The Myanmar Tea Association needs to
develop and implement a quality control programme for packaging pickled tea;
given the high level of concerns about phyto-sanitary requirements for all food
items, there is a need to adhere to or exceed the ISO standard for pickled tea
production at all levels. Therefore, more support should be provided to obtain the
quality certifications. As suggested in Trienekens (2011) for the inclusion of small-
holders through cooperatives or food retail industry programs to overcome the
high cost in certification, pickled tea industry in Myanmar is also starting up with
the standard factory where the products are up to standards.
Packaging is also very important in trade promotion where competition to obtain
shelf space in supermarkets is high. Package labelling and compliance is also
important—packages should display all ingredients, nutritional values,
carbohydrates, fats, salts, and other information, along with the production and
expiry dates. Convenience packaging, where the consumer could mix the
ingredients in a tea leaf salad with a plastic spoon or some kind of stirring
implement, would also be great as a fast snack food.

5.4.4 Product Differentiation
Pickled tea is not a visually attractive product and it has a unique smell, but the
taste of the product is very appealing. Market promotions and free tastings should
be conducted so that consumers are able to taste the product before they purchase
it.
Various studies have shown that product differentiation is another means of
upgrading the value chain (Choudhry & Lister, 1997; Fonseka, 1997; Trienekens,
2011). Pickled tea is a unique type of tea which is in a form of tea that is eaten and
not drunk in most cases so this may provide sufficient product differentiation to
stand out in the global food market.
Pickled tea is also a great side snack with a beverage or on its own. Pickled tea with
mixed nuts makes a good snack with beer. It can also be eaten in combination with
crackers or bread for a more Westernised taste. With proper methods and
research, jams and jellies could also be made from pickled tea. Since pickled tea is
generally a fermented foodstuff, it could be possible to an alcohol based beverage
from the product.
More than just a convenient snack food, pickled tea can be produced in other ways
to enhance its health benefits, for example, as a super green dietary supplement
and to use in cooking. Apart from the popular pickled tea salad in Myanmar,
pickled tea can also be used in everyday dishes. A contestant on the popular New
Zealand television show Master Chef (McEwen, Hollings, 2015) cooked “Braised
Ginger Pork Belly with Burmese Tea Leaf Salad”, where pickled tea was cooked
together with pork.

The black residue left over from processing pickled tea is currently used as a hair
product on a local scale. With proper research and technology, this could be used
to produce shampoo, hair dye, and other hair products. Various researchers have
proven the effect of tea on hair health (Kubo et al., 1992; Kintz et al., 2000).
There is also a Burmese cook book by the name hsa*ba (Chaw, 2013) meaning
"please eat". The book’s pickled tea leaf salad recipe has been referenced by
several food blogs. The book has received the Gourmet World cookbook award in
2009 and won three awards in the following categories: Best Recipe Book, Best
Asian Cuisine Book, and Best First Cookbook. Encouraging publication of Burmese
cook books written in English is also recommended, so consumers become more
familiar with the product.

106
Chapter 6
SUMMARY AND CONCLUSION
6.1 Summary and Conclusion
This research was an exploratory study with an attempt to analyse the value chain
of pickled tea in Myanmar, examine the performance of the participants in the
value chain, and identify the weaknesses that hinder the development of the
pickled tea industry. In addition, this study described the potential of pickled tea in
other countries to determine if pickled tea can position itself in the market for
ethnic cuisine. The data used for this study were generated from both primary and
secondary sources. The primary data were collected from questionnaires and
semi-structured interviews.
Value chain analysis of the study areas revealed that the main participants in the
pickled tea value chain are tea farmers, pickled tea producers, wholesalers,
manufacturers, retailers, and consumers. There are also governmental and non-
governmental supporters, traders, brokers, and input suppliers who support the
pickled tea value chain directly or indirectly. Value chains need to be strengthened
to support the pickled tea market as a profit-making industry.
Constraints and weaknesses hindering the development of the pickled tea sector
are found at all the stages of the value chain. At farm level, tea farmers faced a
shortage of tea pickers, lower prices and yield, lack of input and credit for
investment, lack of technology, lack of farm gate margin and restricted financial
capacity for attaining organic certification.

CHAPTER-6 107 SUMMERY AND CONCLUSION
At the market level, constraints included limited direct access to the market, low
product price, lack of transport and storage, low quality product, and lack of policy
framework. The pickled tea value chain is also constrained by weak extension
services, poor linkage of research and extension, and insufficient or ineffective
handling, including storage, packaging, and transportation systems.
Some potential development opportunities to improve the current situation are
discussed. Value chain upgrading is a way to improve the efficiency and
effectiveness of the chain. At farm level, a number of important measures to
increase tea production are necessary, such as pruning and filling up of plants as
well as efficient weeding, while labour should be used more effectively to carry out
these tasks.
At the national level, targeted strategies should be implemented to provide the
required support for newcomers to the pickled tea industry and to create a
competitive environment among suppliers. The creation of a more favourable
environment in terms of production, processing, marketing, branding, packaging
and trading will pave the way for new investment into the pickled tea sector. It is
necessary to diversify exports to include higher quality pickled tea; therefore
quality improvement along the pickled tea value chain should be a key focus.
Experiences from other countries on branding may prove valuable in obtaining a
national trademark for pickled tea; however, the lack of reliable data and statistics
is a major constraint to effective policy analysis, strategy development, and
planning that requires urgent attention. The reorientation and strengthening of the
policy and planning system for agriculture is clearly a high priority area where
extensive capacity development is needed. This should be coupled with a focus on

improving health standards and processing techniques to attain a higher standard
of food safety, in order to meet other countries’ stringent food hygiene regulations
on imported products.
Although pickled tea is well known in Myanmar to every Burmese, it is still
relatively unknown elsewhere in the world. Only people who have been to
Myanmar or been exposed to Burmese culture know about its existence. The study
showed that pickled tea is a very unique product of Myanmar with a high potential
for growth and development. It is a very promising enterprise that can contribute
effectively to the overall social-economical aspect of the tea sector. With proper
management practices, effective technologies, and a reliable support system, the
nascent pickled tea market could be transformed into a profitable industry.
6.2 Suggestions for Future Research
This research on pickled tea is merely a first attempt and opportunities exist for
further research in multiple areas. More research on tea production and pickled
tea processing should be continued.
Profitability analysis should also be conducted to find out if pickled tea is worth
introducing into specific market. This type of business analysis, which deals with
the financial and economical feasibility of introducing pickled tea into a new
country, is recommended for future research.
An important area for future research market research would be to explore if
pickled tea salad could be accepted more broadly in the international market.
International consumers do not know what pickled tea tastes like, so are not

actively demanding the product. A significant consumer survey across various
retail outlets and restaurants would provide a better idea of consumers’ demand
which will enable to establish better product-differentiation strategies.
Taste testing is an area of research that is necessary for further studies and should
be conducted to evaluate the reaction of consumers to pickled tea, with
investigation into taste preferences and opinions as well as their likely use of
pickled tea as a salad in their daily meals. This will contribute to a clear
understanding of consumers’ attitudes and opinions towards pickled tea.
Pickled tea passed the acceptable levels in the United States; however,
inconsistency in the quality of the product requires more research and tests. This
study revealed that there is a potential for this product in the global market,
however, more laboratory tests should be conducted.
Another research opportunity would be in the field of qualitative research, which
comprises a wider sampling analysis, the use of surveys, and more professional
taste tests. Moreover, research on the potential for wider use of pickled tea
products should also be carried out in the future; however, this would require
adequate funding.
Interestingly, the value chain of pickled tea exported to the United States does not
cease at the exporting stage. It involves importers which serve as wholesalers and
retailers for distribution of the pickled tea within the United States. The current
research, however, could not be conducted in the United States to a great extent;
therefore, future research in the U.S. market is recommended in order to provide
the full story of the value chain. It will be impotent to find out what happens to the

Burmese pickled tea after reaching the United States; whether wholesalers or
retailers add value to the product; and if so, how much cost is incurred and what
effect this has on the price of the final product; or whether pickled tea products are
sold under a Burmese brand or under the brands of wholesalers or retailers.
Moreover, if the costs and earnings of wholesalers and retailers could be gathered,
the distribution of revenue between the exporting and importing countries can be
covered more fully. In the current study the sample size was relatively small and
therefore would be increased substantially in future research.
Farmers mentioned the importance of geographical location of the tea plantation
when producing pickled tea. It was stated that some specific regions are most
suited to growing green tea or black tea, while the study areas of Namsan and
Pindaya townships are more suitable for pickled tea production. This could be due
to the soil type or other environmental factors—this is another potential area for
study.

111
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131
APPENDICES
APPENDIX-1: Laphet Value Chain Questionnaire – Farmers

Date:
1. General Information
1.1 Name of farmer:
1.2 Ph:
1.3 Village/ Village Tract:
1.4 Town:
1.5 Province:
2. Socio-demographic Characteristics
2.1 Gender: ¨ Female ¨ Male
2.2 Age: years
2.3 Education: years
2.4 Number of years spent on tea plantation: years
2.5 Are you a member of an organization? ¨ Yes ¨ No
2.6 If yes, name of organizations:
1.
2.
3.
2.7 What are the benefits of being a member?
1.
2.
3.

APPENDIX-1 132
3. Economic status/ livelihoods
3.1 What are the other sources of income/means of livelihood?
1.
2.
3.
3.2 Has there been any increase/decrease in your income in recent years?
¨ Yes ¨ No
If yes, how much? %
3.3 Do you have to get credit? ¨ Yes ¨ No
If yes, sources of credit
1. Agri 3. Informal 5.Others

Source 2. Microfinance 4.Relatives
Bank lenders
Interest

Rate (%)

3.4 How much credit is needed per acre? Kyats/acre
3.5 Have you observed/ experienced any economic changes- price, profit,
demand?
Economic Changes 1. Price 2. Profit 3. Demand

1. Yes/ 2. No
1. Increase/ 2. Decrease

APPENDIX-1 133
4. Ownership
4.1 Do you own the tea fields? ¨ Yes ¨ No
If no, how much is the rent per year? Kyats/ acres
4.2 Total area of land cultivated? Acres
4.3 How many plants do you have per acre? Plants
4.4 Will it be easy to expand your tea plantation? ¨ Yes ¨ No
If no, what are the constraints?
1.
2.
3.
5. Production
5.1 Sources of inputs? (seeds, fertilizers, pesticides)
Source of inputs 1. seeds 2. fertilizers 3. pesticides 4. others
From where?

5.2 Plucking
Plucking 1. Times 2. Times 3. Times 4. Times
When??
Total harvest (vol/ac)
For laphet (vol/ac)

APPENDIX-1 134
5.3 Labor - plucking/ac, drying/ tons, …costs other?
Packaging
Plucking Drying Steaming Rolling Pressing
labor /Storage
(/ac) (/MT) (/MT) (/MT) (/MT)
(/MT)
Source
(hired/family)
Cost
How

5.4 Source of information on tea plantation such as on production, drying?
1.
2.
3.
5.5 Problems? ¨ Yes ¨ No
1.
2.
3.
5.6 Storage? ¨ Yes ¨ No
Yes No
Where? Where to?
How?

APPENDIX-1 135
6. Marketing
6.1 To whom do you sell your products to? Table (%)
Contract Company 1 Company 2 Company 3

Traders
processors (Name) (Name) (Name)
Amount (%)
(/ac or from total)
Mode of sale:
1. Picked up
2. Delivered(cost)
Contracts:
1. Yes
2. No

6.2 What is the mean of Transportation???
7. General Potential
7.1 What is your overall view of the pickled tea sector?
7.2 What is the greatest Challenge/issue facing in tea plantation today?
Challenges
Issues
7.3 In your opinion, what are the main steps that the country should take in
improving tea production?

136
APPENDIX-2: Laphet Value Chain Questionnaire – Wholesalers, Retailers,
Manufacturer(Company)
Date:
1. Name:
2. Firm Name:
3. Principal product or services:
4. E-mail:
5. Ph:
2. Input Supply
- Do you have your own operated tea fields?
¨ Yes, how many acre?
How many plants/ acre?
¨ No, who supplies?
Do you have contract with suppliers?
¨ Yes, how much do you buy? (MT) ¨ No
How much is the price?
- Are there any problems in obtaining high quality tea leaves? Explain.
1.
2.
3.

APPENDIX-2 137

- Define High quality tea leaves?
1.
2.
3.
3. Market access
1. To whom do you sell your products to?
5. Direct
1. Larger 2. Small to
3.Wholesalers 4. Exporters
Firms Firms consumer
Amount
(%)
Price/MT
2. What is the relationship you have with these buyers?
2.1 who determines prices?
2.2 Who determines amount purchased?
2.3 product specifications (in jars or in packets)?
3. How do you promote and market your products?
1.
2.
3.
4.

APPENDIX-2 138

4. How strong is the market for your product right now?
Very Poor Very
Strong
1 2 3 4 5 6
5. What trends do you see for pickled tea? ¨ Increase ¨ Decrease
6. Do you ever collaborate with other firms on promotion and or marketing?
¨ Yes ¨ No
If Yes, then how?
7. Who are the major manufacturing competitors?
1.
2.
3.
8. Is your product exported? ¨ Yes ¨ No
Yes
Countries Amount (MT) Price/ kg How??
1.
2.
3.
No
Why not?
Constraints

APPENDIX-2 139

Any plans in the ¨ Yes ¨ No

future? If Yes, what plans?

9. What do you see as your main challenges in accessing international
markets?
1.
2.
3.
4.
4. Product development
1. What are your major challenges in product design and manufacturing?
1.
2.
3.
2. What other products do you produce/ sell?
Other
Pickled tea Green tea Black tea tea
What percentage does each

product represent in terms of
your gross revenue?
What have you done recently
to improve your products or
services

APPENDIX-2 140

3. What pickled tea flavors do you produce?
1.
2.
3..
4. Which is the most popular?
- Does your brand have strong recognition in quality? ¨ Yes ¨ No
5. Standards and Certifications
1. Is there any a standard or certification for your product? ¨ Yes ¨ No
If yes - Who set these standards and requirements?
- When?
- Do you have any problems in this regards?
If no - Are you also working on getting products certified?
¨ Yes, How? ¨ No, why not
When?
6. Business Membership Organization
1. Is your industry/ company represented by national or local business
associations? ¨ Yes ¨ No
If yes,
2. What are the primary functions of these associations?

APPENDIX-2 141

1.
2.
3.
3. What are the primary benefits of these associations?
1.
2.
3.
4. What additional services should they provide?
1.
2.
3.
7. Policy/ Regulations
1. What government policies/ regulations benefit your business?
¨ 1. Registrations
¨ 2. Inspections
¨ 3. Subsidies
¨ 4. Incentives
¨ 5. Others
2. What government policies/ regulations are obstacles to growing your
business?

APPENDIX-2 142

¨ 1. Registrations
¨ 2. Inspections
¨ 3. Subsidies
¨ 4. Incentives
¨ 5. Others
8. Infrastructure
1. What are the most important infrastructure constraints affecting your
business growth and profitability?
¨ Road/transport conditions
¨ Telephone services
¨ Electricity
¨ Storage
¨ Others
2. What is the company doing about these problems?
9. General Overview
1. What is your overall view of the pickled tea sector in having international
export potential?

APPENDIX-2 143

2. How do you think your company would perform locally and internationally
for the supply of pickled tea in relation to strengths, weakness,
opportunities and threats?
Local
Strengths Weakness

Opportunities Threats

International
Strengths Weakness

Opportunities Threats

APPENDIX-2 144

3. What is the greatest Challenge/issue facing the company today?

145
APPENDIX-3: Laphet Value Chain Questionnaire - Govt. / Organization
Date: __________________
1. Name:
2. Position:
3. Department/ Organization:
4. E-mail:
5. Ph:
1. General overview of the pickle tea sector both domestic and international?
2. Has Myanmar ever attempted to capture a position in the global tea industry
with pickled tea?
¨ Yes, when?
¨ No, why not?
3. Has pickled tea been exported?
¨ Yes, to which countries?
¨ No, why not?

APPENDIX-3 146

4. Has pickled tea products been certified? ¨ Yes ¨ No
¨ Yes, who is doing the certification?
¨ No, why not?
5. What re the standards and criteria for certification?
1.
2.
3.
4.
6. What are the labelling requirements?
1.
2.
3.
4.
7. Estimated time duration to get the product certified?
8. Intended foreign markets?
1.
2.
3.

APPENDIX-3 147

9. What are the constraints in the pickled tea industry?
10. What are the future development plans for pickled tea

148
APPENDIX-4: Laphet Value Chain Questionnaire - Restaurants
Date:__________________
1. Name of Restaurant :
2. E-mail:
3. Ph:
4. Location:
5. Country:
2. Product
Yes No
1. Is Pickled tea in your Menu?
2. Is it popular among customers?
Who are your major customers?
3. ¨ Myanmar ¨ East Asia (Chinese, Japanese, Koreans) ¨ West Asia (Indians)
¨ Australia/ NZ ¨ American ¨ Other (tourists)
How is pickled tea served in your restaurant?

4.
¨ Alone ¨ With nuts ¨ as a Salad ¨ Others,

APPENDIX-4 149

3. Price
1. How much do you sell for a plate? Currency Price
a.
b.
c.
2. Has there been an increase in sale of pickled tea dish over the
year?
¨ Yes , Yearly increase in sales % ¨ No
3. How many plates of pickled tea do you sell in a day from total?
Plates out of total orders / day
4. Frequency
1. Where do you get the supply of pickled tea from?
2. How often do you have to order supply of pickled tea?
3. How much do you order per order?
4. Cost of shipping?
5. What brands do you order?
5. Packaging
What form do you buy the pickled tea?
¨ Jars ¨ packets ¨ plastic containers ¨ others,

APPENDIX-4 150

6. Consumption Preference
What do consumers prefer eating pickled tea with?
¨ Alone ¨ With nuts ¨ as a Salad ¨ Others,
7. Certification
How important to you is for the pickled tea product to be certified?
Not Important Very
Important
1 2 3 4 5 6 7
¨ ¨ ¨ ¨ ¨ ¨ ¨

151

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An Exploratory Value Chain Analysis

potential in the global market.

pickled tea value chain are addressed.

upgrades to the chain if it is to be upgraded. Pickled tea is a profitable industry and

weaknesses and challenges to developing a sustainable pickled tea industry from

marketing, and improved processing technologies can enhance the development of

farmers’ access to modern technology and inputs, developing infrastructure,

cooperative development, and improving extension systems are recommended to

accelerate the chain’s development.

First of all, I am deeply grateful to my supervisors Walter Glass, for his

encouragement, guidance, supervision, advice and support in undertaking this

constructive feedback. Next, I owe my deepest gratitude to my program director,

Bardell for their valuable help and support.

being supportive, understanding, and welcoming throughout the whole study

program. Special thanks to Jamie Hooper and Dave Broderick.

I am also very grateful to the New Zealand Development Scholarship that

supported financially to pursue my Masters at Massey University and gave me this

marvellous opportunity to study and experience this wonderful country, New

sharing their opinions and ideas to be part of the study.

wholesalers, in addition to giving information about pickled tea. I also wish to

I must extend my deepest gratitude to my beloved parents for their enormous

support, throughout the duration of my study.

Lastly, I offer my heartfelt gratitude to all of those who supported me in any

respect during my studies.

3.6 Data Analysis ................................................................................................................... 50

APPENDICES ................................................................................................................ 131

Table 2: World Tea Exports (thousand tonnes) ............................................................ 11

Table 3: World Tea Consumption (thousand tonnes) ................................................... 12

Table 4: Tea Production in Myanmar ............................................................................. 17

Table 6: Prices of Different Types of Tea in Myanmar .................................................. 20

Table 7: Export and Import of Tea in Myanmar ............................................................ 22

Table 8: Tea Picking Seasons in Myanmar ..................................................................... 54

Table 10: Number of Restaurants Surveyed by Country .............................................. 82

Figure 4: Tea producing areas in Myanmar (Note: Myanmar Department of

Figure 7: Pickled tea leaf salad (Honn, 2014) ......................................................................... 24

Figure 9: Typical agricultural value chain and associated business development

Figure 12: Data collection framework. ...................................................................................... 49

Figure 13: A typical pickled tea value chain. .......................................................................... 53

Figure 14: Tea picking in the Northern Shan State. ............................................................... 55

Figure 18: Comparison of pickled tea processing .................................................................. 60

Figure 22: Pickled tea value chain .............................................................................................. 69

Figure 23: Pickled tea prices (prices as of July, 2015). ........................................................ 70

Figure 27: A typical dish of pickled tea served as a salad. ................................................. 82

Figure 29: Importance of certification on a Likert scale of 1-7. ........................................ 85

FAO Food and Agriculture Organization

FAO IGG Food and Agriculture Organization Intergovernmental Group

FAOSTAT Food and Agriculture Organization Corporate Statistical

CTC Crush, Tear and Curl tea

USAID US Agency for International Development

USD United States Dollar

VCA Value Chain Analysis

GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit

HACCP Hazard Analysis Critical Control Point

FCL Full Container Load

FSA Food Safety Activities

GHP Good Hygienic Practice

UNODC United Nations Office on Drugs and Crime