NEWSLETTER – REPORT FROM THE FAIRBIOTEA PROJECTS - 01/2024

General development

Despite the drought, tea production volumes in China rose again in 2023. However, according to the China Tea Marketing Association, tea exports from China fell by 3% in the first half of 2023, and by as much as 14% in value terms. And this process is still continuing. On the one hand, the tensions with the USA are having a negative impact, but the main reason is most likely the economic stagnation, inflation and recession in the West. Market players are unsure about future developments. Inflation is leaving consumers with less money in their wallets for luxury products. We hear that many tea companies are taking a wait-and-see approach and reducing their purchases. Others are trying to maintain their prices or counteract the general increase in costs by buying more conventional tea instead of organic tea. In general, the organic sector is suffering the most from the current situation.

All of this has of course an impact on our Fairbiotea partners. In 2023, Fairbiotea was still able to almost meet its purchase guarantees. For 2024, however, the picture is that Fairbiotea will not be able to import the usual quantities. Demand is simply too low.

Despite price pressure, the products are to become even more sustainable. A contradiction in terms. More sustainability means higher costs. The new German Act on Corporate Due Diligence Obligations in Supply Chains (Lieferkettensorgfaltspflichtengesetz, LkSG) also indirectly forces smaller companies, insofar as they supply larger companies that fall under the Act, to make greater efforts regarding traceability, the labor situation and complaint procedures in the country of origin. Documentation requirements also tie up labor at every level of trade and cause additional costs. Fairbiotea considers itself well positioned with regard to the LkSG and has always provided information about the shortcomings and opportunities in organic tea cultivation.

Certification, security, sustainability

The organic control body CERES, which carries out both Fairbiotea and TraCert inspections for us, has parted company with its long-standing partner in China, Nanjing Yingmu Organic Product Control Co, Ltd.

CERES decided to switch to a newly established control body office in Shanghai, where well-known and trustworthy employees are already working.

To ensure that all inspections at Fairbiotea farms, both organic certification and Fairbiotea and TraCert inspections, remain in one hand, namely with the control body CERES, Fairbiotea has also decided to commission the new CERES partner in Shanghai with all inspections from now on.

To this end, a Fairbiotea employee met in Shanghai with the head of the new office together with the person responsible for China at CERES, and discussed important points for the above inspections. The first TraCert inspection by the new office took place at the end of October 2023 at our partner Wulongshan.

The analyses of the TraCert samples taken by CERES in 2023 did again not detect any pesticide residues.

QINGSHAN

Compost production

The first on-site compost consultation by Ecocert took place at Qingshan in March 2023 when the first compost heap was created. The experts made various suggestions for improvement, including

• Shredding the grass/straw before composting.
• Increasing the amount of cattle manure used.
• Measuring the temperature of the pile more frequently, preferably daily, in several but always the same places.
• Packing the compost in bags after completion until being used as fertilizer.

In addition to the on-site appointment, the experts are also available by telephone if the farm has any problems or queries.

The second consultation meeting took place in November when the second compost heap was turned. Some of the suggestions for improvement could not yet be implemented. For example, the long, hard grass was still not shredded because the shredder was no longer functional. There are now plans to get a new shredder. Other measures have been implemented, such as packing the compost in bags after completion and measuring the temperature more frequently. Nevertheless, the farmers still lack detailed knowledge of when it is exactly the right time to turn the compost heap. This shows that professional compost advice is important and necessary.

SHANGBA

Compost production

The first compost consultation took place in Shangba in April 2023. The proposed measures included

• Adjusting the ratio of the raw materials better and more precisely to the desired carbon-nitrogen ratio in the finished compost.
• Increasing the amount of cattle manure collected, as well as the quantity of other materials.

However, calculating the correct ratio is a task that the farms have not yet been able to accomplish on their own and for which they still need professional help. In addition, the compost was not protected well enough from moisture.

According to the compost manager, approx. 30 tons of compost were produced in 2022. The new compost produced in spring/summer 2023 was applied directly after the last harvest in October. To compare the effectiveness, this was done on specially divided test areas. The farm also planned to buy commercial organic fertilizer to compare it with the self-produced compost. Such commercial organic fertilizer is about twice as expensive as the cost of producing their own compost.

The second consultation in Shangba took place in mid-December when the second compost heap was created. A tarpaulin was now used to protect the compost from moisture. In addition, the raw materials used were adjusted, by which also a reduction of the moisture content was achieved. As a further measure, the experts suggested creating drainage ditches to divert the rain away from the composting area.

Other suggestions for improvement were to measure the temperature even more frequently and to mix the raw materials more thoroughly when turning the pile. Shangba also still lacks the necessary experience to recognize the best time to turn the compost heap. The fact that Shangba is actively looking in the area for suppliers of raw materials, especially cow dung, with the help of the experts was marked as positive.

Nevertheless, it should be noted that development is progressing at a very slow pace, partly because the customer market does not reward it in monetary terms.

WULONGSHAN

Compost production

The first consultation meeting in Wulongshan took place in July. Wulongshan has now created compost heaps in two places. Wulongshan is also still struggling with various difficulties. They also still need support in calculating the correct ratio of raw materials. One of the compost heaps was too wet. This was partly due to inadequate drainage of the compost site, but also to the wet weather when the pile was created. The compost consultant therefore advised that more attention should be paid to the weather forecast when planning the date. Drainage channels should be dug to drain the composting area.

The second compost heap in Wangkou, on the other hand, was partly too dry, so Wulongshan had to order a water tank truck, as there is no stationary water supply at this location.

Wulongshan was also advised to measure the temperature more frequently and in more and always the same places. This would make it easier to determine when to turn the compost heap.

A further consultation took place in December 2023 to turn the second compost heaps of the year. The frequency of temperature measurement was now satisfactory. The weather was also taken into account when creating the piles and the ratio of raw materials was correct thanks to the help of the experts.

Nevertheless, the compost in Guanqiao was again too moist. The drainage of the composting area was still inadequate. The experts also found that the existing hygrometer was unfortunately not giving the right results. They recommended that Wulongshan buys a new one.

Previously produced compost was worked into the soil between the rows of tea bushes as fertilizer. According to Wulongshan, this has made the soil much looser and thus better able to absorb rainwater.

Further tasks for Wulongshan include increasing the amount of compost produced and finding suitable areas to build more compost heaps.

General development

In 2021, Wulongshan leased a new 28-hectare area on the mountain opposite the Guanqiao tea area. The farmers who own the area had cleared it and sold the wood. Wulongshan then planted newly purchased, early sprouting tea bushes there. This new area is expected to end the conversion period on May 1, 2024. The tea bushes are still relatively small, but it will not be long before the yield from this area rises to the level of the other tea areas. This will significantly increase Wulongshan's harvest volume once again.

• May 2023
  After a long search and long negotiations, a contract was finally concluded in December 2022 with the organic inspection body ECOCERT for an on-site compost advisory service, which includes both the theoretical basics, help with practical implementation and support with the (external) procurement of compost material such as manure, etc.
  Read more ...

  Compost advisory contract with ECOCERT

  The three farms Qingshan, Shangba and Wulongshan are being advised.

  Depending on the farm and the needs, two to three visits per year are planned on important occasions such as building the compost heap, turning the heap or spreading the compost. Fairbiotea hopes that this will significantly increase the quality and volume of compost production. 80% of the costs for the advisory services are covered by Fairbiotea, 20% are contributed by the farms themselves.

  The 2022 drought and its impact on the autumn harvest and the new harvest in 2023

  In the summer of 2022, large parts of southern China were hit by drought. In addition to extremely hot temperatures, there was virtually no rain. Zhejiang province was particularly affected, with daytime temperatures exceeding 40 degrees for 4 weeks straight. At the same time, the amount of rainfall in summer was 60% less than in previous years. Jiangxi, Jiangsu, Hunan and Fujian provinces were also affected.

  In some regions, the autumn harvest was much lower than normal, in others it could not be harvested at all. In Fujian, the harvest was a third less than normal. Many tea bushes simply dried up. These crop shortfalls naturally mean losses for the tea farmers.

  The spring harvest was also still affected by the drought. For the Longjing production, perhaps the best-known tea variety in China, 20% lower yields were predicted for spring 2023. In the meantime, however, various suppliers have already reported harvest losses of 20% to 40%. The lower yields due to the drought have already led to rising prices for the best varieties of spring teas, which are mainly marketed in China itself.

  Only tea farms with an expensive irrigation system have survived this drought reasonably unscathed. However, as this is a rather rare extreme weather – up till now - very few farms have such an irrigation system.

  Our Fairbiotea partners got off lightly. Due to their geographical location, the damage was not quite as severe as in other areas.

  But the drought also had other effects. In October, the port of Changsha in Hunan province was closed. The river did not carry enough water for transport ships, which otherwise carry containers of tea to the coast, to sail on it. The more than 600-kilometre-long transport therefore had to be done by road, which entails higher costs. This disruption to the supply chain also had an impact on other sectors of the economy in China and negatively affected supply chains and thus production.

  Freight costs development

  Freight costs for containers had risen to a record level in 2021, then eased somewhat at the end of the first quarter of 2022 and stabilised at a still very high level in mid-2022. All forecasts said that freight costs would not fall further in the short term. However, no one had anticipated the far-reaching effects of the war in Ukraine and the consequences of the clash between the Omikron variant of the Covid virus and the zero-Covid policy in China. New outbreaks of infection flared up in many places in China, which were combated with the strictest measures, such as lockdowns of entire cities. The best-known example is Shanghai, which was in lockdown for more than two months from the end of March to the beginning of June 2022. Production came to a standstill in many places because workers could not even get to the factory. Other cities in China suffered similarly, although not quite as badly as Shanghai.

  Because of the production stoppage due to the anti-covid measures, there were fewer transport orders. Rising energy costs in Europe due to the Ukraine crisis led to a drop in demand for goods. Consumer spending also fell in the USA, which led to less demand for sea transport. All this caused freight rates for containers from China to fall extremely beginning from late summer 2022. By the end of 2022, they had almost reached pre-pandemic levels. Delays caused by handling congestion at ports also eased.

  The lifting of almost all Covid restrictions and the massive wave of infections in China last winter then had another negative impact on the economy, and thus also on the development of freight costs. In many companies, almost all employees were sick with Covid at the same time. In the first quarter of 2023, the Chinese economy was able to recover to some extent, but foreign trade continues to weaken. Freight costs have therefore settled at a low level now.

  Certification, security, sustainability

  The change in responsibilities for the verification and validation of organic certificates of inspection (COI) for import into the EU, as well as the slightly different approach of the authorities now responsible, had led to considerably more time and labour in 2022. The checks are much more detailed, which often meant that additional documents had to be submitted. It also happens from time to time that boxes in the certificate of inspection are filled in incorrectly or inadequately, whereupon the supplier has to request the amendment from his control body at the origin. This costs time and possibly also extra fees.

  The new authorities also charge a separate fee for validating the certificates of inspection, which did not exist before the change of jurisdiction. The new authority also has the right to take samples on a risk-oriented basis and have them analysed. The importer has to pay the considerable costs for such an examination.

  All tea imports from China, whether conventional or organic, have been and still are subject to a 20% laboratory examination by the competent food safety authority at the point of entry into the EU. This also takes an enormous amount of time. The costs for this must also be borne by the importer.

  Since the beginning of 2023, an additional, officially ordered control measure has now been added for organically produced teas from China: 20% of all organic tea exports from China must be laboratory tested by the organic control body on site before leaving the country of origin. The exporter has to bear the costs for this. With the TraCert inspection, Fairbiotea has long been carrying out this type of pre-export sampling by an control body with subsequent laboratory testing, in 100% of all Fairbiotea exports.

  All these additional costs are of course more or less passed on in the supply chain.

   

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• October 2022
  China continues to pursue a zero-covid policy, where every outbreak of the virus, no matter how small, is combated with the strictest measures such as mass testing and lockdowns. Travel to China is strictly regulated and only possible with longer quarantine periods. This basically rules out travel to China.
  Read more ...

  Certification, security, sustainability

  As the third country control body CERES operates branches in China, organic audits and Fairbiotea inspections in 2021 and 2022 could be carried out by local staff as usual. However, control visits or supplier audits could still not take place.

  In principle, the TraCert inspections could also be carried out. TraCert inspections , commissioned and paid for by Fairbiotea, are safety checks on goods ready packed for export, during which inspectors of the organic control body CERES take representative samples for laboratory analysis. However, there were some few cases where these inspections could not take place because travel within China was prohibited due to local covid restrictions or was not possible due to strict quarantine requirements.

  As the infection numbers were very low due to the strict measures in China, the 2021 and 2022 harvests were brought in under almost normal conditions.

  Based on the evaluation of the checklists of the 2021 Fairbiotea inspections, a development plan was prepared for each farm for the following year. In the course of digitalisation, which many companies had to introduce in the wake of the pandemic, Fairbiotea discussed and coordinated these development plans with all partner farms in video meetings.

  Preparations for the new organic regulation 2018/848 have caused discussions, especially towards the end of 2021. Specifications regarding possible changes to TRACES, the digital online platform for the creation of inspection certificates for organic imports from third countries, were only published very shortly before they came into force. And the simultaneous change of the authorities beeing responsible for the control of the import procedure for organic goods in Germany has also led to many questions.

  The new Organic Regulation 2018/848 contains transitional arrangements for a number of third countries. According to the implementing regulation 2021/2325, the recognition of control bodies in certain third countries for the purposes of equivalence under article 33(3) of Regulation (EC) No 834/2007 is valid until December 31st 2024. This means, for example, that control bodies active in China may certify under the old Organic Regulation 834/2007 until the end of 2024.

  This creates some legal uncertainties in the case of complaints when it comes to the evaluation of residues from environmental contamination. The new Organic Regulation 2018/848, which applies in the EU, specifies different procedures for the presence of substances.

  Practically all tea is exposed to environmental contaminants and even plant’s own substances are interpreted by authorities as application pesticides. Suspected cases are often based solely on the presence of residues. Pesticide-free goods are not questioned, even if they may have been grown using forbidden methods that cannot be detected in the laboratory. Fairbiotea wants to improve the control mechanisms and uncover abuses. See also our article on the EU control system and its problems.

  The new supply chain due diligence law is causing uncertainty in the trade. It leads to more bureaucracy and more documentation. Therefore, the development of long-term supplier partnerships at eye level is important to us.

  Fairbiotea has already achieved a high level of transparency and sustainability through active engagement and cooperation with control bodies throughout the supply chain and continues this development process.

  General development

  The development of the freight situation, which was already apparent at the end of 2020, deteriorated even further in the following year, peaking in mid-2021. Freight prices increased many times over compared to pre-pandemic times. At times, a container from China to Europe cost 8 times as much as before. But not only the prices were affected, due to the low availability of empty containers in the country of origin and covid-related problems with clearance in many destination ports, there were considerable delays in deliveries. The blocking of the Suez Canal by the Ever Given in March 2021 further exacerbated this situation.

  Transporting containers by train promised to remedy the situation, even though the costs for this were still higher than those for ship transports. However, as the transport volume had also risen sharply here due to the situation, the containers took a similar amount of time as by ship. In addition, the import procedure at the border into the EU was not well coordinated. Every container of tea from China must be cleared by the food authority at the point of entry into the EU. This caused further costs and delays.

  Due to the constantly changing freight prices, it was very difficult for importers to predict reliable prices for their customers. Quantity planning with producers was also very difficult, as demand changed greatly as the pandemic progressed. Because of the long delivery times, it was not possible to react quickly to the changing demand, or only to a very limited extent. The early planning of regular needs in partnership with the Fairbiotea farms greatly increases the security for all parties involved.

  In addition to the general price increase, there was an increase of the statutory minimum wages in very many provinces in 2021. It is becoming increasingly difficult for the farms to find seasonal workers for harvesting and weeding, even if they are paid much more than the minimum wage regulation requires. The young population often migrates to the cities to earn even better. This leaves the older farmers who either cannot or do not want to do the strenuous work in the fields, or who are busy with their own fields.

  QINGSHAN

  Certification, security, sustainability

  Unfortunately, there was no possibility for our staff to visit the farm in 2021. The strict travel restrictions in China still apply, so it is unlikely that a visit will be possible in 2022 either. In addition to the usual EU organic audit, there was again a Fairbiotea inspection by the organic control body CERES in 2021, which confirmed Qingshan's compliance with Fairbiotea requirements. The new farm in Guizhou - we reported - could not be visited by us either. Although Fairbiotea inspections continue to be carried out there, Fairbiotea has decided to accept this farm as a project member only after a personal inspection. Fairbiotea continues to buy tea from this farm, and we very much hope that the covid situation will slowly ease so that trips to China will be possible again.

  The wages of the seasonal workers for the harvest in Qingshan are about 12.5 to 15 yuan per hour, depending on the job, which is about €1.78 to €2.14 according to the current exchange rate. In Hunan province, the statutory minimum wage was increased in 2022. In the district where Qingshan is located, it increased from 1380 yuan/month to 1550 yuan/month. At 15 yuan per hour and 8 working hours per day, seasonal workers are still quite a bit above the statutory minimum wage.

  Compost production

  Compost production continues in the usual way in Qingshan. The last pile was built in October 2021. At the beginning of 2021, Qingshan had bought a new water vapour permeable tarp to cover the compost heap, as the old compost fleece, which Fairbiotea had procured for Qingshan at the end of 2014, already had too many damaged spots. At over 1,500 euros, the costs for this are not insubstantial for a small tea farm.

  One problem in Qingshan is still the amount of compost produced, which is too small to supply the whole farm. The limiting factor here is the cow dung collected from the cattle kept on the farm. Efforts have been made to find external sources of additional cow dung. A first possible supplier has already been identified, a cattle farm about 110 kilometres away. The permanent procurement of all biomasses for a significant expansion of compost production is still a problem that is not being tackled vigorously enough. Fairbiotea is still looking for a consulting service to help with this. Such a consulting service now seems to be on the horizon.

  WULONGSHAN

  Certification, security, sustainability

  Unfortunately, there was again no opportunity for our staff to visit the farm in 2021. The strict travel restrictions in China still apply, so probably it won’t be possible to visit the farm in 2022 either. In addition to the usual EU organic audit, there was again a Fairbiotea inspection by the organic control body CERES in 2021, which confirmed Wulongshan's compliance with the Fairbiotea requirements.

  The 2021 certification went smoothly. Wulongshan had a total of 44.5 hectares of certified organic tea cultivation area at its command. Almost the entire production volume of organic tea was exported on behalf of Fairbiotea, over 136 tons. This was over 11 tons more than in the previous year. In 2022, the quantities will increase again, as the Zhulinwo tea plot (7.6 ha) finished its conversion period at the end of April and the harvest beginning from May can then be marketed as organic.

  In addition, Wulongshan has leased another tea plot, whose conversion period started on May 1st 2021 and is expected to end on April 30th 2024. This new garden is adjacent to the Guanqiao plot and has 28 hectares.

  In terms of processing, Wulongshan had to take further adjustment measures. We had reported that after the discontinuation of two larger plots in 2019, it was no longer economical to operate the final processing factory with the small remaining quantities of the farm. Therefore, Wulongshan took processing and packing orders from surrounding conventional farms to ensure utilizing to capacity the permanent staff of the factory. However, as Fairbiotea requires a strict separation of organic from conventional processing, Wulongshan originally planned to set up a separate workshop for conventional orders. This did not work out, because the local authorities decided to use the land that was planned for this purpose for something else. As a result, Wulongshan set up a pre-processing facility within the factory premises, so that the employees there can be kept busy with pre-processing during harvest times, while the final processing is done in the remaining time. This means that they no longer need to accept outside orders and produce only organically grown tea now.

  Cost increases did not only affect freight costs, but locally also many things became more expensive. For example, the wages of seasonal workers for harvesting increased from about 12.5 to 15 yuan per hour, about €2.14 at the current exchange rate. Other work like weeding is paid at 12.5 yuan per hour, about €1.78.

  In Jiangxi province, the statutory minimum wage was increased in 2021. In the district where Wulongshan is located, it increased from 1470 yuan/month to 1610 yuan/month. At 15 yuan per hour and 8 working hours per day, seasonal workers are still quite a bit above the statutory minimum wage.

  These seasonal workers all come from the surrounding areas of the farm, they are mostly farmers and between 45 and 65 years old. About twice as many women as men work on the farm. The seasonal workers are covered by a general insurance policy for the whole company. Some, however, do not want this insurance at all, but would prefer to receive the costs for it as additional income.

  This year, the conversion from UTZ to Rainforest Alliance certification will take place, due to the merger of the two seals under the new Rainforest Alliance standard. Several trainings are planned for this in the development plan.

  Compost production

  In 2021, Wulongshan bought a water vapour permeable compost tarp measuring about 21 x 9 metres, a considerable investment at the equivalent of over 1500 euros. In summer, a compost heap of about 120 tons was built. Again, cow dung was bought from a cattle farm in Anhui province. With the new cover, however, the compost behaved differently. It took a long time for the pile to reach the right temperature. Unfortunately, the right technical tools for processing the compost pile are not yet available. The pile was turned with a borrowed shovel excavator. The development plan foresees compost production again in 2022.

  SHANGBA

  General development

  Unfortunately, there was again no opportunity for our staff to visit the farm in 2021. The strict travel restrictions in China still apply, so it is unlikely that a visit will be possible in 2022 either.

  Certification, security, sustainability

  At Fairbiotea's request, Shangba switched back to CERES as organic control body in 2021. In addition to the usual EU organic audit, there was a Fairbiotea inspection by CERES in 2021, which confirmed Shangba's compliance with Fairbiotea requirements.

  As already reported for the other farms, the control body CERES measures the area of the fields planted with tea bushes very precisely using Google Maps and no longer just copies the size of the leased area into the certificate. It was found that of the total area of 530 hectares at Shangba farm, 287.47 hectares are actually cultivated with tea bushes.

  The wage of seasonal workers in Shangba is about 17 to 30 yuan per hour, depending on the job, about €2.40 to €4.20 according to the current exchange rate.

  The statutory minimum wage has not been increased in Guizhou province since the end of 2019. In the district where Shangba is located, it is 1570 yuan/month. At 17 yuan per hour and 8 working hours per day, seasonal workers are well above the statutory minimum wage.

  Compost production

  In order to make progress towards more sustainability, Fairbiotea has stipulated in the development plan for Shangba farm that at least one first trial compost heap with cow dung must be made in 2022. In Shangba the main problem of compost production is also the procurement of the necessary materials such as cow dung and green biomass.

  In May 2022, a first small compost heap was put up using green waste from the farm's surroundings, cow dung, the roots of organically grown crops and tea stalks from the processing factory. The whole thing was covered with a foil and turned with the help of a front loader. The evaluation of the results is still pending. Another trial pile is planned for October.

   

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• December 2020
  The Covid-19 pandemic is currently keeping the entire world on tenterhooks. The effects on the global economy will be felt for many years to come. What impact will the pandemic, which is believed to have started in China, have on our Fairbiotea projects?
  Read more ...

  Certification, security, sustainability

  Due to the extensive restrictions brought about by the Covid-19 pandemic, and in order not to disrupt the supply of high-quality food, the European Council agreed to the proposal that the introduction of the new EU Organic Regulation (Regulation (EU) 2018/848), which had been worked towards for many years, be postponed to January 1st, 2022.

  Organic audits were conducted in 2020 by the Chinese partners of the third country control bodies as usual, however, due to travel restrictions, the control bodies were unable to send quality managers to China to supervise the audits and inspectors, or for unannounced inspection visits. Supplier audits by the buyers/importers also could not take place this year. Thus, organic inspections were very superficial at best. Some tea producers may have taken advantage of such limited controls committing violations against the organic regulation. In our opinion, the control of organic cultivation in China is anyway already inadequate. Many inexpensive organic teas offered by Chinese merchant exporters on the global market in 2020 thus have an even more dubious origin than before.

  Covid-19 and the impact on our projects

  

  The pandemic began in late 2019 probably in the city of Wuhan in Hubei Province in central China and spread from there to other regions of China during January 2020. With the start of the Chinese New Year vacation in late January, Wuhan was sealed off and a lockdown was imposed on the entire country. Businesses were forced to close, schools were closed, and public life came to a standstill. Contact restriction and tracing, disinfection, and mask-wearing were key components of the fight against the virus. Due to the very strict measures, the situation was brought under control in many parts of China in early March and businesses started working again. Wuhan took a little longer, reopening only on April 10th. Since then, smaller, regional outbreaks have occurred from time to time, but have been kept under control through strict measures such as local lockdowns, extensive testing, and the use of surveillance apps.

  Due to limited travel possibilities, we were unable to get our own picture of the situation. Therefore, the following description of the situation in the farms is based on the reports of our Fairbiotea partners in China. In the regions of our projects it was possible to work again from the beginning of March, our partners report. Nevertheless, there were labor shortages on some other farms, especially on farms that rely on seasonal workers from outside their region. Travelling inside the country was still strictly regulated. This mainly affected the early spring harvest, most of which is sold in China itself. A little later in April, at the time when the larger quantities of the spring harvest are brought in, the situation had already eased again. The other harvests in 2020 could be brought in basically without any adverse effects.

  Many rural residents normally work as migrant workers in the large cities. When this was no longer possible due to the lockdown, they simply stayed at home in the countryside, where they had returned for the New Year celebration in accordance with tradition, and worked in agriculture again, which made up for the labor shortage to some extent. However, these workers demanded higher pay, partly because they were used to higher wages from the cities, and partly because there was a higher demand for labor than there was available. This led to an increase in the general cost of labor on the farms. Despite all this, most of the rural residents, who normally would have been migrant workers, could not earn as much as if they had worked in the cities.

  The global lockdowns, as well as the lockdown in China itself, the closing of factories and shops, have had an impact on the economy. Many Chinese no longer have as much money in their wallets as they did before. This had an impact on tea consumption. In particular, sales of expensive, high-end spring teas, which are very popular in China, declined, both due to the decrease in purchasing power and the smaller harvest. However, this decline ultimately affects the export, as tea factories try to compensate for higher labor costs and lost revenue from the spring harvest through higher export prices.

  However, since consumption in America and Europe has also suffered as a result of the lockdowns, it is difficult for exporters to achieve higher prices on the market. Sales risks and uncertainty characterized the purchasing by the importers in 2020. So, supporting our partners in this crisis is an important concern for us.

  Another development due to the corona virus is the collapse in global trade. First, factories in China were at a standstill, so there was no supply of goods for export. Then the lockdowns in the rest of the world affected the imports from those countries. Fewer goods were ordered, shipping companies had to thin out their container shipping lines from China to Europe. Exports from China then picked up strongly again in the fall. In September, 9.9% more goods were exported from China than in the same month of the previous year, and in November the figure was as much as 21.1% higher. Overall, China has thus almost recovered the losses it suffered in the spring. However, with many more goods exported from China than imported this year, there is a dramatic shortage of empty containers. Freight costs rose dramatically in the fall due to the above-mentioned reasons. In some cases, they were more than twice as high as a few months earlier. In view of the above-mentioned uncertainties on the sales side, it is not clear yet whether it will be possible to pass on the additional costs for transport to the trade.

  All in all, 2020 was not a good year for tea farms, tea factories and their employees.

  In 2020, the Chinese government, just like other governments, took measures to support businesses affected by the crisis, especially small and medium-sized ones. One example of this is that each provincial government was allowed to exempt small and medium-sized enterprises from paying the employer's contribution to the pension insurance entirely, while large companies were able to receive a 50% relief. The companies were also allowed to defer payments into the housing fund, a type of statutory home ownership savings scheme paid half by the employer and half by the employee. The exporters of our projects made use of both measures. Beyond that there were several more measures, which cannot be detailed here.

  QINGSHAN

  General development

  This year, unfortunately, there was no possibility for our staff to visit Qingshan farm. The strict travel restrictions in China, especially for foreigners, made this impossible. Nevertheless, there was again a Fairbiotea inspection by the organic control body CERES this year, which confirmed the fulfillment of the Fairbiotea requirements on the part of Qingshan.

  The three-year start-up funding to establish cattle breeding on the farm has now expired. The herd currently consists of 11 animals and thus stands firmly on its own feet. Unfortunately, 2 cows died this year, otherwise the herd would already consist of 13 animals. The support of the compost managers by Fairbiotea has also come to an end. Compost production is well installed and continues in the familiar way.

  Certification, security, sustainability

  The area of Qingshan farm, which was not large anyway, has decreased due to the loss of some parts that had to be used for other purposes. As previously reported, the third country control body started 2019 using Google maps to measure the actual cultivation area of a tea farm. In 2020, Qingshan farm has now also been re-measured in such a way. Many tea farms only calculate with the area information from the lease contracts and have no way to measure themselves the actual cultivation area that is planted with tea bushes. As can be expected, the re-measurement with Google results in smaller cultivation areas. For Qingshan, 40 hectares of pure cultivation area were measured and certified in the new 2020 organic certificate, down from 54 hectares in 2019. Unfortunately, there are no opportunities to increase the area of the Qingshan farm.

  Fairbiotea has therefore been on the lookout for an additional farm of the same exporter, in order to initiate and support the development process towards more sustainability there, and to include the farm in Fairbiotea as well. We selected a farm in the province of Guizhou for this purpose. A Fairbiotea inspection by the organic control body has been carried out there already this year. The results are very positive, but Fairbiotea would still like to personally inspect the farm before accepting it as a new partner. Since this was not possible in 2020 due to Corona, Fairbiotea has postponed the decision on the inclusion of this farm to the coming year 2021. Nevertheless, we purchased already quite some tea from this farm in 2019 and 2020. We will report on the further developments in our "Actual" newsletter.

  Modernization

  As reported in the 2019 newsletter, the management of Chenzhou Jietan had to realize that the building of the modern final processing factory in Yuanling was too large in scale and that total exports fell short of expectations. Two of the factory halls were already taken over by the county government in 2019, the last hall of the factory was then finally abandoned in 2020.

  Since Fairbiotea plans to include another farm of the same exporter in the project, it suggested itself to have the teas of the two farms processed in the same factory, this is better also in terms of supplying equivalent tea qualities. From 2020 on, the teas from both farms will therefore be processed in a final processing factory in Guzhang. This factory has been certified organic continuously since 2005.

  

  Compost production

  Compost production has become firmly established in Qingshan. Most recently, in October 2020 a new compost pile was put up. The compost from previous productions was spread on the tea fields as fertilizer in November. To the steep tea fields it usually has to be carried laboriously on the back. In total, Qingshan produces about 50 tons of compost per year.

  WULONGSHAN

  General development

  This year, unfortunately, there was no possibility for our staff to visit Wulongshan farm. The strict travel restrictions in China, especially for foreigners, made this impossible. Nevertheless, in addition to the usual EU organic audit, there was again a Fairbiotea inspection by the organic control body CERES this year, which confirmed Wulongshan's compliance with the Fairbiotea requirements.

  Certification, security, sustainability

  The occurrences during the certification process in 2019 had Wulongshan properly shaken up, and had far-reaching consequences. Therefore, we would like to start with a review. During the 2019 organic inspection, an employee of Wulongshan was found to have violated the EU organic regulation, whether intentionally or through ignorance could not be definitively determined. The concerned area was accordingly downgraded to the first year of conversion. Fairbiotea did not purchase any tea from this area. Due to this violation, the integrity of other plots was also questioned, it was prohibited to market the 2019 harvest of some of the plots as organic. The background to this was that the control body doubted the relatively high yield claims for these areas on the part of Wulongshan.

  There are again and again cases of disagreements between farms and control bodies about the yield per hectare that can be achieved. The control bodies, which carry out the EU organic certification in China, basically have no reliable method to determine the yield on a certain area, which is also subject to seasonal and weather-related fluctuations, because no research is carried out on this and no useful statistical data is available. If the yield is set too high by the control body, it opens up space for producers to sell more organic goods than actually can be produced on their certified area. There are companies which then purchase additional quantities from non-certified sources. In this way, producers save the cost of certification and evade inspections, because many practices banned in organic farming can no longer be detected in the final product, which moreover may have been mixed. In China, there is systematic organic fraud with over-certified yields. Fairbiotea has made the control bodies aware of this problem. On the other hand, if the control body sets the yield figures too low to prevent fraud with goods from non-certified sources, the farms feel unfairly treated and disputes arise. Some farms simply change their control body then. Until now, it was not possible to determine an objective quantity for an average yield per hectare of a tea farm in China, and thus to clarify who is right here.

  One more reason for this is the fact that in many places no documentation of the quantity of the freshly harvested tea leaves is done. This additional work of documenting the exact quantity was not considered necessary at Wulongshan either, since the entire quantity comes from the company's own fields and is harvested by hired workers.

  Actual traceability does not exist either; the factual origin of a quantity of tea cannot be determined because there is no objective method for doing so. After appropriate research, it would be possible to determine the geographical origin of a product with reasonable accuracy using elemental and isotopic analyses. Unfortunately, the EU control system in all aspects does not feel responsible to establish such safeguards measures and to initiate the necessary processes. All the more the trade and private organizations like Fairbiotea have to take responsibility to unveil deficits of the control system and to compensate them as good as possible. The research project on provenance determination by means of elemental and isotopic analysis, which Fairbiotea has initiated, is currently waiting to get financed by research funds. For more information on this, see our 2019 newsletter below.

  Therefore, in 2019 Wulongshan was left with the income from the export of only 60 tons of organic tea. The rest of the harvest, for which the control body revoked the organic status, had to be sold as conventional goods.

  Further investments in safety and sustainability were thus hampered for the time being. The very good analysis results of the 2020 harvest show that the investments made so far in modernizing the factories have been worthwhile.

  Fairbiotea's minimum requirements concerning product safety go beyond organic legislation. Hence, the equipment of the pre-processing factories of two new plots of Wulongshan, that would have finished their conversion period in 2019, did not meet our requirements. The conditions there cannot protect the tea from contamination with environmental toxins, especially due to the extensive use of coal as fuel in the various machines. These plots were planned by Wulongshan as an expansion of the farm, but without direct consultation with Fairbiotea. However, the plots are also too far away from the more modern factories, such as in Guanqiao, for the tea leaves to be processed there.

  For the above reason, these two plots could not be included in Fairbiotea in 2019. Furthermore, Wulongshan was not aware beforehand that a separate certification would have been necessary for these two farms due to a legal requirement, because they are located in a different administrative district than the other plots of Wulongshan. As a result, certification costs would have been significantly higher than if they had been located in the same district, as the basic fee for certifying a farm would have been incurred twice.

  The loss of export revenue due to the restrictions by the control body, along with the higher certification costs, would have unfortunately put Wulongshan in financial difficulties. Wulongshan was forced to abandon both of these two plots and cancel their certification.

  Another development that was set off by the events in 2019 is that Wulongshan's refinery factory had to accept processing and packing orders from surrounding conventional farms. With the small remaining own quantities, it was no longer economical to operate the factory. In order to maintain a higher utilization rate and to be able to employ the permanent workers throughout the year, additional orders were accepted.

  Especially the first spring harvest, which is mainly sold in China, was processed in the refinery factory of Wulongshan, since there are no export goods at this time. This is perfectly legitimate with proper segregation and documentation. However, since Fairbiotea requires strict separation of conventional and organic processing as an extended requirement of the development plan for reasons of organic safety - laboratories today can detect smallest amounts of contamination in organic goods -, plans are underway at Wulongshan to completely separate the processing of conventional goods from organic production in terms of space.

  It is very difficult for small companies to invest in safety, sustainability and modern equipment, because such investments only pay off from reaching a certain production volume. The margin on the sale of organic tea is too low to achieve this already with small quantities. That’s why Fairbiotea gives purchase guarantees to ensure planning security, on the basis of which such investments are possible.

  After the intensive control in 2019, the control in 2020 passed without any noticeable problems. Currently, 38.67 hectares of cultivated area with a production volume of 125 tons of dried tea are certified. We have documented the current development status on our Wulongshan development page.

  Compost production

  In 2020, no compost was produced due to Covid-19 restrictions. For a long time, it was not possible to organize transports of the required ingredients such as manure, etc.. Therefore, Wulongshan has stopped compost production for this year, but plans to continue with it in the coming year 2021.

  SHANGBA

  General development

  This year, unfortunately, there was no possibility for our staff to visit Shangba farm. The strict travel restrictions in China, especially for foreigners, made this impossible.

  Certification, security, sustainability

  In 2019, the parent company running Shangba tea farm had signed a two-year contract with an Australian control body, for cost reasons without consulting Fairbiotea and against the agreements. Therefore, the organic certification in 2020 was still done by this control body. Nevertheless, there still was a Fairbiotea inspection by the organic control body CERES this year, which confirmed the fulfillment of the Fairbiotea requirements on the part of Shangba tea farm. Since Shangba continued to cooperate with CERES for the Fairbiotea inspections and also agreed to return to CERES as their control body in 2021, Fairbiotea accepted the interim change as a gesture of goodwill.

  Compost production

  Tea waste from the final processing factory, such as stalks, is composted and thus applied back to the tea fields. However, actual compost production with cow manure does not yet take place because they could not find a source for the manure yet. In addition, the know-how for large-scale compost production is not yet available in the farm and would have to be purchased in form of professional consulting. However, such consulting is hard to come by in China. Fairbiotea has been searching for a suitable compost consultant in China for several years without success.

  DONGZHAI

  

  General development

  For years, Dongzhai farm has been doing a very good job, providing excellent teas. This year there was for the first time also a large order of individually designed pressed tea cakes. Not only Pu Erh tea can be pressed this way, but also white or black tea is perfectly suited for this kind of processing. In the new showroom of the operating company Puer Zuxiang, one can taste and examine these and other teas.

  Certification, security, sustainability

  Two of the leading sustainability certification organizations, UTZ and Rainforest Alliance, have merged and will in the future certify according to one corporate, new global standard under the name of Rainforest Alliance. In the run-up to this, they have recognized each other. Dongzhai therefore decided 2020 already to have only one of the two certifications in place, namely Rainforest Alliance.

  Compost production

  Compost production has expanded even further in recent years. Puer Zuxiang has its own compost production company, which has a capacity of over 5000 tons per year. Currently, only about half of this is produced. In addition to goat dung, oilseed cakes and the pulp of coffee cherries, among other things, are processed into compost. Production happens continuously, on average two new piles per month. The compost is applied to the tea fields twice a year, once in May, June, the other time in November, December. About 15 tons per hectare are used.

   

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• November 2019
  Traceability will play an increasingly important role in the future. A very special way, namely the proof of origin by means of isotope and element analysis, is a unique research project, which is supported by Fairbiotea.
  Read more ...

  Certification, security, sustainability

    The scientific foundation of this project is the fact that isotopes and elements contained in the soil and the rocks leave measurable signatures in plant material. If one compares these signatures with comparative data from soil and rock samples, it can be said with considerable accuracy whether a plant has grown at that place or not. This also applies to dried tea leaves.

  In 2018, Fairbiotea accompanied a scientist to three of our farms, where she drew the first samples of soil, rock and tea leaves. The project is now waiting for the allocation of public research funds.

  Minimisation of hazardous substances

  With the additional requirements laid down in the new organic regulation 2018/848, Fairbiotea devoted itself more extensively to the production of jasmine tea and visited the factories which do the scenting with fresh jasmine flowers for our Fairbiotea partners Dongzhai, Qingshan and Shangba. Since fresh jasmine flowers cannot be transported over a long distance, it is necessary that the processing plant is located directly in the area where jasmine blossoms are grown. And since only very fresh flowers are suitable for scenting, the tea must be transported to the place of jasmine cultivation. All of the above-mentioned factories are located in the largest jasmine growing area in China in Heng county, Guangxi province.

  The controlled organic cultivation of jasmine flowers is extremely difficult and risky, and would lead to very high prices for organic jasmine tea. The use of conventional ingredients in organic products is according to the organic regulation permitted under specific conditions, and so conventionally grown flowers are used also for the production of organic jasmine tea. All visited processing plants are of course certified organic, because although the cultivation of the jasmine flowers is conventional, the processing of organic tea and the equipment must of course be checked and certified by a control body.

  The processing companies must take great care to ensure that the tea is not contaminated with pesticides by the flowers. For most customers, residue values are essential, even though the product could be, from the legal point of view, perfectly labelled as organic. There are no separate MRLs for organic products, the same values apply for them as for conventional products, as long as cultivation and processing were done in compliance with the EU organic regulation. Minimisation measures will become even more important with the introduction of the new organic regulation 2021, which requests an investigation for every detection of a residue, whether there was a use of the pesticide in contradiction to the organic regulation. Therefore, everything is done to avoid or minimise residues in jasmine tea.

  For this purpose, the above-mentioned factories have, for example, long-term contracts with the farms that supply the flowers. The use of pesticides is strictly limited to the exact specifications of the processing company in order to keep the pesticide exposure as low as possible.  The process of aromatization also differs from conventional tea. For organic tea, flowers and tea are separated from each other by a thin layer of cloth, a kind of gauze, so that they do not come into contact with each other. You can read more about the exact production process of jasmine tea on our tea production page.

  QINGSHAN

  General development

  In 2018 as well, the wages for the compost managers and the cattle breeding have been paid by Fairbiotea. The herd of cattle now includes 11 animals, 2 of which are bulls.  Sufficient manure is produced for compost production.

  Since the available area in Qingshan is limited, Fairbiotea is currently checking together with the producer whether an expansion is possible by converting other areas.

  Certification, security, sustainability

  In 2018, as already reported above, Fairbiotea accompanied a scientist to three of our farms to draw first samples of soil, rock and tea leaves. In Qingshan such a sampling took place in several sections of the farm.

  Modernisation

  In 2019, the management of Chenzhou Jietan company realized that the construction of the modern final processing plant in Yuanling was a little too large-scaled and that total export revenues fell short of expectations. Low profits due to persistently low export prices remain a problem for China's tea industry.  Two of the three new factory buildings have been emptied completely already and are being rented out to other companies, the last remaining factory hall was still in operation in 2019, but is planned to be sold also. Sencha production will be dropped. The proposed new office building likewise will not be realized. In the future the final processing of the Qingshan teas will be carried out in a factory near the city of Changsha.

  WULONGSHAN

  General development

  This year's inspection has revealed some change for Wulongshan.  Due to a number of misunderstandings between the producer and the control body, the marketing of this year's harvest of some areas as organic goods was prohibited, one of the plots was even downgraded to first year of conversion. We have documented the current state of development on our page Wulongshan - Development.

  Certification, security, sustainability

  On the initiative of Fairbiotea in view of the new EU organic regulation 2018/848, the control body CERES reviewed and adjusted their processes. For example, new methods of measuring the cultivation area using Google Maps were applied. Furthermore, a test harvest including primary processing was supervised by several inspectors in order to obtain reliable harvest quantities. These new methods still need further improvement, at this point they are still not working completely satisfying. Here, the third country control body has to take responsibility to develop reliable methods.

  In 2018, as already reported above, Fairbiotea accompanied a scientist to three of our farms to draw first samples of soil, rock and tea leaves. In Wulongshan such a sampling took place on several plots of the farm.

  Compost production

  A very encouraging message from Wulongshan is the construction of their first compost pile in June 2019. The areas available for tea cultivation in Wulongshan are not sufficient to harvest enough biomass for compost production. In addition, there are currently only a few animals in the tea plantation. That is why they had to buy biomass and dung for their first compost pile from exterior sources. For heaping up and turning the pile Wulongshan rented a frontloader.

  Expensive special-purpose machines are still missing, also a suitable semi-permeable foil to cover the compost protecting it against rain und too much moisture. For this purpose Wulongshan constructed a kind of straw roof on a rack above the pile.

  SHANGBA

  General development

  Contrary to the agreement with Fairbiotea, the parent company of Shangba tea farm decided this year to change its control body. Nevertheless, CERES will again carry out a Fairbiotea inspection of Shangba tea farm for us this year and check all requirements for a Fairbiotea member. Since Shangba is an exemplary operation run by a large parent company, we assume that again all minimum requirements will be fully met. On Fairbiotea's pushing, however, Shangba has promised to return to CERES as certifier next year.

  Certification, security, sustainability

  In 2018, as already reported above, Fairbiotea accompanied a scientist to three of our farms to draw first samples of soil, rock and tea leaves. In Shangba such a sampling took place in several sections of the farm.

  DONGZHAI

  

  Certification, security, sustainability

  To comply with the requirements of the market, Dongzhai obtained 2018 now also the sustainability certifications according to UTZ and Rainforest Alliance.

  Modernisation

  A new tea factory was built in 2017 and was equipped with new, modern machines in the beginning of 2018.

   

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