Living and working in the tea gardens - The traditional Chinese smallholder model in comparison with the modern Chinese plantation model

In the People’s Republic of China land ownership is reserved to the state. Autonomous farmers hold traditionally agricultural land of varied sizes between 0.1 and 2 hectares per family in hereditary leasehold, which is dedicated to them by the state to assure their livelihood. Often the tea plantations are divided into 50 to 100 patches of a correspondent number of smallholder families.

The right to use these long-term leased areas is granted to the farmers for their lifetime and will be inherited by their heirs. The smallholders can decide about this land on their own, unless the farmers rent out their land to other farmers, agricultural producers or plantation enterprises (so-called company farms).

Smallholders are classified as self-employed, like everywhere else in the world, therefore neither Chinese nor international labour law applies to them, neither does the statutory minimum wage. The farmers do not have a statutory health or pension insurance. For a private insurance they normally lack the financial means. The small piece of land has to feed them when they are old. In general, they grow vegetables, most of them conventional, and hold one or two pigs, chickens and goats etc. for their self-supply.

To earn some money for their daily necessities, they sell tea, which they traditionally cultivate on their land. They realise very low prices for their tea, because the Chinese traders who buy it take advantage of the lack of rights and the poverty of these farmers and exploit them. The additional income that the farmers earn in this way is often below the poverty line.

The families normally live either in adjacent villages or in solitary, simple houses on their agricultural land. Each family works for itself. Within these smallholder structures in the Chinese agriculture, there is usually no superordinated management with which the families comply. At best, they process their tea collectively in a preprocessing factory, in case it is in communal ownership and does not belong to any company. Mainly the tea is bought by companies who process it in their own factories.

Besides their own farming work some farmers pursue other jobs, e.g. as day labourer in the agriculture or on construction sites, or they find permanent employment in a preprocessing factory or in one of the surrounding final processing factories run by a company. In doing so, they are assured of the Chinese minimum wage and labour rights.

With the economic success of China, a significant rural exodus started. The young family members are away as migrant workers or they settled in the big cities, where they can earn an income, which is often 10 to 20 times higher than the one in the tea cultivation of their parents.

The kids of the migrants live with their grandparents in the countryside and go to school there. The schools up to 9^th grade are public and free of charge. The families get together once a year for the spring festival in their hometown. The kids often see their parents only once a year for a few days.

The smallholder farmers who work in the tea farms are often older than 50 years and can hardly accomplish the hard physical labour in the fields. As their entitlement to social benefits is limited, they are forced to work until the end of their life, or they let their land for rent and receive additional assistance from the family members who left for the city.

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The preprocessing factories and the machines in the small farms are often outdated or in an inadequate hygienic condition for the production of food for the European market. The farmers have very little knowledge about organic agriculture, except that the holders of the organic certificate tell them not to use chemical pesticides. The holders of the organic certificates for the agricultural land of these small farmers and their preprocessing factories are often the operating companies of the final processing factories, plantation enterprises, tea traders or exporters, who pay also the fee for these certifications.

Professional trainings in organic agriculture for the smallholders are often impossible because of their low education or do not take place due to the lack of interest of the people involved or for financial reasons.

Although they declared themselves ready to practice organic agriculture with their signatures, yet they do not act of their own accord and are often forced to sign documents which they cannot understand due to their lack of education.

Even if a part of the smallholders observes the basic rules of the organic agricultural process, there are always others, who openly or secretly revolt against the exploitation and contravene against the instructions regarding organic cultivation. For example, usually only a part of the farmers practice manual weed disposal mandatory in organic cultivation, as it implies a considerable additional workload.

The mandatory documentation of the organic agriculture is often falsified by the holders of the organic certificate, to fulfil the bureaucratic EU guidelines.

The designation of managers of the internal control system (ICS managers), necessary for group certifications of smallholders, often exists only on paper. In practice, there is almost no internal control. The nominated ICS managers are generally not trained and have no adequate knowledge of the regulations for organic cultivation.

In addition, for legal reasons the agricultural land cannot be effectively controlled by the ICS managers or by the holders of the organic certificate. The cultivated land belongs to the state and only the independent smallholders have the right to control it. The certificate holder is responsible to the control body, however, by Chinese law he has the right to control the land only if he rented it from the farmers. In this case, he would manage the plantation as a company farm, all affected tea farmers would have to receive a work contract and earn the minimum wage. This is what the legislator provides for. However, financing a hired tea farmer is much more expensive for the operator of a company farm than if he buys the tea from the self-employed smallholder. Of course, this contradicts the economic thinking of the entrepreneurs.

Under the conditions of these smallholder tea gardens, an organic agriculture that is complying with the EU regulation is not realisable. Corruption among Chinese organic inspectors, exploitation, coercion and fear cannot be the basis for the compliance with the standards of organic agriculture.

Risk-oriented quality management or hygiene management is hardly possible without support from European trading companies. And one or two inspections per year by the third-country control body and the holder of the group certificate is far from sufficient for an effective control. In the current EU control system, it is also impossible to disclose even a small fraction of the violations against the regulation for organic production.

The low prices, which are possible due to the non-compliance with regulations, lacking quality management as well as the exploitation of smallholders, harm all organic companies around the world who want to work in a sustainable way.

There is an unfair competition between the sustainable organic producers (company farms/plantation enterprises), which face higher costs for the fair treatment of their employees and the better quality management, and those traders who exploit smallholders and comply with organic regulations only when absolutely necessary to maintain the organic certification and thus have low production costs. The European market prefers those organic products with the lower price, and the European legislation supports this deficiency due to a lack of knowledge about the culturally different structures in China and Europe.

The problem is not known to most of the importers, authorities and accreditation bodies, because the current control system does not lead to more sustainability, transparency and the possibility to completely trace back the organic products. The majority of the importers do not know the agricultural entity from which their goods come. However, this would be important in order to be able to differentiate between risky smallholder businesses and sustainable ones.

Normally only the control body gets to know from which structure and which company the goods derive.

Because there is no quality management in smallholder structures and the organic security is not guaranteed, smallholders should not receive any organic certification. Nonetheless, the EU control bodies hold on to risky group certifications, either because they have to work economically or because they do not know the real conditions in the farms due to corrupt inspectors who are bribed and fake inspection reports.

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As land ownership is reserved to the Chinese state, the plantation enterprise (usually the operating company of the local final processing factory) rents from all the smallholders the cultivable areas of a tea farm and thus gains the legal control over the land and the preprocessing factory. The farmers obtain, according to Chinese regulations, an employment contract and a minimum wage. This ensures a much higher income for the farmers than they can achieve by working as an independent smallholder. In addition to the minimum wage, they receive their lease income. The working conditions are fair and comply with the work and social standards of the International Labour Organisation (ILO). The Chinese labour law can be compared in many ways to the German one.

As it is for the farmers, also all the other employees in agriculture, production and administration receive a seasonal or permanent contract. Additional labour demand is covered by temporary employment agencies (partly with migrant workers). The employees in the factories and in the administration are mostly given permanent employment contracts and are paid far above the minimum wage. The Chinese labour law and the payment of a minimum wage are applicable for every kind of work contract.

The Chinese government participates on a long-term basis in financing the modernisation of the company farms and pays considerable sums for environmental protection to the companies itself or to the local administration, if they practice certified organic cultivation.

All production sites and the organically cultivated areas are subject to the control of the company management. This way the organic process becomes manageable, controllable and sustainably developable.

The companies invest into sustainable development, appoint managers and train employees to control and organise the organic cultivation process and the production in the tea factories.

Investments are made in the improvement of hygienic standards in the tea factories. If needed, modern equipment is purchased, in order to satisfy the quality requirements from Europe.To solve problems such as environmental contaminations, the risk-oriented quality management takes measures and makes investments to minimise and avoid such contaminations. The risk and quality management in Chinese company farms is not yet at a European level, but is developing in this direction. The plantation companies almost always have certified quality and hygiene management systems in order to be able to produce a high level of product safety.

The managers are responsible for the administration and the documentation in all sections of the company and implement the prescribed organic processes and all its certifications. There are trained personnel that have the necessary knowledge about organic agriculture and is capable to execute the necessary documentations and to instruct the employees.

In the company farms the organic cultivation and processing are run at a more professional level compared to the group-certificated smallholder farms, and with a higher degree of organic security, because there the prescribed process is known and can be implemented and controlled.

The workers of these companies do not jeopardise the organic process by buying herbicide on their own expense to save themselves the physical work of weeding, as is often the case in smallholder farms, because they are controlled and adequately paid by the management.

Many companies dispose of organic certificates for the whole production chain: agriculture, pre-processing, final processing and partly also for trade and export. This shortens the process, reduces the number of companies involved and brings off a higher level of product and certification security.

In the meantime, some companies also received Rainforest Alliance sustainability certifications. The organisation Fairtrade unfortunately denied these companies the certification, although the conditions there are more fair in contrast to the smallholder farms to which Fairtrade gives its certification.

Plantation companies are by and large willing to cooperate with European importers for the development of sustainability and product safety.

In the teas produced by these companies, one can seldom detect prohibited pesticides, and if sporadically residues are found, they can mostly be traced back to a cross-contamination from a neighbouring conventional tea producer, which can still occur due to wind drift despite safety distances.

The globally increasing pollution of the environment with chemicals, which are often mistaken as pesticides and which contaminate the cultivated land as well as the products themselves, represent a growing challenge because the minimisation of these substances through measures in the production process by the companies is not always possible. Here, international politics should take on more responsibility in the prevention of environmental contaminations. This cannot be guaranteed even by the best companies.

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Unfortunately, the European laws for organic agriculture are often counterproductive: too bureaucratic, not enough sustainable and faulty. This causes often unsolvable problems, particularly in the practical control by third-country control bodies and for the organic safety. The sustainable organic production must be also economically reasonable for the producer, otherwise sustainability cannot be achieved permanently. The too low price of tea, expected by European companies and consumers, and the lacking European consciousness that sustainable products have high production costs, are the biggest enemies of sustainability and the biggest risk for product safety. If they consistently want sustainable products, Europeans have to learn to pay fair prices aligned to the production costs. In Europe, we are far behind on this matter.

The pricing pressure in Europe, which affects the Chinese producers, and the unequal competition with the Chinese traders who provide their cheap tea by exploiting smallholders and by violating the regulations, has a negative impact on the economic security and the sustainable conduct of company farms as well as on the product safety. When sustainably working companies that comply with the organic regulations, pay their employees fairly and therefore face higher production costs, realise that they are not working cost covering when complying with all these standards, they will not be able to continue their business model without sufficient financial support from European companies.

For this reason, many company farms have already started to buy additional quantities of tea cheaply from smallholder farms under exploitative conditions when the prices demanded by the West are too low, in order to mix this tea with the tea they produce themselves or to export it directly in order to become competitive again and achieve surplus income.

All this is legal according to the European regulation on organic production and no importer is being informed by the European control system about this manipulation. If things are done the usual way European importers do not get to know anything about the actual origin of their imported tea.

Only those diligent European importers who enter into development partnerships with company farms, third country control bodies and organisations like e.g. Fairbiotea (www.fairbiotea.de), and who give the sustainable producers a long-term financial security through large import quantities and as fair as possible prices, can be sure about the origin of their tea from sustainable agriculture.

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