Purpose of iTea
Response to Production Growth, Stagnated Prices and Importance of Tea
Tea production globally has grown tremendously over the last four decades, with global exports only growing marginally. The bulk of production is consumed in the producer countries with the value of exports in dollar terms growing by about 20%. At the same time, production costs have more than doubled tea producers worse off in earnings.
As other agricultural economic sectors seem to be struggling in many parts of the world, especially in East Africa, the tea industry remain to play a critical economic role. In Kenya for example, tea accounts for about 1.5% of the country’s GDP, is the leading foreign exchange earner at about 23%, and supports well over 650,000 smallholder farmers, in addition to over 6 million Kenyans directly and indirectly deriving a livelihood from tea. Tea growing is also a rural-based economic activity that has led to major rural development in roads, schools, health centers and other social amenities.
Invigorating the Price Discovery Mechanism
Average tea prices at global tea auctions over the years keep fluctuating and have generally stagnated. The prices realised at the auctions are based on valuations from quality determination from sensory quality analysis that is not standardized across the various individual persons involved, with each doing their own separately. The quality determination reports generated by each player are not shared between them.
Tea samples have to be physically supplied across the world leading to selling delays that runs into months after production and not all interested parties receive the samples. This is the basis of sales at the current tea auctions and leads to a skewed price discovery mechanism that greatly disadvantages tea producers.
Tea Quality Determination Challenge
The valuations arrived at by the different players in tea trade are principally pegged on the quality as determined individually by each one of them, making the quality determination a key strategic aspect at the auction and in the entire tea trade.
Producers continue to produce tea and place it in the market without pegging it on any established quality level that would attract the best valuations. The quality reports received by Producers lack quality values and scores that can be trended for quality monitoring, consistency and possible intervention. This has contributed to quality inconsistencies from factories, necessitating thorough quality analysis by Buyers for every single production from a factory.
The iTea Quality Determination Solution
iTea Limited has developed iTea QualiTech, a technology-based solution that brings all the known quality parameters as are used in the tea industry, removing the subjective human factor, giving numerical scores. This quality determination technology relies on the relationship between black tea chemical constituents and their influence on the taste, colour, smell and flavour of the product. The chemical constituents’ analysis can be reliably and objectively used to determine the quality of the teas without the need for actual tea tasting.
These analysis enables Producers to establish their quality levels complete with scores, enabling monitoring of quality production, and undertaking timely interventions to improve on quality. This assists Producers achieve Consistency in Quality – a critical requirement by Buyers!
The same technology is also used to analyze standard samples from Buyers and match them to the wide array of teas available on offer ahead of bidding, making it easier to place their bids. This brings tremendous efficiencies to the tea buying process.
iTea has developed 4 unique products to provide solutions to the challenges facing the industry.
Purpose of iTea
Tea production has tremendously grown over the years. Value of exported teas in dollar terms has remained the same or lower for most countries. At the same time cost of production has been spiraling up.
In most tea producing countries, agricultural economic sectors have been struggling, and the tea industry has not been spared. In these countries tea still plays a critical economic role.
In Kenya it accounts for about 1.5% of the country’s GDP, is the leading foreign exchange earner at about 23%, and supports well over 650,000 smallholder farmers, in addition to over 6 million Kenyans directly and indirectly deriving a livelihood from tea.
Tea growing is also a rural-based economic activity that has led to major rural development in roads, schools, health centers and other social amenities.
Tea prices have over the years been fluctuating and have generally stagnated. The prices realised at the auction are as a result of a quality determination and valuation process that is subjective, not standardised and not used in subsequent trading.
The quality determination reports generated by Brokers are only shared with the Producers and never with the Buyers to interest them to buy the teas. Instead Buyers undertake their own separate quality analysis based on the tea samples supplied to them, leading to selling delays that run into months after production. The quality so determined by the Buyers leads to their offer prices mostly with no reference to the broker valuations.
The valuations arrived at by both the Brokers and Buyers are principally pegged on the quality so determined by each one of them. Sadly, both Brokers and Buyers have no common standard for the said quality determination. The same quality determination is done subjectively by different Broker and Buyer firms, by different staff members.
Quality determination is therefore a key strategic blackspot at the auction and in the entire tea trade.
Unfortunately, even Producers produce teas without pegging them on a certain standard quality score aligned to the Buyers quality level needs and which would attract the best valuation from both Brokers and Buyers.
Even the quality reports Producers receive from Brokers lack scores to tell the level of quality generally and for each quality parameter.
Buyers would prefer to buy teas from individual Producers that are of consistent quality levels over time to avoid the rigorous quality determination exercises all the time they are buying. Unfortunately, Producers lack the tools to monitor and trend their quality production levels to achieve such consistency based on measurable scores.
iTea Limited has developed iTea QualiTech, a technology-based system that brings all the known quality parameters as are used in the tea industry, removing the subjective human factor, giving numerical scores and using algorithms. This is a predictive tea sensory quality determination technology that relies on the relationship between black tea chemical constituents and their influence of the taste, colour, smell and flavour of the product. The lab chemical constituents analysis can be reliably and objectively used to analyze the quality of the teas without the need for actual tea tasting.
The analysis results allow Producers to establish their quality levels complete with scores, monitor and trend their quality production levels and undertake any interventions to improve on quality. It actually helps Producers achieve a critical thing required by Buyers, Consistency in Quality!
The iTea QualiTech is also capable of analyzing the Buyers samples standards and matching the same with the teas available on offer by pointing them to such teas ahead of bidding.
The quality determination report produced through iTea QualiTech analysis is based on the commercial quality grades categorization as is used in trade. These reports can be used by Producers, Brokers, Buyers and their customers introducing tremendous efficiencies and cost cutting in the tea trade processes.