Transforming an organic tea estate in Assam, India, into an economic powerhouse: setting new standards for park management; strengthening the community.
Written by Gunter Pauli,
author of "The Blue Economy," March 1, 2016.
Kaziranga received preliminary notification as a protected forest in 1905, and the park has been a World Heritage Site since 1985, celebrating over 80 years of nature conservation. The rhino, elephant, and tiger populations have increased significantly over time. Hathikuli Organics, a tea plantation established over a century ago, decided in 2007 to convert the estate to an organic business, aiming to eliminate chemical runoff into the park. The challenge is how to turn the business into a profit, and how to cover the rapidly expanding budget of the Park which is increasingly diverting essential resources from public and private institutions to fight poachers attracted by the largest population of Asian rhinos in the world.
Introduction
Assam has a population of 32 million. It is located in the far northeast of India, bordering China and Myanmar. It was here that British colonizers established tea plantations more than a century ago, long before the use of chemicals in agriculture, to ensure England's tea supply when the Opium Wars cut off supplies from China. Assam produces 60% of all the tea consumed in India. Here, under the leadership of the Tata Group, the decision was made to convert a large 450-hectare tea-growing area into a 100% certified organic farm. The rationale was simple yet exemplary in the sector: the tea plantations are located on the foothills bordering Kaziranga National Park. How can a profitable business be built when the cocktail of chemicals flowing into the park pollutes both the park itself and the Bhramaputra River, which runs alongside it and is one of the world's best fish breeding grounds, feeding hundreds of millions of people downstream? It is in this region that the Indian government and conservation NGOs, in cooperation with visionary communities and the Tata Group, have successfully demonstrated that it is possible to regenerate the entire wildlife population, including tigers, rhinos, and elephants, while simultaneously fostering coexistence with a growing local population. The challenge now is to design a competitive business model for agriculture and industry throughout the Kaziranga National Park's area of influence, where the value generated sustains extraordinary ecosystem services, from biodiversity to soil fertility, creates jobs—the best antidote to poaching—and builds community.
Certified organic
The immediate challenge facing the Hathikuli organic tea estate is that the productivity of these century-old bushes has plummeted by more than half since the use of chemicals and synthetic fertilizers ceased. While traditional tea experts blame the lack of synthetic fertilizers and pest control, it is important to determine the root cause of this dramatic drop in production: the soil has been depleted of carbon. Without carbon, there are no microorganisms to nourish the roots, and less water is retained, increasing the need for irrigation. There are two options: either re-establish a chemical lifeline for these old tea trees, or regenerate a dynamic natural environment for the soil microorganisms and insects that replenish the topsoil with carbon and nutrients. Recreating such a natural environment requires, first and foremost, replenishing this thin layer of the Earth's skin with carbon. An analysis indicates that the farm's carbon content has fallen to less than 1%, while local forests still contain 6%, and the richest soils for agriculture, known as Terra preta, are said to have a carbon content of over 30%. Intensive agriculture depletes the soil of carbon, meaning that only a constant supply of external energy from petrochemical resources can allow plants to maintain their productivity. This harsh reality necessitates a critical analysis of the term "certified organic." This label, which has been applied with slightly different standards worldwide, essentially tells consumers what is "not" in the product they are buying. That is, that this tea or cotton has not been treated with pesticides, herbicides, and/or synthetic fertilizers. However, this certificate says nothing about the soil, nor about the contents of the food or clothing being purchased! While the Tata Group actively sought organic certification according to the definitions of organic products in the United States, Europe, and Japan, each time undergoing a costly certification process, it never occurred to them that this independent verification says nothing about the extraordinary context: protecting the world's largest rhinoceros park from runoff chemicals. The second requirement is to reintroduce biodiversity. This is a challenge in a tea plantation where management will follow the modern mantra of focus, limiting operations to the core business, built around the core competency. However, when this single activity does not generate the revenue and margins necessary to sustain the business, a choice must be made between the commercial imperative to reduce costs, increase productivity, and reduce labor, or opting for the income from additional crops that can be quickly and efficiently cultivated and harvested using available resources. While the traditionally trained Master of Business Administration holder would reject the idea of creating additional revenue streams, it may be the best way to generate cash and replenish the soil, restoring the much-needed fertility.
Reopening of the migration corridor
The management of the tea plantation went beyond simply removing the chemical burden from the park's flora and fauna, creating, for the first time in the world, a migration and escape corridor for mammals across its grounds. The Brahmaputra River plains are part of a unique ecosystem that experiences annual flooding. The dramatic rise in water levels clears this nearly 500-square-kilometer area of debris, replenishes the surface soil with silt containing a wealth of nutrients from the Himalayas, and ensures that next spring, the tall, lush grasses will provide abundant food for rhinos, elephants, wild boars, deer, and hundreds of species of birds and plants, creating such a vast food reserve that predators like tigers can fully enjoy it. However, during the flood season, all the animals must migrate to the hills surrounding the plains. As human settlements grew from a few thousand at the park's creation to 150,000, and as tea plantations expanded, the passage from the river basin to the highlands became obstructed, leading to conflicts between humans and migratory animals. The tea plantation recognized that the only way to resolve the confrontation between wildlife and human tea cultivation was to provide a safe passage for animals. Hathikuli Organic donated a land corridor to the national park that runs directly through the tea plantation. Wildlife dislikes confrontation, and when a passage is offered, many animals seek and find their way to higher elevations on both sides of the river. This is the first known plantation that opens a migration route reducing collision between humans and wildlife by respecting the animals' need to roam the land as they did for millennia before the expansion of human settlements, and certainly before the establishment of a commercial plantation.
How can we fight poaching while making profits from organic products?
In 1823, Robert Bruce observed, during a trade mission, that the Assamica tea variety grew wild in the hills of Rangpor. Tea cultivation here takes place under less than ideal conditions compared to the Darjeeling region of India. Assam's winters are colder, with temperatures dropping by 3 to 5 degrees Celsius. The Himalayas are within sight. This results in a three- to four-month annual break in the tea harvest. During the winter season, the tea processing plant is closed, and although some maintenance work is carried out, this affects employment. Hathikuli Organic employs 850 full-time staff, manages 550 households on its premises, and relies on 1,500 temporary workers. However, these temporary workers are without work for at least five months a year. It is during this period that wildlife is most threatened. The tea plantation is the largest employer in the region, eclipsing the national park, which employs 1,200 people. Stable, full-time jobs are essential to prevent locals from being tempted by poaching. The best way to ensure that those who know the terrain best, day and night, refuse to participate in poaching is to have full-time jobs in the area. Locals who are most informed about park operations and the movements of rhinos, elephants, and tigers—the animals that top the list of species to be illegally killed—should all be employed. As long as there is unemployment, hunger and malnutrition, a lack of healthcare, and no encouragement of local culture and traditions, including crafts, music, and dance, local people are likely to turn to illegal activities. The day I went on my first elephant ride, herding rhinos across the Brahmaputra River plains, a rhino was killed by poachers at dawn. Although the perpetrators failed to remove the horn, irreparable damage was done by taking the life of a highly endangered animal. This deep penetration of the park by illegal hunters confirmed that they had a very good knowledge of the area and must at least have been advised by locals. This is one of the main reasons why creating permanent jobs must be a priority. However, the harsh reality for the tea industry is that by converting the plantation to organic and ceding the migration corridor, the company has lost money. Under these circumstances, increasing the number of salaried workers is not an option. On the contrary, the board and shareholders are pushing for the estate to become profitable again after years of intensive commitment to the environment and the implementation of a social program that includes nurseries and kindergartens for employees' children, a staff social center, and a 24/7 hospital for all residents of the region. This is what is being called the "business imperative." Tea plant productivity has plummeted by nearly 70%, while processing capacity has remained the same, increasing overhead costs. Just as all organic certifications have been successfully obtained, an insect infestation affects a third of the plantation. Whereas in the past, this Helopeltis (tea mosquito) infestation would have been quickly controlled with a pesticide, this solution is now prohibited by organic certification guidelines. These pests require biological remediation. Employment is therefore increasing, but so are costs and the accumulation of greater losses. It is within this context of benefiting the environment and the local population that we must design a better revenue model that also allows for the restoration of arable land and provides diversified income, while reducing risks. Unless Hathikuli becomes profitable within a reasonable timeframe, the initial intentions of finding coexistence between the park's flora and fauna, human settlements with culture and traditions, and the operation of businesses as a source of value generation, will go from a vision to a failure. This cannot happen.
A portfolio of initiatives
Amalgamated Plantations Pvt. Ltd. (APPL), the company that ultimately owns this unique experiment, was committed to finding a solution. The team's initial rationale was to diversify the plantation's income. This idea wasn't always well-received by traditional management, which emphasized focus and cost reduction. They experimented with numerous crops but ultimately struck gold by planting pepper vines that populate the shade trees covering the plantation. Starting with an organic tea plantation, the tree canopy covering the bushes provides a certified organic environment for growing organic pepper. This certification was obtained, and sales contribute to the company's profitability. A modest first step that we call "diversification within the tea plantation," utilizing the tea plantation's ecosystem services to generate more value. This is more efficient than replacing tea with another crop. APPL's intention is for every tree in the plantation to produce pepper. It makes sense. The pepper needs to be dried, the facility is already in place, so investment costs are minimal. A second initiative concerns water. The plantation needs irrigation. Over the years, the estate has relied on deep tube wells. Over time, managers have observed a drop in the water table, an increase in pumping costs, and realized that the local population was very likely also extracting water to meet their needs. This has depleted the park's groundwater, affecting the flora and fauna, especially during the dry season. Therefore, it was decided to create 18 rainwater harvesting ponds. This presented another opportunity: fish farming. After several years of research, Hathikuli's management concluded that organic farming of up to six types of carp, using the traditional Chinese method that utilizes each trophic level, from grass carp to bottom-dwelling fish, was the way forward. Faced with a lack of local supply of strong, healthy broodstock to provide fry, farmers decided to create their own breeding ponds. First-hand verification demonstrated a very healthy, diverse, and thriving fish population. It is worth noting that the Brahmaputra River is—after the Amazon basin—the second largest fish farming region in the world, and that a fish farming initiative could therefore boost local fish protein production, instead of the overfishing, acid fishing, or dynamite fishing that currently strain the river's resources.
Go beyond the obvious
These two initiatives determined the direction of the transformation of this tea plantation: a business that utilizes locally available resources, benefits people and the park, and generates profit by creating more value. The question is how quickly this can be implemented on a larger scale. After incurring millions in losses annually, shareholder patience has its limits. Building on two decades of integrated fish farming, initially inspired by the pioneering work of Professor George Chan of Mauritius and Professor Li Kangmin of China, we have provided a blueprint for a vision that integrates all available resources and builds upon the initial steps taken by the ATP team. The most significant potential contribution is not the invention of a new technology, nor the development of a different management concept. The focus is on linking all activities and operations within the tea sector to a series of processes that include feedback loops, creating multiplier effects by leveraging both existing capital expenditures (CAPEX) and day-to-day operating costs (OPEX). It is necessary to take stock of how costs can be converted into revenue and how underutilized assets can generate additional cash flow. The following pages describe what is possible and provide the fundamental elements for implementing this portfolio of opportunities.
Start with the abundance of pruning
The pruning of the tea bushes represents the largest and most underutilized waste on the estate. Its volume and weight are a multiple of the tea harvest. Management has stopped burning this debris and has switched to composting. It is important to remember that unattended tea bushes grow into large, leafy trees. Thus, pruning slows their growth through a controlled cutting process and promotes the growth of fresh leaves, which are harvested and processed locally into tea. Since hardwood takes years to decompose, the return of this organic debris as nutrients to the soil is slow and certainly does not contribute to the urgent need to replenish the soil's carbon, nor does it generate additional revenue or help reduce costs. The best solution is to use these hundreds of tons of organic matter to cultivate mushrooms. Mushrooms are not only excellent wood decomposers, but these lignocellulose devourers also produce commercially valuable fruiting bodies. One ton of hardwood can yield up to half a ton of shiitake mushrooms. Now, if the bagging of the substrate is planned around the pruning and growth of the mushrooms, the harvest can be scheduled for a period when no tea harvesting and processing facilities are idle. This means that the drying, grinding, and bagging facilities are extended from seven months to a full year. This immediately contributes to profit and employment. Part-time staff can now be full-time, more versatile, better paid, and involved in developing the new business, which improves food quality and safety. In addition to the pruning, the park and its surroundings suffer from pockets of water hyacinth infestations. Research and practice in Africa have proven that this invasive, fibrous perennial, whose seeds can germinate for up to seven years, is also an ideal substrate for mushrooms. Thus, when pruning is exhausted, water hyacinths can supplement the substrate supply, creating a stable activity with multiple sources of raw materials. It could even be converted into a year-round operation, increasing the factory's processing volume and revenue, also benefiting the local population. This would immediately transform the current four-month downtime, royally devoted to cleaning and maintaining the factory, into a four-month operation where the exact same equipment used for drying, grinding, and packaging tea is used for mushrooms. This would represent an increase of at least $1,000 per ton of processed mushrooms, more than the current market price of tea. Since the quantity of pruning is a multiple of the quantity of tea leaves, these four months of operation could contribute significantly to revenue and profit by spreading overhead costs over a full year. Although the exact figures are still to be determined, it's not difficult to summarize the impact of this expansion of the business on the back of an envelope. Preparing mushroom cultivation could generate widespread citizen participation, as is the case with mushroom farming in China. The volume of mushroom bags could reach thousands, even hundreds of thousands. There's no need to store them at the factory. The central production unit would focus on processing the mushrooms into "bricks" for mycelium inoculation, which could be produced locally under strict hygiene conditions, as well as in one of the existing laboratories in the field. It's possible to place the vegetative bags (once the mushrooms have penetrated the substrate) in the homes of local people, ensuring community participation, starting with employees who involve their spouses and children. Cultivation thus becomes a community effort. Since the income from mushroom cultivation is higher than that from tea, there's a generous margin for setting the standard. There is an additional advantage: cultivating mushrooms at home requires strict adherence to hygiene standards, which not only increases fruiting productivity but also positively impacts the health of community members. In the second phase of cultivation, called fruiting, the mushrooms need a carefully maintained environment for an extended harvest period. This process requires regular hydration, ensuring spontaneous growth and an attractive appearance and shape. Larger mushrooms, representing 10% of the market, can be sold fresh, while the others can be processed in factories, requiring drying and blending. Although mushrooms are not exactly the same as tea, much of the existing equipment can be used for both. A trial run will quickly determine the precise setup. Based on our experience, we know that the surest way to develop this activity is to involve women's communities with a green thumb, transforming it into a thriving agricultural enterprise. The production of thousands of tons of mushrooms could be transformed, in cooperation with leading culinary brands such as Denmark's Noma (renowned for years as the world's best restaurant), into highly prized plant-based and nutrient-rich cubes containing a variety of carefully selected mushrooms, locally harvested pepper, and dozens of indigenous herbs that could also be cultivated by communities to offer a range of extraordinary blends. This process has been tested in Zimbabwe, using domesticated mushrooms grown on agricultural waste, including coffee, and could be adapted for tea.
Are mushrooms competitive?
These mushrooms will be competitive in the market. First, because the raw material is fresh and local. Second, because there is a ready market for industrially produced organic mushrooms. Third, because there is readily available capital equipment that can be deployed without additional investment costs, including an energy source that can ensure sterilization, guaranteeing high productivity. Although the cost-benefit analysis needs to be more detailed, the rationale can be explained based on comparable cases worldwide. The social impact is immediate and would generate the kind of additional income for closely related families, offering the added benefit of cohesion and reducing the risk of diversion into poaching.
How to rebuild the soil?
One question arises: what about compost and the need to replenish the soil with organic matter? An examination of the soil's health and structure reveals that this thin layer has been exploited to its limits. The carbon content is less than one percent. Simply applying compost is not enough. One of the best immediate sources of carbon and nitrogen is spent mushroom substrate. Ironically, the prunings that take too long to decompose are enriched with amino acids by the fungi, providing a wealth of carbon and nitrogen that the fungi have extracted from the air. This means that mushroom cultivation is not only a viable economic activity in its own right, but also a crucial element in restoring soil fertility. This soil urgently needs carbon replenishment, and while spent substrate is an excellent first step, more is needed to reach the fertility levels seen decades ago. A reference carbon content of 30 to 35% would be ideal. Recent research on Terra Preta, or black earth, as practiced by the Incas, indigenous Amazonian populations, and Vikings, shows that a combination of organic matter with charcoal and excrement provides one of the richest soils with sustained long-term fertility. The question is how a tea plantation can access and accumulate such a rich carbon source, in addition to fungi. The strategy being pursued in Brazil and elsewhere involves converting diapers—a convenient but environmentally costly modern nuisance—into Terra Preta. If and when diapers are primarily made from bamboo, with two simple layers of bioplastic, enhanced with bamboo charcoal, which is a balancing agent for a baby's skin, then this material can be converted into carbon-rich Terra Preta. With a local population of 150,000, it is estimated that 1,000 babies could each produce one ton of Terra Preta per year. This represents one thousand tons of carbon-rich material, while also creating value for the region's abundant bamboo and generating additional employment in the process. While this wouldn't be enough to sustain the plantation, it could become a contributing factor. Although designing a sustainable and profitable business for locally made diapers requires further effort, this is how the blue economy integrates into the local community, building and intertwining multiple activities that stimulate the local economy. This is achieved by putting more money into the pockets of local communities and providing a powerful platform for creating a premium tea brand.
Learn more about fish ponds
Fish ponds could also help replenish the soil with nutrients. If the 18 water retention dams were converted into fish farms and operated year-round, intensive farming of mixed crops with only a limited number of bottom-dwelling organisms would become one of the richest sources of fertilizer. After the fish are harvested, draining the ponds in winter would provide nitrogen-rich sludge at a marginal cost, while simultaneously sanitizing the ponds by exposing the bottom to a few weeks of ultraviolet sunlight. If these fish are fed through a cycle that begins in a digester, whose sludge is then mineralized by algae beds, the feed stream to the ponds will include a rich mix of benthic, zooplankton, and phytoplankton. This efficient nutrient cycle feeds the fish. This reduces the cost of externally produced feed, thereby increasing locally available cash flow. However, one drawback of the current setup is that winters in Assam can be cold, with temperatures dropping to 3-5 degrees Celsius. While this is true and affects the fish farms, it is also true that the hot air production for the tea (and mushroom) drying process relies on three wood- and coal-fired power plants. The exhaust gases from these three chimneys could be cleaned of SOx and NOx, while the remaining hot air, rich in CO2, could be used to cultivate spirulina and heat the ponds. This would require the additional investment of approximately three kilometers of insulated hot water piping. Such an expenditure would increase fish productivity from the current 3.5 tons per hectare per year to at least 10 tons. This represents an annual production of around 200 tons of fish for the 18 ponds, a considerable addition to food security, based on healthy fish protein, generating additional income for the tea plantation that goes beyond tea, pepper, and mushrooms. You could say that every ton produced on land will save a ton of fish from the river. We are now consolidating multiple financial streams around the available resources of the tea plantation… and it's all organic. We would say it goes beyond organic! It goes far beyond the desire and necessity to reduce costs in order to survive.
From a loss to multiple cash inflows
Now that the commercial product portfolio has expanded to include four organic products, the tea plantation is becoming more than just a tea producer. The operations generate multiple cash flows by utilizing existing resources, addressing the farm's basic needs—particularly soil production and the supply of abundant, rich water; value-generating industrial processing; the local community's desire for more and more stable employment; and shareholders' eagerness to transform a loss-making operation into a sustainable one. All things considered, it's important to move beyond traditional "organic" marketing. This tea plantation is not simply providing quality products; it is potentially contributing to society and the natural park in ways never before seen. It is not only strengthening its own operations by securing the future of the business itself, but it is also increasing the resilience of communities while building an economy that grows without depleting resources or endangering the delicate balance with the thriving wildlife that borders the plantation. In fact, this economic model regenerates the ecosystem with meticulous care and strengthens the region's resilience. This tea plantation will become a major tourist destination, complementing the park itself. This will further boost sales and strengthen the brand, which must leverage the marketing power this story provides. This is an era of specialty teas without equal worldwide. It should be understood as a path toward harmony between the communities, the park's habitat's flora and fauna, and the business imperatives of a company.
Go beyond tea and mushrooms
Of course, this is just the beginning. There are many other challenges to overcome and many opportunities to seize. The development of biological herbicides and pesticides could become another pillar. This goes beyond the activities of Amalgamated Plantations. However, as a key customer for biochemicals that meet the world's strictest organic standards, the area can kick-start a new industry. Since the TATA Chemicals Group decided to move away from traditional petrochemicals and enter the nutraceutical and biochemical market, it is possible to create synergy between tea plantations and the chemical industry. The number of potential products is vast, and we are only scratching the surface. Tests have shown that elephants are highly sensitive to capsaicin, the spicy substance in chili peppers. The world's hottest chilies are grown in Assam, which could be another option to explore. These shrubs are easy to plant and could surround the tea plantation, with a clear effect on wildlife. They could be mixed with mushrooms and other herbs to create unique blends. Furthermore, the chemistry of tea requires further study. Over the past 20 years, we have been involved in the discovery of coffee chemistry. We first understood that coffee is an ideal substrate for fungi (post-harvest, post-industrial, and post-consumer). We then learned that the substrate used after mushroom harvesting is a competitive feed for chickens and an ideal soil enrichment. Coffee grounds can combat odors in textiles, carpets, and refrigerators, while also protecting paint from UV rays, extending its lifespan, and serving, on a laboratory scale, as an excellent hydrogen absorber, competing with platinum in fuel cells. Is it possible that this tea/park initiative could be the platform for a broader initiative on tea chemistry? I hope so. The chemistry of tea is taught only to tea brewing experts. It is not taught to those who envision the industries of the future in general, and tea chemistry in particular. If Assam is to provide livelihoods beyond simply supplying cheap tea to 60% of India's population, it must commit to the direction chosen by the Tata Group and the Amalgamated Plantations team, and go far beyond what could have been imagined by the visionaries who created the park over a century ago and launched the tea plantation at the same time.
This is just the beginning
The sums spent on the tea plantation throughout this organic conversion process should not be considered losses, but rather investments in corporate social responsibility (CSR). A group of Tata's size and reputation should not view these initiatives as purely operational, forcing the company to integrate itself into traditional supply chain management aimed at offering tea at a low and competitive price to European customers. The unfolding strategy, and the story yet to be told to the public, clearly pave the way for an extraordinary positioning of its brand image… beyond CSR. This is the beginning of a powerful specialty tea with a premium brand that has no competition in the world. This "tea" symbolizes far more than just a beverage in a global game of price, quality, profitability, and market share. Until now, the company has chosen not to share this extraordinary combination of managing one of the world's richest and most biodiverse ecosystems and pursuing a profitable business model. This story deserves to be told and could be at the heart of a premium global brand, a thriving community, and a resilient ecosystem. Kaziranga National Park and World Heritage Site, along with the tea farmers of Assam, certainly deserve a better path than the logic of cost reduction and streamlining operations, especially since the alternatives described are not only viable but also readily available, based on proven results elsewhere in the world. This should benefit the company beyond the tea business, influencing the new strategy for chemicals (since only biochemicals can be used) and the food business, which could now expand into a broader range of products, including the industrial cultivation and processing of mushrooms. If this proves viable in the Hathikuli estate, the business logic can be extended to the 25 other tea plantations controlled by the Tata Group. This effort can then be transformed into a corporate business strategy. And that's a lesson the whole world would like to learn! For a short video summarizing "The Challenge" described above, please visit the following website
