Encouraging responsible investment in Tea and eucalyptus

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Encouraging responsible investment in Tea and eucalyptus


28 February 2017

Lao tea could soon have an international profile similar to that of the coffee sector, with growing interest from the Chinese and European markets.

And, following a recent MRLG-funded project, the tea sector is now on track to develop a sustainable and ethical supply chain, with stakeholders across the country working to address land governance issues in particular.

Private investment in the agroforestry sector in Laos has helped to develop production, processing and market opportunities. Such investment is essential for the development of rural economies and has significant potential benefits for local communities and smallholder farmers.

But poor practices, like limited consultation, improper land acquisition, unfair contractual arrangements and a lack of support for smallholder farmers, have had adverse environmental and social impacts on rural communities. These, in turn, have raised legitimacy issues for the entire sector.
In early 2016, Earth Systems, funded by the Mekong Region Land Governance project through its Quick Disbursement Fund, undertook a project designed to facilitate private sector leadership to address land governance issues in the tea and eucalypt plantation sectors.

Both are grown in remote areas by ethnic minorities and predominantly by women, and therefore face similar threats and opportunities.

Over six months, the Earth Systems team worked to develop a shared awareness amongst key tea and eucalypt plantation stakeholders of the challenges and opportunities for each sub-sector, and promote ‘collaborative action’ toward sustainable and socially responsible agro-forestry.

One of the project’s key outputs for the tea sector include the establishment of a Lao Tea Dialogue Platform, with targeted workshops involving northern and southern tea stakeholders.

It also helped develop an Industry Position Paper for local regional and international stakeholders including producers, processors, government and development partners, outlining the challenges, opportunities and policy directions for supporting the sustainable development of the Lao tea sector. Some of the key issues for the sector include the protection of ancient tea forests, smallholder land tenure security and production, developing a Lao Tea Brand and promoting tea eco-tourism.

Tea samples have also been sent to a specialty tea supplier in the UK and a business development representative from Beerlao to facilitate the creation of new domestic and international market opportunities.

On an international level, Earth Systems has now been engaged by the European Chamber of Commerce and Industry to develop a tea Industry Profile report to help market the sector in Europe and other global markets.

It also helped to facilitate the visit, in mid-December 2016, of a European tea distributor who in recent years built an ethical supply chain for specialty teas for the European market in China, met with tea stakeholders from across Lao PDR and saw similarities with the situation that he initially encountered in the Chinese tea sector.

As a result of the visit, this investor has resolved to invest in the Lao Tea Sector and work with Lao tea stakeholders to set up an ethical supply chain for the European market starting in 2017.

In terms of the eucalypt sector, there is now an industry working group consisting of four of the five major industrial plantation companies operating in Lao PDR who collectively account for almost all production and processing of Eucalyptus and Acacia species.

It has also produced an Industry Position Paper and will cooperate with the Lao National Chamber of Commerce and Industry and International Finance Cooperation, which will provide financial support for the working group in the first two years.