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Ensure to Continue Growing with Tea: The Other Side of Tea Indonesia's Face Print E-mail


Agriculture has the most basic task of supporting humanity and mobilizing the economy in rural areas. So the indicator of success is high productivity both quantity and quality and man faat economy that is providing employment for the community in the surrounding area the average accessibility to education is still very limited. The labor force in this group is not easy to access and penetrate the labor needs in the manufacturing sectors requiring adequate knowledge and skills. For a particular group of people, working in the agricultural sector is the only option. Therefore, the agricultural sector should not fail in conducting its business in order to guarantee its function as a source of income for its owners, to welfare its stakeholders and to function actively in managing and preserving natural resources.

indonesia is one of the few countries to gain the luxury of natural resources. The agro-climatic conditions and soil fertility allow so many different plant species to grow, develop and produce properly.

This paper is intended to provide views of different sides related to the inevitability that the plantation business in Indonesia is marginalized. Even worse conditions experienced by companies that rely on plantation commodities today, in the eyes of many observers less popular is the tea. This commodity over the last two decades is considered a failed commodity for plantation managers for profit.

Poor market prices often serve as a major cause for producers (plantation companies) behind the poor performance of tea and cocoa in generating revenue. While in the eyes of buyers the weakness of the struggling price of Indonesian tea in the market is due to the low quality of Indonesian tea amid abundant supply of tea in the market that is produced both from new debutant countries and productivity increases from old producers.

The vicious circle: eggs and chicken

In the midst of a weakening world economy, running a company is not an easy matter, especially if it relies on unpopular commodities such as tea. The low price of the product and on the other hand the ever-rising cost with its own character becomes an irrefutable reason and within certain limits makes the manager of the company can lose its orientation in doing business.

Often we use the analogy of eggs and chickens to represent quality problems on the one hand and price on the other. Manufacturers is responsible for quality and the buyer is responsible for the price. But in fact the market has its own rules especially if the plantation products are still characterized by bulk and become common product (commodity) then the market is the price determinant. Under these circumstances, corporate leaders' decisions take on a very essential role whether to take a position as a productive chicken or wait for a price verdict on the eggs produced. Often people say that tea is a tea, each of which has its own market quality. An important key for decision makers is the belief in the advantages and disadvantages of the company.

Paradigm and Shackles Stigma in Tea Agribusiness

In the plantation business paradigm, there is a lot of stigma about products, processes, buyers and markets formed by the assumptions used in its time. But over time, the existing paradigm has begun to shift because the assumptions used in the past can not be used anymore. The demand-supply balance is changing, user and consumer preferences are changing, positions against competitors is changing, cost structure and cost control change, even climate change.

Tea as long managed properly, both in terms of production, marketing, and product development is still profitable. Manufacturers must be open with changes not to be shackled by old stigmas about grading, buyer preferences, quality and so on. People used to drink tea by brewing, now the consumption of teabags grows extraordinary and clear grade is used as ingredients of brewed tea and different teabags. Examples of such facts can be withdrawn as a reference in the determination of production policies. Do not get stuck on the stigmatization of grade while at the same time the user preference is ignored. Manufacturers can adjust demandable tea quality specifications into grades that may be made more cost-efficient, thus turnover is high and business can continue to grow. This does not mean we sacrifice good quality, we are able to produce good quality but look first what the market needs.

The triumph of tea agribusiness is not as good as in the past, but this condition suggests both challenge and opportunity. What should be well understood first is what exactly is the indicator of glory in question? What is the productivity, the area of the area? quality ?, selling price, or what ?. Sometimes we find statistical data and interpret it superficially. We see the results of tea auction in the KPB then compared with the results of tea auction other countries, and then concluded the price of Indonesian tea is lower. We see the quality of Indonesian tea products and compared to Sri Lankan tea production, for example, and generally it can be concluded that the quality of Sri Lankan tea is better. This means that tea is good quality is also good, but in fact the price is not everything, the sustainability of the tea plantation business is also heavily influenced by the cost of production. Good tea is made with good raw material quality and the right process, good raw material picking contains limited quantity consequences and this could potentially increase production costs. Good tea is made with good raw material quality and the right process, good raw material picking contains limited quantity consequences and this could potentially increase production costs. Have we ever compared our production costs with other state manufacturers ?, how is their cost structure? do we also know whether they are actually a profit or loss ?, and many more things. Make no mistake! their prices are high, their quality is good but their production cost is also high, so is their profit also good ?. If these questions can be answered we may be carried on the more precise reason to be in what way tea agribusiness in Indonesia should be managed. Not to mention the commodity development policy (including the tea) which has been fully based on the internal policies of individual plantation companies rather than national entities representing tea agribusiness in Indonesia. If we imagine how the existing tea garden was built along with all the facilities in its time it will imagine how hard the effort is done and how big the constraints faced that could be much heavier than the obstacles that we now face. Every business activity in different time periods will face different problems. We must see it thoroughly.


The choices tea planters take in Indonesia are now not entirely wrong, the business is attractive if there are benefits and quality improvements can be achieved if everything works well. If sales are not good and companies are not profitable, then there is certainly no room to think about improving quality. That's the normative logic, but if the company's leaders make a bold breakthrough by making a decision to invest in quality improvement and on the other hand have a clear marketing policy, then this investment will in time provide satisfactory results and make the company has a good competitiveness.

Not all companies that produce good quality products make good profits. Strategy of mastery of certain market segment become the key. Business decisions do not apply all the time, every now and then we have to think it's better to be king in the middle segment than just being a complement in the top segment, while continuing to be a key player in the top market segment. This decision requires management to take control of the company in all lines from production to marketing. The thing that often happens is that production is controlled by the company while marketing is controlled by the other party. Consequently management loses its 'magnitude' to its products and is not in the best position to make quick decisions to survive or make changes.

Another case if the company took a policy to produce premium products. Keep in mind that premium tea and bulk (common tea) products are produced from the same plant, grown from the same garden, which is treated in the same way, but becomes different when behind the processing there is a different scenario or will to show what called 'tea'. The will is also able to change the producer's position from 'price taker' to 'price maker' and by itself the producer will have chance to dominate in the segment which is created from a strong and specific will.

It is clear here that the company's ability to ensure revenue is key and this is gained through the right marketing strategy. Thus, the upstream production activities will find the reason also appropriate.

Experience of PT. Pagilaran

Pagilaran is a plantation company based on two unpopular commodities namely tea and cocoa. By the end of 2005, the company had been convicted failed, due to various things and almost closed, following the increase in fuel prices that exceeded 100% at the time.But the company was finally able to bounce back without an injection of funds at all and rely solely on business reform and resource management. The company is reforming most of the stigma about tea grading, the market, buyer preferences and SOPs at the garden level and so on. The result in a short time this company can bounce back and even growing and able to invest gradually toward PT. New standalone pagilaran.

The company is now also actively raising the prestige of tea through various cultural events, scientific, health, and social community. Through Yogyakarta Tea Talk in 2012 with the tea masters from various parts of the world echoed the issue of 'Premium Tea vs. Common Tea'. In 2014, along with tea business practitioners in various lines, it is advised that tea prices should not be cheap, for the sake of business continuity upstream of tea agribusiness.


Gb 1. Ritual minum teh bersama tea masters dan keluarga Kerajaan Yogyakarta

Referring to this experience, it is strongly believed that tea can not always be scapegoated as the cause of corporate losses, and in time the better price will belong to the producers following an investment decision that successfully improves the quality of Indonesian tea that wins the competition in the market in the selected segment.

Prospects of Tea Agribusiness and Forward

The prospect of tea agribusiness is still good if the business actors in all segments put their business in the right line, because we have extraordinary resources. People often read statistics about tea without knowing the reason behind the emergence of these numbers and finally frustrated themselves. Some companies in Indonesia have experienced very difficult times over the years because they are stuck on the stigma about the market, the quality and perspectives of ingrained tea commodities to the production sector. While at the same time the company began to lose control of wages, the prices of means of production.

In the past the tea plantations were managed because the company has gardens and factories, buyers dictate about quality and plantation companies are happy to be able to produce good tea no matter how the production cost of the whole production, sold 40-50% of its production already, the company profit because most the cost group is controlled by the company. Now the conditions are different, wages are controlled by the government, fertilizer is no longer subsidized, BBM market price, so entrepreneurs must be smart to play utilize and manage resources so that the company can still survive and even grow.

What matters is how do we manage the resources of this great natural resource with good management and trading so the prospects of tea and other plantation commodities will remain good. The role of the government is very important here to protect its citizens in running their business and keep their position in the eyes of most overseas buyers, since most black tea products are marketed in the export market.

In the future there will be a change in demand and supply equilibrium, changes in the share of supply and interesting is the growth of both export and domestic demand. From notes taken from various media surveys shows the high growth of domestic market demand for processed tea products.

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