**Table 12: Price differentials across bordering districts for selected products, Darjeeling vs. Panchagarh (2010)**

||Diff. (TK)|Consum<br>% diff.|er prices<br>Cons. %<br>in total|Potential<br>gains (%<br>cons.)|Pr<br>Diff. (TK)|oducer pr<br>% diff.|ices<br>Potential<br>savings (%<br>cons.)|
|---|---|---|---|---|---|---|---|
|Rice|17.8|73%|11.0%|8.0%|6.7|27%|3.0%|
|Wheat Whole|16.4|89%|1.5%|1.3%|3.4|19%|0.3%|
|Onion|30.5|93%|0.6%|0.6%|22.7|69%|0.4%|
|Gur|51.6|90%|0.1%|0.0%||||
|Chillies Dry|-2.7|-16%|1.0%|0.2%||||
|Tea Leaf|-7.1|-20%|0.1%|0.01%||||

_Source: Authors’ elaboration based on Government of India’s Labour Bureau, India NSS 2009-10; Bangladesh HIES 2010. Prices are converted using the average Rupee-Taka exchange rate in 2010. Rice is not differentiated by type in the data for Darjeeling; in the case of Bangladesh fine rice is taken for consumers and the average across the varieties for producers. The price differential is computed as the difference between Darjeeling consumer prices and Panchagarh consumer or producer prices as estimated from the HIES. Cons. % in total indicates the share of the product in total households’ expenditures in the more expensive district; potential gains are the potential savings as a share of total households’ expenditures in the expensive district obtained by equalizing the price with that of the cheaper district._

# **5. Cross-border value chains in the tea sector**

Two main types of tea are grown in the region – Chinese variety in the hilly region of Darjeeling and Assamese in the Terai and Dooars region. In addition, the way in which tea is processed varies. In most cases, the hilly “orthodox” tea, which is of higher quality, is hand-processed or rolled using machinery (in a way that mimics hand-rolling). Most Terai tea is machine-processed, through a method called CTC (crush, tear, curl). The tea grown in Jhapa is exclusively CTC, while in Ilam there is also orthodox variety. The dynamics of the industry vary dramatically between the two types, with the high-quality Darjeeling (orthodox) tea recognized as a Geographical Indication (GI).<sup>11</sup> The orthodox tea is auctioned in Kolkata, while tea from the Terai is auctioned at the regional center in Siliguri.

In Darjeeling, the tea industry consists of both big growers (those who cultivate more than 25 acres) and small growers. There are 336 large growers registered and estimates for the number of small growers range between 22,000 and 40,000. Evidence from the field surveys suggests that small growers are the main suppliers in tea trade, with local collectors and traders also accounting for a significant share. The role of cooperatives in the Indian tea sector is negligible.

In Nepal, Jhapa and Ilam dominate the tea industry – in 2010-11, they produced 87% and 10% of the country’s total output, respectively (Government of Nepal, 2012). In Jhapa, major portion of the land area reported for tea cultivation is occupied by gardens, while 84 percent of the tea production comes from small farmers. In Ilam, small farmers constitute the major portion (67.5 percent) of the area for tea cultivation, accounting for about 69% of production. The ranking based on the field survey shows that farmers are the main suppliers of tea produce in Jhapa and Ilam, as was the case in Darjeeling, followed by local collectors and cooperatives. There is no role for traders in Nepal unlike that of India. Tea is a key production for households especially in Jhapa, being responsible for

> 11 Unlike other forms of IP like patents, which are rewards for new creations, GIs are not newly _created_ , but only _recognized_ . There are three inter-related properties of GIs: first, they confer a right to exclude producers from outside the designated geography from using the indication; second, the right to exclusion often attracts a commercial premium; and third, GIs are aimed at protecting consumers and producers from products that convey misleading claims about origin or reputation (Wagle, 2007).

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