Story of Change

Premium Paninggaran Tea: The Journey to the Top

Author: Shinta Maharani / Andhiani Manik Kumalasari / Paulus Enggal Sulaksono
Published: 09/06/2022

The lovely aroma of premium green tea, a signature of Paninggaran mountains area, wafted from the processing area. Retnowati, together with a worker, were meticulously picking out the stalks from the tea leaves that just came out of the two processing machines owned by Koperasi Paninggaran Berdikari Makmur (KPBM) in Paninggaran Village, Pekalongan District, Central Java.

The Tea picker income increases after Market Linkage intervention

KPBM cooperative was established by a tea farmers association in 2016 with the support of Pekalongan District Government, which supplied the cooperative with tea processing machines. The cooperative markets the tea under the label Parama Premium.

Warniti, a manager in KPBM, said that the cooperative helps the farmers to obtain a better selling price for their tea. In the past, the farmers sold low-grade tea leaves in wet condition at Rp2,100 per kg to middlemen. Since the establishment of the cooperative, they have been able to sell the tea leaves at Rp2,500 per kg to be processed into green tea. The adoption of Market Linkages model by KPBM provided a learning opportunity for the farmers to increase the quality of their tea, which in turn would further boost the selling price. The cooperative now purchases premium tea from the farmers at Rp5,000 per kg, while specialty tea is priced at Rp10,000 per kg.

Besides the farmers, the tea pickers are also enjoying the benefit of the Market Linkages model. They can now earn Rp1,500 per kg for premium-grade tea leaves and Rp3,000 per kg for specialty-grade tea leaves, a whopping increase from Rp900 per kg for low-grade tea leaves. The tea pickers could pick around 30–50 kg of tea leaves a day, depending on the size of area and the distance to the plantation from their homes.

Market Linkages is an approach model that drives the productivity and market access for Micro and Small Enterprises (MSE) by involving local governments and MSE actors to review market opportunities and design promising business models together.

In 2019, the Pekalongan District Government, supported by KOMPAK, initiated Market Linkages model for Paninggaran Tea SME actors through Koperasi Paninggaran Berdikari Makmur (KPBM). The Pekalongan District Government facilitated KPBM in applying for aid from the government, banking, and private sectors. As a result, KPBM successfully acquired aid in the form of tea processing machines and business training. These enabled KPBM to produce better quality green tea in greater quantity.

The Market Linkages model also helped connect the farmers and KPBM with an offtaker, namely PT Citra Kencana Cemerlang, which boasts Havilla Tea as one of its premium products. This partnership was able to triple the cooperative’s tea production. In addition to purchasing the tea produced by KPBM, PT Citra Kencana Cemerlang also partnered with Research Institute for Tea and Cinchona (RITC) to provide training on business planning, plantation governance, and tea packaging. According to Warniti, who also serves as tea picking coordinator, as many as 15 farmers and tea pickers had attended these trainings

The training from PT Citra Kencana Cemerlang taught Retnowati many aspects of tea

Warniti explained that in regard of plantation governance, experts from RITC gave the participants knowledge of pruning, weeding, pest eradication, picking, and drying techniques. To produce fresh tea leaves, pickers should use their hands instead of knife. The handpicking technique is one of the things that distinguish premium tea from standard-quality tea. Furthermore, pickers must also avoid placing tea leaves carelessly or piling them up. “The picked leaves should not be exposed directly to sunlight. To prevent them from spoiling, the tea leaves have to be placed under the shrubs,” said Warniti.

Before attending the training from PT Citra Kencana Cemerlang, Retnowati, a cooperative manager, said that the cooperative members—including herself—did not know how to brew tea properly. She revealed that previously, they just brewed the tea leaves without paying attention to temperature and water ratio. As a result, the tea tasted bitter and dry on the throat.

The training from PT Citra Kencana Cemerlang taught Warniti and Retnowati many aspects of tea. In addition to good brewing technique, they also learned how to acquire a strong tea flavor that feels gentle on the throat. Besides RITC, PT Citra Kencana Cemerlang also partnered with KYUB Studio to provide training on product packaging, rebranding of Teh Parama Paninggaran into “The Parama – Traveling Tea”, and marketing techniques which includes online marketing through e-commerce platform.

The story begins from a piece of history that has now become a fact. It’s about how Paninggaran tea is processed into a top quality commodity that can travel worldwide

Andre Lionsong, Co-founder & Creative Director, KYUB Studio

According to Andre Lionsong, Co-founder & Creative Director of KYUB Studio, the journey of Paninggaran tea is the key message that Parama wishes to identify itself with as a premium tea brand. “The story begins from a piece of history that has now become a fact. It’s about how Paninggaran tea is processed into a top quality commodity that can travel worldwide,” he explained. Andre added that in addition to the story of Paninggaran tea, packaging is an equally important selling point as products compete not only in quality, but also packaging. Packaging adds value to a product as a differentiator as well as a promotional tool. “Hopefully, our efforts will result in Teh Parama being enjoyed by tea enthusiasts in Indonesia and all over the world, and the benefits will go full circle to improve the welfare of the farmers—particularly the female farmers—in Paninggaran," said Andre.

Hurip Budi Riyantini, Head of Industry, Commerce, Cooperative, and MSME Agency of Pekalongan District, supported MSE and other farmers groups who process and market their tea independently through cooperative. That way, tea could be priced higher and farmers would not be taken advantage of by middlemen. Moreover, by establishing farmers association and cooperative, they would also have more bargaining power against factories. According to Hurip, the Market Linkages model is crucial for the development of tea farmers in Paninggaran, because they can now attend various trainings suitable to their needs. Meanwhile, the District Government assisted by providing tea processing machines. “Without the collaboration with KOMPAK, it would have been impossible for the farmers to develop this far,” Hurip pointed out.

Yulian Akbar, Head of Pekalongan Regional Development Planning Agency, warmly welcomed the partnership between the District Government and KOMPAK. The role of KOMPAK, which acted as intermediary between the farmers and PT Citra Kencana Cemerlang, was crucial in creating the opportunity for the development of the commodity. Akbar also hoped that one day Paninggaran can be a tea tourism destination. Aside from buying and drinking tea, visitors could go on a tour to learn about the story and history of Paninggaran tea. “In other words, it can be developed into a tour package,” Akbar explained. Warniti was grateful that the selling price of green tea in the cooperative has improved since the adoption of Market Linkages. Currently, she, along with 32 other members of the cooperative, are enjoying the benefits of the model. She hoped that the cooperative that she run together with the other managers can continue to grow and improve in terms of its management, especially from the human capital side. “Hopefully, the tea farmers can be more prosperous,” she concluded

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