Tea- The Current Situation
World tea production in the last
decade has grown at an yearly rate of 1.81 percent until 1999
and consumption has kept pace at a slightly higher growth rate
of 2.05 percent per annum. However global consumption has
consistently been significantly less than production.
World tea production has been
dominated by India where output peaked at over 870000 tonnes in
1998. The second largest producer is China with its highest
output also recorded in 1998 when its production reached 665000
tonnes. Kenya follows at a distant third at 294200 tonnes, and
Sri Lanka at 280100 tonnes. Indonesia, Argentina and Bangladesh
follows as fifth, sixth and seventh respectively.
Preliminary estimates available
to FAO indicate that world tea production in 1999 declined down
from a record 1998 output of nearly 3 mn tonnes to 3.7 mn tonnes.
Smaller crops were harvested in all major producing countries,
except China and Sri Lanka, as unfavorable weather affected
yields in Bangladesh, Indonesia and Kenya.
Draught from January to May 1999
in Bangladesh followed by heavy rains and flooding from June to
August' 1999, resulted in an 18% decline in production. In India,
a severe draught in the North Eastern state of Assam, main tea
growing region, accounted for a 7% decline in output and in
Indonesia, adverse weather coupled with political uncertainties early in the year contributed to 8% reduction. In kenya, after a
record expansion in output of more than 33% in 1998. Cold
weather in tea growing areas reduced harvests in 1999 by more
than 15%. Production in Malawi and Tanzania declined by 5% each,
while output in China, Argentina and Japan remained at similar
levels in 1998. Unfavorable weather and lower grower prices in
Sri Lanka contributed to a reduction in harvests in that country
in the first eight months of 1999. However, higher prices lead
to a production boost in the final quarter of the year. Pruning carried out during the period of lower prices by small holders
enhanced yields and output increased by just over one percent.
World tea exports have grown by
almost two percent over the last decade. Sri Lanka is the
largest exporter followed by Kenya, China and India as second,
third and fourth respectively. World export data available
to FAO covers trade to the end of 1998. In that year global
exports expanded by more than 7%, compared to 1997, to reach
1.27 mn tonnes. The increase mainly reflected a 32% price in
shipments from kenys, where exports reached a record level for
that conuntry of 263000 tonnes. Sri Lanka shipped a record
265000 tonnes in 1998, 3% more thn inn 1997, exports in Chine
recoverd in thesde markets in 1998. Exports from India in 1998
sustaines a significant export volumes previously in 1997.
World imports grew yearly at 1.2%
over the lasdt decade. United kingdom was the largest Importer
until 1997 and the CIS surpassed its imports. Pakistan is the
third largest importing country followed by the United States,
Egypt and Japan.
In 1998, world tea impose rose by
2.4 percent compared to volumes in 1997, with most of the growth
occurring in developing countries, mainly Pakistan where the
demand expanded by 28%. Significant growth was also experienced
in the United States, as imports expanded by 19%in1998,
potential attributable to the impact of consumer promotion of
the health benefits of tea consumption in that country. However
the expansion was not sufficient to offset declines in other
developed countries, such as the 4% decline in the EC and 5%
percent in the Russian Federation. A marked trend in recent
years has been the shift in demand towards the import of quality
teas, not only in mature markets such as the Unite Kingdom and
the Russian Federation, but also in the rst of the Europe and
The price of bulk tea generally
declined in al; auction markets in the first half of 1999. due
to forecast larger crops in major producing countries and weaker
demand in the Russian Federation. However, prices recovered as
revised production estimates indicated lower harvests. The FAO
composite price trend for tea ( a weighted average price of tea
traded in major auction markets of Kenya, India, Sri Lanka)
indicated a sustained price decline in the first half of 1999,
from an average of US 166 cents to US 161 cents per kg. However,
in the third quarter prices recovered by 11 percent to US 178
cents per kg. Prices further improved in the fourth quarter and
averages US 183 cents per kg up 3% from previous quarter.
Medium Term Developments
efforts at improving prices were production oriented, and focused
mainly on reducing the cost of production and in creasing
yields. But the more attention was needed at a market place
where demand had remained sluggish or had shown declining trend
in some traditional markets. This led shifted the focus on
increasing demand through Research on Health benefits of Black
One of the
most tangible and immediate benefits of this approach has been
the creation of the "Tea Mark".
release of some of the positive findings have begun to stimulte
consumption in several market, notably in North America. These
developments have also been taken into account when revising its
projection which are as follows.
black tea production is prepared to reach 3.1 mn tonnes by 2005,
an annual average growth rate of 3 percent from the 1993-95 base
period. Production in India is estimated at 1.15 mn tonnees in
2005. Nost of the envisaged increase in Sri Lanka should result
from recent economic reforms and the national plan for tea
production expansion. Production by 2005 is projected to reach
300000 tonnes. China and Indonesia would increase black tea
production180000 tonnes and 105100 tonnes to 280000 tonnes
and 180000 tonns respectively. Output of tea in Bangladesh would
grow to about 60000 tonnes in 2005. And in Africxan countries,
increase in plantation area as well as productivity are likely
to support the growth in production.]
black tea consumption is projected to increase by 3% pr annum to
3.0 million tonnes by 2005, with developing countries accounting
for the largest part of the perspective increase. Consumption in
these countries would reach 2.15 mn tonnes by 2005, an annual
growth rate of more than 3 percent.
tea consumption in India is expected to reach 820000 tonnes by
2005. In other major markets for black tea such as Pakistan,
Iran and Egypt, consumption is expected to reach 170000 tonnes,
130000 tonnes, and 100000 tonnes respectively by 2005. The
reduction in import tariffs and declining prices could have a
more pronounced effect on the consumption in these countries.
developed countries including countries in transition, black tea
consumption would increase more moderately to 850000 tonnes in
2005.Consumption in European Community is projected to increase
only slightly in th next decade since higher purchases by
France, Italy, Germany and the Netherlands would be
counterbalanced by a continuing decline in the United Kingdom.
Silmilarly consumption in the United State of America is
projected to increase at a relatively low rate of less than one
percent., while in the CIS a stronger growth consumption rate of
nearly 5 percent is projected to increase consumption to 250000
tonnes in 2005.
requirements at 2005 are projected at 1.55 mn tonnes, an average
annual increase of 3.6 percent from the base period average.
Import requirements by developed countries is projected to
increase to 700000 tonnes. Major importers would be the CIS,
Pakistan, the United Kingdom, the United States and Egypt which
would account for 51 percent of total import requirements.
availabilities are projected to reach 1.6 million tonnes in
2005, an average annual increase of 3.8 percent from the actual
exports during the base period. China, India, Indonesia, Sri
Lanka and Kenya are expected to account for 78% of the total
projected export availabilities. The balance would largely be
sourced from Bangladesh, Malawi, Tanzania, Turkey and Zimbabwe,
where export availabilities are expected to increase
significantly over the medium term.