New ideas to boost world tea market

(FAO) Just like for other tropical products, the world tea market has seen a tendency for increasing supplies to run ahead of demand growth, depressing prices and returns to producers in developing countries.

As different attempts to control supplies over the years proved ineffective, tea market experts have switched their attention to demand and especially how to boost demand in producing countries where per capita tea consumption is low, according to an FAO Report prepared for the Intergovernmental Group on Tea meeting in Hangzhou, China.

World tea production continued to grow in 2006. The annual growth rate was more than 3 per cent to reach an estimated 3.6 million tonnes. The expansion was mainly due to record crops in China, Viet Nam and India.

The very latest figures put world black tea production at 2.5 million tonnes as compared to 968 000 tonnes for green tea.

FAO projections to 2017 indicate that world green tea production is expected to grow at a considerably faster rate than black tea, 4.5 per cent annually compared to 1.9 per cent for black tea. The projections reflect the growth in China where the programme for production expansion through rehabilitation, replanting and some conversion is expected to continue to 2017.

The level of world tea consumption in 2006 was roughly equal to production. But its growth rate was only one percent, a slowdown from the annual average of 2.7 per cent growth over the previous decade.

Per capita consumption in the major tea producing countries lags behind, in spite of their strong economic growth. Russians consume 1.26 kg per year and the British 2.2 kg per year but in India tea consumption is only 0.65 kg per head per year and in China it is only 0.53 kg per year.

The report sees an immediate potential for expanding consumption in producing countries with strong economic growth and low per capita consumption of tea and looks at how this might be achieved through quality improvement.

"Expanding consumption in producing countries could ease supply pressure at the world level and improve tea prices in the long run," according to the FAO report. Although tea quality is a complex matter, there is growing international interest in the enforcement of minimum quality standards for tea traded internationally.

Better quality should increase demand while preventing low quality tea from being traded should curtail the oversupply situation in the world tea market, according to the report. The difficulty is to agree on internationally acceptable quality standards.

The judgement of tea quality and assessment of its characteristics and value is generally undertaken by tea tasters who usually base their judgment on a particular requirement. However, such requirements may reflect differing tastes among countries and customers.

Difficulties in defining reference qualities are also compounded by the wide range of producing areas with different cultural, plucking and manufacturing techniques as well as differing impacts of climatic conditions.

At its last meeting in 2006, the Intergovernmental Group on Tea recommended the adoption of ISO 3720 (ISO stands for the International Standards Organization) as the minimum quality standard for black tea entering international trade.

The report examined in Hangzhou this week outlines developments regarding the acceptance of ISO standard 3720 and its application and invites the Group to define follow-up action to gradually extend the application of this standard in international trade.

Countries accounting for about 80 % of exports of black tea have adopted national standards that were either identical to ISO 3720 or slightly different.

The report notes that ISO 3720 applies to black tea only, but work on standards for green tea is also underway.

The Hangzhou meeting will also examine the establishment of a working group to identify potential geographical indications (GIs) for tea. The main features of GIs will be examined and assessed in the context of the existing international regulatory framework.

It is hoped that GIs will help expand tea consumption worldwide.