Tea producers mull key changes to stem falling prices and demand

Tea-producing countries have proposed new regulations similar to those that dictate oil prices in the wake of low prices of the green leaf in the international market.

Leading tea producers in Africa, including Kenya, and Asia attribute the low prices to overproduction, which they insist should be controlled to ensure better returns and maintain quality. 

Member countries, who met in Dubai recently to discuss the progress of the sector, also noted how climate change has affected the quality of green leaf, leading to low prices

At the forum, participants proposed limiting tea production in certain seasons or months of the year as the Organisation of Petroleum Exporting Countries (Opec) does to regulate prices. 

They also agreed that more efforts should be made towards specialised tea like purple tea.

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He said in the past five years, tea production has increased rapidly in the country. 

“Whatever we produce is consumed locally, but prices have gone down,” he said. 

Indian Tea Association Chairman Hemant Bangur said the global tea industry is facing a demand and supply mismatch as production continues to outpace demand with demand in the traditional tea-consuming nations of Europe and Asia stagnating. 

“However, one crucial and significant population group remains unpenetrated. Africa with its growing population and rising income provides a favourable ground for the introduction of the world’s healthiest beverage with a potential to become one of the largest markets of black tea,” said Mr Bangur.

EATTA boss Mr Sewe noted that the sector in the region is currently facing a decline in tea quality and high production volumes that require concerted efforts in addressing climate change and farmers’ concerns.

“The increasing impact of climate change is partly to blame for the declining tea quality as it is adversely affecting the tea sector globally,” he said.

This was echoed by the Malawian Tea Association Chairman Sangawani Hara. 

He said there is an urgent need to stop farmers from uprooting tea, a habit he noted may progressively cause the decline of tea globally.

“Climate change is a big problem that must be addressed to sustain the level of tea productivity,” said Mr Hara.

While debunking the long-held perception that African markets do not take tea due to the imbalance in the amount produced and exported, Mr Sewe said the habit of consuming tea must be inculcated from a younger age as an aspirational drink among the youth as a way of increasing demand. 

“African adolescents and youth can potentially be targeted by offering this healthy, stimulating beverage as the centrepiece of social interaction similar to South Asia and China,” he said. 

He said the African Continental Free Trade Agreement (AfCFTA) protocol is another opportunity to boost this demand as a way of reducing overreliance on traditional export markets. 

“Africa should consider sustaining quality drive, reducing pruning cycles, increasing tea consumption and regulating new tea plantations,” reads a statement from EATTA on the meeting’s deliberations. 

Global oversupply, it adds, is a phenomenon, which creates a mismatch in the demand-supply equilibrium and adversely impacts prices. 

Tea prices across all black tea auction centres have stagnated over the last few years as well. 

“Due to large-scale expansion of tea growing areas in the last decade, global tea production has increased from 5.228 billion kilograms in 2014 to 6.603 billion kilograms in 2023, an increase of 26.30 per cent,” said EATTA.

Consumption levels, on the other hand, have not kept pace with the production growth, and there was an apparent oversupply of 391 million kilograms in 2023 as per the International Tea Committee Bulletin.

“Concerted efforts and strategies to correct the mismatch between production and consumption and demand should be implemented by tea-producing countries as a price stabilisation mechanism for the sustainability of the tea sector,” says the lobby. 

Conflicts in the Red Sea and the Gulf of Aden are also said to have exacerbated tea buying and export challenges due to increases in logistics costs and shipping disruption, thereby diminishing the producers’ returns, hence affecting millions of smallholder tea farmers’ households.

“Adoption of climate resilient adaptation strategies in the tea producing countries to mitigate the negative impacts of climate change in the tea sector is crucial for the long-term viability of the tea sector,” said EATTA.