A report from the FAO predicts that export markets for green tea will grow faster than export markets for black tea in the next ten years and that ‘markets in major importing countries are unlikely to expand further’, given their current saturation level. ‘World black tea exports are projected to grow by 1.8% between now and 2019. Green tea exports are expected to grow as much as 5.5% per year.’ The FAO Composite Price for tea ‘increased by 13% in 2009, pushing prices to record levels last year,’ contributing to ‘a 7% increase in export earnings at the global level.’ This was a result of ‘drought in some of the major tea-producing regions of Asia and Africa’. Prices however have now stabilised.

According to the FAO, Kenya is the world’s second largest tea exporter behind China, ahead of Sri Lanka and India. In Kenya, ‘receipts from tea cover the country’s entire food import bill’, accounting for 35% of total agricultural export receipts, according to FAO. Commodafrica noted that the price for Kenyan tea was up 30% for the first semester of 2010, following the droughts of the previous two years.

The supply of black tea is expected to be in equilibrium by 2019, with this promoting ‘relatively stable prices at slightly higher than the average over the past decade.’ In terms of consumption trends, it was suggested at the 19th session of the intergovernmental group on tea in May 2010 that the global tea industry ‘seemed to be currently in a very good position and poised for a period of unprecedented growth as a result of: health benefits; consumer relevance; natural image; fighter of obesity; and exotic appeal.’ However concerns over pesticide residues needed to be continually addressed, if these good prospects were not to be blighted.

The Nouvelle presse du thé, according to Commodafrica, notes that France now has ‘a mature and high-quality’ market for tea. French tea imports, while still low compared to coffee, have increased threefold over the last 25 years, with the emphasis now on factors such as traceability, employee working conditions on plantations and sustainability, as well as production from specific regions.

A recent press release by the FAO shows that in 2009, prices for black tea reached record levels, peaking at US$3.18/kg in September 2009, compared to US$2.38/kg in 2008 (+33.6%). These high prices come after a four-year period when growth in consumption outpaced growth in production. While the economic downturn did little to dampen tea consumption, there are fears that these high prices could over-stimulate production and lead to a supply-and-demand imbalance, with prices falling back in 2010, on the back of recovery in production in areas adversely affected by weather events.

FAO is suggesting that in the coming ten years the expansion of tea production could substantially exceed growth in consumption, with the current situation of market balance being transformed into one of growing surplus production. This could serve both to depress prices and reduce ‘returns to producers in developing countries’. In this context increasing attention is being paid to ‘expanding consumption in producing countries’ and getting to grips with the challenge of establishing quality standards. According to the FAO ‘better quality should increase demand while preventing low-quality tea from being traded should curtail the over-supply situation in the world tea market.

According to FAO reports tea prices are expected to remain strong in 2008 despite rising production. In 2006 tea production grew by 3%, reaching 3.6 million tonnes, while consumption grew by 1% to 3.64 million tonnes., but tea prices rose by 6.5% in US dollar terms in 2007. Up to 2017 the FAO projects annual production growth of 1.9% for black tea and 4.5% for green tea. An oversupply of 300,000 tonnes of black tea is anticipated with a danger of even higher levels if supply over-reacts to current high prices. The FAO has called for strategies to improve demand, including using quality standards to segment the world tea markets. Imposing minimum quality standards ‘would by default reduce the quantity of tea in the world market and improve prices, at least in the short to medium terms’.