Tea prices remain strong
27 February 2008
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’.
Editorial comment
There would appear to be questions as to whether the price increases for tea in US dollar terms represent a real increase in disposable income for tea producers, given the declining value of the US dollar and escalating input costs.