STiR coffee and tea magazine

28 STiR coffee and tea / Issue 2, 2020 (April / May) green tea. The limited range of teas on the market are mostly blends, with chamomile or citrus extract, for exam- ple. To boggle the mind and perhaps rock the boat of tea traditionalists, a popular version is avocado bubble tea. Mombasa Tea Auction: Premiumization at Last The first Mombasa tea auction of 2020 saw the first-ever sale of a Kenya premium orthodox tea. This marks a significant step in the national industry's priority to escape the commodity trap of intensifying global competition in the CTC black tea market that is also marked by falling prices, rising costs, and overcapacity. The sale was a specialty brand from Empire Kenya EPZ Ltd., auctioned for shipment to Sri Lanka. The package distinguished it from the standard bulk teas, showing the "Big Five" wild animals associated with Kenya and aimed at helping promote tourism in Kenya. The price is not available from public reports, but a survey published in late 2017 showed that some green and purple teas were selling for $15.00-300.00 a kilogram. Orthodox black teas are at a market premium of 20% or more. The success of purple tea has been a signal of the need for premiumization. In early 2020, Rwanda CTC black tea commanded a price of $3.18 a kilogram. Kenya's sold for $2.23 a kilo. Since 2017, purple tea has commanded a price that is seven times the black tea average. (The high startup investments and processing costs have offset some of this advantage.) Around 60% of the tea shipped from Mombasa is black fannings, 12% dust (the lowest grade), and around 12% is broken-leaf. The main buyers at the auctions are Pakistan, Egypt, and the UK. Growth in Pakistan is flat on long-term trends. Exports to Egypt fell 15% in 2017. Since 2012, UK purchases have been down, while that of Rwanda tea has increased 21%. There's just no future in low end fannings and broken-leaf black tea. The new premium teas have largely been sold direct, bypassing the auction. Milima Estate black tea, for example, is an outstanding specialty product, sold by Harney. Kenya is at a market disadvan- tage due to the lack of international agreements in Africa to ease the many Northern California jury awarding damages for $2 billion to a couple who had used the pesticide. While that was reduced to $87 million, there are now thousands of cases against Roundup, mostly in the US. Estimates are as high as 40,000 in total. While EPA declared Roundup as "safe," public opinion has been strongly against Monsanto, for fears of the unknown risks and its poor public relations, lack of control of the diffusion of GMO and Roundup crops across the envi- ronment, and its often ruthless prosecu- tion of farmers for violating its strict contract rules. Whether those are fair criticisms or ungrounded anti-science is a matter for the courts. In late February, Bayer switched its strategy from being expected to settle a major suit for $10 billion to a position that they're not ready and will consider options. Glyphosate is widely used in many tea growing nations. When it was banned in Sri Lanka, the industry was crippled by weed-choked fields and resulting crop losses. Imposed in 2015, the ban was lifted in 2018. In India, there are around 70 competing brands. It seems fairly certain that there will be no resolution of the Roundup debate anytime soon. That means more courts cases and legislative and regulatory moves to restrict or ban it. In the other direction, there will be increases in demand, and climate change may well accelerate that growth, as insects and weeds get out of control through shifts in precipitation patterns and extremes of rain and drought. Kenya Mombasa tea auction Roundup: a commonly used agro- chemical taxes and tariffs. For example, there is a 15% tax on packaged teas imposed by major export customer nations. The role of the Mombasa Auction in premiumization is unclear; the major target of opportunity is the US market. The managing director of the East Africa Tea Traders Association, Edward Mudibo, highlighted how the high ranking of Kenya teas is undercut by the reliance on middlemen and the repack- aging by different countries, losing the brand identity. He argues that auctioning premium teas at Mombasa will be an asset in attracting US buyers. He says, "At the moment, companies trading orthodox tea sell direct to markets abroad since the volumes to auction on a weekly basis have not reached the required threshold, but we are holding talks to set required standards even as we encourage more suppliers to maintain consistency in supply." Bayer Acquisition of Monsanto Bayer, the German conglomerate, acquired the Monsanto in 2018, for $63-66 billion (reported figures vary). The Monsanto name disappeared, along with its association with GMO crops (genetically modified organisms) and the glyphosate-based pesticide, Roundup. Glyphosate sales continue to grow, and Bayer is building production capacity and sales and marketing synergies in India, whose agrochemical market is expected to double by 2025. Bayer has a strong product portfolio in crop sciences: seeds, protection, nutrient supplements, mosquito control, and soil health. Monsanto adds r&d skills, digital farming, and production capacity.And Roundup. Within a few months of the merger, Bayer lost almost 30% of its market capitalization as a direct result of a

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