STiR coffee and tea magazine

STiR coffee and tea 43 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: World Bank / Universal Commodities (Tea) Trading Inc. 1750 1650 1550 1450 1350 1250 1150 Total tea available for international Trade 3 year rolling average Black Tea - International Traded Availability (2005-2023) '000 tonnes Tea warehouses in Mombasa, Kenya are overflowing with unsold tea. Country Trade Value ($000) Quantity (kgs) Kenya 1,300,349 545,574,000 Sri Lanka 619,284 135,669,000 India 596,686 204,187,000 China 337,367 44,270,700 Argentina 70,624 61,424,600 Malawi 70,318 45,016,900 $2,994,628 1,036,142,200 Top Black Tea Producers-Exporters (2023) Source: World Bank | WITS | 090240 Fermented and Partly Fermented 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 '000 tonnes Source: World Bank / Universal Commodities (Tea) Trading Inc. 500 400 300 200 100 0 Black Tea - Major Producer-Exporters (2004-2023) Kenya Ceylon Others India exports Other Africa Tea retained Malawi China Black exp Note growth of Kenya exports and "Tea retained" (tea held at origin net of consumption). Amount of tea produced available for export. An Unwanted Surplus of Aging Tea March data from the Africa Tea Brokers (ATB) showed that nearly 60% of tea remained unsold. Only 42 million kilos of the 72 million kilos on offer left the auction warehouse complex in Mombasa, which is now bulging with a surplus. In March 2022, teas from Kenya, Uganda, Rwanda, Madagascar, Tanzania, and Burundi were already piling up. The volume of individual sales before week 12 in 2024 averaged 20 million kilos at prices well below the government minimum of $2.43 per kilo. The price floor for Kenya Tea Development Agency (KTDA) set in July 2021 failed as the threshold was rarely achieved. Sellers are permitted to catalog tea for auction twice, two weeks apart. If the tea remains unsold, it is viewed as poor qual- ity and heavily discounted. An estimated 237 million kilos of tea delivered to the Mom- basa auction in 2023 were unsold. Prices recently improved to $3.41 per kilo (Sh 443), but the Tea Board of Kenya (TBK) reports that the tea's absorption rate has declined from 84% in 2021 to 76% in 2022 before falling to 60% in 2023. The average price paid at auction in 2023 was $2.24 per kilo, down from an average of $2.49 per kilo in 2022, according to KTDA. Price controls are to blame, acknowledged the government officials who lamented the unintended consequences. Kenya's principal secretary of investments said the government intends to lift the minimum. "We do have a crisis," said Flora Mutahi, founder and CEO of Melvin Marsh International. The glut has worsened, and prices are down. Right now, we are suffering," she said. Jem McDowall, Vice President at Universal (Tea) Commod- ities in Bronxville, NY, writes that tea prices won't swing back until supply stops being force-fed. "There are occasional price blips when supply is threatened, but these quickly correct themselves." The best Kenyan tea sold for $3.50 to $4 per kilo in 2012. There are now floor prices significantly below that level and more than 200,000 tonnes of unsold inventory. "This is entirely thanks to yield and productivity policies for the last 15 years," he explains. These policies predictably torpe- doed the global market price structure. The ONLY reason tea isn't selling at even lower prices is the producer's cost of pro- duction and their resistance to trying to keep their heads above water, he said. Customers Perceive Tea as Low-Priced Grocers eagerly stock tea. It's a staple comparable in popularity to bread, milk, eggs, coffee, and cheese. In developed countries, 80% of tea is sold in supermarkets, where fierce competition and steady innovation keep a lid on tea prices. Grocers chafe when accused of forcing down prices, denying growers their due. The truth is that specialty and fine- grade tea in tins, tea bags, and sachets generate high turnover in sales at good margins.

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