Issue link: https://read.dmtmag.com/i/831276
STiR coffee and tea 49 Leading Producers 2016 Production totaled 5,462,718 metric tons Increasing disposable income in most developing nations is contributing to a wider intake of tea consumption, writes Peiris. "When one looks at markets where further volume growth is bound to take place, they are China, India, the Middle East, Pakistan & Afghanistan, Bangladesh, Taiwan, Morocco, Sudan, Kazakhstan, Ukraine, the US, and Malaysia," he said. Consumption "As much as we take interest in individual countries, it is global availability that kicks the market forces into action," observes Peiris. 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 China India Sri Lanka Japan Indonesia Turkey Vietnam Kenya Argentina 2,350,000 1,239,190 77,000 125,500 253,312 165,000 474,808 84,000 292,362 Tonnes Whether China produces more for internal use, or Kenya wishes to produce more for export, "this increasing availability keeps the global prices at modest levels since the price in Kenya tends to be the yardstick for both cut, tear, and curl (CTC) and orthodox (loose leaf) though they could very well be higher or lower," he said. "Prices, worldwide tend to be higher in Sri Lanka, where they are driven by labor costs, and lower in Vietnam in line with quality," he said. "If Kenya continues at the pace they have, there will be lots of tea, which will accelerate the shift to CTC from orthodox in most markets, probably at lower prices, making other suppliers simply niche players," he said. Forecast Forecasts should be taken with a grain of salt, observes Peiris. Weather, political instability, economic doldrums all contribute to uncertainty. Last spring, the weather in China was unusually cold, the coldest recorded in several decades. This year the har- vest was delayed by the late onset of warmer weather. The Economist projects an unusual downturn: "We expect global tea production to contract in 2017, by 2.7% year on year, for the first time since our data series began in 2000." The estimate is based on gloomy weather in countries where 35% of tea is grown, along with reduced profits for farmers due to increase costs for inputs such as fertilizer leading to less investment. The latter can be blamed on the fact that so many of the world's currencies are expected to remain weak against the U.S. dollar.