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International tea economy to be strained.

The global shortfall in tea production in major producing countries for the first seven or eight months of 1992 is estimated at about 100,000 metric tons (15%) as compared with the corresponding period of 1991. This shortfall cannot be made up during the rest of the year and there may even be a further drop in production. Drought conditions, mainly in Sri Lanka and South India are responsible for this state of affairs.

Sri Lanka's crop to the end of August 1992 dropped by about 56,000 metric tons and South India to the end of July by about 21,000 metric tons, while Kenya reported a loss in crop of about 15,000 metric tons. In spite of reduced production, prices in local currency in producing countries depreciated against the US dollar and sterling. The main reasons were the changes in the USSR, reep, the CIS, Confederation of Independent States.

In the absence of up-to-date production and export figures from China, Turkey and the Former USSR, it is extremely difficult to make a more or less justified guess about world production and exports of black tea in 1992.

China's total crop (including green tea) for 1990 was estimated at 540,000 metric tons of which about 100,000 tons of black tea from the former USSR and Turkey cannot be ignored but are not decisive in the total supply position.

We may assume that India's' output for 1992 will be around 715 metric tons against 740 metric tons in 1991. Usually India exports about 200,000 metric tons, about half of which went to the (former) USSR.

Understandably India will try hard to secure trade agreements for tea exports to the former USSR (CIS). But there seem to be problems in the form of import licenses and payment terms (transferable foreign exchange against delivery of the tea). The position in which the USSR (CIS) finds itself presently, shortage of cash, may lead producing, exporting countries to accept alternative modes of payments such as barter deals, etc, which all the problems attached to such modes.

In the meantime, more tea will be produced. Last year, world crops probably amounted to about 2 .25 million kg of which less than 50% were exported (black tea) from producing countries. And of these, approximately one million kg maximum 20% finds its way to Europe, including the U.K. and Ireland, 8% to the U.S. and Canada and the rest to importing countries in Asia and Africa (Pakistan, Egypt etc.) In the past (1990/1) the USSR absorbed about 20% of world imports, which is more than the U.K. and the rest of the Europe together.

Importing countries in Asia and Africa are now reasonable for about 50% of world import. Last year, there have been dramatic change in East Europe and the former USSR (CIS). Iraq, (usually importing about 40,000 metric tons a year), stopped importing direct (from Sri Lanka etc.) but their can be little doubt about it that increased shipments from Sri Lanka to Jordan and other countries explain Iraq's temporary absence as direct buyers at some selling centers.

The changes in Eastern Europe, USSR and the Iraqi problems disrupted the market generally and it will take quite some time (years possibly) until all problems have been sorted out and the market will have returned to normal.

|Normal' is unlikely to be what it was in the days of the foundation of the International Tea Committee (1933), administering the International Tea Regulation Scheme. Efforts have been made after WWII to revive the International Tea Committee by collecting and publishing statistics so that producers and consumers may be guided about developments as regards supply and demand, remunerative prices etc. Unfortunately all efforts proved to be in vain and the world of tea is now faced with more than abundant supplies and too few importing countries where payment can and will be made in transferable currency (sterling or dollars). If world production can not be geared to world consumption (which was the 1933 principle, adopted but never really applied to). This for the rest also applies to other commodities, like coffee, cocoa etc. and market prices will continue to decline probably.
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Author:Meeberg, Rothfos van de
Publication:Tea & Coffee Trade Journal
Date:Nov 1, 1992
Words:702
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