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World tea economy reviewed in Rome tea meeting.

The Ninth Session of the Inter-Governmental Meeting on Tea was held in Rome under the auspices of the Food and Agriculture Organization on October 7-10, 1991. It was attended by delegates from 33 countries as well as by international organizations including UNCTAD/GATT, the EEC and ITC. The focus of the discussions centered on two major issues, a review of the world tea economy, and the selection of projects for funding from the Common Fund for Commodities.

Short term outlook for tea

The Conference reviewed in detail the short term outlook for black tea. Many delegates from producing countries expressed concern on the continuing downturn in tea prices in the world tea market, despite increases in the costs of production of tea and depreciation of national currencies of many of the tea producing countries. This has resulted in tea production becoming unprofitable to the developing exporting countries with adverse effects on their economies and on the welfare of the smallholder producers.

The delegates from the importing countries agreed that long term stability of the tea market could be imperilled if tea prices continued to be at the current unremunerative levels.

The Conference agreed that in the short-term, the supply and demand in the world tea market would remain in broad balance. Any improvement in prices in the coming months would largely depend on the level of tea imports by former USSR, Iraq and East European countries. Under the present uncertain circumstances, the possible developments in these markets are difficult to predict.

However, the present drought in Indonesia, if continued unabated, might tilt the balance to pave the way for an improvement in prices. Delegates from the producing countries reiterated their view that if substandard teas below ISO Standard 3720 are removed from the international and domestic markets, it would improve the current price situation.

Long term outlook for tea

On the basis of the available data and projections of demand, supply and trade, the delegates believe that there is likely to be a close balance between supply and demand of black tea in the world market by the year 2000.

The total estimated production was 2,646,000 tons against a projected demand of 2,663,000 tons, resulting in a marginal surplus of demand. This would indicate that the tea prices would, in the long term, be firm.

The general consensus was that the prices of CTC teas would be somewhat firmer, while prices for orthodox teas could remain volatile. The substantial convenience factors associated with tea bags and the reduction of the effective price of cup of tea from using CTC teas might be the factors that would stimulate demand in the longer-term for CTC teas.

Common Fund project funding

Two projects seeking finance from the Common Fund were submitted by the FAO Secretariat for the consideration of the meeting. One project related to the generic promotion of tea and the other project on Tea Consumption and Human Health.

After detail discussion, the Inter-Governmental Group decided to submit one project integrating Tea Consumption and Human Health and Generic Promotion to the Common Fund for Commodities. The meeting further decided that an Ad Hoc Group of Experts be established immediately in order to:

a) select priorities for further research to establish the beneficial effects of tea on human health;

b) devise the implementation of an international generic promotion campaign to communicate the message of tea and health across the world;

c) prepare the detail budget for the integrated project; and

d) formulate the time-span for the integrated program.

The Inter-Governmental meeting decided that the above work should be completed by the Adhoc Group of Experts by the end of February 1992. This will enable the Inter-Governmental Group to meet again in April/May 1992 to endorse the project and authorize its submission to the Common Fund for Commodities for funding.
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Title Annotation:Inter-Governmental Meeting on Tea discuss tea market and priorities for the Common Fund for Commodities
Author:Sambasivam, T.
Publication:Tea & Coffee Trade Journal
Date:Jan 1, 1992
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