Today the world celebrates tea, its most popular beverage. Whether you prefer it black, green, white or steeped in additional herbs, there’s a strong chance that your country will have a national preference.
On the fifth ever International Tea Day, we take a look at issues affecting the trade of the aromatic beverage.
International Tea Day
The day was introduced by the UN’s General Assembly in 2019 to promote the sustainable production and consumption of tea, as well as raising awareness of the commodity’s role in combatting hunger and poverty in low-income countries, where the plant whose leaves are used in tea products – Camellia sinesis – is grown.
An UN interest group, the Intergovernmental Group on Tea, has emphasised the need to expand internal demand in tea-producing nations, where consumption is relatively low. However, as demand has declined among traditional tea-importing countries, a push towards local consumption is also needed to protect the farmers whose livelihoods depend on the crop.
When passing the resolution to enshrine the day in 2019, the UN highlighted that “tea production and processing constitutes a main source of livelihoods for millions of families in developing countries”.
Support needed
The Fairtrade Foundation has also highlighted the precarity of a secure income for those engaged in tea farming, especially in high-producing nations like Sri Lanka and Kenya.
Small-scale farmers face stiff competition from plantation growers, who are better able to manage the low prices offered by buyers. This can make it difficult to afford the necessary tools and products, namely fertiliser, which enhance production, creating a vicious cycle that further limits scalability.
It’s also noted that those working on large plantations or estates – either in fields, fertilising, weeding and plucking the leaves, or in the processing factories – often earn wages low enough to keep them trapped in a cycle of poverty.
Imbalances are then reinforced upon entering international markets. As tea is a rarity among agricultural commodities, sold predominantly through auctions with no futures market to mitigate against price fluctuations, a small number of companies dominate sales at each auction.
The UN has specifically benchmarked the global tea trade to several of its Sustainable Development Goals: reduction of extreme poverty (Goal 1), the fight against hunger (Goal 2), the empowerment of women (Goal 5) and the sustainable use of terrestrial ecosystems (Goal 15).
Digitalising supply chains
Where exporting is still a significant economic contributor, work is also being done to simplify trade of the commodity, with increased digitalisation to reduce the cost and time burdens involved.
The Institute of Export & International Trade (IOE&IT) recently partnered with other organisations - such as TradeMark Africa, the IOTA Foundation and the Tony Blair Institute - to create a digital trade corridor between the UK and Kenya, one of the world’s biggest producers and exporters of tea.
Created to decrease the time and cost involved in international trade, while boosting “trust, fairness and inclusivity”, the corridor could save Kenyan exporters as much as £40m.
Tea was one of the commodities trialed, along with cut flowers, coffee and frozen fish.
The Trade Logistics Information Pipeline (TLIP) - a distributed ledger technology (DLT)-driven platform designed to increase secure, transparent exchanges of data between parties - was estimated to have reduced the time required to export Kenyan flowers to the Netherlands by 30%.
IOE&IT director general Marco Forgione celebrated TLIP’s potential for enabling 80% cost reductions and boosting SME efficiency by 35%.
He added that commitment to TLIP reflects IOE&IT’s desire to “shape a future where trade facilitation benefits societies worldwide through the creation of a more equitable and sustainable global trade ecosystem and infrastructure”.
Global picture
Camellia sinesis grows widely around the world, with some of the most notable tea-producing nations located in Asia and Africa.
China is the world’s largest producer and exporter of tea, with international sales worth US$1.77bn recorded in 2022, according to the Observatory of Economic Complexity.
In terms of exports, this was followed by Kenya ($1.39bn), Sri Lanka ($1.29bn) and India ($761m).
The greatest importers were Pakistan, the US and Russia. A recent report from the Pakistan Statistical Institute stated that imports had risen 17%, with $547.4m bought in 10 months of this financial year.
An announcement was recently made from Islamabad that customs duties on tea imports would be revised in light of what is deems “unscrupulous importers” diverting their goods to Azad Kashmir – a region which enjoys lower duties – before smuggling it into other parts of the country.