Posts Tagged ‘tea farm’

Imagine pristine dewy hills with rolling tea plantations and smiling women picking leaves at their leisure – beautiful, is it not? Trouble is that just about everything in this image is wrong if you just bought your tea from any supermarket. Supermarket teas are the most viciously competed market segment within tea industry and pushing down the price is the most important competitive advantage. So why the low price of supermarket tea is such a bad thing?

Walmart is a market just as the rest of them

PRICE PRESSURE

Growing tea has been labor intensive from the start. For this reason it has remained dominant farming industry in countries what have very low salaries. However, consumers demand ever cheaper teas and markets are consuming more and more tea, supermarket chains have massive bargaining power over tea farmers and farmers have no way but to cut the costs. Even in low-cost countries this had resulted in the use of machinery and chemicals in tea growing and tea processing as well as the use of pesticides and fertilizers.

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Global warming troubles tea farmers. Traditional tea cultivation areas are facing climate changes that influence the rainfall and temperature. Changes in average rainfalls and temperatures mean that once ideal conditions for example Assam tea cannot be found in the same elevation as before.

Gloom and doom over a tea farm.

Photo by Jakob Montrasio

WHAT THE GLOBAL WARMING MEANS TO A TEA FARM?

A tea farm that has been founded maybe one hundred years ago is now facing deep trouble. Farms have been using lot of money into investments that boost the tea production and into land purchases. Now these traditional tea farms find that their location is not so ideal anymore.

THE QUANTITY OF THE TEA CROP

The quantitiy of the harvested tea has dropped slightly because the changed weather but this is not a catastrophical change because the drop in production is usually compensated by the increase in the prices. The world has learned to drink tea in huge mugs and that has meant increased consuption. This is the reason why the low production quantity is not so pressing issue for a tea grower.

THE QUALITY OF THE TEA CROP

Here comes the trouble. Tea enthusiasts around the world have come to value specific tastes and tea blends and to get those special aromaone needs standard quality teas. Standard quality tea can only be grown in steady conditions. which are now qreatly affected by changing weather patterns stirred by the global warming phenomenon.

Imagine that you grow Assam tea and you have a long supply contract with some big tea company. That tea company supplies tea to the breakfast table of millions of people. Think what effect it would have if consumer would find their favourite tea tasting like – well – something else. Tea drinker would find another brand that suits her taste buds better.

The case is about applying the right to use Geographical Indicators rule from the WTO. I’m sure that many of you tea enthusiasts also gulp down some bubbly every now and then so you might recall similar case done by France regarding the Champagne area. Now Sri Lanka Tea Board is on the job and we just have to sit back and wait… and possibly drink several hundred cups of tea while doing all that waiting.

GEOGRAPHICAL INDICATOR – WHAT DOES IT MEAN?

It could mean that only tea with the right to be called Ceylon tea would have to be grown in the island of the Sri Lanka and especially on those traditional tea growing areas. Now that could seriously dent the business of other producers and companies that make some kind of tea mixes with a hint of Ceylon tea and masses of some other crap.

Naturally the positive side of this is that in the future the brand Ceylon would actually guarantee, to a degree, the quality of the product. I would like to see that because it is so tedious job to try and keep updated on good Ceylon tea. Oh by the way, Kenilworth Estate Ceylon Tea is possibly the best Ceylon tea, which is easily available on the market and you can get it with a push of a button from here.

WHOLESALE TEA PRICES ARE GOING UP ALL OVER THE WORLD African tea prices have risen about 5% year-on-year in the most of the producing countries, like Kenya, Uganda, Burundi etc. It doesn’t end there as reports from India, Sri Lanka and other countries in the Orient have claimed similar price increases. This is good news for the producers and doesn’t really affect consumers because of the raw material cost of a tea bag is something so little that you need a microscope to see it. What is driving up the wholesale tea or bulk tea prices? It could be popularity, tough weather conditions and opportunity costs or something else. TEA IS BECOMING MORE AND MORE POPULAR Tea is more than just a small part of the English breakfast. Today we have tea houses that are as much focused on tea as coffee shops on coffee. In this kind of establishments you can get a cup of regular coffee if you insist but that’s about it. It is safe to say that tea has taken hold of other parts of the world than just East and that small right hand corner of an English breakfast table.

WEATHER CHANGES BRING UNCERTAINTY OVER TEA CROPS Global warming or not the fluctuating weather patterns over the globe have made it even more uncertain to farm cash crops. This year Africa has seen lot of droughts and that has increased tea prices more than what they would have risen given the increased global demand for tea. Storms also do their trick as heavy rains soak the bushes. TEA HAS TO COMPETE WITH OTHER CASH CROPS Tea farmers are running businesses and they make cultivation decisions based on the return for their investment. World market prices make sure that some years tea is not very profitable while other crops might do very well indeed. This affects to cultivation decisions, farmers might swap into other plants or new farmers might initially choose something else than tea farming. Many a time tea’s biggest competitor is not coffee but some fruit for example. FUTURE TEA PRICES? Let me consult the tea leaves on the bottom of my tea cup… Ah, it looks like some changes will take place.

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