World tea prices expected to remain firm in 2012

PHNOM PENH (Herald) - World tea prices are expected to remain firm this year as demand for black tea, which accounts for most of world production, has exceeded supply since 2009, the  Food and Agriculture Organization of the United Nations (FAO) said Wednesday.

In a statement from Rome, the FAO said tea prices averaged $2.85 a kilogram last year. "The high tea prices resulted in an estimated 2.2 percent increase in the export earnings of producing countries in 2011, significantly benefitting their rural incomes and household food security", the agency said, citing findings by the FAO Integovernmental Group on Tea.

Total world tea consumption climbed 5.6 percent to four million tonnes in 2010, the latest year for which figures are available, and was underpinned by the rapid growth in incomes, particularly in China, India and other emerging economies.

Production rose 4.2 percent to 4.1 million tonnes during the same period with black tea output increasing 5.5 percent in response to record prices and green tea output edging up 1.9 percent. China remained the world’s largest tea producing country with an output of 1.4 million tonnes and a 33 percent share of the world’s total.

A review of the market "indicates an improvement in the fundamental oversupply situation seen in recent years, with supply and demand coming into greater balance at prices higher than over the last decade.

"But that trend will not continue if growers over-react to current firm prices," the FAO warned.

Over the coming decade, black tea production is projected to  grow at almost 1.9 percent annually to reach 3.28 million tonnes by 2021 while green tea production is projected to grow much faster at 7.2 percent a  year to 2.6 million tonnes in the same period, reflecting anticipated growth in China, where production is expected to reach 2.3 million tonnes.

The FAO meanhwhile urged tea growers to diversify into other market segments such as organic tea.

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