British retailers and consumers urgently need to stop seeing tea as a “cheap commodity” and pay more for their brew - or risk undermining traditional tea-harvesting skills and jeopardising the sector’s long-term quality standards and sustainability, a new report has warned.
The cost of growing tea has increased 94% over the past five years, but prices paid to growers have gone up by just 25% on average over the period, claimed Cafédirect in its RealiTEA report.
More recently, tea prices in key regions have even been on a downward trend: commodity tea prices in Kenya, for example, have fallen by more than 20% over the 12 months, as strong production runs have kept supplies high and prices low [Mintec, see box below]. At the same time, retail tea prices in UK mults had risen just 3.8%, said the Fairtrade supplier.
Commodity prices 29 June 2013: palm kernel oil, tea
Although prices have risen slightly on a month-on-month basis, the story of the coconut and palm kernel oil markets remains one of falling prices overall. Thanks to good global production levels, palm kernel oil has fallen by 21.1% over the past year - and it has dragged coconut oil prices down with it.
The low prices for palm kernel oil have encouraged more producers to switch to it from coconut, reducing demand for coconut oil and pushing down prices.
Kenyan tea prices remain low - down 22.7% year-on-year and 12.9% month-on-month - with production in April more than double that of April 2012. This was the ninth consecutive month production increased, pushing prices down to £1,836/tonne.
As growers battled rising oil, transport and fertiliser costs and struggled to cope with generally higher living costs, they were forced to make compromises in how they harvested and processed tea leaves, with more smallholders being driven towards mechanical cutting as opposed to hand harvesting. “Machine is the standard for mass-market, low-grade tea, which results in twigs and the tougher lower leaves in tea bags,” Cafédirect said.
Machine cutting also had a negative impact on the environment and the long-term health of tea bushes, it added, but “continual pressure on price is forcing farmers to make the choice between quality and survival”.
Cafédirect CEO John Steel said tea had been considered a cheap commodity in the UK for too long - “a telling sign of a lingering colonial mindset that distances consumers from the real value of tea, with many large companies exploiting local resources while reaping huge profits for themselves”.
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