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by Courtney Cavaliere
Tea exports from China have risen dramatically over the past few years and are expected to increase further, which is a cause for concern in many developing countries that depend on tea sales, according to a recent front-page article in the New York Times.1
According to the article, Chinese figures indicate that the production of tea (Camellia sinensis (L.) Kuntze, Theaceae) increased 8.7% last year and is accelerating as newly planted tea bushes reach maturity, inefficient state-owned farms are transferred to output-conscious entrepreneurs, and certain government policies promote tea industry growth. It is now anticipated that China will soon become the world’s largest tea exporter by tonnage, overtaking Sri Lanka this year and Kenya next year.
China’s success in the tea market, meanwhile, could threaten the economies of various developing countries. Tea production is a huge employer in such areas as Bangladesh, India, Sri Lanka, Indonesia, and various East African nations. According to the Times article, countries that suffered from the tsunami last December are particularly vulnerable to Chinese competition in the tea industry. In Sri Lanka, the tea business helps feed nearly a tenth of the population. Four dozen large farms producing black tea leaves in these threatened countries have already shut down over the past 2 years, causing the displacement of tens of thousands of workers in southern India alone.
China’s preeminence in the tea industry, however, seems to reflect its history with the beverage. The British East India Company, which acquired its tea from China, held a monopoly on tea supply to Britain until 1834, after which other countries finally became big exporters. The article states that the origins of tea itself are often traced back to ancient China. The earliest literary reference, dating back nearly 5,000 years, tells of how Chinese Emperor Shen Nung discovered the drink after tea leaves accidentally dropped into his hot water.
According to the Times article, government support encouraged the 18.9% jump in Chinese tea exports last year, which totaled $437 million. In Beijing, for instance, municipal and provincial governments offered subsidies to the tea industry in order to alleviate lingering poverty and unemployment in the countryside, and they paid up to half the cost of planting new tea farms and building tea-processing factories. Beijing has also eliminated an 8% tax on tea production as a way to increase rural incomes.
Tea consumption in China, on the other hand, has grown only 2% a year. Young Chinese citizens, in particular, have been showing a preference for other beverages, including coffee and Coca-ColaŽ. The abundance of Chinese tea entering global markets will likely continue only if Chinese people keep switching to these other beverages. Other challenges could also affect China’s tea business, including land erosion and cold winter conditions, which could temporarily halt development of new tea leaves for several months. Furthermore, the near stagnation of the global market has caused reluctance among some Chinese officials to comment about future levels of tea production.
The complete article can be viewed on the New York Times web site at http://www.nytimes.com/2005/10/11/business/worldbusiness/11tea.html.
Reference
1. Bradsher, Keith. Read the tea leaves: China will be top exporter. The New York Times. Oct 11, 2005;A:1, C:4.
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