Global tea prices set to stay strong this year, says UN agency

Global tea prices are set to stay strong through 2012, with demand driven by growth in Asia, according to the United Nations Food and Agriculture Organization (FAO).

The agency’s Intergovernmental Group on Tea says that the high price of tea, which averaged $2.85 per kilogram in 2011, reflects the fact that demand for black tea – accounting for most of world production – has exceeded supply since 2009.

The Group, which recently met for its biennial meeting in Colombo, Sri Lanka, added that the higher prices resulted in an estimated 2.2 per cent increase in the export earnings of producing countries last year.

Global tea consumption grew by 5.6 per cent in 2010 – the latest year for which figures were available – to four million tons. This increase was underpinned by the rapid growth in per capita income levels, particularly in China, India and other emerging economies.

In China, total consumption reached 1.06 million tons in 2010 – the largest in the world – while in India it reached 828,890 tons, FAO says in a news release.

Global production meanwhile increased by 4.2 per cent to 4.1 million tons in 2010. Black tea output increased by 5.5 per cent in response to record prices, while green tea output increased by 1.9 per cent.

China remained the world’s largest tea producing country with an output of 1.4 million tons and a 33 per cent share of the world’s total.

Looking ahead to the next 10 years, the Group estimated that world black tea production will grow at almost 1.9 per cent annually to reach 3.28 million tons by 2021 and also come into equilibrium with demand at a price of $2.75 per kilogram – just under the current price.