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Coffee and Tea Reports from the Front Lines

Smuggling of Tea Causes Loss

Islamabad - It is estimated that tea smuggling can be equated to a loss of 48,000 tons of tea that was bought illegally during the FY06 period as compared to 40,000 tons in FY05, thus inflicting a revenue loss of Rs 2b. According to a report published in the Daily Dawn, legal tea imports declined by 12.5% from 114,000 tons in FY06 to 130,000 tons in FY05, figures and documents sent by the Pakistan Tea Association (PTA) to the commerce ministry revealed.

The association said the arrival of tea under the Afghan Transit Trade Agreement (ATTA) from Kenya alone accounted for the increase of 9,000 tons or 40% of the 32,610 tons imported in FY06 from 23,610 tons in FY05. Tea was also brought under the ATTA from several other countries, namely China, India, Indonesia, Vietnam, etc, which amounted to approximately 15,000 tons.

The cumulative impact of duty and taxes on imports of tea through legal channels comes up to 33% while smugglers pay only 8-10%.

If the trade policy is not slashed for 2006-07, the share of smuggled tea will further rise and legal imports will decline to 100,000 tons during this fiscal period, he said.

The share of tea imports from Kenya declined to 65,511 tons ($1.89/kg) in FY06 from 83,176 tons ($1.73/ kg) in FY05 due to rising prices in Kenya due to the drought. Altaf said that Kenya’s black tea production had been short by 37 million kgs during January to May this year compared to the same period last calendar year.

Coffee Prices Rise in Demand

United Kingdom - According to a report published in The Financial Express, coffee consumption in India, Indonesia and Mexico, may grow to more than 25% in the next three years, the International Coffee Organization (ICO) said. These countries are considered traditional coffee-producers but are not normally known as having a strong coffee-drinking culture.” There will be a “significant,” increase in prices, Christopher Wyke, who helps manage London-based Schroders Plc’s $75 million commodity fund, said “As producing countries get richer, they use more resources, use more metals, eat more food and drink more coffee.”

The ICO, which is funded by its member countries, plans to start promoting coffee drinking in those countries to balance supply and demand. By curbing the amount of beans exported, it plans to lessen the extent of price swings. The campaigns in India, Indonesia, and Mexico will start in September as Schroder’s commodity fund is projected to increase its investment in coffee because consumption may outpace production in those countries, Wyke said in an interview. “There are constraints on supply in terms of how much land is available to expand coffee production.” “We are now working with the governments and institutions in India, Indonesia, and Mexico to do something similar to past successful campaigns in Brazil,” said an ICO official.

Sri Lanka Launches Tea Assistance Project to Increase Tea Production

Sri Lanka - The Government of Sri Lanka recently launched the Tea Development Project Revolving Fund Credit Scheme. This development would assist existing small tea growers and the tea factory owners to improve the productivity of the tea industry in Sri Lanka.

The Ministry of Plantation, Tea Small Holding Development Authority [TSHDA] Central Bank of Sri Lanka, Sri Lanka Tea Board and local commercial banks are engaged with this exercise under the financial assistance of the Asian Development Bank. After the launching of the new tea revolving credit scheme, Chairman of the TSHDA Noel Padmasiri Kariyawasam said this scheme would provide 1,100 million rupees to improve local tea industry within next seven years.

Speaking to the media, the chairman said that this loan would provide tea replanting, infilling of blocks, nursery establishment, use of new technology, improvement for tea factories to obtain HACCP certification and social organization development.

According to the experts of the TSHDA, the revolving credit scheme does not grant any assistance to start new plantations. However, tea small holders associations now can obtain loans to purchase plucking machines, plucking shears, leaf transport vehicles or crates and machines to ease cultural operations.

China to Set Standards for Tea Drinks

China - China’s food authority is working on new standards to lift the quality of ready-to-drink tea beverages, a booming segment of the drinks industry. The country’s food quality and safety body, AQSIQ, has set up a team of experts to draft standards on the components, labeling and additives permitted in tea-based drinks, as told to AP-Foodtechnology.com.

Tea drinks now make up a fifth of China’s beverage market, after the products took off in the late 1990s following a similar trend in other Asian markets. But there are concerns that many consumers are buying them because they consider them to be healthy when some of the products do not even contain any tea.

“Some of the so-called tea drinks in the market are not real tea drinks”Qian from the China Beverage Industry Association stated. Tea polyphenols, L-Theanine caffeine and protein are all necessary elements for tea beverages and sugar content must also be controlled for low-sugar or sugarless tea drinks. Standards are also needed to limit the additives used in tea drinks.

Further, a spot test on tea drinks by AQSIQ found that about 10% of a sample of different products sold in the market did not meet hygiene and safety criteria.

Production of tea drinks has seen rapid growth in China, with the fastest growth in 2001 reaching 2.53 million lbs, almost 20% of the world’s total. Since then, annual growth has slowed but volumes are still expanding. Tea drinks now account for 20% of the soft drink market, with Uni-president and Kang Master (owned by Ting Hsing Food) leading the category.



Tea & Coffee - October/November, 2006
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