Covid-19’s effect on tea origins and production

Last week, the Tea and Herbal Association of Canada (THAC) held a two-day virtual North American Tea Conference (the “in-person” event has been postponed to 28-30 September 2021) under the theme, “The Present Reimagined.” The event offered a strong mix of presentations covering the impact of Covid-19 on Canadian consumption trends, consumer behaviour and purchasing patterns, as well as the pandemic’s effect on the global tea industry.

With more than 80 million people involved in tea production, Covid-19 certainly affected the industry. Once countries began closing their borders in March, for example, international buyers stopped visiting origins. When air traffic was halted, shipments of tea (and numerous other commodities) were interrupted. Perhaps most impacted, however, were tea origins, John Snell, founder of the consulting firm, NMteaB, noted in his presentation, although some regions were affected much more than others.

In China, which overtook India in terms of tea production in 2006, Snell said the strict restrictions imposed by the government on citizens to control the outbreak impacted production somewhat, but they mainly affected domestic sales and speed of exports. While the spring harvest was heavily reduced due to lack of the labour caused by the virus, summer and autumn productions were not affected much. However, many farmers have reduced the production because they are not optimistic about the market/consumption. Interestingly, despite international trade being blocked and shaky logistics at the beginning of 2020, Snell said that China’s tea exports were only slightly reduced — about 1.65%.

India, on the other hand, has not faired as well. Lockdowns in the country began on 24 March. While the easing of some restrictions in April enabled some first flush production and preparation for the second flush in Darjeeling, the first flush in Assam was completely eradicated due to widespread closures across the country. Snell noted that the second flush was very good quality but lower on volume. An unexpected positive result of the halt in production in India has been the increase in green leaf prices for the bought leaf sector. “Previously 12Rs/Kg these farmers were on the brink of collapse,” he said. “Now green leaf is fetching 40 50Rs/Kg.”

In Sri Lanka, the lockdown was in place from the second week of March through the end of May. Tea was declared an essential service, so production was maintained. According to Snell, the biggest impact was to value-added trade, where access to packaging materials and labour restrictions bit hard. He added that the loss of hard currency from visitors and overseas workers is having the biggest impact.

In East Africa, tea crops were unaffected. Snell said that by all accounts, the majority of tea produced in Argentina (whose leading export market is the United States) was sold by the time the pandemic was announced, but he noted that “the Argentine tea crop of 2019-20 was unspectacular.”

Live tea auctions were cancelled so several countries such as India, Indonesia and Sri Lanka held online auctions, which were successful according to several reports.

However, exporting tea is still a problem as customs in many countries have been slow to process exports due to Covid-19 restrictions on staff. “Demand for certain goods has been slower, globally, as industry has slowed and PPE shipments taking space,” shared Snell. He further explained that shipments have been affected because the flow of vessels and containers has been upset and they are sitting in the wrong spots, while shipping companies have pulled sailing schedules, pooled sailings with other lines and have disregarded freight contracts.

Despite the burdens incurred by Covid-19, the prognosis for the global tea industry seems to be good. “The likelihood is for some short-term pain with respect to logistics — time to market and costs. [However,] there is no significant long-term effect on supply and demand,” said Snell.

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