This report is not to be published nor may it be quoted as representing the Bank's views.

E-143

INTERNATIONAL BANK FOR REC9NS1:~'Q.9TION AND DEV~~9_:PMENT

Economic Department Prepared by: A. Kruithof

WORLD TEA TRADE

March 27. 1951

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I.

II.

III.

IV.

V.

VI.

TABLE OF CONTENTS

General Introduction

Cultiv~tion and Processing:

(a) Cultivation

(bl Processing (0 Types and Quality of Tea (d Storage and Packing (e Retail Trade

Main Producing: Countrie~

(a~ "Green tea" conn tries (b "Black tea" countries

!!:ade Sznd P~

1. Trade 2. Prices 3. International Tea Agreement

Consumption

1. 2. 3. 4. 5.

The

1. 2.

United Kingdom United states British Commonwealth Europe and Other Countries Producing Countries

Outlook for the Tea Market

Short-term tong-term

Statisticab-Tables

I. II.

III ..

Production Exports Absorption

Page No.

1

1

1 2 3 4 4

4

4 5

9

9 12 13

15

15 16 17 17 18

19

19 21

23 24 25

WORLD 'lEA TRADE -I. General Introduction

1. Origin

The product from which the beverage tea is extracted for domestic

use is the ultimate result of a series of natural, commercial and industrial

manipulations on the young leaves of the tea plant which, existing in differ-

ent varieties, originates from the Thea Sinensi~.

The tea plant and the beverage tea were known in Qh!~ far back in

history but it was not until the discovery of the tea plant in ~ (early

19th century) that cultivation started on a more commercial scale. Sold as

a rarity in dispensaries in England and the Netherlands in the 17th and lyth

centuries (from occasional cargoes from China) tea gradually became a domestic

beverage in those countries and has spread from there allover the world.

In the s~cond half of the 19th century tea cultivation expanded

from India to Ceylon and Indonesia, where it reached its main development

in the second and third decade of the present century. In 8as~,~frica tea

growing on a small scale has developed only recently.

II. Cultivation and Processing

As it goes on the world market tea is a semi.finished product,

since it has been changed from its original state by mechanical or hand prep-

aration.

(a) QuJ..tivatiop

Wet and warm weather conditions are ideal for a successful tea

culture; consequently tea is found mainly in tropical and sub-tropical countries,

particularly in the Asiatic hemisphere.

Soil conditions, drainage possibilities and availability of labor

are other primary factors in growing tea but practice shows that no absolute

boundaries are to be given for tea cultivation. Northernmost areas are certain

Japanese Islands and the Georgian Republic of Russia. Southernmost limits are

- 2 -

Mozambique, East Africa. Tea is I?;rown only in Brazil in the Western Hemisphere

between 50 North and 100 South.

Tea culture can be divided into two main categories: plantation

culture, and tea growing by small holders and/or native producers. Both methods

of production are found in the main producing countries but plantation growing

is by far the most important in India, Ceylon, Indonesia and ~ast Africa, whereas

tea as a peasant crop is dominant in China.

In the plantation culture the tea seeds are laid out in nurseries and,

after a period of 6-12 months, (dependingou weather, soil and local conditions)

the seedlings are transplanted to the main gardens, It takes two or three years

before a tea bush delivers its first crop, and another two or three years before

it comes into full production.

The bushes which would normally reach a height of 20 to 30 ft. are

pruned into shape at a height of about 3-5 ft. to facilitate plucking as well as

to achieve the best output. The extreme bud plus one, tl,)'O or three leaves are

plucked from the stems of the bushes and sent to the factory.

In the plantation culture, elaborate use is made of modern scientific

agricultural methods based on fundamental and practical research; the main pro­

ducing countries have established special tea research stations.

Small holders have a wide range of methods of cultivation varying

from occasional harvesting of a small number of bushes, as is done in China, to a

mbre or less methodical harvesting of srrall acreages as in Ceylon and Indonesia.

(b) Processing

In the plantation industry black tea is made by the following process;

The leaves are made pliable by ~ithering them in spacious lofts in which air of q

certain humidity and temperature is circulated for about IS-24 hours, depending

on humidity, altitude eta. The next step is to bru!se the leaves in rollers so

-3-

that the internal juices can spread over the surface and the tannin which charac­

terizes the tea in its ultimate form can be exposed. The final stage of fermenta­

tion takes place in a cool, dark basement. This process has to be stopped after a

certain time to avoid damage to the quality of the product. The fermentation is

ended bY!1ring the tea in big dryers (siroccos), and by blowing heated air over

the tea, 1.J'hich is black when it comes out of the "siroccos ll • By a process of

siftin~ the tea is sorted into various grades and then packed in plywood chests

(before the war mostly made from Scandinavian plywood) each containing about 110

Ibs. net.

The method of processing described above requires a fectory equipped

with expensive machines which means that if the plantation is to pay, a given

minimum area of land must be under cultivation. In consequence, most of the tea

indust:ty is found on ,-restern-owned plantations, In Ceylon and Indonesia, there

is a certain area (in Ceylon about 121% of the total acreage and in Indonesia

about 30%) cultivated by small holders or native tea growers. The yields of

these areas are, however, sold either to estate factories in the neighborhood or

to special "bought leaf 11 factories, Due to the large amounts of capital which

has to be invested in land clearing and planting as well as in the necessary

machinery, it does not seem very likely that in the near future the tea ind'lstry

will be in the hands of native producers. In recent years native cooperatives

have been formed which might result in a less dependent native industry.

(c) TYKes and Qualitf of Tea

The three main types of tea, £lack, ~~, and oolong, are arrived at

by different methods of prooessing. Fully processed and fermented (as described

above) black te~ is the most important in world trade, accounting for nearly 95%

of total world exports.

Fermentation is eliminated in the processing of gteen te§ and oolong

is only half fermented, These teas especially are prepared by many different

methods ranging from hand to mechanical preparation.

-4-

Within a specific type of tea, grades and quality depend, in the

first place, on the number of leaves plucked. Processing leads to pekoes,

broken pekoes and souchongs hll black teas) after plucking one, t 1;JO, or three

leaves and the bud.

The altitude at which the tea is grown also influences the quality,

ranging from high grown (best quality) through ~ grown to ~ grown teas.

Ultimately, speoific weather conditions, soil, plant material and

skill in the manufacturing process determine the quality delivered to the

market.

(d) Storage and racking

Storage and packing of tea require very careful he.ndling because the

product quickly attracts humidity and odors, the former preventing the storage

of the product for a long time in the producing countries. In moderate climates,

however, tea can be kept for about one year without a serious decline in quality.

(e) Eetall Trade

After arrival in the countries of cons\UIlption the product is further

handled by blenders, who by mixing different qualities produce a certain brand

which is sold to the retail-trade either in the form of small parcels of t or

1 pound, or as tea bags (mostly in the United States).

III. ~ Producing Countries

Tea production is widely scattered over the world but the main pro-

ducing countries, China, Japan, Form~, India, Ceylon, Indonesia, and East

Africa, can be divided into two main groups:

(a) the "green tea" countries: China, Japan and Formosa

(b) the "black tea" countries: India (and Pakistan), Ceylon, Indonesia, and East Africa.

(a) The first group is in absolute figures, by far the most important

source of tea but it is of minor importance as far as world tea trade in black

tea is concerned.

- 5 ~

Green teas, oolong and some other types of minor importance (i.e.

souchong and brick tea) are produced and consumed mainly in those countries

with only a small amount going to specific outside markets such as the United

states for green and oolong tea, and North Africa for green tea.

No reliable figures are available either for the acreage under

cultivation in ~ or for her total production but prewar estimates indicat­

ed output at some 600 million Ibs. a year while the 1947 production has been

estimated at about 60% of the prewar output.

In China, where tea has been grown since early history, it is culti-

vated as peasant crop while the processing described earlier takes place only

on a very limited scale. From the total tea exports of China in prewar years

(averaging about 90 million lbs. per year in the period 1934-38) only 20-25%

was exported as black tea, about 35~40% as green tea and the remaining quantity

in other forms but mostly as brick tea, a specific item in the overland trade

between China and Russia.

JaEan and Formosa produce mainly non-black types of tea and the

bulk of production is consumed in those countries; out of Japan's total

production of about 109 million Ibs. in 1934-38 only 30% entered world trade

and roughly 10% of this quantity was black tea.

(b) The following estimates for 1950 indicate the relative importance

of the different producing areas in the total black tea production. Output

in 1950 has continued in all producing countries on the same high level as in

1949 and an estimate might give the follm4ing figures:

North India 485 million lbs. South India 100 " » Pakistan 50 » H

Ceylon 300 » n

Indonesia 80 " " East Africa 35 » n

others 20 " » --1,070 » »

-6-

A big increase in acreage and production occurred in the main coun-

tries between 1920 and 1930 when output went up by roughly 34%. By that time

production was far above the oonsuvption level and the following years of

general economic depression made it clear to producers that measures had to

be taken to re-establish the eqUilibrium between supply and demand. This was

done under the International Tea Agreement (see Chapter IV) concluded by the

various national producers organizations and, where necessary, legally backed

up by the respective governments. The agreement was based on two main prin-

ciples:

(a) Limitation of expansion of planted acreage;

(b) Restriction of exports from participating countries.

From the late thirties onward the trend in total production haa

been progressively upward, rising from 959 million lbs. to 1,108 milUon Ibs.

in 1949.

Expansion of production on a large scale is limited by the time needed

to bring a tea plant into production, but given a certain acreage the crop can

be more or less kept in line with the existing demand by changing the method

of plucking and/or the period between plucking rounds.

In the attached Table I, a general review is given of the development

of production in the main centers. From this table it appears that luS!.1!., ~.!hich

accounted for roughly 40% of world production in 1934-38, by 1949 had increased

production to 632 million Ibs. or 60% of world production. Exports from India

and Pakistan amounted to 38% of world tea exports in 1934/3S ae against 57% in

1945 and 54% in 1949.

After Partition in 1947 only a relatively small part of the tea

acreage of the Indian sub-continent came under the jurisdiction of (East)

Pakl~tan, where in 1949 about 7;,000 acres of tea produced some 50 million Ibs.

-7-

In the Indian Union a distinct separation in tea producing areas is

found between North and South India. In the former more than 580,000 acres

producing about 480 million lbs. are located mainly in Assam and Bengal.

Weather conditions in these regions confine the plucking season to the months

between April/Nay and November/December.

Continuous plucking can be carried out in South India where about

165,000 acres of tea produce approximately 100 million lbs. a year.

Ceylon's production increased by 30% from 229 million lbs o in 1934/38

to nearly 299 million lbs o in 1949, accounting for 27% of the worl,l production

at 1,108 million Ibs. Ceylon's share of world tea exports increased from 25%

in 1934/38 to .35% in 1945 and was 31% in 1949 .. ..

The development of world tea trade is of particular i?:"llpo:;:-tance to

Ceylon where tea exports a'.:lcount for nearly 65% of the total exports by value.

During and after World 1,Jar II an important change has occurred in tr .. e destination

of these exports as the following table shows:

United Kingdom United States Australia Kew Zealand Egypt Iran/Iraq

Percent of Ceylon Tea Exports to:

1934t3~

69 5 6 4 1 1

1946 1242 51 41 16 9 13 11 4 5 4 8 1 6

§.2!!.!:~: Statistical Bul:.etin) International Tea Committee, 1950.

Indonesian output stopped completely during the Japanese occupation

and internal political and economic conditions prevented a resQ~ption on a big

scale directly after the war. Annual production, which had reached 181 million

lbs. in 1940 was not more than slightly under 60 million Ibs. by 1949 but a

rapid increase was reported in 1950, when 49.5 million 1bs. of tea were produced

in the first six months of 1950. Besides political unrest the n~in factors

- 8 -

hampering production in this country are:;

(s) Destruction of about 30% of the estate area during the Japanese occupation.

(b) Destruction of most of the tea factories on Java and Sums tra.

(0) 4 decreased number ( 1n 1949 a total of 107 estates were reported as re-oocupied by the original owners against an operating number of 277 in 1940) of estates in operation in comparison with prewar years.

In the meantime the East African territories of Kenya, Uganda,

Tanganyika and Nyassaland have expanded production to an even greater extent

than the other producing areas. The total quantity increased from 14.4 ~illion

Ibs. in 1934/38 to 30.8 million lbs. in 1949.

In addition to the "black tea ll countries mentioned earlier, tea culti-

vation on a small scale is also found in Brazil, Mozambique, IndO-China, Malaya,

Iran and others, but all of them produce only a very small part of the total

black tea output.

Russia is known to have considerable acreages under cultivation

(130,000 acres in 1940, with a further development in the Caucasus reported re­

cently). However, being a big tea consuming country herself (home production

does not cover consumption) Russia does not enter world tea trade except for the

diminishing imports of black tea stated to be about 17 million lbs. in 1949

against an average of about 35 million Ibs. in the thirties. Russia has always

taken a large share of China green tea and has now organized the China Green

Tea Producers so that 95% of present production is diverted to Russia.

-9-

IV. Trade and Prices ,

The value of world tea trade amounted to 450.500 m!llion dollars

in 1949 compared with 202 million in 1938. In recent years relative value

of tea to total exports was highest in Ceylon (about 65%), follo1lred by

Nyassaland (32%) and India (15%). In other countries the relative value is

very small as the following table eh~s:

Value of all Value of Percent '!'ea Tea E2rQort~ to Total Domestic ~i[

1938 1.2iI1 1948 1,938 1947 1948 1938 194 ., 19,8 . (Millions) - -

Ceylon (rupees) 263.5 835 .. 4 937.7 172.4 566.5 590.3 65.4 67.8 63.0 Nyassaland (t) 1.0 2.7 4.2 0.5 0.8 1.4 46.7 31.3 32.5 India ~ (rupees) 1,591.4 .3,802.0 4,131.6 235.9 514.9 636.9 14,8 1.3.5 15.4 Kenya (t) 3.8 9.6 11.4 0.5 0.9

Indonesia (guilders) 669.9 343.2 1,040.4 56.2 5.6 China sI (dollars) 762 .. 6 6,376.5 1,398.4 33.1 230.2 Japan ~ (U.S. dollars)

2,678.5 173.6 258.6 12.1 ~

~ Not available EI In 1938, million yen Sf In 1948, million gold yuan 41 In 1948-49 Indian Union only. The value

of all domestic exports from Pakistan in 1948·49 totalled 856.3 million rupees of which tea accounted for 37.6 million rupees or 4.4 percent.

0.6 13.2 9.4

21.4 8.6 1.6 28.3 4.3 3.6

1~8 0.5 ~

§.E~: Plantation Crops, Gommonpealth Econom!c Committee.

Uthough all "black tea" countries have a high rate of exports to

production (particularly true for Ceylon) India shows a decreasing percentage

owing to the fact that internal consum.ption went up considerably during and

after World War II. A table stating the percent of production as exported

is given on the following page:

5.7

2.1 2.0

0.7

- 10 -

India and East China ,y Pakistan Ceylon Indonesia Africa JaEan .

1934-38 80% 96% 9r:f/o 100% 36% 15%

1943 67 98 n.a. 96 9 ?

1946 55 103 185 83 15 7

1948 61 99 70 82 15 ?

1949 69 97 80 79 63 ?

,y Based on rough estimates as given by the International Tea Committee for a production of 600 million 1bs. before 1936 and 240 million lbs. in 1946. The percentage of black tea exports of total production amounted to about 3% in 1934/38 and 4% in 1946.

The figures in Table II of the Appendix indicate that as a whole the

position of the "black tea" countries has improved considerably in the last

decade. In the period 1934-38 the yearly average of exports was 719.9 million

1bs. or 82% of total world exports (872.8 million 1bs.) which increased to 92%

of world exports (958.1 million Ibs.) in 1949. There seems to be little chance

that there will be any important changes in the near future although the rapid

recovery of Japanese exports since the war could cause a downward trend. On the

other hand it is to be expected that Indonesian exports will progressively in-

crease and that the future of Chinese exports will be very uncertain in view of

current world condltion8~

The tea trade before the war was mainly handled through auctions of

which the London Market was by far the most important, owing to the high rate

of consumption and entrepot trade in the United Kingdom. Local markets at

Q2l9mbo, Cal~, ~atavia (now Djakarta) and even Amsterdam, had only a limited

scope but, the Eastern markets were growing in importance before the war as

more and more direct trade developed between producing and consuming countries,

particularly the Near East and Australia. This development is partly reflected

in'the following figures on the U.K.'a re-exports of tea:

- 11 -

Re-expsrts of Tea From the United Kingdom (in million 1bs.)

Destination 1932 1937 1942 1949

British Countries 30.9 26.5 6.4 3.1

Europe 25 .. 7 2.3.3 4.2

United States 16.5 15.5 0.1

Other Foreign Countries 4.9 1.3 0 .. 4 -bL

Total 78.2 69.6 6.8

Source; Bulletin of Statistics, Internatio~~l Tea Committee

In 19.39 the beginning of bulk purchasing by the United Kingdom and

the closing of the London auctions might have given an opportunity for local

markets to develop, but this was temporarily hampered by the fact that during

the war all supplies of tea were bought by the British Ministry of Food and

allocated to consuming countries; prices were fixed at the average of 1936-38

with added corrections for increased costs of production and ha.ndling and

shipping costs. The same principle was applied to the bulk purchases of the

United Kingdom in postwar years.

These government purchases, varying from 450 to 500 million lbs. in

the postwar years, a.ccounted for the greater part of the market and in some

years met severe opposition, especially when it appeared that in the normal

auctions at Colombo and Calcutta higher prices could be obtained than those

paid on the government contracts.

8.7

After long negotiations it was decided to reopen the London,auctions

in April, 1951 and thereby end the U.K. bulk purchasing. This decision was

opposed by the governments of India and Ceylon, who fear a decrease in the

direct trade with consuming countries which has been established since the

reopening of the Calcutta and Colombo auctions in 1947. It remains to be seen,

however, how much tea will be made available from producing countries for the

- 12 -

London auctions as long as the British subsidy, rationing and fixed retail

prices are maintained. From Ceylon it was reported that not more than 100

million Ibs. of the 1950/51 produotion would be released for London auctions,

leaving 170 million Ibs. to be sold at Colombo auctions and 30 million lbs. for

direct forward contracts from producers to consumers.

Amsterdam auctions reopened in December 1948 and the Djakarta w~rket

also resumed its activities in 1949 so that there will be, from April 1951 on,

a situation similar to that before the war.

Apart from the U.K. purchases only small quantities of tea have been

negotiated in trade agreements between producing countries. The largest quantity

(9,000,000 lbs.) was exported under a 1949 agreement between India and Russia.

Some arrangements were also made with various European countries for importing

Indonesian tea.

2. Prices -The International T.ea Agreement of 1933 prevented a continuation of

the severe fall in prices, which started in 1927. Gradually prices reflected the

better situation which developed under the scheme and prices at London auctions

had risen from 9.45d per lb. in 1932 to 13.85d per lb. in 1939. From 1939

prices were based on the rates fixed by the British Ministry of Food. However,

with the reopening of the Colombo and Calcutta auctions in 1947 a free market

price was established once again.

The heavy demand after the war was responsible for the maintenance

of high prices, which in general rose to about 3 times the prewar level as is

shown in the following table:

- 1.3 -

London !I Amsterdam hi Colombo s;/ Calcutta gj

1934-38 1940 1947 1948 1949

13.76 43.25 69 9 10 81 1.3 6

160 1 9 5 155 1 10 4

203.00 193 1 15 1

!I d per lb. 21 cts. per hkg. ~ Rupee cents per lb. gj Rupee, anna, pie per lb.

3. Internationat Tea Agreem~

The first agreement was made in February 1933 among private producing

associations from In~ia, Ceylon and Indonesia for a period of 5 years from April

1, 1933. Ouring this first period Nyassaland, Kenya, Uganda, Tanganyika and

Malaya also participated in the scheme, but only to the extent of limiting the

permissible planted acreage.

The same principles which were mentioned in Chapter II! (page 6) formed

the basic provisions of the second agreement which was in force until 1943. The

African countries included in their internal administration provisions to regu-

late exports according to estimated potential production after deduction for

domestic consumption. The permissible acreage for Malaya was fixed at an area

sufficient to provide for internal oonsumption requirements.

During the war it was decided to maintain the agreement for the dura-

tion and for a period of about two years after the war,

In 1947 the Governments of African countries did not renew the necessary

control legislation and ceased to be parties to the agreement; ~~laya had already

terminated its membership in 1946.

From April 1948 on, an Interim Agreement existed for two years and

from April 1, 1950 a new five year agreement was reached among the representatives

of producers of India, Pakistan, Ceylon and Indonesia, In the preamble of both

agreements special attention was paid to the provisions set forward in the proposed

charter for an International Trade OrganiZation, so that the way has been kept open

-14-

to revise the provisions according to requirements which might follow from

international obligations which the regulating countries might assume.

The participating countries are permitted to cultivate tea on the

following acreages:

India

Pakistan

Ceylon

Indonesia

Total

806,728 acres

79,768 " 588,227 " 539.772 "

2,014,495 It

During the period covered by the agreement it is possible to extend

these permissible acreages up to 5% of the original amount while replacements are

allowed up to 10% to be accompanied, however, by simultaneous uprooting of the

tea in the area replaced.

standard exports for the nel., five year period baaed on average exports

in previous years have been fixed as follows:

India 348,246,170 Ibs.

Pakistan 34,996,746 " Ceylon 251,588,012 " Indonesia 173. 597. OQ,Q I'

Total 808,427,928 It

The International Tea Committee sets annually a percentage (export

quota) based on these standard exports, as the maximum exports allowed. In

1942, the percentage WaS set at 125 and increased to 130 in 1950-51 which

shows that as far as permissible exports are concerned the scheme has been

actually inoperative since 1942.

- 15 -

v. Consumption

As in the case of production, tea consumption on a large seale is

limited to relatively few countries.

The absorption figures given in the attached Teble III, do not repre-

sent total world consumption because the quantities shown for various countries

may be: (1) "home consumption ll , (2) actual imports after deduction of re-exports,

and (3) estimates for those countries which do not publish the necessary statis-

tics. In this table the actual consumption in the producing countries is in-

eluded in order to give a complete view of the si tUB tion as ,Par as qetr,and for

tea is concerned.

Five of the main importing countries account for about 74% of total

world absorption of tea (919.7 million lbs) and two (the United Kingdom and

the United States) of these five countries accounted for 60% of world absorption.

The important differences in tea-0rinking habits of the various nations

are shown in the fo11~Ning table of per capita consumption in 1949.

1. United Kingdom

United Kinpdom New Zealand Australia Canada Union of ~outh Africa Egypt Netherlands Uni ted States Switzerland Denmark Belgium/Lux.

Pounds

7.8 7.8 6.5 2.8 1.5 2.2 1.3 0.57 0.39 0,,19 0.14

In the United Kingdom tea drinking was introduced in the 17th century

and has become such a strong habit, that it has spread from the European part

of the Empire over all the Dominions and Colonies. Before the war when tea

- 16 -

was not rationed, the per capita consumption in the United Kingdom amounted to

9 1bs. per year which was 50% of world absorption (870 million lbs).

Mainly due to shipping difficulties total absorption by the United

Kingdom dropped to the lowest point in 1942 (352.6 million 1bs.), then increased

to 415.4 million Ibs. in 1944 and fell back to only 347.8 million Ibs. in 1946.

From then on, however, absorption recovered to 466.4 million lbs. in 1949, but

in the first ten months of 1950 imports declined to 289 million lbs. compared

with 358 million lbs. for the same period in 1949, which caused a reduction in

the ration from 2t to 2 oz. per week.

The main sources of U.Kfs imports are India (including Pakistan) and

Ceylon, which deliver respectively 72% and 25% of total imports in U.K.

Present tea consumption is completely determined by governmental

control such as rationing, fixed retail prices and a subsidy on tea prices, the

latter now at a rate of lOid per lb. on the wholesale price. This will, however,

be increased to a flat rate of Is per lb. as soon as auctions have reopened.

As long as those measures are kept in force no important changes in

the quantity of consumption oan be expected but one point may be gained namely,

a shift to the consumption of better qualities because the United Kingdom

consumers are accustomed to a high standard of quality.

2. The United ~tates

Ranking second in the list ~f consuming (non~producing) countries

comes the United ~tates with an average prewar consumption of about 83 millinn

1bs. which declined during the war owing to a shortage of supplies but since then

has increased to 92.4 million lbs. in 1949. ~ince the per capita consumption in

the United States ia not more than 0.57 lbs. per year it is clear that the tea

drinking habits of the U.S.A. are not comparable with those in the U.K. To

increase this figure a nation-wide campaign is being carried out supported by

- 17-

producers, wholesalers and retailers. It is believed that good results may

be obtainable, especially if the proper use of tea bags can be impressed upon

consumers.

A table giving the main sources of U.~. gross imports is stated below:

In million Ibe. In % of Total Imports

12~38 1941 1947 1948 1242 19~4-~8 194t ~ 1948 ~

India and Pakistan 9 17 38 28 33 11 16 56 30 35

Ceylon 16 27 20 45 32 19 25 29 49 34

Indonesia 17 46 4 11 20 43 - 5 12

China 6 7 4 3 4 7 7 6 3 4

Japan/Formosa 22 8 4 7 8 27 7 6 8 8

Other Countries 13 2 2 5 7 16 2 3 5 7

Total 83 107 68 9g_ 95 100 100 100 100 100 i

3. British Commonwealth

In contrast to the United ,ctates, Canada, Australia and New Zealansi

can be considered as outstanding tea-drinking countries and imports in these

areas can be set at an annual 42, 48, and 20 million Ibs. respectively. Tea

rationing in Australia waS ended in July 1950 but since then no remarkable

change in consumption has occurred.

4. EuroEe and Other Countries

Excluding Russia only two countries in EuroE~ import a substantial

amount of tea, Eire and the Netherlands. They had a prewar yearly average of

about 23 million Ibs. each. Both of the countries had to restrict consumption

heavily during the war, but since 1945 a gradual recovery has taken place and

imports are now about 17 million Ibs. for the Netherlands and 19 million Ibs.

fOr Ireland.

- IS -

Of the African countries ~ is showing a constant increase in

absorption; the prewar fi~lre of about 15 million lbs. rose to over 35 million

lbs. in 1949. In the Union of South Afri~ the progress was slower but still

amounted to nearly 50% of prewar consumption.

5. E!0qucin~ Countries

Although not directly entering into world tea trade, consumption in

producing countries is growing to such an extent that its possible effect on

exports is worth mentioning.

Particularly during and after the war, consumption in lnQia and

Pakistan increased rapidly and is estimated at 165 million lbs. per year in 1948

in contrast to 97.6 million lbs. in 1939.

No complete figures are available for In~onesia and ~ where prewar

figures indicated a consumption of about 29 and 15 million Ibs. respectively.

The latest available figure for consumption in ~yloU at 14.5 ~illion

lbs. in 1948 shows an increase of 4 million lbs. over the 1939 level.

Although per capita consumption is still very low in the producing

countries, the recent development indicates that the popUlation of those co~n­

tries are prepared to drink more tea than they did before - suggesting good

possibilities for further expansion, especially if improved standards of living

would allow spending a greater part of the income on food and beverages than

is posslb16 at the present level.

One of the minor regrettable consequences of world '!,Jar II has been

the fact that tea consumption had to be curtailed owing to shortage of available

suprl1es but the rapid restoration of trade since 1945 gives confidence that no

permanent loss in the output took place and that there still remains a possi­

bility for further expansion, especially with consumption still rationed in a

territory which takes c~re of nearly 50% of total absorption,

VI.

- 19 -

The Outlook for the Tea Market --1. Short-term

In 1950 the tea market was stable and there seems no reason to fear

that an important breakdown will occur in the near future. As far as can be

seen the following arguments support this view on the supply side:

Existing political conditions in ~ will prevent her ~rom bringing

large quantities on the export market and make it even probable that she will

have to reduce her exports.

In the main producing countries, India, Pakistan and Ce~lon there are

no indications of declining production although exports might be hampered by

lack of available shipping facilities and shortages of materials essential

to the tea industry, such as plywood chests which might be an important item

in the case of India.

Indonesia's production might well reach a level of above 100 million

1bs. aDd the most important addition to the total supply ~an be expected from

this country.

~ African production is also likely to increase but due to the

fact that a certain amount must be reserved for the home market it is doubtful

whether this will have a great effect on the world supplies.

Japanese production and exports might easily maintain the upward

trend of postwar years and it is probable that this source will further add

to world supplies.

On the demand side the main determining factor will be the develop-

ment of the international situation, 1 . .fhich may cause stockpiling in consuming

countries.

As it has been stated that no plans exist for ending the rationing

in the United Kingdom it is expected that the amount consumed will remain at

roughly 485 million lbs.

With no signs of IIq~e.:r buyingll in the last two years in other consuming countries it may be assumed that the high 1949 and 1950 level can be maintained,

- 20-

suggesting a favorable outlook for the 1emnnd side in 1951 as a whole,

In figures, the situation would be approximately as follows:

1934-38

1949

1951 (estimated)

1953 (estimated)

BLACK TEA SUPPLY (million Ibs) ~

Maj or Produc ing Oountries JJ

(Production)

846

1,021

1,075

1,130

TEA. AEOSRPTIOn (million Ibs)

Other (huorts) Total

158 1,004

70 1,091

90 1,165

105 1,235

Major Producing Importing

Countries Oountries sJ Total

1934-38

1949

863

920

112

235

1951 (estimated)

1953 (estimated)

930

975

240

255

~ IBRD estimates based on figures published by the International Tea Committee.

JJ India, Pakistan, Ceylon, Indonesia, East Africa. £I Estimated home consumption in India, Pakistan,

Ceylon, Indonesia and East Africa.

975

1,155

1,170

1,2;0

From these figures it can be concluded that the sit·~tion in the world

market will depend, to a great extent, on actual consumption in the major

producing countries, The present high level of prices may decrease slight11

as a result of decreased home consumption and a consequent increase of quantities

available, Lower prices might also result from the accumulation of stocks by

private trade in the United Kingdom (in anticipation of re~establishing re-ex­

ports) and by the end of bulk purchasing,.

- 21-

2. Long-term.

The general economic situation will be the determining influence in

the long run but on the technical side of the tea industry the following points

seem to be of importance:

Expansion of production will, for another period of 5 years, be limited

to a certain extent by the provisions of the Tea Agreement, so that no surprises

can be expected on this score. The question remains whether Indonesia will be

able to develop its full production capacity and in what period of time this can

be achieved.

The enormaus;,utput of the last few years in Ceylon and India and whether

Pakistan makes it doubtful/as much care has been given to soil and agricultural

conditions as are necessary to maintain this output for a number of years. It

might be advisable for producers even from a technical pnint of view to switch

to a certain extent to the manufacturing of smaller quantities thus giving a

rest-period to thG acreages which have been for so long in tAP production.

Moreove~with the restoration of the free supply and demand situation more stress

will be laid on quality than on quantity, All these factors suggest a possible

falling output in old producing areas which will be partly offset by the introduc-

tion of new areas in those countries.

Revolutionary developments in tea cultivation and industry are not

likely to increase production. Haybe mechanical land clearing would shorten

the period befor~ the first crops can be collected but this would only mean a

difference of some months. Mechanical tea plucking has been tried out in Ceylon

and Malaya with, according to the reports, contradiotory result~. Even the favor-

able results did not lead to putting the machinery into practice on a large scale.

Development of tea supplies from new areas can hardly be expected on

such a large scale that the effect would be noticeable within a period of five

years. The only sizeable expansion might come from East Africa supported by a

- 22 -

stronger demand from the United Kingdom.

Whether the de-rationing of tea in England would provide an opportunity

for a big expansion in consumption depends largely on the governmental policy

regarding subsidy and prices. With the help of the Tea ¥arket Expansion Board

consumption in other 14estern countries is not liable to fall severely and there

is still a big field left uncovered in Asiatic and African countries with their

huge populations.

Neither the figures for the near future nor the considerations for the

following years seem to indicate instability in the world tea industry and trade.

TABLE I

PRODUCTION OF TEA (In million Ibs)

Pakistan & North South East

Average India, India Ceylon Indonesia Africa Janan

1934-38 347.0 67.2 229.0 164.8 14.4 23.9 108.7

1939

1940

1941

1942

1943

1944

1945

1946

1947

1948

1949

390.6 78.4 237.3 183.6 24.1 29.2 126.7

395.3 78.8 265.1 181.0 27 .. 1 24.3 128.4

420.1 80.9 247.9 n.a. 29.6 24 .. 5 136.5

477.7 95.1 291.4 n.a. 32.1 2L}.1 134.5

457.7 97.3 268.8 n.a. 27.3 22.9 124.5

412.4 97.2 296.8 n.a. 30.3 n.a. 103.8

438.0 92.4 276.9 n.a. 30.8 n.a. 52.1

L~97 .2 96.0 282.9 n.a. 30.4 n.a. 47.2

508.0 96.2 298.5 3·3 32.1 n.a. 48.8

512.5 100.5 298.8 28.5 29.6 n.a. 57.;3

532.8 99.1 298.6 59.9 30.8 n.a. 67.0

11 Excluding China and Russia y l\fot incll~ding l;1alaya "ihere production was only about

1,000,000 lbs in prewar years JJ Totals do not include Indonesian production of I;'!hlch

no reliable figures are availaole; from 1944 Formosa ~roduction is included in China fi~lres (unavailable)

!±I Estimated n.a. Not available

Others 11

4.1

3.2

5.6

6.8

6.7 :?J

11.6 Y 13.5 Y 12.9 :?J

15.1

17.6

19.5

20.0 1jJ

Source: Statistical Bulletin, International rea COITuni ttee, 1950

959.1

1,072.1

1,10.5.6

946.3

1,061.6 J/

1,061.6 JJ

954.0 JJ

903.1 J/

968.8 J/

1,004.5

1,046.7

1,108.0 !±I

2'~1Lll

.ID;:f.9B.T§ _ 9l:'-1~_FBmUJ:loDQQ1[G C01TN.TB1],_~ (In million lb~)

India & Indo- East World Av!!af!.e Pakistan ~e1f.?-...2E nesia Africa Total China Japan Formosa 'E.! Others Total ----- --.-- --1934-38 331.6 219.8 149.1 14.4 714.9 90.3 39.3 21.6 6.7 872.8

1939 331.8 228.1 162.1 22.0 744.0 49.7 51.8 26.1 7~9 879.6

1940 352.6 246.4 159.6 23.8 782.4 76.0 36.0 19.2 8.2 921.8

1941 401.0 237.5 167.0 24 .. 3 829.8 20.1 27.1 16.7 7.6 901.2

1942 !;!/ 334.4 265.7 n.a. 26.4 626 .. 5 3.2 11.4 15.0 2.1 658.2

1943 !!:/ 372.0 263.9 n.a. 22.7 658.6 2.9 18.6 14.3 2.4 696.8

1944 III 454.0 276.2 n.a. 23.9 754.1 1.2 14.9 2.9 773.1

1945 ~I 379.3 232.0 n.e .• 26.2 637.5 16.2 3·2 656.9

1946 299.5 291.8 6.1 25.5 622.9 15.2 7.5 n.a. 5.0 650.6

1947 424.8 287.3 8.7 25.9 746.7 36.2 7.0 n.a. 4.5 794.4

1948 376.5 295.8 19.8 24.4 716.5 38.6 8.9 n.a. 5.8 769.8

1949 518.9 297.6 48.4 23.0 887.9 45 .. 0 15.8 n.a. 9.4 958.1 s.! ~! Incomplete figures II From 1946 included in China s.1 Partly estimated (i.e. for China t Formosa and other countries) n.a. Not available

Source: Statistical Bulletin, International Tea Commission, 1950

TABlE III - ABSORPTION OF TY'.A Un miTI.io!'l 1bs)---

Average Average ~~ 1914-,8 1932 1940-44 1945 J. <t,4.Q 1941 1948 1942

United Kingdom 435.3 468.8 434.5 381.4 347.8 372.3 404 .. 4 466.4 Netherlands 2.).1 29.0 3~3 ,.1 11.9 12.6 13·1 16.7 Ireland 22.8 21.8 11.8 7.8 16.2 25.7 26.3 18.6 U.S.S.R. 41.2 25.1 19.6 .6 2.5 16.9 14.9 16.8 Other ~~orpean Countries 12.8 ..3£h.Q ..n.:2 -1Q.:.Q _6<1·.5 J4·9 -12. 4 _2C).8

Total Europe 555.2 582.7 481.4 404.9 393.9 442.4 478.1 544.3

United States 82.8 96.7 83.9 83.0 91.4 60.6 88.9 92.4 Canada 37.7 42.7 37.3 51.2 27.0 44.8 34.8 42.7 Other North AmericNl Countries 3·0 3.3 2.8 2.9 3.3 4.5 3.9 1.5 Latin America 11.1 1~.1 2.6 ~ 8.4 10:2 ~ ~

Total America 134.6 154.8 133.8 146.3 130.1 120.1 136.5 145.1

Iran 15.,5 19.3 12.2 3.9 10.5 16.5 16.2 23.0 Iraq 6.1 6.8 ,.6 5.1 3.9 14.8 13.5 16.0 Malaya 4.6 4.2 1.1 3.3 3.5 3.9 Tea imports into tea producing

countries !Ja/ 8.0 17.7 1).5 .1 1.3 3·0 1.0 2.0 Estimated home consumption in

producing countries l/ 200.0 198.0 290.0 270.0 265.0 277.0 290.0 290.0 Other Asiatic Countries £/ ~ ..3.Z£l _J4.4 :1-Z·1 J.2.& -61.8 2S'& 24~1

Total Asia 253.6 283.1 355.8 296.2 305.5 336.l.J. 350.0 359.6

Egypt 15 .. 1 15.5 12.4 9.3 10.8 27.6 29.7 35.6 French Morocco 17.6 16.0 5.2 5.3 8.8 7.4 16.1 20.0 Union of South Africa 13.8 18.1 16.8 12.9 11.9 21.6 18.4 19., Other African Countries ..2.hl ~ 10.1 24.7 16.4 _24.7 ~.:J _26~

Total Africa 69.6 73·7 64.7 52.2 47.9 81.3 84.5 101. 7

Australia 46.1 51.1 l.j'5.7 43.7 50.6 49.2 48.0 46.9 New Zealand 10.5 11.3 11.2 7.8 10.7 14.2 17.3 10.5 Other Oceania --~ 1.1 .9 --:.:z --1~ _l.t? -L.~ ---l.J!

Total Oceania 57.5 63.5 57.8 .4 62.5 64.6 66.5 58.8 WORLD TOTAL sl .L..Q1~ .L.!21& .L.Q2.h:i 952.Q 2:2~ ~!r'& ls115.6 1.209.5

« (See foot~es foll;;ing page)

!!:! India, Ceylon. Indonesia,. China, Formosa, Indochina ana Japan

2/ Rough estimates for India, Ceylon, Burma, Indonesia, Japan and African territories ba.sed on production and exnorts

;;./ Including estima tea for absorption by Middle East P'orces in 1939-1945

~/ Approximate figures from 1939 on

Source! statistical Bulletin, International Tea Committee. 1950