twenty first session of fao/igg on tea 1 bandung, indonesia, 5 - 7 november 2014 sri lanka tea...

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Twenty First Session of FAO/IGG ON TEA 1 Bandung, Indonesia, 5 - 7 November 2014 SRI LANKA TEA INDUSTRY MARKET REVIEW

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Twenty First Session of

FAO/IGG ON TEA

1

Bandung, Indonesia, 5 - 7 November 2014

SRI LANKA TEA INDUSTRYMARKET REVIEW

Janaki KuruppuChairperson - Sri Lanka Tea Board

Source : ITC Report, London

World Tea Production (Mkgs) Country 2006 2007 2008 2009 2010 2011 2012 2013

Sri Lanka 310.8 304.6 318.7 291.1 331.4 327.5 328 340

YOY % -2 -2 4.6 -8.6 13.8 -1.2 -1.5 3.6

China 1028.1 1140 1257.6 1358.6 1475.1 1550 1790 1924

India 981.8 986.4 980.8 979 966.4 988.3 1126 1200

Kenya 310.6 369.6 345.8 314.2 399 377.9 370 432

Vietnam 142.5 148.3 166.4 175 170 178 190 180

Turkey 142 178 155 153 148 145 147 149

World 3579 3795 3863.5 3944.4 4162.5 4217.1 4624.62 4907

YOY% 6 1.8 2 5.5 1.3 9.6 6.1

Source : ITC Report, London

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At the 20th session in Colombo under the Chairmanship of Sri Lanka, 3 new working groups were proposed:

Working Group on Organic Tea

Working Group on climate change

Working group on Small Holder Farmers

20th Session of FAO - IGG on Tea

So why an International Tea Producer Forum?

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VisionTo position tea as the most acceptable, natural and healthy beverage globally

MissionTo position tea as the most preferred beverage universally through stimulating its consumption by facilitating and execution of generic promotional campaigns and raising awareness of the health and life style benefits of tea

Vision and Mission of the ITPF

a. Safe guard interests of tea producer countries.

b. Deliberate and evolve collective solutions on problems affecting producers.

c. Provide technical co-operation, sharing of technology and expertise by member countries.

d. Stimulate demand for tea by promoting consumption of tea.

e. To undertake market studies, surveys, research projects aimed at

addressing any specific issues

f. To undertake and facilitate programs for providing training to members or their executives in various aspects of marketing tea.

Objectives of ITPF

Progress So Far

• 2012: Signing a Resolution in Colombo, Sri Lanka at the 20th Session of FAO/IGG to form an ITPF.

• 10 Countries namely India, Kenya, Sri Lanka, Indonesia, Bangladesh, Malawi, Rwanda, Tanzania, Iran & Burundi signed that MOU.

• Proposal by Sri Lanka as the current Chair of FAO/IGG on Tea to host a Ministerial Forum.

• 2013: Historical gathering in Colombo on 21st January 2013 and ITPF was formally established.

• Seven countries signed the MOU and the constitution (Sri Lanka, India, Kenya, Indonesia, Malawi, Rwanda, Iran)

Consent of Producer Countries

Country 2008 2012 2013 2014India Obtained Govt.

approvalSigned Resolution Founder member Obtained cabinet

approval and completed the process

Sri Lanka Obtained Govt. approval

Signed Resolution Founder member Obtained cabinet approval and completed the process

Kenya Obtained Govt. approval

Signed Resolution Founder member Response is awaited

Malawi Obtained Govt. approval

Signed Resolution Founder member Response is awaited

Rwanda Pending Signed Resolution Founder member Response is awaited

Indonesia Signed Resolution Founder member Response is awaited

Iran Signed Resolution Founder member Response is awaited

Bangladesh Pending Signed Resolution Consented to be founder member

Tanzania Pending Signed Resolution Consented to be founder member

Burundi Pending Signed Resolution ---

Zimbabwe Pending Signed Resolution ---

Sri Lanka Tea Production

Tea Production – Elevation Wise

Source : Sri Lanka Tea Board

YearHighGrown (%)

MidGrown (%)

LowGrown (%) Total

2006

74.7 24

51.6 17

184.5 59

310.8

2007

72.5 24

54.4 17

177.7 59

304.6

2008

84.4 26

49.0 15

185.3 59

318.7

2009

72.8 25

44.7 15

173.1 60

290.6

2010 79.1 24 56.1 17 196.2 59 331.4

2011 79.2 24 52.5 16 196.6 60 328.4

2012 73.6 22 52.6 16 202.1 62 328.4

2013 75.5 22 56.2 16 208.4 61 340.2Source : Sri Lanka Tea Board

AREA OF TEA PLANTED IN SRI LANKA

Elevation Planted (Ha) Share (100%)

High Grown 41,13741,137 19%19%

Mid Grown 71,01871,018 32%32%

Low Grown 109,814109,814 49%49%

Total 221,969221,969 100100

Source : Sri Lanka Tea Board

2008 2009 2010 2011 2012 2013

Bulk

178.0

164.6 176.8 179.9 130.25 130.09

Packets

84.3

75.5 89.8 95.8 153.8 157.0

Tea Bags

20.3

18.7 25.7 24.6 21.4 24.07

Others

18.6

21.2 1.8 2.9 0.54 1.98

Re-Exports

18.6

10.6 18.6 20.5 14.6 8.51

Total (Mn Kgs)

319.8

290.6 305.7 323.7 320.7 321.65

ValueBillion

USD 1.26 1.18 1.37 1.51 1.44 1.55

SRI LANKA TEA EXPORTS (Mn. KGS)

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Source : Sri Lanka Customs

Sri Lanka Tea Exports earning

Ceylon Tea Exports FOB unit price

Source : Sri Lanka Customs

DOMESTIC CONSUMPTION

Year Qty. (Mn. Kgs) Approx.

2006 27.5

2007 28.0

2008 28.5

2009 28.5

2010 28.4

2011 28.9

2012 27.8

2013 27.5

Source : ITC Report, London

DISTRIBUTION CHANNELS

Type Percentage

Supermarkets 25% Grocery retailing 30% Convenience stores 30% Tea Shops / Tea Houses 5%

Others 10%

Tea Industry’s Role in Sri Lanka’s Economy

Tea export earnings reached USD 1.55 Billion in 2013 a historical high contributing 15% to the nation’s foreign exchange.

Of the 322 Mn Kgs exported over 55% was in value added form

Tea generates 65% of export agriculture revenue

Tea industry contributes approx. 2% of the island’s GDP

With 2 Million employed directly and indirectly 10% of the population of Sri Lanka depends on the industry.

Sri Lankan Tea Industry’s Role in the Global Tea Economy

Sri Lanka remains the world’s largest orthodox tea producer and the world’s largest orthodox tea exporter with 17% market share

2013 production placed Sri Lanka as the 4th largest producer of tea with 9% share of the global tea crop.

As per 2013 export volume Sri Lanka has been able to sustain the position of 3rd largest exporter exporting to more than 150 countries.

Sri Lanka also succeeded in maintaining her position as world’s largest pre-packed tea exporter and the number one in value added earnings (60%)

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Ethical & Sustainable Practices

Strict adherence of ISO 3720 Minimum quality Standard across entire supply chain Ensuring certification on Ethical Tea Partnership, Fair Trade Labeling , Rain Forest Alliance etc. Clean as ever in pesticide residues

Compatibility with CODEX, FAO, EU & Japanese standards for Maximum Residue LimitsDrive for re planting and in-filling to increase productivity and reduce cost of productionSupport Forest Garden Tea Growers to protect biodiversity & commitment for ecological sensitivity

PURITY & FOOD SAFETY

ISO

22000:2005

HACCP

ENVIRONMENT

Rainforest Alliance Certification

GLOBAL GAP Certification

Forest Stewardship Council

Agricultural Standards

Beyond the TRI & RRI Guidelines

Committed to CEO Water

Mandate

Signatory to the ‘Caring for

Climate’

Preservation of Biodiversity

Committed to the

Ten

Principles in

•Human Rights

•Labour Standards

•Environment

•Anti – corruption

Ethical Tea

Partnership

ETHICALBUSINESS

Living Environment

Health & Nutrition

Community Capacity

Building

Empowerment of

Youth

SOCIETY

Commitment to Sustainable Business business

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Accolade from Montreal Protocol in Canada for first ever Ozone Friendly tea in the world.

Sri Lanka tea industry was awarded Ozone friendly status in 2007 for non usage of Methyl Bromide an Ozone depleting substance.

Ozone friendly Ceylon tea supports the reduction of global warming.

Environmentally friendly & ecologically pure tea.

Helps an earth caring community to free the planet from pollution.

OZONE FRIENDLY CEYLON TEA

Issues Facing Sri Lankan Tea Industry

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Exported to over 150 countries: No uniformity in standards applied by importing countries

Lack of knowledge of consumer countries about good quality tea

Low quality teas exploiting Ceylon Tea name Price War: undercutting Climate change Consequences – Extreme weather

Dependent – EL NINO/LA NINA Phenomena play havoc

THANK YOU.

SRI LANKA TEA BOARDE-mail: [email protected]

a.com

THANK YOU.

SRI LANKA TEA BOARDE-mail: [email protected]

a.com 33