In a recently published report, the Food and Agriculture Organization (FAO) of the United Nations stated that tea prices have reached an “unprecedented high.”  Traditional import markets in developed countries are almost at full capacity, but markets in tea producing countries, including Kenya and United Republic of Tanzania, are largely untapped. These countries consume just one-tenth of tea in places like the United Kingdom and Russia.   Based on these findings, FAO concluded that pushing domestic consumption of the beverage in tea-producing countries could help improve food security.

How does drinking tea improve food security, one might ask?  Despite its much publicized health benefits, people cannot survive on tea alone.

The reason is tea is a cash crop. In Kenya, the world’s largest tea producing country after China, tea accounts for 35 percent of the country’s export receipts and covers its entire food import bill.   In other words, increasing income from cash crops such as tea can increase a country’s ability to buy food.

In addition, growing tea also brings job opportunities and income for local populations. Unilever, owner of the brands Lipton and PG Tips, is the largest tea retailer in the world.  Its global production totals over 3 million tons and it employs more than 2 million people.  In Kenya alone, it employs 16,000 people and 40,000 people depend on the income of these workers for a living.

It makes sense to encourage tea consumption in producing countries as tea sold domestically means money retained in the local economy. However, rising tea prices may pose a barrier for consumption in poor consumers of developing countries.  It was indicated in the report that tea prices rose by 12 percent in producing countries in 2009.  Also, rural populations who do not purchase food from supermarkets may find it difficult to increase consumption, as most tea is sold in these outlets.

It turns out that the rise in tea price is not only worrisome for attracting potential consumers, but for retaining existing ones.  In traditional markets, it has begun to affect consumer’s choice to keep consuming the beverage.

With the sustainability of global tea economy at stake, those involved in tea production and trade agree that the first line of action is to advertise green tea’s health benefits heavily to boost its consumption, and increase the demand in producer countries. Doing so, prices abroad would remain at an acceptable level for consumers, retailers could satiate their appetite for more tea-drinkers and producers could continue to grow more tea.

FAO warned against “increasing the size of tea plantations,” which could “damage prices in the long run.”   The audience addressed here would be large corporations such as Unilever.  Decisions these companies make, such as expanding production, could have a much bigger impact on market prices than any change in tea consumption in producing countries.

In the face of over-supply and volatile tea prices, it may be worthwhile for tea producing countries to explore more direct ways to increase food security. In Tanzania, organizations such as the World Vegetable Center are already helping farmers grow indigenous food crops such as fruit and vegetables with high nutritive value.  These crops could allow farmers to feed themselves and sell produce that fetch higher prices in domestic markets, thus increasing incomes and reducing dependency on imported foods.

Guest Post is by Alex Tung. A research intern with the Nourishing the Planet project and Worldwatch Institute.

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