Covid-19 brews trouble for tea amid disrupted supply

29 April 2020 12:35 pm - 0     - {{hitsCtrl.values.hits}}

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The coronavirus outbreak is causing a rare stir in the usually staid global tea market, with labour lockdowns stifling supplies just as millions in lockdown drive up demand for the beverage known for its immunity-boosting properties.

Five countries – China, India, Kenya, Sri Lanka and Vietnam – account for 82 per cent of global tea exports, but strict restrictions on movement to contain the coronavirus pandemic have already disrupted the key leaf-picking season, delayed some shipments by about a month and triggered a spike in prices.

Fewer pickers combined with colder-than-normal temperatures last month are expected to trim output in top producer China this year, while production in No 2 grower India and Sri Lanka have also been impacted by labour and weather issues.

India's output is likely to drop by 120 million kgs or 9 per cent in 2020 as the lockdown initially forced plantations to suspend plucking during the opening harvest – the prized first flush – and then operate with about half the workforce, said Prabhat Bezboruah, chairman of India's Tea Board.

Kashmiri men employed by government pack tea bags for distribution among needy people inside a temporary storage in Srinagar, Indian controlled Kashmir, Tuesday, April 21, 2020.

The International Tea Committee (ITC) estimates India's 2020 exports will fall 7 per cent.

In March, exports from India slumped 34 per cent and nearly halved from Sri Lanka, India's Commerce Ministry and tea brokers say.

The bright spot is Kenya, the world's top exporter, which has seen minimal interruption to harvest since March and, according to ITC, may see domestic output rise by 15 per cent this year.

Vietnam's output is also expected to be largely unaffected, but it is a relatively smaller player.

Still, importers have already started feeling the pinch amid dwindling supplies from South Asia.

"Shipments from India have been delayed by an average of one month, and we have also experienced delays in the supply of tea from other countries, in particular Sri Lanka," said Orimi trade, Russia's leading tea manufacturer.

Prices for raw tea, which Russia imports, jumped as much as 30 per cent from pre -lockdown levels.

In Sri Lanka, tea production was down nearly a quarter due to an earlier drought, and the virus is now affecting exports, said Jayampathy Molligoda, chairman of the Sri Lanka Tea Board.

Turkey, the world's top tea consumer per capita, is usually self-sufficient in production but faces its own labour shortage.

Local producers say they usually rely on migrant workers from areas like Georgia and Azerbaijan, but that this year they will have to use inexperienced locals which may cut supplies.

The stifled supplies come just as global demand for food and beverages has risen with the pandemic confining people indoors.

Also, the world's most-consumed drink after water is emerging as the preferred choice for many given its low caffeine content and other health benefits.

"Demand for tea is higher than it was ... tea in Russia has an image of a thing that, combined with lemon, boosts the immunity system," said Ramaz Chanturiya, at the Rusteacoffee lobby.

Russia, which has reported more than 93,000 coronavirus cases and over 800 deaths, is a major tea importer.

That said, industry participants and ITC do not expect the hot tea trend to last in the long term as major exporting countries had an excess supply in 2019, although the demand-supply balance is likely to be disrupted in the shorter term.

"Tea prices were depressed for the last few years. The current supply disruption could provide much-needed support," said Ahmed from ATPA.(Reuters)

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