Tea Coverage
Tea is consumed more than any other drink in the world, excluding water. Originally from China, it spread across trade routes over centuries to become the USD 9.5 billion industry it is today.
But behind this popular beverage are 13 million people working hard to grow, pluck, and process tea leaves into the neat packages we find in the supermarket. Two thirds of those people are smallholder farmers in developing countries. They face the formidable challenge of producing an affordable, quality, and more sustainable product in a highly competitive market and under increasingly harsh and unpredictable weather conditions.
In some tea-producing countries, smallholder farmers make no profit at all, as their total production costs can exceed their earnings. On top of bearing all the risks related to extreme weather changes and variations in the cost and availability of crucial inputs like fertilizers, they are also most affected by low prices and volatility in the tea sector.
Voluntary sustainability standards (VSSs) have been working to address sustainability challenges in the tea sector for 30 years. Many focus on building climate resilience—for example, by encouraging farmers to use techniques that help them cope with periods of drought or that maintain soil fertility to improve yields and quality. Some also seek to improve the prices and incomes of smallholder farmers.
VSS-compliant tea now represents at least a quarter of total global production. However, evidence of VSSs’ impact on farmers’ incomes is limited and tends to be very context specific. It is not clear if minimum prices, premiums, and other differentials really make a difference to tea farmers’ livelihoods—or even make up for the costs of certification. They certainly will not if VSS-compliant tea is sold as conventional, which estimates suggest happens 90% of the time.
There is an urgent need to develop new approaches to recognizing the social and environmental costs of conventional tea production so that farmers can be adequately rewarded for using more sustainable practices. Our report provides recommendations for how governments, private sector actors, and standard-setting bodies can better support smallholder farmers and make tea production fairer and more sustainable.
Global Market Report: Tea prices and sustainability (2024) View the 2020 report
Key Takeaways
13 million jobs
Over two thirds of the 13 million people employed in the global tea sector are smallholder farmers in developing countries. They produced 60% of the world’s tea in 2022.
USD 9.5 billion in trade value
Global tea production has surpassed USD 17 billion annually, with tea trade valued at USD 9.5 billion, representing a significant source of export earnings for low-income and emerging economies.
VSS production up by 30%
From 2008 to 2019, VSS-compliant tea experienced a compound annual growth rate (CAGR) of about 30%, accounting for around a quarter of tea production overall.
2 million tonnes
In 2019, at least 1.67 million tonnes of VSS-compliant tea was produced by more than 1 million farmers, reaching a farm gate value in excess of USD 155 million.
Highlights
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Nearly a quarter of global tea production was VSS compliant in 2019
Growing at a CAGR of around 30% between 2008 and 2019, VSS-compliant tea now represents at least a quarter of total global production. However, there are signs that this growth could be slowing, as CAGR dropped to 12%–13% from 2014 to 2019.
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Progress on sustainable sourcing commitments
Five of the largest tea manufacturers bought 2.2 million tonnes of tea in 2020. Just under two thirds of that volume (1.6 million tonnes) complied with a VSS.
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VSS-compliant tea production volumes in 2019
The most prominent VSSs in the tea sector in 2019 were Rainforest Alliance (1.33 million tonnes), Organic (0.41 million tonnes), Fairtrade International (0.18 million tonnes), and UTZ (0.14 million tonnes).
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The effects of VSSs on tea farmers’ prices and incomes vary in different countries
From 2020 to 2022, tea producers in India, Kenya, and Sri Lanka who complied with Fairtrade International and/or Organic may have received prices and premiums that were higher than the average international market price or average auction prices. For Kenyan producers selling through the Mombasa auction, this could be as much as 23% higher for farmers certified by both Fairtrade International and Organic. However, average auction prices in Colombo and Kolkata over the same period were the same or higher, which can discourage farmers in these countries from pursuing compliance.
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Distribution of tea production in the top 15 producing countries in 2019
Tea is cultivated in more than 60 countries, primarily in Asia, Africa, South America, and parts of Eastern Europe. China produces 70% of the world’s tea, followed by India, Kenya, and Sri Lanka.