Price rises stirring in tea and coffee world

Your cup of tea or coffee may be about to get more expensive.

The UN’s Food and Agriculture Organisation (FAO) said black tea demand had exceeded supply since 2009, driving up the price.

Droughts in the world’s main tea-exporting countries of India, Kenya and Sri Lanka have triggered a continuous shortfall in the market.

Demand has been bolstered by rapid economic “growth in per capita income levels, particularly in China and other economies”, the UN agency said.

The average price of tea last year was US$2.85 per kilogram, compared with $2.33 in 2009. Total tea consumption increased 5.6 per cent to 4 million tonnes in 2010, the latest data shows.

In China, total consumption rose 8.2 per cent in 2009 from a year earlier and 1.4 per cent in 2010 to reach 1.06 million tonnes, the most in the world.

But production rose at a slower pace, at 4.2 per cent to 4.1 million tonnes for the same period. Black tea output increased by 5.5 per cent “in response to record prices” while green tea output was up 1.9 per cent.

World black tea is expected to come into equilibrium with regard to supply and demand by 2021 with a price of $2.75 per kilogram. Coffee-bean prices have also rallied. Robusta, used for making instant drinks and espresso, has gained almost 9 per cent since the start of the year amid lower crop yields and higher demand, to trade at $2,009 a tonne.

“The Robusta bean used to be very cheap because the plant didn’t require much maintenance,” said Hussein Awada, the owner at Lebanese Roastery in Abu Dhabi. But bad weather in Indonesia had reduced stocks for the 2012-2013 harvest, he said.

Mr Awada is hoping next year’s crop will be large enough to prevent further price rises.

“Coffee is the backbone of my business. In 35 years, we have hiked our prices twice only.”

twitter: Follow our breaking business news and retweet to your followers. Follow us

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.