January 2021 Update: Coronavirus Impact on the Tea Industry

The pandemic has passed its one-year anniversary as many of us still hunker down, venturing into public places only when necessary. Unprecedented numbers of us are working from home, and in lieu of gathering round the office coffeepot, are making our own beverages. And discovering that we want the indulgence of high quality and taste.

But how has the tea industry fared as the pandemic drags on? And why might our favorite tea be unavailable or out of stock?

A lot of product unavailability has to do with transportation issues, a problem that particularly impacts small businesses who are loath to pass too many costs on to their customers and who don’t have their own huge warehouses to store extra stock. TeaHaus, for example, a small independent tea shop, has been waiting for tea for months. After two shutdowns in Germany,  and air freight both difficult and expensive to come by, the tea had to come by boat, and presumably is still on the ocean somewhere.

Transportation by Air

The most recent air freight update posted on DHL’s website dates back to October, before the holiday season, at a time when demand was increasing. But DHL’s summary demonstrates the magnitude of the problem (stats as of October 2020):

  • Capacity is 35% lower than a year ago
  • Cargo capacity on passenger flights is 50% lower than a year ago
  • Freight rates are 54% higher than a year ago, and were expected to increase even more due to the holiday demand and continued shipments of personal protective equipment
  • It’s predicted that passenger traffic won’t reach pre-pandemic levels until 2026 (and, fewer passenger flights mean less cargo capacity)
  • Some airlines continue to use passenger planes for cargo, but as explained in my May 2020 update, the cabins were designed to carry passengers, not cargo; therefore, loading is more difficult, and because the fire detection system is different, someone must ride in the cabin to monitor the cargo

One of the upshots:

Lack of cargo capacity remains a key obstacle for faster recovery in demand. (DHL October 2020)

airplane

Transportation by Ship

Moving to the shipping industry, DHL’s January 2021 update has sobering news for any small business waiting for their shipments to arrive. Yes, carriers increased their capacity in light of the increased demand. However, that triggered other situations:

  • Ports, particularly in the U.S., are too crowded
  • Port congestion means ships must wait to dock and then must wait for equipment to remove the cargo; all of this is exacerbated by the limits imposed on the workforce by the pandemic
  • The congestion and delays are disrupting schedules; in November, schedule reliability was only 50.1%
  • Predictions are that this situation will continue through March 2021 and possibly longer
  • Rates are increasing on many routes

One of their conclusions?

This situation is unprecedented and requires a lot of flexibility from customers, forwarders
and ocean carriers. (DHL January 2021)

shipping routes
Shipping routes (B. S. Halpern [T. Hengl; D. Groll], Wikimedia Commons, CC BY-SA 3.0)

The Tea Industry Itself

Here are a few snapshots of the tea industry in various places around the world, some positive whereas others are sobering.

For many tea farmers, these are the months in which the tea plants are prepared for spring’s new growth. In some countries along the equator, tea can be harvested year-round, but in most places, the plants are currently resting.

Lisa of TeaHaus had a Zoom meeting last week with Takatomo Katagi, head of Katagi Koukaen in Asamiya, Japan (pictured below at sunrise). Taka told us that during this time of year, when it’s cold outside (17°F on that day), he maintains the soil, mixing in fallen leaves. The leaves act as a natural fertilizer and also help keep the soil temperature more stable. Next he will work in rapeseed oil, another natural fertilizer. Due to the pandemic and the lack of a vaccine right now, the area’s economy, he said, remains slow.

Taka's garden

In my recent post on a tea from Vietnam, one of the world’s major tea producers, I mentioned that restrictions have meant that rural farmers haven’t been able to travel to cities to find additional work. In a trickle-down effect, that means that children may be working on farms instead of returning to school. With rural populations already living in poverty and the tea industry struggling to improve, the virus has made overcoming those obstacles yet more difficult.

Turkey, a country that holds the world’s record for drinking the most tea per person, has spent the pandemic, well, . . . drinking tea! During the first three months of the pandemic, the Turks doubled the amount of tea they drank. They also shared!

Turkey’s tea exports increased a whopping 43% in the first seven months of 2020 and reached $9.13 million. . . . The country sold 2,325 tons of tea to 102 different countries in the said period, recording an almost 500-ton increase compared with the same period last year. (Daily Sabah 11/25/20)

Tea gardens in northern India (Assam, Darjeeling, West Bengal) lost some 65% of their first-flush due to the lockdown. Bad weather followed, which slowed the plants’ recovery and meant there was less second-flush tea as well. With northern India producing over three-quarters of India’s tea, this was a huge hit. However, chair of the India Tea Association, Vivek Goenka, said that because nearly all the tea is now gone, the market is strong with prices either stable or, for better-quality tea, higher (Roy 12/25/20).

In nearby Bangladesh, workers remain impoverished, despite a recent increase in wages, which Rock R. Rozario (10/26/20) argues is pitifully too little, contending that few care whether these workers even survive:

This was evident even during Covid-19 when the whole of Bangladesh was locked down, except for tea workers who were forced to keep factories running with utter disregard for their health and safety.

The country’s tea industry employs nearly 100,000 workers plus another 30,000 seasonally, producing 90 million kilograms of tea each year for domestic consumption (Rozario 2020). Living conditions are appalling, medical care inadequate, and human rights pretty much non-existent, according to Rozario. It’s unconscionable that tea workers were on the job when others weren’t.

Tea workers in Sri Lanka have also been calling for increased wages, having suffered when production went down (as of October, by some 25%) due to the pandemic (People’s Dispatch 10/3/20). Owners apparently continued to impose productivity requirements while cutting wages. However, another source maintains that there was only a 10% drop in tea production, due to bad weather, but, admittedly, that was the “lowest output seen over a decade and falling behind the original target . . . set for the year” (Daily Mirror 1/7/21). Either way, it’s expected that the industry will recover in 2021.

Recently, as reported by the Business Daily (12/21/20), tea from Rwanda is selling at a higher price than that from Kenya, although Kenya accounts for three-quarters of the tea that comes to the Mombasa Tea Auction. Tea brokers attributed the premium price to the tea’s high quality. In addition, prices overall have been higher recently after months of low prices that reflected the glut of tea produced this past year.

Meanwhile, in Kenya, legislature is pending that, if passed, will assure tea farmers receive 50% of their proceeds within a month of auction rather than receiving the bulk of payment at the end of the year (Business Daily 12/23/20). In the current system, farmers frequently must take out loans, so this more constant stream of income ought to be beneficial.

Globally, the tea market is expected to grow in 2021, with most of the revenue generated in China, the world’s largest tea producer (Statista 2020). But as we now all know, projections can be disrupted and overturned by the smallest of things, such as a microscopic virus.

So as we remain safely home, cheered by the prospect of coming vaccines, let’s take a moment to appreciate the tea that we have, with a commitment to purchase from trustworthy sources that obtain their tea from large gardens that treat their employees well and from small independent farmers.

Solving any problem requires a global effort.

teas

Sources: Business Daily, “Rwandan tea outshines Kenyan,” 12/21/20; Business Daily, “Win for tea farmers as Senate passes prompt payments bill,” 12/23/20; Daily Mirror, “Tea output projected to recover this year,” 1/7/21; Daily Sabah, “More staying at home, more tea: Pandemic ramps up consumption of Turkey’s favorite beverage,” November 25, 2020; DHL, “Airfreight state of the industry,” October 2020; DHL, “Ocean freight market update,” January 2021; People’s Dispatch, “Sri Lankan tea estate workers agitate for better pay,” News Click, 10/3/20; Roy, S., “Cash flow issues pull down tea price in North,” The Hindu, Business Line, 12/25/20; Rozario, R. R., “No end to slavery for Bangladesh’s tea workers,” UCA News, 10/26/20; Statista, “Tea,” May 2020.

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