Page 1Tea Exporters Association Sri Lanka

Congratulations Joining Our Team…..

TEA AGM 2020 Postponed

TEA welcomes BPL TeasThe committee of management of TEA approved the rejoining of M/S Bogawantalawa Tea Ceylon (Pvt) Ltd effective from 25th September 2020.

Life Time Achievement Award for Tea Trade Members

SRI LANKA TEA PRODUCTION – JANUARY TO AUGUST 2020Sri Lanka Tea production of 22.4 million kgs in August 2020 was a decrease of 3.7 million kgs vis-à-vis 26.2 million kgs of August 2019. All elevations have shown a decrease in production compared to 2019, with Low Growns recording the highest, followed by High Growns and Medium Growns.

September 2020

The Management of TEA seriously considered the new developments in the country after a number of COVID 19 positive cases were reported from Gampaha district. The management was concerned about the safety of it’s members and their employees and took the decision to postpone the AGM scheduled for 8th October 2020. The new date would be announced after evaluating the situation. All tickets issued for the AGM will be valid for the new date.

The management has decided to recognizes and honour the outstanding

persons who have made extra ordinary contributions towards the promotion

of “Ceylon Tea” and developing the tea export sector, commencing from this

year’s AGM. The selection will be based on the following criteria and a

selected party should have satisfied at least 2/3rd of the items included in the

criteria.

1. Excellence in leadership, Brand development, Innovation and being an outstanding person in the tea export sector.2. Vision for long term orientation & potential for expansion of tea export business.3. Development of most globally outreached Sri Lanka tea brand/s.4. Company or individual contribution for growth in tea export supply chain.5. Implementation of sustainable policies – environment protection, resource efficiency, CSR projects etc.6. Product and Market diversification in the last few decades.7. Adherence to international standards to meet the global consumer requirements. 8. Tea export volumes, values and unit FOB prices in the last few decades.9. Employment generation, contribution to national economy etc.10. Contribution to expand Ceylon Tea market share & reputation in the global tea market.11. Contribution made through business enterprises or stakeholder associations for betterment of Sri Lanka tea industry.

WORLD TEA CROP

Page 2Tea Exporters Association Sri Lanka

The available tea crop figures for January-August 2020 period are appended below (in MT)

January-August 2020 cumulative production of 179.1 million kgs too, shows a decrease of 31.8 million kgs against the volume of 211.01 million kgs of January-August 2019. All elevations show a decrease against 2019 with Low Growns, once again, recording the highest deficit followed by High Growns and Medium Growns.

CTC production for August 2020 of 1.6 million kgs shows a decrease of 0.5 million kgs when compared with 2.2 million kgs of August 2019. On a cumulative basis, January-August 2020 CTC production of 15.6 million kgs records a marginal gain vis-à-vis 15.4 million kgs of January-August 2019. High Growns show a gain YOY, whilst Mediums remained static. Low Growns, however, show a decrease compared to the corresponding period of 2019.

(SLTB)

The latest tea crop figures of some leading tea producing countries are furnished below (in million Kg).

September 2020

(SL Customs)

Page 3Tea Exporters Association Sri Lanka

SRI LANKA TEA EXPORTS - JANUARY TO AUGUST 2020

Tea exports for the month of August 2020 totalled 22.01 million kgs, recording a deficit of 4.19 million kgs vis-à-vis 26.20 million kgs of 2019. Tea Bags, Tea in Packets and Bulk tea segments have shown a decline YOY. Total revenue of Rs. 19.03 billion for August 2020 too shows a decrease of Rs. 2.10 billion against the revenue of Rs. 21.10 billion of August 2019. However, the total FOB value of Rs. 864.99 (USD 4.71) shows a gain of Rs. 58.59 vis-à-vis Rs. 806.40 (USD 4.54) of August 2019.

January-August 2020 cumulative exports totalled 174.1 million kgs recording a decrease of 22.1 million kgs against the volume of 196.2 million kgs of January-August 2019. All main categories of exports, (i.e. Tea bags, Packeted tea and Bulk tea) have shown a decrease compared to the corresponding period of 2019. Total revenue too of Rs. 149.40 billion shows a deficit of Rs. 13.10 billion vis-à-vis Rs. 162.50 billion of 2019. Meanwhile, January-August 2020 FOB value of Rs. 858.25 (USD 4.67) shows a gain of Rs. 29.87 vis-à-vis Rs. 828.38 (USD 4.68) of January-August 2019.

Turkey has emerged as the largest importer followed by Iraq and Russia. Iran, China, Azerbaijan, Chile, Libya and Syria are some of the other noteworthy importers. It is also relevant to note that destinations such as the UAE, Japan and Hong Kong have shown a fairly significant decrease in imports during the period under review.

The tea export figures for January-August 2020 are listed below (in MT).

September 2020

experience with a fashionable product and integrating the gourmet quality tea into their life style. The growing retail sector is innovatively catering for new preferences through a diversity of tea origins and flavours.

Page 4Tea Exporters Association Sri Lanka

MAJOR IMPORTERS OF SRI LANKA TEA - JANUARY/AUGUST 2020

(SL Customs- courtesy Forbes & Walker Tea Brokers)

Production in Bangladesh is understood to have returned to near normalcy since July following the setbacks in recent months.

In Rwanda, production and exports are known to be higher this year with 18 factories now manufacturing tea with some of the newer plantations generating healthy yields.

The Council of the European Union is understood to have authorized the formal signing of the China-EU agreement on geographical indications. 100 European geographical indication products in China and 100 Chinese geographical indication products in the European Union will be protected under this agreement. According to the terms of the agreement, 28 tea geographical indication products have been included within the first batch of the protection list and it is expected that the scope of this agreement will be expanded to cover 175 additional products for each party including 31 tea products four years later.

Summary of Developments in the Major Tea Producing Countries

September 2020

In India, cumulative tea crop at the end of August reflects a decline of 22% in comparison with the previous year with the deficit recorded almost totally in the North. One of the reasons that prices at all auction centres in India have remained high in recent months is as a result of supply shortages in the March-June period when in-home consumption was known to have been relatively higher.

In Kenya, production continued to remain high in July though it was relatively less than last year as a result of cold spells of weather, less rainfall and pruning - the cumulative crop now reflects a growth of nearly by 40%.

(Source: International Tea Committee / Courtesy – Forbes and Walker Tea Brokers)

2. Forecast for MENA Region – 2017

Page 5Tea Exporters Association Sri Lanka

Weekly Auctions

Mombasa

Colombo

Kolkata

Guwahathi

The strong trend of the previous month continued at the first two sales for both CTC and Orthodox teas. However, there was less off take at the next sale. The last sale of the moth saw good demand, but at easier rates.

Kochi

Chittagong

There was only fair demand at the first sale of the month whilst the better teas attracted more interest during the following week. Demand was weaker for the larger quantities on offer in Wks. 3 and 4.

Jakarta

All teas met with good demand at the first sale of the month at dearer rates. However, demand was somewhat selective at the following sales.

Limbe

September 2020

Though 22% of the quantity on offer remained unsold, there was good demand at the first sale of the month. Whilst Kazakhstan and other CIS nations showed less interest, all other major buyers remained active. Fair demand only was witnessed at the following sales but Pakistan, Egypt and UK showed more interest throughout the month.

The first sale of the month drew improved demand for teas from all elevations and overall demand remained strong at each of the following sales. Prices for leafy teas were lower at the last sale of the month whilst small leaf teas of High and Medium elevations attracted more interest resulting in improved prices.

Demand was somewhat curtailed in the first week and there was reduced demand with buyers showing less interest on all categories at the following sales but price levels remained quite high.

Market was somewhat easier at the first sale of the month, mainly for the leafy teas. With exporters remaining selective with their purchases, there was less demand at the next three sales. Significant quantities of leafy teas were withdrawn and the total average price continued to slide through the month.

Strong demand witnessed in the previous month continued at the first sale of the month. There was slightly less demand resulting in an irregular market at the second and third weeks with loose tea buyers being more selective. Brighter liquoring teas attracted wider interest at the last sale of the month.

(Source: International Tea Committee / Courtesy – Forbes and Walker Tea Brokers)

Page 6 Tea Exporters Association Sri Lanka

Indian Tea Industry suffers in First Half of 2020

In the first half of current year, India’s tea exports have taken a beating on all three fronts – volume, value and price – compared to the same period of 2019.

As per the official data released by the Tea Board, India’s tea exports nosedived to 93.93 million kg in the first six months of 2020 from 119.72 million kg during January-June 2019, marking a decline of 21.54 per cent.

With fewer takers, especially at higher prices, the average price dropped to INRS 218.30 a kg from INRS 225.37 in January-June 2019, marking a loss of 3.14 per cent.

As less volume was shipped at lower average price, the overall earnings from tea exports suffered significantly. In the first half, overall earnings dropped to INRS 2,050.52 crore from INRS 2,698.13 crore, posting a shortfall of 24 per cent.

Tea industry in both North India and South India posted a decline in tea exports on all the three parameters.

It is also reported that Global black tea production is down by 8% in the first half of 2020.

(Agri-Business – India)

Sustainability of Chinese Tea China is a leader in sustainable and organic tea production. The “secret” facts about the sustainable Chinese tea industry include:

• China is the world’s largest tea exporter• Half of Fair Trade tea in the United States is from China• More than 50 percent of USDA Organic tea in the United States comes from China

September 2020

Lower availability due to output reduction, Covid 19 -induced

lockdown in many countries, suspension of transport facilities,

disruption in the public auctions, hesitancy among exporters to

invest huge sums against uncertain shipments and disturbance

in banking operations were said to be major causes for poor

performance on India’s tea export front.

At the same time, China’s sustainable tea aligns with their domestic goals for ecological improvement and poverty reduction. Sustainable teas in China correspond with U.N. Sustainable Development Goals and China’s own internal goals for economic, social and environmental development.

China’s drive toward increased sustainability comes from both internal and external pressures. Major importing countries like United States and Morocco expect healthier teas with lower pesticide levels that are better for the environment. Consumers in the United States increasingly desire products that are more sustainable and they’re prepared to pay for them.

2. Forecast for MENA Region – 2017

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Page 7 Tea Exporters Association Sri LankaSeptember 2020

Sustainable teas are also associated with a healthier lifestyle. The sustainability mindset includes:

• Economic development for tea workers

• Environmental protection

• Social responsibility

Sustainable teas are feel-good teas that shoppers are seeking, and these shoppers are willing to pay

more to get. For many consumers, a fuller concept of wellness incorporates health benefits and a better

life not just for the drinker, but for all those involved in the tea’s life cycle. China plays a critical role in

these sustainable, good-for-us-all teas.

China’s gains in sustainability align with growing U.S. demand for sustainable teas. U.S. consumers are

seeking more sustainability – 48 percent are looking to change their consumption habits to reduce their

impact on the environment, and 90 percent of Millennials are willing to pay more for products with

environmentally friendly ingredients.

In light of these hidden facts, any serious discussion of sustainable teas in the United States should include Chinese teas and their role in the tea market. Telling the story of how U.S. tea businesses deliver sustainable Chinese teas is important because it is:

• Morally Right – It’s the right approach for our Earth and future generations.• Good Economics – Sustainable tea continues to be an economic driver for millions living in poverty.• Smart Business – Consumers seek and trust brands committed to sustainability.

Kenya's leading tea producer is setting up a specialized factory to produce Japanese sencha green tea, in a move aimed at raising farmers' earnings from the crop.

The East African country, the world's biggest exporter of black tea, is trying to diversify into speciality teas, which normally command higher prices than the traditional variety.

China is one of the biggest producers of Japanese sencha green tea, which differs from conventional tea mainly due to its distinct preparation process, KTDA said.

"One of the requirements of processing Japanese sencha green tea is that it should be delivered to the factory within one hour of plucking," said Jared Onduso, an assistant manager for the project.

(Index Mundi/ Reuters)

Kenya Expands Green Tea Production

Tea Loving Nigerians Finding New Thirst For Coffee

Page 8Tea Exporters Association Sri LankaSeptember 2020

The importance of these sustainability stories often gets lost in the buzz of other news headlines, but China

sustainability continues to lift lives out of poverty, strengthen the environment, and satisfy tea drinkers

across the globe. This is a secret that deserves to be told.

At present Nigerians drink only a tiny amount of coffee. Tea or cocoa are the hot drinks of choice, and are

forecast to account for close to 40% of Nigeria’s non-alcoholic drink spending by 2023, according to

research body Fitch Solutions. By contrast, spending on coffee is seen only at 2.5 per cent. However, a new

trend is developing that wealthy Nigerians cultivate a cafe culture that can also spur consumption of locally

grown crops. “Nigeria is a very aspirational society,” an industry expert says and it’s very easy for things to

catch on.”

(Online Tea Blogs)

The new factory will cost 330 million shillings ($3.05 million), 45% of which is being provided by the Japan Development Agency (JICA). It is expected that manufacturing by new factory may commence from second quarter 2021.

"We can diversify the products that smallholder tea farmers process in order to ensure that they are cushioned against the fluctuations of black tea prices," says an executive at the Kenya Tea Development Agency (KTDA).

Page 9Tea Exporters Association Sri Lanka

Consumption is rising; the retail value of coffee sold has nearly tripled since 2010 to $29 million last year, according to a market research company.

But it is still a market in its infancy. Kenya, with a quarter the number of people as Nigeria, consumes close to the same amount of coffee, and spent $11 million more on the drink last year. Meanwhile South Africa consumed more than six times as much coffee as Nigeria and spent 9 times as much.

In a country where the majority live on less than $2 a day, most Nigerian coffee-drinkers opt for bitter cups of instant coffee that street vendors hawk for 100 naira, just a few cents.

International coffee shop chains have yet to enter the country significantly, although there are a few domestic chains. Nigeria’s Cafe Neo has several locations in Lagos, and Happy Coffee also aims to bring coffee to the masses.

The Kenyan coffee farm focuses on selling high-quality beans and serving them correctly. It also trains baristas and sells grinders and espresso machines. Its roastery capacity has grown from 10 tonnes in 2016 to 50 tonnes today. “More and more young Nigerians appreciate the benefits of coffee and the different ways that it can be consumed.”

(Oman Observer)

Tea Board India Undertakes Virtual Promotional Activities

September 2020

Café owners believe that brewing with imported Italian Moka pots, Japanese siphons and American Chemex coffeemakers can convince Nigerians to drink higher-quality coffee.

Nigeria could easily grow more coffee and that local consumption could help spur this. A Kenyan who founded Lagos-based Kaldi Coffee Ltd in 2014, says luring Nigerians who had only tasted bitter instant coffee would be tough.

On the domestic front, a virtual B2B meet was organized by Tea Board India, with the overall objective of making low-tea drinking states of India into promising markets, where the potential for consumption of tea is high. The webinar attracted wholesalers and retailers from Uttar Pradesh and the National Capital Region, so that they could engage in business with the sellers from the Northeast. This domestic B2B meeting was the first in a series to be organized in the four states of Uttar Pradesh, Bihar, Jharkhand and Odisha, as part of an attempt by Tea Board India to aggressively promote Indian tea in the domestic and international markets.

Tea Board India has been initiating a slew of virtual promotional activities through webinars, virtual B2B meets and video conferences, in order to facilitate tea business, both in the domestic sphere and the export sector, in light of the global pandemic.

A virtual B2B meet of Indian tea exporters, importers and other stakeholders of Egypt were organized jointly by the Embassy of India, Cairo and Tea Board India recently. The underlying principle behind organizing this B2B meet was to develop networking opportunities and to generate the requisite business leads for Indian tea exporters to Egypt. About 60 delegates participated in the meet, which covered various possibilities for increasing Indian tea exports to Egypt.

Page 10Tea Exporters Association Sri Lanka

Saudi Economy Shrinks in 2Q

Back then, the oil sector slumped by 4.6%, while the non-oil sector posted a positive growth rate of 1.6%.

But the coronavirus-driven lockdowns were bound to impact the Saudi economy hard in the second quarter.

(Reuters)

(Tea Board of India)

The Saudi unemployment rate was "largely impacted by the effects of the COVID-19 pandemic on the Saudi economy," it said.

September 2020

Consumer spending fell 5.5% year on year in August, as the VAT hike kicked in, said Arqaam Capital,

citing August central bank data. Inflation meanwhile spiked to 6.2% in August, due to the VAT increase.

Saudi Arabia tripled a value-added tax in July to boost non-oil revenues, but that is limiting domestic

demand, dampening economic recovery.

"More important is going to be the ongoing impact of Covid and the continued low oil price. Fiscal

retrenchment and tightening will result in a weak domestic economic backdrop and a weak outlook for

private sector job creation for nationals”.

The overall quarterly GDP performance was the largest year-on-year drop since the quarterly series began

in 2010, Capital Economics said.

The non-oil sector, which is the focus of Saudi reforms aimed at diversifying the economy away from

crude revenues, shrank by 8.2%, while the oil sector declined by 5.3%, the statistics authority said.

Further, an interactive meeting was held via video conferencing with major exporters and associations, on

the issue of the “Way Forward for Indian Tea Exports in the Current Situation.” The meeting was chaired by

Shri P.K. Sahoo, deputy chairman of Tea Board India.

These were the first of the series of virtual meetings organized by Tea Board India in the wake of the global

pandemic, to facilitate tea trade. The Tea Board India plans to organize more of these meetings in the

coming months to address the issues related to both domestic, international tea trade and other

requirements of the Indian Tea Industry.

In the first quarter, Saudi Arabia posted a 1% economic

contraction, but that only captured part of the oil price collapse

and the impact of the pandemic, which escalated in March.

Saudi Arabia's economy shrank by 7% in the second quarter, a sign of how deeply the new coronavirus hit

both the oil and non-oil sectors, while unemployment hit a record high of 15.4%, official data showed.

The world’s largest oil exporter is facing a deep recession after the COVID-19 pandemic curbed global

crude demand and measures to contain the coronavirus hurt domestic activity.

"The private sector and the government sector recorded a negative

growth rate of 10.1% and 3.5%, respectively," said the General

Authority for Statistics.

Page 11Tea Exporters Association Sri LankaSeptember 2020

A new Dar es Salaam tea auction would officially start this month, the Tanzania Board of Tea (TBT) said yesterday.

(The Citizen News Paper)

Meanwhile, the board is in talks with professionals from Sri Lanka and Kenya who would help to increase the knowledge of local experts on how to identify the best tea to be accepted in foreign markets.

Also the board has written to various tea buyers around the

world and locals so that they could participate in the auction.

In the future, Rwanda and Burundi, who are also tea

producers, will also start selling their products through the

Dar es Salaam auction.

“This is a great opportunity for producers and sellers, there is a team we formed that was able to visit all

production areas and many farmers have shown interest in the presence of the auction,” he said Currently

more than 32,000 smallholders’ farmers are engaged in the sub sector whereby on average 40,000 to

60,000 people are employed in farms and factories. However over 2 million are engaging in the tea value

chain.

According to him, the government decided to open the auction in Dar es Salaam with a view to stimulating

economic growth and empowering smallholder farmers. The new auction suggests that farmers and

businesspersons would now not have to travel to Mombasa, Kenya where they were selling their product.

Tanzania tea sold through Mombasa auction is estimated at between 5,000 and 8,000 tonnes per year,

depending on the harvest season and weather in major production areas.

The new tea auction will be conducted by the Tanzania Mercantile Exchange (TMX) via an online system,

whereby buyers across the world will be able to get the opportunity to participate. European Union (EU)

through the Agri-connect project has agreed to finance a major conference that will bring together all tea

crop stakeholders and professionals who will help to train local people.

The Managing Director of TBT has told The Citizen that they were now waiting for the Warehouse

Receipts Regulatory Board’s approval of the two warehouses with a capacity to store 13,000 tonnes of tea

at once. Tanzania’s farmers have a capacity to produce 6 to 7 million tonnes of tea per month.

Tanzania to have first Tea Auction