Falling Prices Threaten Livelihood of Tea Smallholders

More than two-thirds of the poor in rural areas are smallholder farmers, yet these same farmers produce 70% of the world’s food, according to the United Nations’ Food and Agricultural Organization (FAO).

FAO’s Intergovernmental Group on Tea (IGG/Tea) recently expressed concerns that falling tea prices globally place smallholders in difficult circumstances. Tea is an ideal cash crop for smallholders as the trees thrive on land generally unsuitable for growing conventional food crops, but as supply outstrips demand, prices may fall sharply over the next decade, according to FAO. Delegates from 92 countries attending the FAO-IGG conference in Naivasha, Kenya in June learned that tea prices in Kenya dropped as much as 30% in 2015 due to surplus production.

FAO research indicates smallholders remain dominate producers globally.

FAO research indicates smallholders remain dominate producers globally.

The 180,000-metric-ton surplus in 2014 led to price declines that averaged 5.4% compared to 2013. IGG Chairman Kaison Wang said that more and more growers are turning to tea despite the price challenges. Kaison reported that green leaf prices are no longer sufficient to sustain smallholders in many parts of the world.

“Caution needs to be exercised by stakeholders in the world tea economy,” according to the IGG. It added that greater efforts should be directed at “expanding demand.” Studies made by the IGG indicate that although prices may increase in nominal terms through 2024, in real terms prices may actually decline by an average of 1% per year between 2014 and 2024, according to reports in The Hindu.

Wawan (single name) farms one  hectare of assamica variety tea. His garden in Indonesia produces about 5,000 kg of tea per year.

Wawan (single name) farms one hectare of assamica variety tea. His garden in Indonesia produces about 5,000 kg of tea per year.

Smallholders as a group, including the non-poor, still dominate most farming systems of developing countries and, on the positive side, account for a majority of rural employment, most food production and significant export earnings, according to FAO, which has expressed concern over the increasing economic integration associated with globalization.

“Despite the general concerns expressed in many quarters, relatively little is known about the actual impacts of globalization on the livelihoods of different types of smallholders and other rural poor. There is a pressing need to characterize the effects of globalization on different types of smallholders and villages and to identify policy measures to enhance smallholders’ opportunities and minimize negative impacts associated with globalization, according to FAO.

Sources: FAO: Analyzing Impacts of Globalization on Smallholders, The Hindu