Indonesia Exports Plunge

A combination of weather, competing cash crops and economics is expected to cut Indonesia’s tea production by 40% this year reducing exports to 48,000 metric tons.

14i3_FEA_IndonesiaMarketReport_DewataGarden2In a report published by the Jarkata Globe the Indonesia Tea Council predicted a 2015 crop of 120,000 metric tons with exports falling under 50,000 mt for the first time in decades. Tea production has declined an average 1.7% annually for the past few years, according to Karyudi, director of the Research Center for Tea and Quinine. Competing cash crops such as palm groves used to produce palm oil convinced many smaller farmers to abandon tea.

Nearly half of Indonesia’s tea is exported to Russia, Pakistan and the United Kingdom. The United States also buys large quantities. In 2014 Indonesia was the world’s 7th largest tea producer. Due to a severe drought caused by a particularly strong El Nino, the country is unlikely to remain in the top 10.

Indonesia Tea Production_2015

Production was 146,682 metric tons in 2014 from 121,034 hectares under tea, according to FAO (Food and Agricultural Organization of the United Nations). This year’s El Nino, a cyclical weather phenomena attributed to ocean warming, is one of the strongest on record. Warm seas off the coast of South America impact rainfall in Southeast Asia.

14i3_FEA_IndonesiaMarketReport_DewataGarden4Much of Indonesia’s teas for export are produced by state-owned enterprises. Gardens like Perkebunan Nusantara have for many years supplied black teas to multi-national corporations including Unilever Indonesia. Unilever also buys from a few privately held estates including Kabepe Chakra and Gunung Slamat. Smallholders are struggling as yields are low and the nation’s tea bushes are aging (which decreases yield) and the domestic market remains small. Indonesians consume an average 11 ounces (.32 kilo) per person well below most producing countries.

Sauce: FAO, Jakarta Globe, Indonesia Investments