The Asian Tea Alliance (ATA) announced in April 2019 in a memorandum of understanding (MOU), an agreement to act rather than a formal plan, between the main industry and policy organizations in five tea-growing countries: Indian Tea Association, China Tea Marketing Association, Indonesian Tea Marketing Association, Sri Lanka Tea Board and Japan Tea Association. It is representative of the trend towards co-opetition as critical to the future of tea growing in an era of climate change, global overcapacity, disappearing operating profit margins, and labor and social turmoil.
Co-opetition can be summarized as “Collaborate in the morning soyou can compete in the afternoon.” It’s very different from a cartel—cooperateso we can stop outsiders competing—or a NAFTA-like trade treaty. It is a formalgroup publicly committed to working together on a specific area where thecollaborative gains outweigh individual advantage.
The BBC summarizes the issue as “Tea industry’s future restson corporate collaboration” and points to how the largest “teacompanies are laying to one side their competitive instincts to protect thelong-term future of their business” through transparency and authentication,Fair Trade, Rainforest-UTZ, the Ethical Tea Partnership, and supplieridentification. ATA works from the other end of the value chain.
The viability and impact of ATA is unclear. It is an MOU only. Itmay drift, lack financial and organizational resources or not be a priority fornational policy makers and industry leaders. But it is part of a growing trendaway from “Go it alone” to “We can only work on this together, “This” is thefuture of the tea industry. And ATA is the largest force in trading.
Here are rankings of the top ten countries in tea Production(millions of metric tons), Exports and Imports. ATA nations are highlighted.They absolutely dominate production and exports and, correspondingly, areminnows in imports.
Tea Exports and Imports (ATA members shaded)
| Production | Exports | Imports | ||||
| 1 | China | 2.5* | China | 1.8 | Pakistan | 0.6 |
| 2 | India | 1.3 | Kenya | 1.1 | Russia | 0.5 |
| 3 | Kenya | 0.4 | India | 0.8 | USA | 0.5 |
| 4 | Sri Lanka | 0.4 | Sri Lanka | 0.7 | UK | 0.4 |
| 5 | Vietnam | 0.3 | Germany | 0.3 | Egypt | 0.3 |
| 6 | Turkey | 0.2 | Poland | 0.2 | Germany | 0.2 |
| 7 | Indonesia | 0.1 | Japan | 0.1 | Morocco | 0.2 |
| 8 | Myanmar | 0.1 | UK | 0.1 | Japan | 0.2 |
| 9 | Iran | 0.1 | USA | 0.1 | Vietnam | 0.2 |
| 10 | Bangladesh | 0.1 | Vietnam | 0.1 | France | 0.2 |
*Reported in millions of metric tons
For the ATA, the agenda is expanding both the size and quality ofthe trade space and mobilizing to move forward on sustainable development as ablock. The specific targets are:
- Trade: within themajor markets of Europe, Russia which produces virtually no tea but imports$500 million worth, mostly from Kenya; the US, which is among the fastestgrowing tea re-exporters as well as a major importer, and West Asia; a clusterof very varied countries, including Turkey, the Middle East and Iran, as wellas between China and India.
- Cultural exchange: Tradedelegations are a key factor in tea trade relationships. They serve manypurposes, such as informally fueling communication, testing out proposals andagreements, and `bringing together senior industry, political and NGOofficials. Sri Lanka has long relied on these to help build its export markets,and smaller players such as Vietnam and Indonesia draw heavily on them to makeits case for relaxation of import restrictions by countries such as Japan.
ATA emerged from a series of such interactions, with a pivotal MOUin December 2018 that focused on global market promotion of China and India aspremium producers.
- Technology exchange: This is anunderexplored area of opportunity. There are pockets of advanced applicationbut little sharing of information, expertise and experience. China is theglobal leader in drones for precision agriculture and Japan in robotics. Thereis plenty to share.
- Global promotion: Here, the broadmessage is that the era of mediocre commodity tea is over for the ATA growers. Today,there is a massive oversupply of bulk tea. Climate change throws the entiremarket into uncertainty and volatility. Sri Lanka and Kenya are in severedroughts that have halved output.
Prices drop with oversupply and costs increase withunderproduction. The future of tea rests with premiumization, a message the ATAaims to make its brand.
- Asian sustainability agenda:This is obviously central to co-opetition across every area of tea, from bushto cup. The broad agenda is to focus on the UN-mandated SDGs – SustainableDevelopment Goals – drawing on implementation support from suchorganizations as the Solidaridad Network, astrong backer and enabler of the MOUs. This is funded by four Europeangovernments and the International Finance Corporation.
SOURCES: Business Standard, India Today, Times of India
Sri Lanka, China: Tea industry newsletters