Goodricke group managing director and former chairman of the Indian Tea Association S K Bhasin told an Asia Tea Industry conference in Singapore that world output continued to rise while consumption remained flat.
I suggest the major tea-producing countries such as China, India, Sri Lanka, Malaysia, Kenya, Malawi and Bangladesh should sit together and work out a mutually acceptable formula for tea exports in the coming years, Bhasin said.
The first important decision needed on the part of every exporting country is to restrict its exports to a level which fetches remunerative prices, he said.
Food and Agriculture Organisation official Alastair Hicks told the conference that production expansion programmes in many countries would boost output to 2.81 million tonnes by the year 2005 from the 1991-93 average of 1.91 million tonnes.
In 1994, production was 1.74 million tonnes while consumption was 1.70 million tonnes. Tea is a popular beverage in many countries in the world.
Sri Lanka, the world's largest exporter, expected production to soar to an all-time high of 250 million kg in 1996 against the former record of 245.96 million kg in 1995, said Colombo Tea Traders Association's former chair R L Jurainsz. But tea imports by major consumers like Britain fell nearly eight per cent in 1995 to 137,000 tonnes while US imports slid 15.8 percent to 81,300 tonnes, FAO figures showed. Tea export competition among exporting countries continued to intensify as demand remained weak, Hicks said.
Bhasin said the excess supply made it vital that producing countries banded together and set aside a desire to boost exports in favour of a drive to boost prices. It does not require a mathematical genius to show that an indiscriminate increase in production and exports only results in a fall in tea prices and it is better to exporta slightly lower quantity which can fetch a much higher price and a much bigger total revenue than to export a large quantity at a very low price, he said.
Another factor the tea industry faced was increased competition from other drinks like mineral water and soft drinks, said Rachmat Baduriddin, chairman of the Indonesian Tea Association.
It's total share can be eroded drastically unless effective strategic measures are taken by the tea industry as a whole, the official said, adding the competition would continue to exert very strong downward pressures on the tea industry.