In 2017 we can still enjoy a cup of artisanally made tea, but for how long will this be possible, and what are the actionable steps we can take to ensure the sustainability of tea? Our economy in the developed world is unstable, so you can only imagine what the economy is like in the not-so-developed world. These are issues that tea producers around the globe have to think about on a daily basis, as the task of producing tea becomes more and more financially straining. In my past “What is Sustainability for Tea” articles, I highlighted the environmental and social issues around the sustainability of tea, and in this article we will look at the economic factors.
According to Merriam-Webster Dictionary, sustainable means “able to be used without being completely used up or destroyed.” Applied to the tea industry it means that the industry will be able to continue to operation without being destroyed.
One of the strongest institutes ever invented by man is business. The trends of business, and economics, follow the trends of society and nature. It was the growing demand for tea that caused the rapid expansion of the global tea industry. It is the flooding of the market with affordably made teas that is now threatening the sustainability of the industry.
For the majority of tea’s history it remained a product that was enjoyed on a localized level mostly by the people that produced it. As the world became globalized an international thirst for tea developed. Wars were fought for the rights of trading tea from China, incentivizing businessmen to develop new tea industries in colonized regions such as India, Sri Lanka, and Kenya. As more product became available the market value of the product remained low; a consequence of simple supply-and-demand economics.
Tea has turned into a global commodity where all producers compete on an even playing field, where producers that can offer a lower price set a low expected price in the market. Buyers have options and often find that the smartest business strategy is to buy low and sell high. With the exception of China, most tea producers currently are in a competitive environment where the market price they receive for the tea is not enough to cover the expense to produce it. Production profit margins reduce year by year. Educated youth are encouraged to seek employment in the cities while older generations are left to tend to tea fields. With no future generations to take over the heritage of producing tea, many tea fields are left to go feral in tea mountains after aging farmers die.
This phenomenon affects small, family producers who produce high-quality teas with much labor. Large tea estates that have the advantage of economies of scale are also up against a hard position in the industry. Although they are able to produce extremely large quantities, they are offered the low price. With the increased cost of production due to natural inflation it has become difficult for them to remain competitive. This has led to a series of controversial business practices such as the use of agricultural chemicals (which affects the environmental sustainability and the unjust treatment of labor (which affects the social sustainability).
This issue will only expand as time goes on, and the economic factors remain the same. Market prices will remain low and cost of production will continue to rise. This is not sustainable. It is unknown what the exact solution will be. Economic trends move with society, so there is power in society making positive change to encourage the sustainability of tea through a change in behavior on a mass scale. In my next and final article of this series, I will propose what we can do as tea lovers and tea business people to save the future of tea that we love so much.