May ‘08
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Annual Bulk Tea Sale (500g bags only) 40% off selected 2006 tea

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Spring Tea, Cold Winters, Currency Fluctuation, & Labor Reform

It’s spring time and the early green tea has been harvested. Although the crop is very good, prices will be up this year for a number of reasons. The winter in China was a long and cold with a lot of snow. While the snow was welcome in some areas that did not get as much last year because of the early spring, still the prime picking season was shortened this year. During the Spring Festival this year, hundreds of thousands of travelers were stranded by the storms from one side of China to the other. Especially hard hit this year were the green tea growing areas. The shortened spring caused the supply to be greatly reduced causing the price of quality green tea to rise.

There are other factors driving up the price. The price for good quality pickers has risien for a couple of reason. The first is a labor reform law that was passed this year the requires employers that pay 28% of a workers wages for a type of social security to help for retirement and other social benefits. While this is a great benefit for workers it raises the cost of tea production. There is another issue involved in raising the price of good quality tea. A lot of pickers have left the country for the city. This is a nationwide issue in agriculture in general, and because good pickers are very skilled, the shortage has also raised the price.

The other major factor is the weak dollar. The trend will probably continue over time as the Chinese economy continues to grow, the strength of the RMB will continue to grow too. China has tried to keep the RMB low to aid the price of exports, but they have started to adjust it against the dollar. The days of cheap imports from China are gradually starting to come to a close.

Of course, quality tea has never been cheap in China, but with the Chinese economy doing so well, the competition for the best tea is increasing. With the new restrictions on Chinese tea exports, ( I will write about this later) Chinese tea producers are seeing the domestic market as being far more attractive than the subsidized export market. This could have an affect on the number of producers that are organic certified. As a long time supporter of organics we will continue to help producers pay for organic certifications, but it may reduce the overall number. This may not happen, however, because the domestic market is becoming better informed and more demanding about the safety of the Chinese food supply. The environmental movement inside of China is also gaining momentum. It will be interesting to see what will happen over the next few years. Certainly things are changing and changing rapidly.

Austin

Posted: April 14th, 2008 under Seven Cups News, Tea News.