COMMITTEE ON COMMODITY PROBLEMS
REPORT OF THE FOURTEENTH SESSION OF THE INTERGOVERNMENTAL GROUP ON TEA
New Delhi, India, 10 – 11 October 2001
APPENDIX – LIST OF DOCUMENTS
1. The Intergovernmental Group on Tea held its Fourteenth Session at the Vigyan Bhawan International Conference Centre from 10 – 11 October 2001 in New Delhi, India. It was attended by the following member countries: Bangladesh, Burundi, Germany, India, Indonesia, Kenya, Malawi, Philippines, Sri Lanka, Tanzania, the United States of America and Zambia. The European Community attended as Member Organization. In addition, an observer from the International Tea Committee attended. A list of participants was distributed as document CCP:TE 01/Inf. 3.
2. The Session was formally inaugurated by Mr Rajiv Pratap Rudy, Minister of State for Commerce and Industry, Government of India. The statement of the Director-General, Mr Jacques Diouf, was delivered on his behalf by Mr David Hallam, Chief of the Raw Materials, Tropical and Horticultural Products Service, and the Session was opened by Mr Hagen Streichert, the First Vice-Chairperson of the 13th Session. The meeting noted the EC statement of competence and voting rights.
3. The Group expressed warm appreciation to the Government of India and particularly to the Tea Board of India for the hospitality provided to delegates and for the opportunity to meet and strengthen international cooperation and interaction among major tea exporting and importing countries.
4. The Group elected Mr L.V. Saptharishi (India) as Chairperson, Mr H. Streichert (Germany) as First Vice-Chairperson and Mr C.M. Kang’e (Kenya) as Second Vice-Chairperson. The Group agreed that Messrs C.S. Ratwatte (Sri Lanka) and M. Kushner (USA) should act as Rapporteurs.
5. The Provisional Agenda, CCP:TE 01/1 was adopted.
6. The Group reviewed the current situation and short-term outlook with the assistance of background document CCP:TE 01/2. Most of the delegations provided additional information regarding the tea sector in their country. The tendency for supply growth to exceed demand growth with consequent downward pressure on prices was noted. The Group considered that factors underlying these market developments warranted further investigation to provide a basis for the design of appropriate marketing responses. Further investment should be in line with the capacity that the market can absorb.
7. The global situation indicated that production growth was on a par with export growth, while at the same time large retention levels were noted in producing countries, suggesting that the greatest potential for market growth might be in the producing countries themselves. However, elsewhere, domestic consumption has registered only marginal increases or even declined. The apparent balance between supply and demand in the largest consuming market, India, was noted, and it was felt that this might contribute to maintenance of world prices.
8. The Group recognized the importance of enhancing demand for tea but felt that, as for other beverages, attempts to increase consumption levels by promotion needed to take account of the specific character of each market. The Group also noted the difficulties in determining the nature of demand trends in the light of annual variability and the highly segmented nature of markets where growth in certain key new segments was significantly higher than in other more traditional segments. Several delegates expressed an interest in sharing market information and also technical data, perhaps through electronic means, to improve transparency within the market. It was also requested that market information for smaller but faster growing tea producing countries should be presented explicitly in the assessment of the global tea market.
9. The Group reviewed the medium-term outlook to 2010 with the assistance of document CCP:TE 01/3. Delegations noted the importance of medium-term projections as a basis for defining their future production and marketing strategies and encouraged the Secretariat to continue its work in this area. However, some expressed doubts as to the feasibility of making projections over a ten-year time horizon given the dynamic nature of the industry, and suggested that results for a five-year time horizon might also usefully be presented at future sessions. It was also requested that projections for individual emerging producing countries be presented.
10. A number of delegations described the results of their own medium-term projection exercises. In general, these indicated a more pessimistic outlook for market balance, although the Group concurred with the conclusions and recommendations for action contained in document CCP:TE 01/3. It was agreed that further collaboration and consultation between the Secretariat and member countries could be beneficial in taking account of greater country-specific information in the projections and in developing projection methodologies.
11. The Group discussed the medium-term trends in supply and demand and possible measures to promote market balance. It was agreed that there was a need for an analytical study of the international tea economy to assist and inform such discussions, and the Group requested that the Secretariat undertake such a study. It was suggested that the results of this study might be presented at an international tea conference in 2002.
12. The Group considered this agenda item with the assistance of background document CCP:TE 01/4 on developments in the Russian tea market. The Group welcomed the comprehensive and useful information provided in the study in spite of the difficulties of obtaining accurate statistical data on Russian markets. It requested that the Secretariat continue to analyze markets of interest and suggested a wide range of possible countries for study. The value of updating previous studies was also noted. It was further suggested that, if possible, future studies might include additional information on different tea market segments and on possible strategies to access the markets concerned. Specific markets proposed for study were those in Eastern European, the Baltic States, China, India and Pakistan. However, the Group acknowledged that the range and scope of future studies would of necessity be limited by the resources available to the Secretariat. The selection would be made in consultation with member countries.
13. The Group discussed recent trade policy developments with the assistance of document CCP:TE 01/5. It expressed particular concern at the lack of harmonization between standards on maximum residue levels (MRLs) applied by different importing countries which created uncertainty for exporters and was a potential deterrent to trade. Further, MRL standards in some countries were apparently based on “minimum detection limits” rather than on scientific field residue data on tea.
14. It was decided to establish a working group comprising scientists from tea producing and consuming countries to gather the available scientific data on pesticide residues for different countries. This working group would report back to the Group, which would then present the evidence to the Codex Alimentarius Committee with a view to providing a more objective basis for MRL standards and promoting their international harmonization.
15. The Group also considered the impact of tariff, non-tariff and exchange control restraints limiting exports to certain countries. The Secretariat was requested to make a study of this subject and present it to the next Session of the Group.
16. The Group noted that with respect to the Tea Mark there were two issues that needed to be resolved. The most immediate was the continued administration of the Tea Mark. The Group noted that resources were needed urgently if the Secretariat was to continue administering the Mark. Despite the Group's directive at its last Session that the Steering Committee of the Project would, through the Secretariat, work out an equitable formula for levying licensing fees and conveying the contribution of each member, only a few had indicated a willingness to contribute. The Secretariat required these contributions to maintain international registration of the trade mark and meet the costs of associated legal challenges.
17. The Group recommended that a status paper be prepared and distributed by the Secretariat. This report would include the level of contribution of each member necessary to meet the administrative costs of the Tea Mark. The Group further recommended that after considering this status paper each member should respond to the Secretariat on its intention to participate in the use of the Tea Mark by the end of 2001. The Secretariat would then make an assessment of the future of the Tea Mark after considering the submissions and inform members on whether the administration of the Mark could be continued by FAO or other options be considered.
18. The second issue is that of the generic promotion to be carried out using the Tea Mark. However, it was agreed that this issue can only be considered once the future of the administrative mechanism was resolved.
19. The Group noted that the organic tea project proposal which was endorsed by the Group at its last Session had been submitted to the Common Fund for Commodities (CFC) for consideration. The project was approved in principle, and the remaining issue before the project appraisal, most likely at the beginning of 2002, was the loan financing aspects, particularly the loan guarantees.
20. The Group considered two project proposals as contained in document CCP:TE 01/CRS 2: Tea field and factory development project in Bangladesh; and Agroclimatically different properties of tea (Sri Lanka).
21. After carefully considering some reservations concerning the scope of the tea field and factory development project and its conformity with the criteria set by the CFC, the project was endorsed by the Group.
22. The second project, Agroclimatically different properties of tea, was seen as providing potential benefits to other tea producing countries and was also endorsed.
23. Having endorsed both proposals for submission to the Common Fund for Commodities, the Group requested the Secretariat to provide the necessary assistance to the proposing countries. The Group further requested that more information be made available by the Secretariat to the member countries regarding the CFC’s project criteria and procedures.
24. The Group was informed of India’s intention to submit a project proposal on generic promotion and this would be submitted to the IGG Bureau as the inter-sessional mechanism for endorsement of projects.
25. Given the current uncertainty in the world market for tea and the consequent low prices experienced, the Group recommended that a plan of action be drawn up to tackle some of the issues that needed studying in order to minimize this negative impact. It was recommended that the proposed conference to be held next year should examine some of the fundamental factors affecting the global tea economy. On the supply side, an assessment of various supply management schemes could be carried out, and on the demand side, several studies were suggested, including: i) the impact of regional and bilateral trade agreements on consumption; ii) generic promotion using the Tea Mark or other campaigns based on the health message related to tea consumption; iii) a reassessment of the role of the non-active International Tea Promotion Agency (ITPA); iv) an assessment of market potential for “fair trade” tea; and v) a study on price transmission and the relative share of the grower in retail prices. In addition, market studies of both consuming and producing countries were suggested, some of which could be presented or considered at the conference. It was also recommended that a website network be created where information on both technical and marketing information could be shared.
26. The Group expressed its appreciation and thanks for the invitation from the Tea Council of the United States of America to participate as a co-sponsor of a symposium on tea and health, to be held in Washington in September 2002. The Group expressed its willingness in principle to accept the invitation. The possibility of holding the proposed international conference on tea to coincide with the tea and health symposium was discussed.
27. No other matters were discussed.
28. The Group was informed that the date and place of the Fifteenth Session would be determined by the Director-General in consultation with the Chairperson. It noted with appreciation the offer of the delegate of Sri Lanka to host this Session.
Provisional Agenda and timetable
CCP:TE 01 /2
Current market situation
CCP:TE 01/ 3
Medium-term outlook for tea
CCP:TE 01/ 4
Developments in the Russia Federation tea market
CCP:TE 01/ 5
Compendium on trade tariffs and maximum residue levels
Information note on arrangements
European Community (EC) statement of competence and voting rights
List of delegates and observers
Conference Room Series
CCP:TE 01/CRS 1
CCP:TE 01/CRS 2
The Russian tea market
Project proposals for consideration for submission to the Common Fund