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COMMITTEE ON COMMODITY PROBLEMS |
Sixty-second Session |
REPORT OF THE TWELFTH SESSION OF THE INTERGOVERNMENTAL GROUP ON TEA |
Bali, Indonesia, 2-4 July 1997 |
A. MARKET SITUATION AND SHORT-TERM OUTLOOK
B. IDENTIFICATION AND DEVELOPMENT OF MARKETS
C. PRICE DETERIORATION, EXPORT EARNINGS AND FOOD SECURITY OF SMALL TEA GROWERS
D. POLICY CONSIDERATIONS FOR STRENGTHENING ECONOMIC VIABILITY
B. Production and market improvement measures
C. Statement of priorities of the Group to the Common Fund for Commodities
IV. REPORT OF THE INTERNATIONAL TEA BUSINESS CONFERENCE
V. DATE AND PLACE OF THE THIRTEENTH SESSION
1. The Intergovernmental Group on Tea held its Twelfth Session from 2 to 4 July 1997 in Bali, Indonesia. It was attended by the following member countries: Bangladesh, Burundi, Canada, China, European Community, India, Indonesia, Islamic Republic of Iran, Kenya, Malawi, Mauritius, Peru, Sri Lanka, Tanzania, Thailand, Turkey, United Kingdom, United States of America and Viet Nam. In addition, observers from the following organizations attended: Islamic Development Bank, Common Fund for Commodities, and International Tea Committee. In addition, the United Kingdom Tea Council attended as project executing agency (PEA) for the project on tea and health. A list of participants was distributed as document CCP: TE 97/Inf.2.
2. The statement of the Director-General, Mr Jacques Diouf, was delivered on his behalf by Mr A.W. Jalil, FAO Representative in Indonesia and the Session was formally opened by Mr Syarifuddin Karama, Secretary-General of the Ministry of Agriculture, on behalf of the Minister for Agriculture.
3. The Group expressed warm appreciation to the Government of Indonesia and particularly to the Ministry of Agriculture and the Indonesian Tea Association for the hospitality provided to delegates, and for the opportunity to learn more about the tea industry in Indonesia.
4. The Group elected Mr Moeljono Partosoedarso (Indonesia) as Chairman, Ms Danielle O'Rourke (Canada) as First Vice-Chairman, and Mr George Kimani (Kenya) as Second Vice-Chairman. The Group agreed that Messrs Martin Kushner (United States of America) and R.K. Krishnakumar (India) should act as Rapporteurs.
5. The Provisional Agenda, CCP: TE 97/1, was amended and adopted with the amendments reflected in CRS.8.
6. The Group took note of a report concerning the market situation and short-term outlook (CCP: TE 97/2).It stressed the importance of continued market outlook studies as a means of providing a framework for guiding measures aimed at achieving sustainable growth in the tea economy and contributing to lasting price improvement. Suggestions were made to improve such analysis, including:
· Extending coverage to a longer term time span;
· Taking into full account the impact of such factors as economic growth, structural changes in certain markets such as the former USSR and some countries of the Near East, new product development, inventory practices, and growth of domestic production in some importing countries;
· Tracking tea retail prices in major consuming countries, and the age distribution of consumers;
· Differentiating market trends on a qualitative basis.
7. The Group referred to measures to stimulate demand, and to try to avoid structural imbalance in the world market, for example through the project on human health and promotion. Attention was also drawn to the importance of business partnerships to improve economic viability and inter alia small holder income.
8. The Group urged all member countries to cooperate in improving information in these areas, including providing relevant national studies regarding medium-term prospects for production and demand.
9. The Group stressed the need for continuing efforts to identify and analyze potential markets for tea. It reviewed document CCP: TE 97/3 on "Tea Market Developments and Prospects in the Russian Federation" and concluded that the report was a useful initial step but that, within available resources, other markets of the former USSR should be analyzed in order to get a complete picture of the demand situation before and after reform. The Group also drew attention to the need to analyze other markets, particularly in Near Eastern importing countries and China as well as in non-tea drinking countries. The Group requested that data be provided by members to the Secretariat to facilitate this work and expressed appreciation to the International Tea Committee (ITC) for its willingness to make available information on exports to the area of the former USSR to assist in the estimation of demand in that area.
10. The Group discussed the contribution of export earnings from tea on smallholder food security, with the assistance of document CCP: TE 97/4. The Group noted that earnings from tea exports were an important source of foreign exchange which provided a material base for national economic growth and contributed to the payment of food import bills in many tea producing countries. At the household level, earnings also contributed improvement in nutrition and education levels.
11. Group encouraged cooperation between exporting and importing countries to promote demand for tea and improve export earnings. The Group suggested that greater attention be paid to difficulties faced by tea smallholders particularly in terms of technical and financial constraints, and some delegates called for international funding agencies to make efforts to assist them particularly through concessional loans to finance the establishment of small-scale processing factories. While productivity was considered important in improving returns, it also needed to be considered in the context of market opportunities. In addition, the economic and social impact on smallholders of productivity-enhancing technologies, for example mechanization, needed to be carefully examined. To have a better understanding of the problems faced by smallholders, the Group recommended that FAO explore with members the possibility of organizing a workshop to discuss how to assist tea smallholders. The delegate of Indonesia offered to host the workshop.
12. The Group reviewed with great interest the results of the world tea model presented in document CCP: TE 97/5, "Trade volumes and prices in the world tea market." Preliminary results indicated that changes in trade volumes were found to have a significant impact on prices. It was noted that orderly expansion in exports and effective promotion to increase demand could greatly improve world tea prices. Some members of the Group suggested that withholding teas that did not meet ISO 3720 from the export markets would reduce availabilities of tea in the world trade and consequently increase export prices.
13. The Group expressed concerns about the practical implications of the model and requested the Secretariat to refine and improve it taking into account recent market developments when additional data become available. To assist exporting countries in their consideration of production and trade policies, the Group suggested that FAO distribute the updated model to member countries and organize a programme to train their officials in its use providing resources were available. The Group also requested the Secretariat to investigate the major factors affecting import demand, and build these into the model.
14. Mr. Akiyama and Ms. Yabuki of the World Bank, made a presentation on "Estimating Welfare - Maximizing Production Levels for Agricultural Commodities." The document presented a new approach that could be used by policy makers in producing countries when formulating tea projects using a user-friendly, spreadsheet-based programme. It was reported that the main policy objective of producing countries should be based on cost reduction and not production increase per se. Several producing countries expressed interest in this approach, and requested that a special session outside the plenary be organized to explain and discuss the analyses in some detail.
15. The Technical Advisory Committee (TAC) of the Supervisory Body presented its report to the Group covering the research activities on health effects of consumption of black tea as of December 1996 with the assistance of document CCP: TE 96/7. Subsequently, the PEA presented a progress report updating information on findings of health-related research up to the end of Year 2 of the project. Results from the majority of the cancer related studies were now available and should appear in scientific journals in the near future. Available evidence suggested that black tea consumption may protect against lung cancer development. Of the various causes of breast cancer, tea drinking was most likely to protect against those associated with the consumption of high fat diets. While initial results were indicative of positive effects, further studies on colon cancer were necessary. The results of the studies under the cardiovascular disease umbrella conducted to date provided preliminary evidence that tea might be able to protect against the oxidation of fat in the blood, and therefore might protect against the development of heart disease unless an individual's genetic make-up was such that preventive measures were unlikely to be effective. With regard to research on tea and oral health, the Steering Committee of the PEA was actively involved in the assignment of research activities. It was re-emphasized that the intent of the project was not to develop hard health claims for tea which would not be universally accepted. Rather the information from the research as well as that provided from third party sources would be used to develop a health-related message which could continually incorporate new research information and be used internationally in a manner which was consistent with regulatory/legislative restrictions across all countries.
16. On the promotional phase of the project, the Group received with interest a report from the PEA concerning the work which had been completed and extensively researched to develop a communications package to convey a general health message for black tea globally. A number of comments and questions were raised. The Group agreed that the communications device (symbol and strapline) which had been developed was to be considered part of a package for the generic promotion of tea internationally. In addition, the Group noted that access to the UK Tea Council Website containing the research library which consisted of a compilation of relevant research results that would indirectly support the health benefits of tea consumption, was free on formal registration.
17. The Group complimented the PEA and its expert advisors on the work undertaken and endorsed the implementation package as a whole, noting that tailor-made test market plans would be prepared for each of the four test markets. These plans would be placed before the Steering Committee of the PEA for formal clearance at its next meeting scheduled to take place before the end of 1997. It was expected that the test markets would be commenced in January 1998.
18. The Group considered property rights governing the communications package developed on its behalf by the PEA. The PEA reported that pending the Twelfth Session of the Intergovernmental Group a firm of lawyers in the United Kingdom was entrusted with the responsibility of registering the ownership of the communications package. After the conclusion of the Twelfth Session of the Intergovernmental Group the ownership would be registered in the name of FAO. Following consultations with the PEA, the Group agreed that in pursuance of the overall objectives of the project, ownership of the communications device (symbol and the strapline) would continue to be retained by the FAO on behalf of the Intergovernmental Group and its members as well as the Common Fund for Commodities. Following discussions some members drew the attention of the Group to a report that the communications device of the project had become the property of the PEA. It was clarified by the FAO Secretariat that the PEA had relinquished all claims on the communications device and the communications package on behalf of the FAO. The Project Agreement between FAO, the CFC and PEA would be amended accordingly.
19. After discussions it was agreed that the relevant documents including the letter from the PEA relinquishing ownership rights over the communications package and the letter from the firm of lawyers temporarily acting as custodians would be circulated to all members of the Intergovernmental Group on Tea.
20. FAO on behalf of the Group and its members, in cooperation with the PEA and its Steering Committee, would prepare a proposal as to the usage of the communications package for the period following completion of the test markets and the conclusion of the overall project. This proposal would address issues concerning the usage and monitoring of the communications package, taking into account the widely expressed view that the package should be made available as extensively as possible, and in accordance with internationally accepted legal and commercial practice. It was also suggested that consideration should be given to levying a license fee for the use of the communications package. The Group requested that this proposal be transmitted by FAO to IGG members for their comments well in advance of the Group's next session to which the proposal would be submitted for approval.
21. The Group reviewed the report of the Beijing Tea Workshop which was organized by the Secretariat in cooperation with the Ministry of Agriculture, China, in July 1996 with the assistance of document CCP: TE 97/CRS.2. The Group noted the importance of new technologies in improving profitability. It endorsed the recommendation of the Workshop that the development of project proposals be encouraged within the framework of the Statement of Priorities, CCP: TE 96/7, and suggested that FAO promote cooperation in tea research among exporting and importing countries and facilitate the organization of expert meetings on a regular basis to address major issues of concern to the Group.
22. The Group endorsed the Statement of Priorities, CCP: TE 97/6, which was presented by the Secretariat. A few adjustments were suggested and these would be reflected in the final document to be presented to the Common Fund for Commodities (CFC). The Group recommended that the nine project ideas provided in the Annex to document CCP: TE 97/CRS.2 be discussed with the CFC. Any further development of the profiles would be undertaken by the countries and institutions concerned, in consultation with the Secretariat. It was agreed that the Secretariat with the advice of the Chairman, should make such arrangements as needed to ensure effective follow-up between sessions for CFC matters which might require urgent attention.
23. The Group was informed of the outcome of the First International Tea Business Conference (ITBC) organized by the Indonesian Tea Association in Bali, immediately prior to the Twelfth Session of the Intergovernmental Group on Tea. The main conclusions and recommendations of the ITBC were tabled as CCP: TE/CRS.7. Delegates of many producing and consuming countries expressed their warm support for this initiative which had provided tea industry leaders with an opportunity to interact and discuss market and trade issues. They looked forward to the continuation of such opportunities and offered support to the Indonesian Tea Association to launch the proposed International Tea Society.
24. The Group was informed that date and place of its Thirteenth Session would be determined by the Director-General in consultation with the Chairman. It noted with appreciation the offer of the delegate of Turkey to host this session, in conjunction with an international tea business conference, and requested the Secretariat to pursue appropriate consultations. The Group expressed the hope that it would be possible to convene the session before the end of 1999 when the Programme to Create an Increased Demand for Tea through a Generic Promotion Campaign Based on the Human Health Benefits of Black Tea Consumption would terminate.
APPENDIX
List of Documents
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CCP: TE 97/1 |
Provisional Agenda |
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CCP: TE 97/2 |
Tea market developments in 1996 and its short-term prospects |
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CCP: TE 97/3 |
Tea market developments and prospects in the Russian Federation |
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CCP: TE 97/4 |
Price deterioration, export earnings and food security of small tea growers - A case study for Indonesia, Kenya, Sri Lanka and Tanzania |
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CCP: TE 97/5 |
Trade volumes and prices in the world tea market - preliminary results from the world tea model |
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CCP: TE 97/6 |
A statement of priorities of the IGG on Tea |
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CCP: TE 97/6 (Revised) |
A statement of priorities of the IGG on Tea |
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CCP: TE 97/7 |
Report of the TAC on the Programme to Create an Increased Demand for Tea |
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CCP: TE 97/8 |
Report of the Twelfth Session of the Intergovernmental Group on Tea (Bali, Indonesia, 2-4 July 1997) |
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Information Documents | |
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CCP: TE 97/Inf.1 |
Information Note on Arrangements |
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CCP: TE 97/Inf.2 |
List of Delegates and Observers |
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CCP: TE 97/Inf.3 |
European Community - Declaration of Competence and Voting Rights |
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Conference Room Series | |
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CCP: TE97/CRS.1 |
An approach to designing tea production strategy |
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CCP: TE 97/CRS.2 |
Report of the Beijing Tea Workshop on Advances in Tea Sciences and Technologies and the World Tea EconomyZ |
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CCP: TE97/CRS.2 ANNEXES |
Profiles of projects presented at the Beijing Workshop |
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Annex 1 |
Increasing economic return to tea farmers through developing tea products |
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Annex 2 |
In search of reliable parameters and their use as objective quality indicators in black tea |
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Annex 3 |
Development, production and promotion of organic tea in the world |
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Annex 4 |
Implementation of integrated plant production management on tea bio-farming |
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Annex 5 |
Storage of made tea (cryopreservation) |
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Annex 6 |
Studies on tea cola (ready-to-drink) |
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Annex 7 |
Studies on development of tea machineries |
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Annex 8 |
Germplasm exchange |
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Annex 9 |
Development of tea marketing information through strengthening tea statistics |
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CCP: TE 97/CRS.3 |
The Project Executing Agency report on the communications package and the research elements of the Programme to Create an Increased Demand for Tea |
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CCP: TE 97/CRS.4 |
Challenges and Prospects of the Tea Industry in Indonesia |
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CCP: TE 97/CRS.5 |
The Russian Federation tea market |
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CCP: TE 97/CRS.6 |
Tea statistics |
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CCP: TE 97/CRS.7 |
General conclusions and recommendations of the International Tea Business Conference |
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CCP: TE 97/CRS.8 |
Agenda and timetable of working sessions |
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CCP: TE 97/CRS.9 |
Letter by the Project Executing Agency (PEA) relinquishing any rights or ownership of the communications package developed under the Programme to Create an Increased Demand for Tea through Research on the Human Health Benefits of Black Tea Consumption and Generic Promotion |