Tea exports rebound but still lower than 5 years ago

Association Chair Nguyen Thi Anh Hong was widely quoted by the Vietnamese media as saying that the country's tea exports have improved from their lacklustre performance over the past several years.

Though the better figures are encouraging much more need be done to achieve the export levels of five years ago, higher profitability and long-term sustainability, Ms Hong noted.

During the January-November period, the domestic sector shipped 118,000 tons of tea to foreign markets generating US$197 million in gross revenue, up 7.1% in volume and 4.3% in value year-on-year.

Major markets that experienced significant growth for the period included Pakistan, China, Indonesia and Malaysia. Pakistan was the lead buyer of the country’s tea, commanding a 33.5% market share.

Exports were buoyed by two-fold rises in sales volumes to China and Indonesia while consignments to Malaysia jumped 44.7% in volume, said the Association in a prepared statement.

Currently, the tea export price hovers around US$1,656 per ton, roughly a drop of 14% from November of 2015.

In line with statistics from the Association, experts estimate that the Vietnam domestic sector tea output fell to 160,000 tons in 2014— a 13.5% annual decline following a 7.5% drop in 2013.

The area dedicated to tea cultivation in the Southeast Asian country has fallen gradually over recent years, from 130,000 ha in 2009 to 124,000 ha in 2013. Poor weather and a lack of reinvestment in the tea segment contributed to a particularly weak 2014 result.

Experts had forecasted a partial recovery in 2015-16 on the back of the positive impact of official efforts to expand the production area (to a targeted 150,000 ha by 2020) and boost productivity.

However, at a projected level of 170,000 tons in 2016, production will remain around 15% below 2011-12 levels, per experts.

On the upside, Ms Hong noted that the domestic tea sector has managed to strengthen controls over excessive pesticide use, which grip is a fundamental prerequisite for the sector to gain market entry into the EU.

The EU is the globe’s third largest economy in terms of tea consumption and the Association is banking on improved market entry subsequent to a Vietnam-EU free trade agreement coming into full force by 2018.

The use of chemicals in the EU are also strictly regulated so it’s important to keep making progress in this area, added Ms Hong.

The domestic sector has also made headway in improving productivity, coordination among the supply chain members, noted Ms Hong, but still lags in giving effect to a cohesive global marketing and brand building effort.