INTERGOVERNMENTAL GROUP ON TEAEXPERT CONSULTATION ON TEA

MARKET ISSUES

Thomas Jefferson AuditoriumUnited States Department of Agriculture

25 September 2002

TABLE OF CONTENTS

I. INTRODUCTION 2

II. GENERAL STATE OF COMMODITY MARKETS AND MAJOR CONCLUSION OF THE CONSULTATION ON AGRICULTURAL COMMODITY PRICE PROBLEMS 2

III. REVIEW OF THE WORLD TEA MARKET AND FUNDAMENTAL ISSUES 3

IV. MARKET ACCESS 4

V. GENERIC PROMOTION OF TEA BASED ON THE HEALTH MESSAGE:THE IMPACT ON CONSUMPTION 6

VI. OTHER BUSINESS 9

A. Highlights of the Third International Scientific Symposium on Tea and Health: Role of Flavonoids in the Diet 9

B. Next Session of the Intergovernmental Group on Tea 9

ANNEX I 10

ANNEX II 12

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I. INTRODUCTION

The Expert Consultation on Tea Market Issues was held on a back-to-back basis with the Third International Scientific Symposium on Tea and Health: Role of Flavonoids in the Diet, at the Thomas Jefferson Auditorium, United States Department of Agriculture, on 25 September 2002 in Washington, DC, United States of America. It was attended by experts from the following member countries of the Intergovernmental Group on Tea: Burundi, Canada, India, Indonesia, Kenya, Sri Lanka, Tanzania, Turkey, United Kingdom and the United States of America. In addition, experts from the following international organizations also attended: the Common Fund for Commodities, International Tea Committee and the World Bank. The Consultation Programme and the List of Participants are attached as Annex I and II, respectively.

Mr David Hallam, Chief of the Raw Materials, Tropical and Horticultural Products Service of FAO’s Commodities and Trade Division chaired the morning session, and Mr L.V. Saptharishi (India), Chairperson of the Intergovernmental Group on Tea chaired the afternoon session.

The statement of the Director-General, Mr Jacques Diouf, was delivered on his behalf by Mr C.H. Riemenschneider, Director of the FAO Liaison Office for North America. He informed the Consultation that the persistent uncertainty in the marketplace was of great concern and required a careful examination of the pressing issues affecting the global tea economy. Subsequent remedial action could then be articulated in order to minimize their negative impact. He was pleased to see the demonstration of solidarity and commitment of Experts present from producing and consuming IGG member countries, as well as from international organizations such as the Common Fund for Commodities and the World Bank.

Given the impressive line up of Experts present, Mr Riemenschneider was confident that the demand side activities to stimulate consumption would be clearly defined and the direction of future policy options to support such activities determined. He envisaged that such actions would improve market prospects for tea and therefore would have a significant positive impact on the world tea economy.

II. GENERAL STATE OF COMMODITY MARKETS AND MAJOR CONCLUSION OF THE CONSULTATION ON AGRICULTURAL

COMMODITY PRICE PROBLEMS

In introducing the Consultation, Mr Hallam described the general state of commodity markets and major conclusions of the Consultation on Agricultural Commodity Price Problems which was held earlier in the year at FAO in Rome. He stated that world agricultural commodity prices were generally at historically low levels and would likely remain so in the short term. Depressed commodity price levels were not a new phenomenon, and neither were the questions they provoke about underlying causes, whether they mark a departure from previous market behaviour, and whether there was a case for remedial action. Secular relative decline in agricultural commodity prices was expected as technological progress reduced costs and induced supply expansion at a faster rate than population and income growth expand demand.

While demand and supply behaviour could change through time as a result of changes in technology, consumer preferences, market structures, policies or institutions, econometric analysis for several commodities by FAO’s Commodities and Trade Division confirms that market fundamentals continued to be the dominant influence on agricultural commodity prices and that the nature of that influence had not changed significantly.

As for the implications of low agricultural commodity prices, Mr Hallam indicated that the price inelastic demand for most agricultural commodities meant that lower world prices would lead to lower export earnings for developing country exporters. While market liberalization might have increased the share of the export price going to farmers, these price falls had inevitable consequences for the

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economic situation and food security of producers in African, Caribbean and Central American countries dependent on commodity export earnings. Remunerative prices were needed if production and exports were to be sustained and developed to provide a platform for broader development. Many countries currently had no alternative economic platform on which to build. They were dependent for a significant share of their export earnings on one or a few agricultural exports.

In discussing the scope for international action on low commodity prices, Mr Hallam mentioned that recent discussions of international agricultural commodity markets have been dominated by the issue of trade liberalization and the negotiations on improvement of market access and limitation of export subsidies. The process of liberalization was generally seen as one which led to higher commodity prices at least in the short run, although the effects of liberalization on commodity prices so far following the Uruguay Round had been small. For many tropical commodities such as tea, more significant issues were tariff escalation which could discourage developing country exporters from capturing value-added and hence greater export earnings, and domestic support in the developed countries which encouraged excess production. Both of these issues were highlighted at the Doha Ministerial Conference. In the longer term the tendency towards oversupply in commodity markets could only be addressed by encouragement of diversification out of commodity production at least in marginal areas. Diversification could provide an escape from low prices for specific commodities, provided that a wide enough range of alternative activities, including non-agricultural activities, were considered, and that producers had the necessary support to exploit them.

In the past commodity agreements with “economic clauses” to control supply levels were tried without much success although the scope for “producer-only” agreements to limit production or exports had recently been discussed in relation to a number of commodities. However, experience to date in implementing such aggrements were not encouraging. The difficulties of sustaining cooperative market interventions led to interest in risk management and market based tools to cope with price variability, but their feasibility needed to be examined.

Market interventions, compensation schemes and risk management cannot counter long-term decline in relative commodity prices. This required a permanent improved balance between demand and supply. Cooperative international actions to stimulate demand – generic promotion, consumer education programmes, for example – could slow secular price decline. The difficulty, as with supply-side cooperative actions, was to find an institutional manager for such programmes and a means to finance them which minimized free-rider problems. For tea, producing country markets offer scope for development, and successful promotional campaigns had been run in India. A unique approach was being developed by the Intergovernmental Group on Tea and the Food and Agriculture Organization through a programme to stimulate demand through generic promotion emphasizing the health benefits of tea using a symbol and strapline, the Tea Mark. The Common Fund for Commodities (CFC) had an important role in product and market development, but its procedures constrained it from being more pro-active in identifying projects which met international commodity market priorities.

The Experts noted that marketing adjustments were required and that medium to long term marketing strategies were needed in order to impede the negative impacts on the global tea market due to competition with other beverages, including soft drinks.

III. REVIEW OF THE WORLD TEA MARKET AND FUNDAMENTAL ISSUES

Mr Kaison Chang, the Secretary of the Intergovernmental Group on Tea, then provided an overview of the current situation in the world tea market and the possible mid-term prospects for the global tea economy. He informed the Consultation that world tea exports had grown by 3.1 percent annually over the last decade, from 1.02 million tonnes in 1992 to 1.37 million tonnes in 2001. Annual growth in export values, however, was 4.6 percent during this period, rising from US$ 2.27 billion to US$ 2.9 billion in 2000 (the latest data on export values), peaking at US$ 3.4 billion in 1998.

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This trend was evident against a backdrop of declining prices of tropical beverages on the whole in recent years, after a brief recovery in the mid-1990s. A fundamental oversupply, mainly through productivity gains to reduce unit cost, was the main reason for weaker prices. However, compared to coffee and cocoa, tea prices had remained relatively stable over the last few decades, with regular cyclical price peaks occurring every six or seven years.

Given the above scenario, medium-term projections were derived from a dynamic time series model using the most recent data available on black tea production, consumption, trade, prices, population and income growth, of the world tea market. The projections indicated that world black tea production was expected to grow by 1.9 percent annually over the next few years to reach 2.7 million tonnes in 2010. Production in Africa and the Far East was expected to continue to expand, but some downward revision might be needed for Africa, in the light of potential labour shortage arising from the current HIV/AIDS epidemic, which had already been reflected in the growth rate projected for Malawi.

As for world trade in black tea, exports were projected to reach 1.3 million tonnes in 2010, reflecting an average annual increase of 1.7 percent from a base period average of 1.1 million tonnes. Net imports, a proxy for consumption in importing countries, was projected at the same level as exports of 1.3 million tonnes in 2010 from a base average of 1.1 million tonnes. Therefore, consumption in producing countries would have to grow by 2.1 percent per year to reach 1.3 million tonnes, in order to maintain prices at 1998-2000 levels. This required volume of consumption in producing countries would account for 49 percent of projected global black tea production.

Hence, the fundamental issues that had to be examined to improve demand levels had to be divided into short- and medium- to longer-term issues and constraints. The most immediate issue of concern was the current uncertainty and low prices. Erosion of market shares coupled with stagnant consumption in some markets had largely contributed to lower or reduced prices. New strategies particularly aimed at enhancing consumption, increasing value-added as well as further reduction in production and marketing costs were required.

In the longer term, the Consultation noted that the projections to 2010 suggest that supply and demand would only be in balance, if consumption in producing countries was maintained at current rates or almost half of the projected global output in 2010. If prices were to improve, then consumption had to grow at a faster rate. Otherwise, prices would remain depressed. Another concern was the increase in cost of production. Some tea producing countries had already started to reduce labour cost by increasing mechanization, but scope for this was limited.

Mr Chang informed the Consultation that improving yields (through capacity building of growers or investment in inputs), streamlining marketing channels and improving infrastructure could also reduce production cost. Furthermore, appropriate marketing strategies could also lead to improved returns to the industry, as variations in demand among countries suggested that marketing activities needed to be tailored to individual markets. Another important issue to consider was the role of exchange rates in international trade. Currencies of producing countries had depreciated against the currencies of importing developed countries generally with the degree of depreciation varying among countries. This variation contributed to the changes in the trade pattern when the variation altered the relative competitiveness among the tea exporting countries. In export oriented producing countries the devaluation actually resulted in the continued viability of the industry.

The Experts raised the importance of consumer acceptability of green tea in the United States market, indicating that a double-pronged strategy was required to facilitate or enable black tea to enjoy the same level of market growth as green tea.

IV. MARKET ACCESS

Under this topic, the Experts reviewed the impacts of regional trade agreements, in particular those of the Common Market for Eastern and Southern Africa (COMESA) which was addressed by Mr Stephen Nkanata, the Chief Executive Officer of the Kenya Tea Board, and those of the South

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Asian Association for Regional Cooperation (SAARC), which was addressed by Ms Kiru Jayatilaka, Deputy Director of the Sri Lanka Tea Board. Mr Nkanata, in presenting the impact of the COMESA, stated that in the globalized economy, the new slogan should read “cooperation and integration for survival”. Countries were being encouraged to integrate through regional and bilateral trade agreements to take advantage of larger market sizes; to share regional common heritage and destiny; and to allow for greater socio-economic cooperation and development.

In Africa some of the gains made following economic liberalization had been severely eroded by a combination of internal and external factors which include wide-spread poverty, civil strife, political instability and conflicts compounded by natural calamities, particularly weather related droughts and sometimes floods. It sounded ironical that Africa was expected to take advantage of regional cooperation and integration when half of the population lived below the poverty line, on less than US$ 1 per day. It was estimated that within the Eastern and Southern Africa sub-region, the poverty situation is even worse. About 70 percent of the people or about 250 million out of a possible total of about 380 million were living on less than US$ 1 per day. Mr Nkanata referred to a United Nations report indicating that the average African person consumed 20 percent less than the average African person did 25 years ago, and millions were still deprived of basic sanitation and access to clean water, health facilities, education, adequate food and housing. He stated that within the 23 members of the COMESA, 15 were least developed countries (LDCs). He added that the critical challenges facing the regional economy of COMESA included the HIV/AIDS pandemic, the human capital crisis, regional and internal conflicts and the debt overhang.

However, these observations notwithstanding, there was hope and belief that regional integration in the developing countries in the areas of trade and investment would inevitably lead to an expansion of the market for goods and services, and lead to an overall improvement in standards of living and the competitiveness of their goods in the global market.

In presenting the case for Kenya, Mr Nkanata indicated that Kenya was a signatory to three major international and regional trade agreements. The most important was the African-Caribbean-Pacific Group (ACP)-European Union (EU), followed by COMESA and the East African Community (EAC). However, COMESA was the largest export market for Kenya, valued at US$ 688 million compared to imports from COMESA of only US$ 113 million.

Insofar as the impact of COMESA on the tea industry in Kenya was concerned, available data indicated that the volume of tea traded within the region was relatively small compared to the large population. Nevertheless, Kenya had taken advantage of the COMESA agreement to improve and expand tea exports to this region from 38 301 metric tons in 1997 to 66 954 metric tons in 2001, a 75 percent growth over 5 years. The main markets for Kenya tea within COMESA were Egypt, Sudan, Djibouti, Eritrea and Ethiopia.

However, in spite of the COMESA-Free Trade Area (FTA) protocol, trade barriers continued to exist, eroding any gains from free trade, particularly tariff and non-tariff barriers between Egypt and Kenya. Under the COMESA-FTA protocol goods from each country could enter free of any duties. However, Kenya had felt threatened in the past by the flooding of her market with more superior quality and cheaper Egyptian goods and had on occasions reacted by imposing duties on these goods to check their importation. Whenever this happened, Egypt retaliated on a reciprocal basis with a blockade, on Kenya tea, claiming that the tea did not meet the COMESA rules of origin. Overall, trade between the two countries had improved significantly from US$ 109 million in 1998, the year Egypt joined COMESA, to US$ 250 million in 2001. Kenya accounted for US$ 210 million of the total, while Egypt accounted for US$ 40 million. Even as trade volume increased within the COMESA-FTA, the consumer was yet to reap the benefits of zero duty rating. Eager to counter any loss of revenue from duties charged on imports from FTA members, the governments imposed local taxes such as sales tax, value-added tax and, in some countries, defence or anti-dumping taxes, which effectively negated the very essence of affordability of goods and services produced within member states. Of the total value of Kenyan exports to Egypt, tea accounted for US$ 82 million in 2001.

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In the context of the overall tea industry, production and consumption as well as export of tea from Kenya were affected more by weather patterns and forces of supply and demand in the world market rather than by demand in any single region. This was because COMESA, though an important destination for Kenya tea, was rather small compared to Kenya’s total shipments to Asia and the European Community (EC). The volumes exported to COMESA were not enough to change production and export patterns.

Mr Nkanata concluded that within COMESA, the future for market integration through trade liberalization, coordinated production activities and equitable development within member states was bright. Globalization in general, and trade liberalization under the World Trade Organization (WTO) in particular, would encourage countries to remove barriers and open their markets. It was expected that when COMESA was fully integrated, the region would be a strong single trade and investment grouping in which tariff, non-tariff and other impediments to movement of goods, services, capital and people would be totally removed. The grouping would at that point be ready to amalgamate with other African regional bodies to form the African Economic Union.

Ms Jayatilaka presented the impact of SAARC on tea trade and consumption to assist the Consultation in its review of the impact of regional and bilateral trade agreements on the respective tea industries. In presenting the case of SAARC and its impact on Sri Lanka, Ms Jayatilaka stated that SAARC had a population of 1.3 billion comprising India, Pakistan, Bangladesh, Nepal, Sri Lanka, Bhutan and the Maldives. The region as a whole was a dominant player in all aspects of the tea industry: production, export and consumption. In 2000, the SAARC member countries produced a total of 1.2 million tonnes of tea or 40 percent of the global total of 2.9 million tonnes, exported 510 000 tonnes, nearly 40 percent of the global total of 1.3 million tonnes, and consumed 860 000 tonnes of tea or over 30 percent of the global total.

Within the framework of SAARC, Sri Lanka and India entered into a free trade agreement, named the Indo-Lanka Free Trade Agreement (FTA), to further economic, trade and investment opportunities. This agreement came into effect in March 2000. Sri Lanka permitted imports of Indian tea, specifically grades not manufactured in Sri Lanka, while India gave concession to the importation of 15 000 tonnes of “Ceylon Tea” per annum at a tariff rate of 7.5 percent . The current import duty rate is 100 percent of the invoiced value.

The impact of the FTA on the trade of tea between the two countries had been small. In 2000, Sri Lanka only exported 4 percent of its quota of 11 250 tonnes and in 2001 exported 3 percent of its quota of 15 000 tonnes. Ms Jayatilaka concluded that the FTA on the consumption of tea has not been significant. However, it was the beginning of a process to realize the in-built potential of the agreement. In recent years, the Indian domestic consumption of tea had increased steadily whilst exports had declined with less tea being available for exports. The Indian middle class of 250 million was expanding rapidly with increased purchasing power whilst the total Indian population was over 1 billion. Hence, in the medium term as SAARC matures into an alignment similar to that of the European Union with a free flow of goods and services, distinct opportunities existed for Sri Lanka to cater to the Indian demand for tea and for the two countries to benefit from the FTA. Pakistan absorbed approximately 140 000 tonnes of tea per annum and had been second largest tea buyer in the world. The population growth rate was estimated to be 3-3.5 percent per annum to 2010 when the population should reach almost 200 million. Hence, the potential for tea imports by Pakistan was great. Bangladesh on the other hand which was a producer and exporter had a population of 125 million and the per capita tea consumption was relatively very low at 0.27 kg. The potential for domestic tea absorption was thus very high.

V. GENERIC PROMOTION OF TEA BASED ON THE HEALTH MESSAGE: THE IMPACT ON CONSUMPTION

The impact of generic promotion on the consumption of tea in the United States of America was jointly presented by Mr Joseph Simrany, President of the Tea Association of the United States of

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America, and Mr Gerry Doutre, Chairperson of the Tea Council of the United States of America. A precondition stressed by the persenters was that the specific needs of each marketplace must be clearly understood before a generic promotion programme could be initiated because each market had its unique set of opportunities, challenges and special needs that must be determined in order to customize an effective marketing programme. A “one size fits all” approach would be destined to failure and would likely be a waste of financial and human resources.

In the United States consumption of tea was unique in that 85 percent of all the tea consumed was over ice.

The best proof of the effectiveness of the health message to positively influence sales was found in the growth of green tea sales in the United States over the last decade. In a country not known for its like of green tea, sales catapulted over the last decade from virtually nothing to a significant contributor to total tea sales. While marketers dream of having such a positive reaction to confirm the effectiveness of their efforts, it provided positive proof that the tea and health message was being heard and followed in the tea industry. Secondary proof was found in the astounding amount of media coverage that tea had received over the last decade. The total number of positive media impressions was counted in the tens of billions. Again, a marketers dream and the tea industry’s fact.

Green tea consumption had responded more positively than black tea because much of the early scientific studies had focused on the benefits of green tea. As more of the research switched over to black tea, it was expected that a similar reaction, although less explosive, would occur. Black tea was already in full distribution in the United States, and therefore, the triple digit increases that green tea enjoyed over the last decade was not expected for black tea. However, because of its much larger sales base, a relatively small percentage increase would amount to large absolute volume increase.

A producing country’s view on generic promotion was then presented by Mr Rachmat Badruddin, Chairperson of the Indonesia Tea Association. He emphasized that it was time the tea industry addressed issues in combating the persisted low price situation by regulating the supply and promoting tea generically to increase the demand.

While the global market mechanism under the WTO was to be the umbrella of all trade in the world, the Experts should think of how the small world of “the tea fraternity” could cooperate in tackling some of the global market issues. Mr Badruddin recommended the formation of a “body” to “regulate the trade”. He mentioned that he had in the past suggested the name of International Tea Society. There was only a small number of “dominant players” in the trade, and therefore, if they cooperated with the producers, the whole industry would benefit. Although produers wanted a high price, the Consultation should also be aware that it should not be done at the expense of the tea packers or tea drinks manufacturers being rendered non-competitive.

The tea community had long been exclusively for “members” and was resistant to change. Now that the industry was in direct confrontation with other beverages, including soft drinks, they should be more open to change. Not only in regulating supply and demand but also in streamlining the entire distribution channel and consistently applying the latest information technology (IT) in its drive for efficiency. The changes should be done quickly to catch up with other industries.

Mr Badruddin suggested that a small group, representing producing and consuming countries, should meet to discuss the above problems and come up with a business proposal. They should look into the formation of an empowered international tea board, which would perhaps be more suitable to carry out this analysis.

Due to liberalization and the opening of markets, the Experts noted that new industry-driven, consumer-driven and producer-driven instruments were needed to be developed so as to safeguard the international tea market. It was suggested that the possibility of establishing a new international body on tea be explored. So as to foster markets and cultivate a new class of consumers, as well as gain a legitimate share of markets on a variety of parameters – and not only on health parameters – the new international tea body should focus on the interests of the tea industry, as well as those of tea

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producing and tea consuming countries. The Experts recommended that the FAO Secretariat give backstopping support for this effort.

The Experts noted the existence of previous unsuccessful international tea bodies and recommended that precautionary steps be taken in order to avoid that the new international tea body fails.

The Experts arranged that a preparatory meeting on this issue take place in early 2003. The concept should be further explored at the Third World Tea Convention, as well as at the Intergovernmental Group on Tea, which are to take place in October 2003.

Mr William Gorman, the Chief Executive Officer of the United Kingdom Tea Council then presented the impact of generic promotion on the consumption of tea in the United Kingdom and importantly the future use of the Tea Mark. In presenting the UK consumption trends, Mr Gorman indicated that there has been a drop from 50 percent share of “throat” in 1980 to 40 percent share in 2000. This was a worrying trend, but not a terminal one. Tea was still the largest selling beverage and had consistently outsold its nearest rival by two to one on volume. However, in order to regain its previous dominating position, or edge back in that direction, efforts had to be directed at the appropriate segments. Firstly, it was not about recruiting non-tea drinkers. There was no medium term future in that approach. It had to be about increasing consumption with existing tea drinkers. With 70 percent of the population likely to have a cup of tea today, that was a big target to go for.

The next step was to target the strategically important cohort groups. Older people were fairly stable in their consumption patterns but were increasingly substituting tea for soft drinks. As for teenagers, there was not enough money available to cut through the daily noise that this group was exposed to. In other words, tea was not “cool”. From market research, women aged between 25 and 30 were an ideal target. The inherent values of tea resonate very strongly with them. This cohort group was also an important target because in ten years’ time, their consumption would have dropped significantly.

As to the future viability of the Tea Mark in the United Kingdom, there was the attraction of the theoretical benefits. Like the “Woolmark” logo developed by the Australian Wool Board in 1964, both were consumer facing and give reassurance to customers and deliver a “message”.

The founding principal of driving consumption was cardinal. However, there was a supply side issue which must also receive attention if the Tea Mark initiative was to meet its objectives. The market was fickle and entrepreneurial and growers seemed to have little appetite generally for restraining yields. And this was one of the fundamental conundrums for this industry. If consumption increased by three percent, production would rise by five percent quite quickly. Historical supply and absorption data would indicate that. This is an industry that can “rough pluck” to maximise earnings when the opportunities present itself, irrespective of global supply and demand.

The Intergovernmental Group on Tea needed to keep control of this unique property and not sell to the “highest bidder”. One of its greatest assets was that it “spoke” for tea generically. The Mark did not infer that it was Indian, Ceylon or Kenyan or that it was the XYZ brand. It was saying “Tea”, Camellia sinensis, and that was true universality. Mr Gorman recommended that the responsibility for seeding the Tea Mark should be with the various tea boards, tea associations and tea councils. They all were passionate about tea marketing and also had the advantage of direct contact with the packers in the country or region. A person who can persuade, mentor and coach local organizations to develop the idea was needed. Through this process the potential and interest for the Mark can be identified without having to invest further large and speculative funds.

The Experts agreed that generic promotion of the health benefits of tea could be undertaken irrespective of the source from which it comes, i.e. from tea boards, councils and associations and/or tea brand promotion. The Experts explored the possibility of modern promotion techniques for tea. It was noted that in the new context, old ideas of selling tea may no longer be valid for promoting it. Target groups and marketing opportunities and instruments need to be identified.

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The FAO Secretariat informed the Expert Consultation on Tea Market Issues on the status of the Tea Mark. Due to budgetary constraints, the Secretariat proposed that members of the Intergovernmental Group on Tea were to inform the Secretariat of their intentions to making use of the Mark. The Secretariat suggested that should adherence to the Tea Mark not be apparent, the Secretariat would determine the best way to dispose of the Tea Mark and the existing intellectual property owned. Although one alternative would be selling the Tea Mark, no firm decision was taken on how best to dispose of the Mark.

VI. OTHER BUSINESS

A. Highlights of the Third International Scientific Symposium on Tea and Health: Role of Flavonoids in the Diet

The Experts noted with satisfaction that scientific findings were increasingly emerging in favour the health benefits of black and green tea consumption. Although results have not been conclusive as research is ongoing, scientific and medical evidence seemed to increasingly support the health benefits of tea consumption. The Experts suggested that tea producing and consuming countries should take advantage of the scientific findings, utilizing them to promote tea. They recommended that applied research and development efforts should take place in both consuming and producing countries to synergize global efforts. They further recommended that academic, scientific and other channels be used to share the information for the mutual benefit of both the scientific community and the industry.

B. Next Session of the Intergovernmental Group on Tea

At its Fourteenth Session in New Delhi, India, from 10-11 October 2001, the Intergovernmental Group (IGG) on Tea noted with appreciation the offer of the delegate of Sri Lanka to host the Fifteenth Session of the Group. A week later (22-27 October 2001) at the First World Tea Convention in Kenya, Indonesia was elected by tea producing countries to host the Second World Tea Convention. In order to optimize the attendance and to reduce costs of the member countries, Indonesia enquired as to the possibility of hosting the Fifteenth Session of the IGG on Tea on a back-to-back basis with the World Tea Convention.

In accordance with the rules of procedure, preliminary consultations on the venue for the Fifteenth Session were undertaken with the current Chairperson of the IGG on Tea, Mr L.V. Saptharishi (India). Given the interest expressed by Indonesia, the Chairperson recommended further consultations with representatives from Sri Lanka, Indonesia and key members of the IGG on Tea. Finally, at the recent FAO Expert Consultation on Tea Market Issues, which was held on 25 September 2002 in Washington, DC, where all the key members of the IGG on Tea attended, it was agreed that the next session of the IGG on Tea be held in Sri Lanka.

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ANNEX I

INTERGOVERNMENTAL GROUP ON TEAEXPERT CONSULTATION ON TEA MARKET ISSUES

Washington, DC, USA – 25 September 2002

TIMETABLE

Wednesday, 25 September 2002

08.00 – 08.15 I. OPENING ADDRESSWelcome address and opening of the FAO ExpertConsultation on Tea Market IssuesC.H. RiemenschneiderDirector, FAO Liaison Office for North America

08.15 – 08.45 II. INTRODUCTION

General state of commodity markets and major conclusions of theConsultation on Agricultural Commodity Price Problems (Rome,March 2002)D. HallamChief, Raw Materials, Tropical and Horticultural ProductsService, Commodities and Trade Division

08.45 – 09.15 II. REVIEW OF THE WORLD TEA MARKET ANDFUNDAMENTAL ISSUES

General market review, mid-term outlook, issues and constraints, and demand side initiatives to increase sustainability of the world tea economy K. ChangSecretary, Intergovernmental Group on Tea

09.15 – 09.45 Tea break

09.45 – 10.00 Discussion

III. MARKET ACCESS

10.00 – 10.30 The impact of regional and bilateral trade agreements: The case of theCommon Market for Eastern and Southern Africa (COMESA) Agreement and its impact on Kenya on tea exportsS. NkanataChief Executive Officer, Kenya Tea Board

10.30 – 11.00 The impact of the South Asian Association for Regional Cooperation(SAARC) on tea trade and consumptionKR JayatilakaCommissioner, Sri Lanka Tea Board

11.00 – 11.30 Discussion

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IV. GENERIC PROMOTION OF TEA BASED ON THE HEALTH MESSAGE: THE IMPACT ON CONSUMPTION

11.30 – 12.30 The impact of generic promotion on the consumption of tea in the United StatesJ. SimranyPresident, Tea Association/Council of the USAG. DoutreChairman, Tea Council of the USAPresident and Chief Executive Officer, Redco Foods, Inc.

12.30 – 14.00 Lunch break

14.00 – 14.30 The impact of generic promotion on the consumption of tea in IndonesiaR. BadruddinChairman, Indonesia Tea Association

14.30 – 15.00 The impact of generic promotion on the consumption of tea in the United KingdomB. GormanChief Executive Officer, United Kingdom Tea Council

15.00 – 15.30 Tea break

15.30 – 16.00 Discussion on and relevance to the Tea Mark

16.00 – 16.30 V. ACTION PLANS AND ANY OTHER MATTERS

16.30 Closing

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ANNEX II

INTERGOVERNMENTAL GROUP ON TEAEXPERT CONSULTATION ON TEA MARKET ISSUES

Washington, DC, USA – 25 September 2002

LIST OF PARTICIPANTS

BurundiMr Salvator NimubonaDirector GeneralTea Office of BurundiPO Box 2680BujumburaBurundiEmail: otb@cbinf.comTelephone: + (257) 22 4228/88Facsimile: + (257) 22 4657

CanadaMs Louise RobergePresidentTea Council of Canada885 Don Mills RoadSuite 301Toronto, Ontario M3C1V9CanadaEmail address: louise.roberge@tea.caTelelphone: + 1 (416) 510-8647Facsimile: + 1 (416) 510-8044

IndiaMr Shri L.V. SaptharishiAdditional SecretaryMinistry of Commerce/Chairperson, Intergovernmental Group on TeaUdyog BhawanNew Delhi 110-001IndiaEmail: lvs@ub.delhi.nic.inTelephone: + 91 (11) 301-1837Facsimile: + 91 (11) 301-1837

Ms Prya KumarDeputy SecretaryMinistry of Commerce223 B Udyog BhawanNew Delhi 110-001IndiaEmail: priya@ub.delhi.nic.inTelephone: + 91 (11) 301-2926

Facsimile: + 91 (11) 301-0646Mr Kumar Sanjay KrishnaDirector Tea Board of India350 Fifth Ave. #1124New York, NY 10118USAEmail: teaboardny@yahoo.comTelephone: + 1 (212) 563-5261Facsimile: + 1 (212) 563-5650

Mr M. DasguptaAdditional SecretaryIndian Tea Association6 Netaji Subhas RoadCalcutta 700-001IndiaEmail: ita@cal2.vsnl.net.in Telephone: + 91 (33) 210-2473Facsimile: + 91 (33) 243-4301

Mr R.S. JhawarDirectorEveready Industries India Ltd.4 Mangoe LaneCalcutta 700-019IndiaEmail: vs_jhawar@wmg.co.inTelephone: + 91 (33) 248-7119Facsimile: + 91 (33) 248-6824

Mr P. SiganporiaDeputy Managing DirectorTata Tea Ltd.1 Bishop Lofroy RoadCalcutta 700-020IndiaEmail: ps@cal.tatatea.co.inTelephone: + 91 (33) 281-4512Facsimile: + 91 (33) 281-3997

Dr G. RamamoorthyScientist and Tea AdviserUPASI KVCCoonoor, NilgirisAndra TamilnaduIndiaTelephone: 203-0772

Dr T.C. ChaudhuryDirector (Research)Tea Board of India14 BTM SaraniCalcutta 700-001IndiaEmail: tcc@cal2.vsnl.net.inTelephone: + 91 (033) 235-5538/235-1411

Mr Ajai MalhotraMinister (Commerce)Embassy of India2536 Massachusettes Ave. NWWashington, DC 20008USAEmail: mincom@indiagov.orgTelephone: + 1 (202) 939-9826Facsimile: + 1 (202) 797-4693

IndonesiaMr Rachmat BadruddinChairmanIndonesian Tea AssociationJL. Pulombangkeng 15Jakarta SelatanIndonesiaEmail: indotea@indosat.net.idTelephone: + 62 (21) 739-3375Facsimile: + 62 (21) 720-5810

KenyaMr S.K. NkanataManaging DirectorTea Board of KenyaPO Box 20064NairobiKenyaEmail: teaboardk@kenyaweb.comTelephone: + 254 (2) 574-445/6Facsimile: + 254 (2) 562-120

Mr Nicholas NgangaChairmanTea Board of KenyaPO Box 20064NairobiKenyaEmail: teaboardk@form-net.comTelephone: + 254 (2) 572-421Facsimile: + 254 (2) 562-120

Dr Philip O. OwuorResearch ScientistTea Research Foundation of KenyaPO Box 820KerichoKenyaEmail: owuorpo@africaonline.co.keTelephone: + 254 (361) 20598/9Facsimili: + 254 (361) 20595

Dr Martin ObandaResearch ScientistTea Research Foundation of KenyaPO Box 820KerichoKenyaEmail: tearfk@insightkenya.cnTelephone: + 254 (361) 20598/9Facsimili: + 254 (361) 20595

Sri LankaMs K.R. JayatilakaDeputy DirectorSri Lanka Tea Board5741 Galle RoadColombo 3Sri LankaEmail: promotion@pureceylontea.comTelephone: + 94 (1) 581-418Facsimile: + 94 (1) 587-341

TanzaniaMr S.H. MijingaDirector GeneralTea Board of TanzaniaPO Box 2663Dar-es-SalaamTanzaniaTelephone: + 255 (22) 211-4400Facsimile: + 255 (22) 211-4400

TurkeyMr Nejat UralDirector GeneralTurkish Tea BoardEkrem Orhon Mah.53080 – RizeTurkeyTelephone: + 90 (464) 213-0211Facsimile: + 90 (464) 213-0229

Mr M. BicakciDepartment DirectorTurkish Tea BoardEkrem Orhon Mah.53080 – RizeTurkeyTelephone: + 90 (464) 213-0211Facsimile: + 90 (464) 213-0229

United KingdomMs Melanie AdamsPR ManagerThe Tea Council Ltd.9 The CourtyardGowan AvenueLondon SW6 6RHUKEmail: mel@teacouncil.co.ukTelephone: + 44 (207) 371-7787Facsimile: + 44 (207) 371-7958

William GormanExecutive DirectorThe Tea Council Ltd9 The CourtyardGowan AvenueLondon SW6 6RHUK

Mr Manuja PeirisStatisticianInternational Tea CommitteeSir John Lyon House5 High Timber StreetLondon EC4 V3N4UKEmail: Manuja.Peiris@inteacom.globalnet.co.ukTelephone: + 44 (207) 248-4672Facsimile: + 44 (207) 329 6955

United States of AmericaJoseph P. SimranyPresidentTea Association of the United States of America/Tea Council420 Lexington Avenue Suite 825New York, NY 10170USAEmail address: simrany@teausa.orgTelephone: + 1 (212) 986-9415Facsimile: + 1 (212) 697-8658

G. DoutrePresidentPresident and Chief Executive OfficerRedco Foods, Inc.100 Northfield DriveWindsor, CT 06095USAEmail: gerrydoutre@redcofoods.comTelephone: + 1 (860) 688-2121

Martin KushnerConsultantTea Association of the USA420 Lexington AvenueNew York, NY 10170USAEmail: soutea@aol.comTelephone: + 1 (404) 252-7579

Joseph H. WertheimPresidentTea Importers Inc.47 Riverside AvenueWestport, CT 06880USAEmail: teaimport@aol.comTelephone: + 1 (203) 226-3301Facsimile: + 1 (203) 227-1629

Mr Erik HansenAgricultural EconomistUSDA/FAS/HTP1400 Independence Ave. SWWashington, DC 20250USAEmail: erik.hansen@usda.fas.govTelephone: + 1 (202) 720-0875Facsimile: + 1 (202) 720-3799

Common Fund for CommoditiesMr Tai Lai LuSenior Project ManagerCommon Fund for CommoditiesStadhouderskade 551072 AmsterdamNetherlandsEmail: tailai.lu@common-fund.orgTelephone: + 31 (20) 575-4952Facsimile: + 31 (20) 676-0231

World BankMr Donald MitchellLead EconomistWorld Bank1818 H Street NWWashington, DC 20433USAdmitchell@worldbank.orgTelephone: + 1 (202) 473-3854Facsimile: + 1 (202) 522-3564

SecretariatFood and Agriculture Organization of the United Nations

C.H. RiemenschneiderDirectorLiaison Office for North AmericaWashington, DCUSA

Mr David HallamChiefRaw Materials, Tropical and Horticultural Products ServiceCommodities and Trade DivisionRomeItaly

Kaison ChangSenior Commodity SpecialistRaw Materials, Tropical and Horticultural Products ServiceCommodities and Trade DivisionRomeItaly

Margarita BrattlofRaw Materials, Tropical and Horticultural Products ServiceCommodities and Trade DivisionRomeItaly