Case Study
DEMAND FOR TEA EXCEEDED THE SUPPLY, DRIVING UP ITS PRICE
(A Case Study Analysis)
Presented to the Faculty of
NATIONAL UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
Manila, Philippines under the advisory of
Prof. IRENEO R. AGUILAN
In Partial Fulfillment of the Requirements for the Subject
MACROECONOMIC THEORY
1st Semester, AY 2012-2013
Presented by
Baja, Mark Joseph E.
Buenaventura, Ariel B.
Gabito, Charlene T.
Tullao, Perlene Marie G.
Young, Camela M.
September 10, 2012
I. INTRODUCTION/ HISTORY
The tea market is dominated by five countries, Kenya, Sri Lanka, China, India and Indonesia, which export about 80% of the world tea. Apart from China, the rest mainly produce black tea. In 2004, the world’s net import of tea was 1.42 million tonnes, out of which 1.17 million tonnes (82%) was black tea (Anonymous, 2000-2003). In contrary, the growth rate in world black tea consumption was reduced to 2.2% during 1993-2003 (FAO, 2005).
The imbalance situation between the level of demand and supply of tea is a big threat for the tea producing countries, due to decline in prices. Similarly, the depressed price situation has been intensified in Kenyan tea industry due to high production cost (Gesimba et al., 2005). The impact was also enormous on price recovery of Indian tea traded through auction and was ruling below the cost of production (Anonymous, 1998). Previous studies revealed that decline in tea price had negative impact on tea industry in Sri Lanka mainly due to soil degradation and poor productivity (Iqbal et al., 2006). In Indonesia, the market price situation affected the income level of smallholders drastically, which constitutes the largest sector of tea industry (Yuliando and Nakayasu, 2006).
All government of tea exporting countries plans and policies recognize that tea is an important export commodity and that it has high potentials to contribute to national income, employment and environment protection. Teas, from
(A Case Study Analysis)
Presented to the Faculty of
NATIONAL UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
Manila, Philippines under the advisory of
Prof. IRENEO R. AGUILAN
In Partial Fulfillment of the Requirements for the Subject
MACROECONOMIC THEORY
1st Semester, AY 2012-2013
Presented by
Baja, Mark Joseph E.
Buenaventura, Ariel B.
Gabito, Charlene T.
Tullao, Perlene Marie G.
Young, Camela M.
September 10, 2012
I. INTRODUCTION/ HISTORY
The tea market is dominated by five countries, Kenya, Sri Lanka, China, India and Indonesia, which export about 80% of the world tea. Apart from China, the rest mainly produce black tea. In 2004, the world’s net import of tea was 1.42 million tonnes, out of which 1.17 million tonnes (82%) was black tea (Anonymous, 2000-2003). In contrary, the growth rate in world black tea consumption was reduced to 2.2% during 1993-2003 (FAO, 2005).
The imbalance situation between the level of demand and supply of tea is a big threat for the tea producing countries, due to decline in prices. Similarly, the depressed price situation has been intensified in Kenyan tea industry due to high production cost (Gesimba et al., 2005). The impact was also enormous on price recovery of Indian tea traded through auction and was ruling below the cost of production (Anonymous, 1998). Previous studies revealed that decline in tea price had negative impact on tea industry in Sri Lanka mainly due to soil degradation and poor productivity (Iqbal et al., 2006). In Indonesia, the market price situation affected the income level of smallholders drastically, which constitutes the largest sector of tea industry (Yuliando and Nakayasu, 2006).
All government of tea exporting countries plans and policies recognize that tea is an important export commodity and that it has high potentials to contribute to national income, employment and environment protection. Teas, from
Bibliography: http://www.diffen.com/difference/Coffee_vs_Tea http://www.oup.com/uk/orc/bin/9780199565184/9780199565184_ch05.pdf http://www.worthpublishers.com/Catalog/uploadedFiles/Content/Worth/Product/About/Look_Inside/Krugman,_Micro_in_Mods_2e/KrugMicro2eMods_Mod07.pdf http://www.dailymirror.lk/business/features/21673-uncertainty-in-sri-lankan-tea-business-continues.html http://scialert.net/fulltext/?doi=jas.2006.3170.3173&org=11 http://www.helium.com/items/1957504-why-tea-prices-may-be-rising