Global Market Report: Tea prices and sustainability

This report explores recent market trends in the tea sector and explains why sustainability standards and other value chain actors need to get better at recognizing the social and environmental costs of tea production.

  • Over two thirds of the 13 million people employed in the global tea sector are smallholder farmers in developing countries. They produced 60% of the world's tea in 2022.

  • Global tea production has surpassed USD 17 billion annually, with tea trade valued at USD 9.5 billion, representing a significant source of export earnings for low-income and emerging economies.

  • In 2019, at least 1.67 million tonnes of VSS-compliant tea was produced by more than 1 million farmers, reaching a farm gate value in excess of USD 155 million.

Tea is consumed more than any other drink in the world, excluding water. Originally from China, it spread across trade routes over centuries to become the USD 9.5 billion industry it is today.

But behind this popular beverage are 13 million people working hard to grow, pluck, and process tea leaves into the neat packages we find in the supermarket. Two thirds of those people are smallholder farmers in developing countries. They face the formidable challenge of producing an affordable, quality, and more sustainable product in a highly competitive market and under increasingly harsh and unpredictable weather conditions.

In some tea-producing countries, smallholder farmers make no profit at all, as their total production costs can exceed their earnings. On top of bearing all the risks related to extreme weather changes and variations in the cost and availability of crucial inputs like fertilizers, they are also most affected by low prices and volatility in the tea sector.

Voluntary sustainability standards (VSSs) have been working to address sustainability challenges in the tea sector for 30 years. Many focus on building climate resilience, for example by encouraging farmers to use techniques that help them cope with periods of drought or that maintain soil fertility to improve yields and quality. Some also seek to improve the prices and incomes of smallholder farmers.

VSS-compliant tea now represents at least a quarter of total global production. However, evidence of VSSs’ impact on farmers’ incomes is limited and tends to be very context specific. It is not clear if minimum prices, premiums, and other differentials really make a difference to tea farmers’ livelihoods—or even make up for the costs of certification. They certainly will not if VSS-compliant tea is sold as conventional, which estimates suggest happens 90% of the time.

There is an urgent need to develop new approaches for recognizing the social and environmental costs of conventional tea production so that farmers can be adequately rewarded for using more sustainable practices. Our report provides recommendations for how governments, private sector actors, and standard-setting bodies can better support smallholder farmers and make tea production fairer and more sustainable.