China 2022 Drought: Tea Impact and Planning

As if the weather weren't already a perennial topic of conversation, 2022 global heat and drought records have wreaked havoc for farmers across the globe. Tea and botanical growers have not come through unscathed.

Climate change has been a hot topic in the tea and herb community for some time now. The American Herbal Products Association's (AHPA) 10th Botanical Congress (August 2022) heard industry members repeatedly cite years of increased temperatures and dryer conditions cutting into crop yields. Firsd Tea's own survey of tea and coffee professionals revealed increased concerns regarding climate's impact on their businesses.

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SEE ALSO:

https://www.nutritionaloutlook.com/view/will-climate-change-hurt-the-botanicals-industry-it-already-is

https://www.foodnavigator-usa.com/Article/2022/08/17/botanical-yields-fall-as-climate-change-affects-harvests

blog.firsdtea.com/posts/tea-sustainability-perspectives-report-environment

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Recent news has put China's drought and record-breaking heatwave in the spotlight. Industry publications have remarked how China's 2022-2023 tea crops have been (or will be) impacted. Much of this coverage echoes accounts from China WeChat reports.

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SEE ALSO:

https://mp.weixin.qq.com/s/lkvIFJN3iV3clZlkc52Fqg

https://mp.weixin.qq.com/s/Qhsv5ZOuv8-z_tpHvAAxxA

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WHAT WE KNOW

At the time of writing, there has been no official statement made regarding the nationwide impact on China's total tea production, or projected impact on 2023 production. Reports have come in from some specific locations, with preliminary estimates of the potential impact.

1. Jiangsu Province reported over 20,000 ha of tea fields affected, including about 4,700 ha of severely damaged or lost bushes. Jiangsu, while an important tea-producing province, is not among China's top 15 producing provinces by volume.
2. The Enshi area of Hunan Province reported 21,000 ha of tea fields affected with 2,800 ha of unharvestable area. Hubei is usually the 2nd or 3rd largest tea producing province, and Enshi is one of Hubei's larger and better known production areas.
3. Growers in other areas, including Zhejiang Province's Hangzhou and Fujian Province's Anxi region have estimated damages to Fall crops and/or 2023 Spring harvests. These remain unconfirmed, unofficial estimates. The days ahead will determine the scope and accuracy of these projections.

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KEEP IN MIND

While the impact on the affected smallholder farmers in heat/drought-stricken regions is significant, China' overall tea supply is very likely still in a healthy position. These key facts provide valuable perspective on the situation:

1. China's total 2021 tea production stood at 3.06 million metric tons, up 2.6% over the previous year.
2. Expansion of new tea fields saw a 3% gain in ha over the previous year, and tea growing area has been robustly expanding over the past decade.
3. China's 2021 domestic consumption of tea reached 2.3 million metric tons, including about 47,000 metric tons of imported tea.
4. Total 2021 exports equaled 369,355 metric tons.
5. Total China domestic consumption (including imported tea) + total exports = approximately 2.7 million metric tons. This results in a surplus of nearly 13% of 2021 total annual production.
6. China supply, as well as total global tea supply, have consistently exceeded consumption. The annual surplus of supply over demand can vary, but stood at about 3% for 2021.

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SEE ALSO:

blog.firsdtea.com/posts/2022-china-tea-report-production-data

blog.firsdtea.com/posts/2022-china-tea-report-export-data

https://mp.weixin.qq.com/s/YhtCkFBhrLhKUkM0qE2kUw

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POTENTIAL ACTIONS TO CONSIDER

To reiterate- there is currently no indication of an overall shortage in Chinese tea supply, and an accurate picture of overall and regional impacts on 2023 Spring regional harvests remains unclear.

For those tea businesses who are concerned, a few options are available:

1. Projections. Calculate your estimated volumes per SKU that your business will need through at least June of 2023. In many cases, container shipments of China Spring harvest teas do not land in the US until May/June.
2. As inventory space allows, consider increasing order quantities per SKU for teas that you regularly hold to incrementally build up some additional inventory as a buffer.
3. If your business is uncertain as to the best approach, contact your Firsd Tea representative. We have helped many of our clients avoid supply disruptions.