By Dan Bolton
China’s tea harvest is cautiously underway as factories that were closed to prevent the spread of coronavirus re-open under strict sanitation guidelines. In Yunnan, for example, shifts begin with workers scanning the provincial anti-epidemic smartphone app that alerts supervisors if an individual has visited a location known as a source of infection.
Workers must declare their health conditions under severe penalty, submit to temperature scans throughout the day, and reveal contact with anyone showing flu-like symptoms. The WeChat mini-app registers individuals by their national identification number and uses spatial location to track the movement of all 46 million residents in the province. Factory managers estimate these health precautions lower productivity by about 10%.
The extraordinary effort worked. Yunnan reported only two deaths among 174 confirmed cases of coronavirus. The contagion is largely contained by March with only three individuals in hospital.
In the fields, pluckers must wear facemasks and maintain 10-foot separation. At the weigh station, where workers usually chat at the end of their workday, distances are enforced, and hygienic precautions mandatory.
It is too early in the harvest to estimate yield. The weather is favorable but chilly in the early harvest regions. The pre-harvest begins around March 15. Qingming, the traditional festival marking the beginning of the tea harvest, is April 4.
Chinese growers sell most of their first flush locally, tea for export is generally plucked later in the spring, according to the Firsd Tea blog. Firsd Tea “China Inspection and Quarantine (CIQ) and China's ports in Zhejiang Province have re-opened for tea exports. Our colleagues who are dealing directly with both CIQ and the ports feel they are fully staffed and will fulfill export requirements and efficiently get containers onto vessels.”
Mei Yu, secretary-general of the China Tea Association, told the Economic Daily that "While the cost of plucking tea will be higher this year, volumes of mid-grade teas are expected to be higher. As such, the overall price should generally remain on-balance. Volumes of high-end teas should be relatively low, so these prices are likely to increase. Current output and price are not the biggest factors: the wait-and-see attitude of the market is creating instability."
Heidi Yuan, general manager at Xinchang Chengtan Tea Factory in Shaoxing City, Zhejiang said operations in all regions are underway. The main factory re-opened February 15. While the lockdown delayed some shipments, the factory has since sent 13 containers of early harvest tea on its way to market. "Our factory is not fully producing, because the tea is not yet fully mature," said Heidi Yuan. "In March, April, and May, as the tea matures gradually, factory operations will gradually increase,” she explained.
“I personally think that the impact of the coronavirus on our locality is reflected in the sales of tea: Offline sales have greatly reduced, but online sales will increase, and companies need to change their sales strategies in a timely manner!”
The company produces gunpowder, Chunmee tea, Longjing, Black, and Cloud tea under the Foyer Tea brand.
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Factories in Hubei Province, where the virus was first detected, largely remain in lockdown. Smaller cities in rural tea production regions such as Enshi have reported few infections and deaths, but public transportation was suspended in January, and public gatherings are banned. Schools remain closed, cinemas and tea malls are vacant with only pharmacy, grocery and restaurant delivery services, hospitals, clinics, and emergency services operating at full staff.
Hubei is the third largest tea producing province in China, and in 2019 was the country’s 5th largest exporter of tea at 17,000 metric tons, an increase of 43.1% compared to 2018.
The coronavirus has killed 2,727 in Hubei as of February 27, but the daily tally of those in recovery has finally exceeded those diagnosed with the disease formally known as Covid-19. Globally 86,000 Covid-19 cases are confirmed with more than 3,000 deaths, and 39,761 recovered.
Global demand
China faced several impediments to growth before the coronavirus outbreak but retained its rank as the top tea exporter globally in 2019. Green tea exports, the main tea crop, totaled 304,000 metric tons and were valued at $2.02 billion. The average price of exported green tea was $4.336 per kilo in 2019.
China's tea exports were generally stable and of improved quality, despite the U.S.-China trade dispute and uncertainties in the world economy, according to agricultural and trading officials. Tea exports to the U.S. in 2019 were down 5.1% to 15,000 metric tons, but this was easily offset by a 15.6% increase in purchases by ASEAN nations. The 23,000 metric tons sold to ASEAN countries was valued at $400 million, up 55.7% compared to 2018.
Yu Lu, vice president of the China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products (CFNA) said the average annual compound growth rate of exports is 3% during the past three years. Green tea accounts for 82.8% of the total volume, which topped 367,000 metric tons last year.
Trade with countries along the Belt and Road increased 4% last year, earning China $560 million, a year-on-year increase of 307%, according to Yu Lu.
CFNA is an influential trade association representing 70% of China’s agricultural volume. Membership includes state-owned farms as well as 6,000 agriculture organizations that resemble small grower cooperatives. China’s tea industry employs 80 million rural laborers. CFNA operates under the supervision of China’s Ministry.
There is a glut of tea in the global market with black tea producing countries exceeding previous production records despite low prices. Stockpiles are high as slowing economies in Europe, Russia, and the Middle East limit consumption. China, in contrast, reported a 13.6% overall revenue increase year-over-year with black tea exports up 6.7% to 35,000 metric tons. Black tea exports were up 24.5% to $350 million, according to China customs statistics. Black tea averaged $9.92 per kilo, up 16.72% year on year.
In an article published by the China Media Times Tea Weekly, Yu Lu said that Morocco, China's largest trading partner, implemented stringent standards for pesticide residue for 60 chemicals. As a result, sales decreased by 4.2%.
Exports to the European Union, which also enforces very strict LOQs (lowest quantitative concentration) levels, fell 1.5% by volume and 12.1% by value in 2019.