The global tea markets prefer mass produced teas that are standardized in quality and taste, said speakers from the Ministry of Industry and Trade MOIT at a recent business forum in Hanoi.
At the conference, chaired by the Plant Protection Department under MARD, speakers told those in attendance that the domestic market to the contrary has had a traditional preference for low-production handmade teas.
Today, most exported teas cultivated in Vietnam are grown as a commodity in specially designated areas and shipped to foreign markets where they are further processed and packaged for resale.
This movement towards standardization has led to an increase of administrative or so called ‘non-tariff barriers to trade’ in markets such as the EU and Japan, as these economies ignore the reasonable thresholds for pesticide use as established by the World Health Organization (WHO).
The WHO has established perfectly rational CODEX Alimentarius thresholds for residue levels, yet the EU, Japan and other markets have routinely been imposing residue standards that are three to five hundred fold these levels.
The EU and Japan have virtually frozen out imports of tea from Vietnam, while the US is performing many more food safety inspections than in the past. Iran, another major export market, is now also requiring additional documents attesting to the cleanliness of the tea on shipment.
Vietnam is just the latest tea supplier to suffer a loss of reputation. Previously, it was India. As a result, the upward trajectory of exports has been thwarted and the sales revenue in several key tea categories is off the mark.
For the seven months leading up to August of 2016, the volume of tea exports jumped 4.9% to 69,000 metric tons but the overall value dipped 2.1% to US$110 million, according to official statistics.
For 2015, exports dropped 5.5% in volume to 125,000 metric tons from 2014, which in overall general terms means that for the past two-years the volume of sales has been holding fairly steady but revenue has fallen significantly.
The average price of Vietnamese tea for the seven months January-July 2016 dropped 6.6% to US$1,160 per metric ton, against the average price for the same seven-month period in 2015.
Meanwhile the sales price of exports per metric ton has traded for about 60-70% less than that of competitors from Kenya, Sri Lanka, China and India – the largest four players in the global tea markets for the first seven-months of 2016.
While surveys support the fact that some abuse of pesticides exist in the tea industry, there is also little doubt that much of the alleged abuse is overstated and there are not in reality the serious quality issues as has been reported, said MARD speakers.
Much of the problem lies with competitors in importing markets throwing up administrative ‘non-tariff barriers to trade’ as a red herring to disguise their real intent to protect themselves from foreign competition.
The goal of those throwing up these barriers is either to stop Vietnamese teas from entering the market or, in the alternative, to trash the industry’s image and drive the price of its tea downwards so as to make exports to the market unprofitable.
Certainly, more can be done by the industry to market higher quality green and fermented teas, said speakers from MARD, — but they noted the pesticide problem cuts across the entire global food supply.
Vietnamese tea is neither more at risk nor more protected from it.