CASE STUDY: The Trade in Tea

(DISPARITIES IN WEALTH AND DEVELOPMENT: REDUCING DISPARITIES)

• Like other raw materials, only small % final P goes to producers
  • majority of $ generated by tea industry goes to the post-raw-material states
    • benefits MEDCs, not LEDCs (producing nations)
• Dutch Tea Institute report (2006) found:
  • ↓ P (bc ↑ compeition in tea market)…↑ costs of production…pressure to ↓ wages…need to ↑ social, economic, ecological and labor conditions throughout tea sector in LEDCs
• Global tea market dominated by small no. of companies…v. large market power
• Annual export sales of tea (raw material): $3 billion
  • Much LOWER than retail value of global tea business
• Global trading system prevents tea producers from moving up value chain by processing and packaging the tea they grow
  • bc would have to compete w/ v. powerful brands
    • difficult to achieve EOS of global tea companies