This is Part 1 of an article that originally appeared in Tea & Coffee Trade Journal June 2023.

 

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China’s tea industry weathered the storms of 2022 relatively well. The year brought sweltering heat and drought to many parts of the globe, while politics, war, and pandemic measures contributed to economic woes. By the end of the year, however, China maintained its overall production levels and made modest gains in export volume.

A further breakdown of China’s production areas and exports will paint a clearer picture of how China maintained its position as producer of nearly half the world’s teas and one-fifth of global exports.

 

PRODUCTION

As a whole, global production declined by 1.1 percent over the previous year. Estimates put 2022 global tea production at 6.4 mmt, with China producing 3.2 mmt. The next highest producer, India, produced less than half of China’s volume- 1.34 mmt (21%) of total global tea. Rounding out the top 5 global producers were Kenya (8.3%), Turkey (4.4%), and Sri Lanka (3.9%). Most major producing countries yielded less tea, with Sri Lanka showing a 16 percent decline. Political and economic turmoil, along with a poorly executed shift in agricultural policy created major setbacks for the island nation.

In spite of a bumpy year, China’s overall tea production grew by 3.9 percent. Green tea continues to comprise over half (58.2%) of production. In 2020, black tea surpassed dark tea to become the second most produced type by volume. Black tea stood at 15.2 percent and dark tea at 13.4 percent of 2022 production. Black tea continues to outpace dark tea. The biggest gains in production volume over the previous year were seen in white tea (15.4%), black tea (10.9%), and oolong (8.4%).

As trends have shown for several years now, China’s tea production areas have shifted westward. The mainland’s top producing provinces can be roughly divided into Eastern, Central, and Western Belts. The Eastern Belt (Anhui, Fujian, and Zhejiang provinces) produced roughly one-quarter (25.4%) of China’s tea in 2022. These more economically-developed provinces have a long history of tea production, with several well-known specialty teas grown there. The Central Belt, which includes Hubei, Hunan, and Shaanxi provinces, contributed a little over one-fifth (21.5%), and has seen further expansion of tea lands.

However, the biggest area of growth has been the Western Belt that includes Yunnan, Sichuan, and Guizhou provinces. These provinces delivered over one-third (36.0%) of the nation’s tea. This move westward is being driven by multiple factors. For one, urbanization in the eastern half of China drives higher labor costs and the need for more land development. At the same time, the western half is the scene China’s increased efforts at rural development. Tea has been used as a relatively stable, commercial crop that can help economically uplift rural villages and smallholder farmers. While about 60% of the world’s tea production is generated by smallholder farmers, China will have to counterbalance the wave of young labor leaving the countryside for the opportunities in larger cities. This workforce migration has created labor shortages and higher labor costs in some tea harvesting areas. This trend is expected to continue for some time. In terms of rank order by province, Fujian produces the most tea, followed by Yunnan, Sichuan, Guizhou, and Hubei. Hubei experienced a sizable reduction over 2021 levels, shifting from the second to fourth largest producer, an 18.1 percent dip in production. Severe heat and droughts were a likely contributor. Yunnan increased production by 13.9 percent, moving it to second place and marking the biggest gain among the top 5 producers.

LAND AREA

The top five producing provinces were also tops in terms of tea fields, but in different order. Yunnan heads the list, followed by Guizhou, Sichuan, Hubei, and Fujian. As the Western Belt, Yunnan, Guizhou, and Sichuan account for 41.5 percent of the nation’s tea area, followed by the Central Belt (Hubei, Hunan, and Shaanxi) with 22.1 percent of tea area. The Eastern Belt’s tea area represents 19.4 percent of the overall share of tea area. Fujian ranks fifth overall, with Zhejiang at seventh and Anhui in eighth place.

Yunnan saw the greatest gains among the top 5 provinces by area, increasing its land by 5.1 percent to take 15.2 percent of the total share. Guizhou took the second highest share (14.2 percent) while decreasing land area by 1 percent. This biggest gain by province was Guangdong, representing 3 percent of total share, but a 21.3 percent gain in land area. The largest 5 provinces in land area made gains in the range of 1 and 5 percent.

 

YIELDS

In terms of yield (tons per hectare), the southern coastal provinces lead the pack. Fujian, already a top-producing province, ranks first with nearly 2 tons per ha. Guangdong and Guangxi, each providing less than 4.5 percent of total production, ranked second and third with yield ratios between 1.25 and 1.5 tons per ha. Guangdong and Guangxi saw the biggest gains in yield over the previous year (12-19 percent), while Hubei saw a 20 percent decline in tons per hectare.

OUTLOOK

Overall, indications point to China continuing to lead global tea production with the central and western portions of the country as driving forces. The 2023 Spring harvest revealed some lingering effects. Exports, especially of green and black teas, are expected to remain steady in relation to production. This stability helps contribute to fairly moderate increases in average export prices as well, with the most recent 10 years showing a compound annual growth rate (CAGR) of 3.8% in USD per kilogram.