What happens to growers when tea prices go down?

Posted in Our Growers.

What happens to growers when tea prices go down?

The global price of tea has dropped a bit lately – and that has a knock on effect on tea farmers. We reckon people who buy our brew should know where we stand on stuff like this, so here’s the lowdown.

Tea's a globally traded commodity, much of it sold at weekly auctions - and supply and demand affects the price. If it goes down a lot, tea farmers can suddenly see their income plummet.

There are a few things we do to make things more stable for tea growers. We buy almost all of our tea (90% of it) directly from the producers and we've set up long term contracts with our main suppliers, committing to buy their tea for the next three years and also to fund projects which improve social conditions and help the environment. We spent £735,000 in the last year on projects like that.

The contract also involves us promising to pay an extra premium for the best quality tea (which is most of what we buy). So in Kenya and Rwanda, where we buy about two thirds of our tea (because it's the best in Africa) we paid £1.85m above the average auction prices last year.

We also visit our producers a lot in person – which may not sound like much, but isn’t as common as you might think in the tea industry. By doing business face to face as much as possible, we’ve been able to build really strong and supportive relationships with the people who grow our tea.

And the final piece of the puzzle is that we always guarantee a base price, which means we'll always cover the cost of production and a profit margin for producers if the global tea prices fall. That's something we do even when we don't have a long term contract with someone and also when we buy at auction - so when prices go down, we have something in place to help safeguard the livelihoods of all the people we buy from.

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