TEA BY: IB MUSIC   (John Lo and David Su) 茶
PRODUCTION OF TEA:  INTERNATIONAL MARKET SHARE Year Share of World Exports (%) India Ceylon China 1860 0 0 100 1880 20 0 6...
GLOBAL TEA PRODUCTION (NOW)
WHO PRODUCES TEA??? FARMLAND TEA LEAF PICKERS
TEA PROCESSING
Goods Made From Tea Leaves
WHERE TEA IS TRADED <ul><li>Began in China since 2700 BC, spread to Japan around 800 AD </li></ul><ul><li>Dutch East India...
PRICE HISTORY AND CONDITIONS <ul><li>First world war, British gov bought an abundance of tea to avoid shortage. </li></ul>...
PRICE HISTORY AND CONDITIONS (CONT.)
INDUSTRY GROUPS <ul><li>Main industry group: Tea Associations in India, Ceylon, and Dutch East Indies during the early 20 ...
TRADE AGREEMENTS <ul><li>International Tea Agreement in 1930 </li></ul><ul><li>Voluntary; each company agreed to reduce ou...
TRADE AGREEMENTS (CONT.) <ul><li>Although many firms in industry, each firm was managed by a small number of agents </li><...
TRADE AGREEMENTS (CONT.) <ul><li>Increased output = falling prices </li></ul><ul><li>Falling prices indicates noncomplianc...
TRADE AGREEMENTS (CONT.) <ul><li>International Tea Agreement was abandoned in 1931 </li></ul><ul><li>Dutch East Indies had...
TRADE AGREEMENTS (CONT.) <ul><li>Second International Tea Agreement established in 1933 </li></ul><ul><li>Reduction of sup...
SPECULATORS <ul><li>Buyers usually must buy tea in physical form as opposed to just on paper </li></ul><ul><li>Detracts sp...
BIBLIOGRAPHY <ul><li>Gupta, Bishnupriya. &quot;The History of the International Tea Market, 1850-1945.&quot;  Economic His...
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Tea Commodities Project John and David

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Tea Commodities Project John and David

  1. 1. TEA BY: IB MUSIC  (John Lo and David Su) 茶
  2. 2. PRODUCTION OF TEA: INTERNATIONAL MARKET SHARE Year Share of World Exports (%) India Ceylon China 1860 0 0 100 1880 20 0 69 1900 41 24 26 Year Share of World Exports (%) India Ceylon Java and Sumatra 1928 39.0 26.0 16.7 1936 37.1 25.8 18.1 1940 37.5 26.0 18.4
  3. 3. GLOBAL TEA PRODUCTION (NOW)
  4. 4. WHO PRODUCES TEA??? FARMLAND TEA LEAF PICKERS
  5. 5. TEA PROCESSING
  6. 6. Goods Made From Tea Leaves
  7. 7. WHERE TEA IS TRADED <ul><li>Began in China since 2700 BC, spread to Japan around 800 AD </li></ul><ul><li>Dutch East India Company carried Chinese tea to Europe in 1610, entered European market </li></ul><ul><li>Reached England market in 1669 </li></ul><ul><li>British introduced tea culture into India in 1836 and Ceylon (Sri Lanka) in 1867; these two countries soon became major producers + exporters of tea </li></ul><ul><li>By 1900s, tea had spread all around the world </li></ul>
  8. 8. PRICE HISTORY AND CONDITIONS <ul><li>First world war, British gov bought an abundance of tea to avoid shortage. </li></ul><ul><li>Incentive for suppliers, many countries switched land use to tea production </li></ul><ul><li>Increased output until the 1920s </li></ul><ul><li>By 1929 the prices began to fall with the coming of the Depression </li></ul>
  9. 9. PRICE HISTORY AND CONDITIONS (CONT.)
  10. 10. INDUSTRY GROUPS <ul><li>Main industry group: Tea Associations in India, Ceylon, and Dutch East Indies during the early 20 th century </li></ul><ul><li>Tried to control market place through output restriction to increase the profits of producers </li></ul><ul><li>Accomplished through trade agreements </li></ul>
  11. 11. TRADE AGREEMENTS <ul><li>International Tea Agreement in 1930 </li></ul><ul><li>Voluntary; each company agreed to reduce output to prevent falling prices </li></ul>Price Quantity of tea S1 S2 D e2 e1 P2 P1 Supply and demand of tea
  12. 12. TRADE AGREEMENTS (CONT.) <ul><li>Although many firms in industry, each firm was managed by a small number of agents </li></ul><ul><li>Effective firm size was larger </li></ul><ul><li>Greater effect on market if an individual cheats </li></ul><ul><li>Each producer has an incentive to cheat and may reap benefits in the short term </li></ul><ul><li>However, cheating will result in price wars </li></ul>
  13. 13. TRADE AGREEMENTS (CONT.) <ul><li>Increased output = falling prices </li></ul><ul><li>Falling prices indicates noncompliance to trade agreement </li></ul><ul><li>Other firms will be lead to abandon agreements and increase output </li></ul><ul><li>Further noncompliance and increased output = further fall in prices </li></ul><ul><li>More likely to occur when there are fewer decision makers; bigger impact from individuals </li></ul>
  14. 14. TRADE AGREEMENTS (CONT.) <ul><li>International Tea Agreement was abandoned in 1931 </li></ul><ul><li>Dutch East Indies had failed to keep their promise of output reduction </li></ul>
  15. 15. TRADE AGREEMENTS (CONT.) <ul><li>Second International Tea Agreement established in 1933 </li></ul><ul><li>Reduction of supply by 15% of maximum attained in 1929-32 time period </li></ul><ul><li>Was more successful than the first agreement mainly due to legislation; the agreement was legally binding </li></ul><ul><li>Lasted until WWII broke out; war caused a rapid shift in conditions (less purchasing power for consumers, more focus on military goods, possible devastation to manufacturing locations) </li></ul>
  16. 16. SPECULATORS <ul><li>Buyers usually must buy tea in physical form as opposed to just on paper </li></ul><ul><li>Detracts speculators from entering market with as much ease </li></ul>
  17. 17. BIBLIOGRAPHY <ul><li>Gupta, Bishnupriya. &quot;The History of the International Tea Market, 1850-1945.&quot; Economic History Services . 3 Nov. 2008 <http://eh.net/encyclopedia/article/gupta.tea>. </li></ul><ul><li>&quot; tea .&quot; Encyclopædia Britannica . 2008. Encyclopædia Britannica Online. 03 Nov. 2008 <http://www.britannica.com/EBchecked/topic/585115/tea>. </li></ul><ul><li>&quot;The Tea Market - a background study.&quot; Oxfam International. <http://www.maketradefair.com/assets/english/ TeaMarket .pdf > </li></ul>

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