FAO tea meet looking at MRL global harmonisation

Kochi, Nov 28 | Updated: Nov 29 2006, 08:48am hrs
The imposition of maximum residue levels (MRLs) for tea import can have a significant impact on the global tea trade and the FAO inter-governmental group (IGG) on tea to begin in Nairobi from Wednesday is expected to look at global harmonisation of MRL standards.

Fears of lack of global harmonisation of MRL could be seen by several countries as a trade barrier and proving very costly for exporters. During the earlier meet, India along with the UK had been asked to lead a working group to co-ordinate, prioritise and accelerate the submission on behalf of the industry for pesticide MRLs. The study of the group suggested that members need to look at imposing a minimum quality standard for tea entering international trade and ISO 3720 could be adopted for this. Only a few countries had gone in for elimination of low qualities from their exports. India had already taken a major initiative on the quality front and would be among the countries least affected.

Black tea consumption, according to the FAO study, was expected to grow annually at an average 1.3% between 2005 and 2015 and the growth in production 1.7% over the same period. In such a situation, prices were expected to remain around the current level until 2009, before declining and following the downward trend of the past decade.

The study says imposition of MRLs would see a 2.5% reduction in supply and could lead to a 4% increase in world tea prices between 2005 and 2015. If the reduction in supplies were greater at 5% the price increase would be around 8%. The effect of imposing ISO 3720 as a minimum quality standard on global demand and supply was expected to be lesser than that projected for the imposition of MRLs. The price response was similar to that of MRL imposition where prices would get progressively reduced towards 2015 as exporters would begin to adjust to the quality standard, the study feels.

Adoption of MRLs could mean loss of market shares and where exports were to be reduced, smaller entrepreneurs are likely to be more affected and could even be forced to exit trade. The cost of compliance would be a major concern, especially for small traders. The study recommends that adoption of any minimum quality standard should be at a gradual level and not put poorer producers into difficulty. Global harmonisation of MRLs had to be a major and urgent objective of the trade to help reduce the cost of compliance for the exporter shipping to different markets. Countries have been asked to support the group in generating data for chemicals not listed in the MRL regimes. It has suggested that information on the cost of compliance with MRLs and the overall cost to the tea value chain should be compiled and a compliance tool kit created for producers to help them make necessary adjustments.