Because there is too much of it, and there has been for a long time. The clearest statement of just how long comes from Ian Gibbs, chairman of the International Tea Committee, the industry body that has tracked auction prices since the 1930s. Asked in 2022 to describe two decades of the market, he put it in one line: over the last 20 years, there has been no movement, and tea prices, in real terms, are now lower than what was paid a hundred years ago. Not lower than last decade. Lower than a century ago. A commodity whose nominal auction price looks broadly stable from one year to the next has, once inflation is stripped out, been quietly losing ground for the whole of living memory.

The mechanism behind that is not a mystery, and the Food and Agriculture Organization has documented it in its own reporting to the Intergovernmental Group on Tea: production has grown faster than demand, a structural pattern its analysts have tracked across successive market assessments. Output keeps rising because growing more tea is, for most producing countries, still easier than growing the market for it. That single imbalance, more than any one shock, is why a kilo of tea at auction buys less today, after inflation, than it did when the trade's own historians can remember.

The price looks flat. Inflation is doing the damage

Nominal figures hide the trend, which is the trap in reading them at all. Composite auction prices across Mombasa, Kolkata, and Colombo have hovered in a narrow band for years, averaging close to $2.85 a kilo over the past decade by the International Tea Committee's reckoning, with a brief 2022 high near $3.00 giving way to a predicted slide back toward $2.90 the following year. Read in dollars-and-cents terms, that looks like stability. It is not. Every other input to growing and processing tea, fuel, fertiliser, labour, transport, has risen with general inflation over the same stretch, while the auction price has not kept pace. The result is a real price that keeps eroding even while the quoted number barely moves, which is exactly the kind of decline a casual look at the auction sheet will miss.

The FAO's own outlook work puts a number on the mechanism behind that erosion. Reporting to its Intergovernmental Group on Tea, the organisation's analysts have tracked a widening gap between supply and demand growth, projecting the imbalance would keep growing year over year as production expands faster than consumption can absorb it. That kind of persistent oversupply is exactly the condition that holds a real price down decade after decade rather than letting it recover, and it is consistent with FAO's separately reported finding that for many smallholders today, the price received no longer covers the cost of production. That is not a one-year market correction. It is a structural floor giving way under the people who grow the crop, while the shelf price a shopper sees barely shifts.

Too much tea, chasing a market that is not growing as fast

The supply side of the imbalance is well documented and structural, not seasonal. Smallholders, who now grow roughly 60 percent of the world's tea, have spread plantings across China, Kenya, and beyond, because tea is one of the few cash crops available to a small plot of land in many producing regions. Planting more is a rational response to a falling price for any individual grower trying to hold income steady on shrinking margins; summed across millions of smallholders making the same rational choice, it adds supply to a market that is already oversupplied, which pushes the price down further. The FAO's own outlook work, covering production and consumption together, frames the decline this way: this is what happens to price when production keeps outrunning demand growth for a long enough stretch that it becomes the market's default condition rather than a cyclical dip.

Demand has not collapsed in absolute terms. World consumption keeps rising, driven mainly by China and India's own growing domestic markets, the two countries that are simultaneously the world's largest producers. But supply has simply grown faster: the global tea sector now employs some 13 million people, two-thirds of them smallholder farmers, who between them produced 60 percent of the world's tea in 2022, a workforce and a planted area that has kept expanding even as the price each kilo fetches has not. Demand growth, in short, has been real but slower than the growth in supply, and the auction floor is where that mismatch settles.

Where the margin actually goes

The cheapness is asymmetric. It is the grower's price that has gone nowhere for twenty years and sits below where it stood a century ago, not the finished product on a shop shelf, and the gap between the two is the article's real subject. World tea production runs to roughly 4.5 million tonnes a year, and the cost of getting that leaf from a bush to a packet is heavily front-loaded onto the people nearest the bush. Fairtrade, which audits the chain from the growing end rather than the retail end, reports plainly that wages on tea plantations in India are the lowest of any employment sector in the country, a single line that says more about where the squeeze lands than any composite price index does.

The mechanism is structural rather than secretive. A grower's income is set almost entirely by the auction price, a number the grower does not control and that has gone nowhere in real terms for twenty years; a blender, packer, or retailer further down the chain sets its own margin on a finished, branded product, a price point that is far stickier and largely insulated from what happens at the auction floor. Tea's smallholders are not a marginal slice of the trade either: a fifth of all Fairtrade-certified farmers and workers worldwide grow tea specifically, which means the imbalance lands on a genuinely large population, while the value added afterward, blending, branding, distribution, retail, changes hands at prices the auction sheet never touches.

Why a price this low has not been fixed

Voluntary certification, the most widely tried remedy, has not closed the gap at scale. Fairtrade and similar schemes set a minimum price and a premium on top of it, intended as a floor under the worst of the volatility. But certified volumes are a minority of world production, and even certified tea is frequently sold at the ordinary market price anyway, because the certified label finds a paying premium buyer only some of the time. The 2024 IISD assessment of the sector's sustainability standards found the evidence for certification actually lifting smallholder incomes to be limited and highly dependent on context, which is a careful way of saying the floor frequently does not hold where it is needed most.

The deeper reason no fix has stuck is that nobody controls the supply side. Tea has no OPEC. Unlike oil or, for a period, coffee, there has never been a durable cartel of producing countries able to restrict planting or withhold stock to support the price. The FAO's Intergovernmental Group on Tea is the one standing body where producing and consuming governments meet to discuss the market, and its own market assessments have laid out the supply-and-demand mismatch in detail without the group arriving at a binding mechanism to fix it. Millions of smallholders making individually rational decisions to plant more, in a market with no coordinating body and a structurally inelastic demand curve, is a textbook case of a price that stays low because no single actor has the power, or the incentive, to make it stop.

The bottom line

Tea is cheap because supply has outrun demand for years running, with no cartel, no binding international agreement, and millions of independent smallholders each making the locally rational choice that collectively keeps the price down. The grower's price has borne nearly all of that decline; the shelf price, propped up by everything that happens to the leaf after it leaves the farm, largely has not. A reader who wants the next layer of this, who actually captures the difference between the auction floor and the shop shelf, should turn to How the Trade Works, which maps the full chain from garden to cup, and to The Auctions, which sets out how the floor price gets made in the first place. The figures are not hidden. They are simply rarely read together, which is what this publication exists to do.