Global and Regional Trading Blocs of Coffee and Tea: Outlook, Trading Signals and Policies

In world, coffee and tea are the most enjoyable consumer beverages. Drinking coffee and tea reduce
the risk of several diseases such as cardiovascular disease, cancer, stroke, type 2 diabetes and agerelated
neurological disorders. This is based on the foreign trade research study, which examines
area, production, exports and imports of coffee and tea globally during the period from 1990-91 to
2017-18. CAGR, price elasticity’s, instability and trends of exports and import price analysis were
employed for the analysis of the study. The study found that MERCOSUR and SAFTA are the major
producers of coffee and tea, respectively in the world. All regional trading blocs have shown more or
less linear trends in the area and production of coffee and tea during the period of 1990-91 to 2017-
18. Among the countries, Viet Nam and Peru have shown the highest growth rate under the area and
production of coffee over the years. Area and production of tea have been increasing in Viet Nam and
India over the years. Globally import prices of coffee and tea were higher than export prices. All
trading blocs have shown the mixed trends in export and import price of coffee and tea except the
export price of tea in the MERCOSUR, ASEAN and SAFTA. Export prices of coffee and tea were
higher than import price in all trading blocs except EFTA, MERCOSUR and ASEAN. The terms of
trade of coffee and tea were favored in the European Union, NAFTA, COMESA, SAFTA and Pacific
Alliance during the period of 1990-91 to 2017-18. MERCOSUR would get benefited from other
countries due to the higher export prices of coffee. Similarly, EFTA, NAFTA, COMESA and Pacific
Alliance trading blocs would be profited for tea. Globally, Export price elasticity’s of coffee in
MERCOSUR and COMESA were marginally higher than imports price elasticity. Export price
elasticity’s of coffee was found to be marginally higher than imports in the Germany, Italy and
Netherlands (EU); Norway (EFTA); Canada and USA (NAFTA); Venezuela (MERCOSUR); Australia
(ASEAN); Egypt (COMESA); India (SAFTA); and Chile and Peru (Pacific Alliance). Export price
elasticity’s of tea was found to be marginally greater than the imports in the Italy (EU), Norway and
Switzerland (EFTA), USA (NAFTA), Australia, Indonesia and Thailand (ASEAN), and Chile and Peru
(Pacific Alliance). Adapting the climate change plans is very important to enhance the quality and
yield of coffee and tea by using high quality varieties, increased irrigation and soil improvement
measures. Training and conferences help to strengthen the capacity building of farmers on the
integrated pest management practices. Proper price mechanism for coffee and tea land holders must
be necessary to receive the higher profits for their produce. This foreign trade study is very helpful for
multi-stake holders, producers, traders and consumers of coffee and tea.