Growers of black tea should beware the urge to expand plantations to exploit high prices, with green tea likely prove a far faster growing market, the United Nations has said.

The UN's Food and Agriculture Organisation said that world exports of green tea, which has grown in popularity in the West thanks to perceptions of health benefits, were likely to grow by 5.5% a year by 2019.

However, exports of the more widely drunk black tea, which accounts for 80% of world tea trade, would rise by only 1.8% during the whole period, meaning any jump in output would loosen supplies and "damage prices in the long run".

"An overreaction to high prices, particularly in terms of expanding growing areas, should be avoided," the FAO said.

'Limited scope' 

Indeed, the major producing countries, which include China, India, Kenya and Sri Lanka, should focus on drinking more tea themselves, rather than trying to raise exports to Western markets which were already "near saturation".

"But in the countries where tea is produced the per capita consumption is much lower and so there is a lot more market potential."

Tea consumption in producing countries averages about 10% of that in major import markets, "representing a major opportunity for tea-growers if the right marketing strategies are employed", the organisation said.

Tea prices retreat

The world tea price, as measured by an FAO index, jumped from an average of $1.95 a kilogramme in 2007 to a record $3.18 a kilogramme last September, boosted by droughts in many of the major producing countries.

The price increase helped Kenya, the second-ranked exporter of the leaf, cover from tea exports its entire food import bill, Mr Chang said.

Sri Lanka's tea exports covered 60% of its food imports, he said, adding that "tea can be an important contributing factor to a nation's food security".

While tea prices have fallen back from record levels, they remained high by historical standards, the FAO added.

High quality Kenyan tea, the so-called Best BP1s, sold at $3.44 per kilogramme at auction in Nairobi last week, down by about one-third from last year's high, but some 15% above the price in June 2008, before the price spike.