Status of true price analyses for Ceylon tea 2022
True Price Tea is an information page intended to make the developments in understanding the true costs of tea transparent and to share it with tea drinkers. The following parties share information for this: True Pricing Cafe Het Wagenhuis in Breukelen HAS University True Price / Impact Institute Dilmah Ceylon Tea Company Following the model of True Pricing analysis of Kenyan tea, Dilmah commissioned HAS University to make an analysis of Sri Lankan tea. The project of the HAS, led by Mieke Rovers-Lenssen and Marnix Wolters, was carried out in September 2021 – January 2022. As a follow-up to this initial study, Dilmah Teas commissioned True Price to analyze the true cost of Dilmah tea. This study will start in June 2022 and will last several months. Since its foundation in 1988, Dilmah has done as much as possible to prevent and where necessary remedy the hidden impact of tea production, both on a social and ecological level. To what extent Dilmah has succeeded in making a net positive impact, the research of True Price will show.
The following insights emerge from HAS University's research into tea from Sri Lanka in general (so not Dilmah specifically)
The six most impactful externalities that account for the majority of the true cost of tea in Sri Lanka's tea supply chain are water pollution, air pollution, land use, health & safety, social security and income.
Based on the outcome of the materiality matrix, several key topics have been identified as high priority in regard to Ceylon tea and the stakeholders involved in the European tea sector.
When using the bulk price of Sri Lankan tea which is €0.006 per bag of tea, the true cost is €0.06 per bag of tea. The true cost gap is €0.055.
When using the retail price of Ceylon tea which is €0.181 per bag of tea, the true cost is €0.24 per bag of tea. The true cost gap is €0.055.
When using general data, there is virtually no difference in outcome between the production of green and black Ceylon tea.
The environmental externalities currently account for 95% of the final true cost, which provides opportunities for progress.
| Externality | True cost | Unit | True cost (%) |
|---|---|---|---|
| Water pollution | 11.4231 | EUR/kg processed tea | 41.43% |
| Air pollution | 5.024 | EUR/kg processed tea | 18.22% |
| Land use | 9.6014 | EUR/kg processed tea | 34.82% |
| Health & Safety | 0.0254 | EUR/kg processed tea | 0.09% |
| Social Security | 1.1823 | EUR/kg processed tea | 4.29% |
| Income | 0.3142 | EUR/kg processed tea | 1.14% |
| Total true cost | 27.5704 | EUR/kg processed tea | 100% |
| Externality | True cost | Unit | True cost (%) |
|---|---|---|---|
| Water pollution | 0.0228 | EUR/bag of tea | 41.43% |
| Air pollution | 0.01 | EUR/bag of tea | 18.22% |
| Land use | 0.0192 | EUR/bag of tea | 34.82% |
| Health & Safety | 0.0001 | EUR/bag of tea | 0.09% |
| Social Security | 0.0024 | EUR/bag of tea | 4.29% |
| Income | 0.0006 | EUR/bag of tea | 1.14% |
| Total true cost | 0.0551 | EUR/kg processed tea | 100% |
Division True Costs
Water pollution 42
Air pollution 18
Land use 35
Health & Safety 0
Social Security 4
Income 1
HEALTH & SAFETY
0.0001 EUR/bag of tea
SOCIAL SECURITY
0.0024 EUR/bag of tea
INCOME
0.006 EUR/bag of tea
TOTAL PERCENTAGE
0.0031 EUR/bag of tea
WATER POLLUTION
0.0228 EUR/bag of tea
AIR POLLUTION
0.0100 EUR/bag of tea
LAND USE
0.0192 EUR/bag of tea
TOTAL PERCENTAGE
0.0520 EUR/bag of tea