Growing Confidence in the Future Tea Swaps   Growing Confidence in the Future James.Montlake@teaswap.co.uk

Tea Swaps   James W. Montlake BSc., MA, Managing Director

Tea Swaps   Price Confidence James.Montlake@teaswap.co.uk

WHO WHAT WHY WHEN James.Montlake@teaswap.co.uk

WHO James.Montlake@teaswap.co.uk

Who trades Tea Swaps in Sri Lanka? “improved cash-flow management; lower borrowing rates and easier to spend/invest” “improved cash-flow management; lower borrowing rates and easier to spend/invest” “improved budgeting” “improved budgeting” “protection from price volatility” “protection from price volatility” “easier to offer fixed prices to clients” “easier to offer fixed prices to clients” James.Montlake@teaswap.co.uk

Tea Swap volume traded since Inception kgs traded Total volume = 700,000 kgs James.Montlake@teaswap.co.uk

Tea Swap Trials James.Montlake@teaswap.co.uk

23 leading East African Tea Companies trialing Swaps Tea Swap Trial East Africa 23 leading East African Tea Companies trialing Swaps

Tea Swap trial East Africa “Tea Swaps have tremendous potential to protect our business against auction price volatility and assist us to improve our financial forecasting. We have found the Tea Swaps to be fairly simple to understand and use. Joseph Ngige, General Manager, Karirana Estates Limited James.Montlake@teaswap.co.uk

Who else trades Swaps? James.Montlake@teaswap.co.uk http://www.farmdoc.illinois.edu/nccc134/conf_2014/pdf/Peterson_NCCC-134_2014.pdf James.Montlake@teaswap.co.uk

Tea has been absent from Swap markets Coffee Orange Juice Cocoa Milk Swaps Wheat Sugar James.Montlake@teaswap.co.uk

WHAT James.Montlake@teaswap.co.uk

Tea Swaps   Price Confidence James.Montlake@teaswap.co.uk

How does the Tea Swap work? Factory Price Auction Prices James.Montlake@teaswap.co.uk

How does the Tea Swap work? Fixed Price Fixed Price at $2.90 / kg James.Montlake@teaswap.co.uk

Tea is sold in the Auction as normal How does the Tea Swap work? Fixed Price Factory Price Tea is sold in the Auction as normal James.Montlake@teaswap.co.uk

How does the Tea Swap work? $0.13 $0.02 Fixed Price $0.09 $0.22 Factory Price Swap payment is the difference between Auction price and fixed Swap Price James.Montlake@teaswap.co.uk

How does the Tea Swap work? $0.13 $0.02 Fixed Price $0.09 $0.22 Factory Price Swap payment is the difference between Auction price and fixed Swap Price James.Montlake@teaswap.co.uk

How does the Tea Swap work? $0.13 $0.02 Fixed Price $0.09 $0.22 Factory Price Swap payment is the difference between Auction price and fixed Swap Price James.Montlake@teaswap.co.uk

WHY James.Montlake@teaswap.co.uk

Growing Confidence in the Future Why trade Tea Swaps? Growing Confidence in the Future James.Montlake@teaswap.co.uk

Why would a Factory trade a Tea Swap? Better planning Higher profitability No short term loans Price Confidence Factory James.Montlake@teaswap.co.uk

Why are Tea Swaps good for Farmers? PRICE CONFIDENCE Farmer Factory James.Montlake@teaswap.co.uk

Why are Tea Swaps good for Farmers? Better planning Higher quality Plan expenses Farmer James.Montlake@teaswap.co.uk

Why are Tea Swaps good for Farmers? Factory James.Montlake@teaswap.co.uk

Why are Tea Swaps good for Traders? Plan Blend Price More Competitive Long term Quotes Price Confidence Trader James.Montlake@teaswap.co.uk

Why are Tea Swaps good for Packers? PRICE CONFIDENCE Trader Packer James.Montlake@teaswap.co.uk

Why are Tea Swaps good for Packers? Improved budgeting Higher return on Capital Less market risk Packer James.Montlake@teaswap.co.uk

Why are Tea Swaps good for Packers? Trader Packer James.Montlake@teaswap.co.uk

Swaps Benefit Everyone along the Value Chain Factory Trader/Exporter Packer Farmer Auction Tea trade: Swap Prices Factory Trader/Exporter Packer Farmer Tea Swaps James.Montlake@teaswap.co.uk

Small / Medium Business Appropriate for all sizes of business Big Business Small / Medium Business Forward James.Montlake@teaswap.co.uk

Broker makes the Market by dealing in Both Directions Swap Broker Spread $2.08 $2.12 Swap Broker Tea Seller Tea Buyer Broker makes the Market by dealing in Both Directions James.Montlake@teaswap.co.uk

Structure WHEN James.Montlake@teaswap.co.uk

Tea Swap Trial Timeline March April May June First Simulated Trades Started First Simulated Trades Completed 4th African Tea Convention - KAMPALA Second Simulated Trades Started Tea Swaps workshop – Nairobi and Mombasa Education & Training Roadshow - West Kenya East African Simulated Tea Swap Trial Begins 23 participating Tea Companies in East Africa James.Montlake@teaswap.co.uk

Next Steps James.Montlake@teaswap.co.uk June July August September Africa Established First live Swap Trades Completed 4th African Tea Convention - KAMPALA Education and training Roadshow – East Africa Live East African Tea Swap Market Begins James.Montlake@teaswap.co.uk

Key benefits of using Tea Swaps 1 2 3 4 Price Confidence Improved Finances No Impact on Physical Everyone Benefits James.Montlake@teaswap.co.uk

To find out more… www.teaswap.co.uk +94 76 476 0316 (Sri Lanka) James.Montlake@teaswap.co.uk www.teaswap.co.uk +94 76 476 0316 (Sri Lanka) +44 79 084 78226 (UK)