1. Growing Confidence in the Future
Tea Swaps
Growing Confidence in the Future

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

3. Tea Swaps
Price Confidence

4. WHO
WHAT
WHY
WHEN

5. WHO

6. 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”

7. Tea Swap volume traded since Inception
kgs traded
Total volume = 700,000 kgs

8. Tea Swap Trials

9. 23 leading East African Tea Companies trialing Swaps
Tea Swap Trial East Africa
23 leading East African Tea Companies trialing Swaps

10. 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

11. Who else trades Swaps? James.Montlake@teaswap.co.uk

12. Tea has been absent from Swap markets
Coffee
Orange Juice
Cocoa
Milk
Swaps
Wheat
Sugar

13. WHAT

14. Tea Swaps
Price Confidence

15. How does the Tea Swap work?
Factory Price
Auction Prices

16. How does the Tea Swap work?
Fixed Price
Fixed Price at $2.90 / kg

17. 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

18. 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

19. 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

20. 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

21. WHY

22. Growing Confidence in the Future
Why trade Tea Swaps?
Growing Confidence in the Future

23. Why would a Factory trade a Tea Swap?
Better planning
Higher profitability
No short term loans
Price Confidence
Factory

24. Why are Tea Swaps good for Farmers?
PRICE CONFIDENCE
Farmer
Factory

25. Why are Tea Swaps good for Farmers?
Better planning
Higher quality
Plan expenses
Farmer

26. Why are Tea Swaps good for Farmers?
Factory

27. Why are Tea Swaps good for Traders?
Plan Blend Price
More Competitive
Long term Quotes
Price Confidence
Trader

28. Why are Tea Swaps good for Packers?
PRICE CONFIDENCE
Trader
Packer

29. Why are Tea Swaps good for Packers?
Improved budgeting
Higher return on Capital
Less market risk
Packer

30. Why are Tea Swaps good for Packers?
Trader
Packer

31. Swaps Benefit Everyone along the Value Chain
Factory
Trader/Exporter
Packer
Farmer
Auction
Tea trade:
Swap Prices
Factory
Trader/Exporter
Packer
Farmer
Tea Swaps

32. Small / Medium Business
Appropriate for all sizes of business
Big Business
Small / Medium Business
Forward

33. 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

34. Structure
WHEN

35. 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

36. 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

37. Key benefits of using Tea Swaps1 2 3 4
Price Confidence
Improved Finances
No Impact on Physical
Everyone
Benefits

38. To find out more… www.teaswap.co.uk +94 76 476 0316 (Sri Lanka)
(Sri Lanka)
(UK)