In 1929, for fear of a world surplus and then a fall in tea prices, British and Dutch producers agreed to limit harvesting and exports on a voluntary basis. Unfortunately, the agreement was abandoned in 1931, with the British accusing the Dutch of not holding back the sale of small ducks and not reducing exports. Indian tea planters fear that the deal will flood the Indian market with cheap tea from ASEAN countries, meaning Indian tea would no longer be competitive due to its relatively high production costs. However, the treaty would also open up foreign markets that would protect their own tea industry. This could be beneficial for large plantations already active in foreign trade. Small farmers do not export significant amounts of tea. In the first half of the twentieth century, the tea industry saw large price fluctuations. The system remained in force until 31 March 1955 and was not subsequently extended, but an agreement was reached between the governments of the participating countries on the continuation of the International Tea Committee as a centre for the collection and publication of statistics and other information on tea. During this period, price support schemes for several agricultural raw materials were put in place through the establishment of collusion agreements or cartels.

Since primary products have a low price elasticity of demand, limiting production increases producers` profits and is in their collective interest. Early attempts at tea agreements were not successful, but when prices fell, tea producer associations in the three major tea-producing countries created the International Tea Agreement in 1930. Tea associations in India, Ceylon and Dutch India have agreed to cut production to avoid a further fall in prices. It was a voluntary agreement where by which each tea company belonging to tea associations in the producing countries undertook to reduce production. There were a lot of companies in the business. However, since the enterprises were run by a small number of agents who made decisions as to how much to produce, the actual size of the enterprise was larger and increased the viability of a collusive agreement. Each producer of a cartel is incentivized to defraud and release compliance with the rules of other companies. However, if companies are threatened with abandonment of the agreement and prices fall if participants do not comply, the agreement can be maintained. Economic theory predicts that cartels can be maintained by price wars – any sign of non-compliance such as falling prices leads each company to abandon the agreement and increase production, resulting in a further fall in prices.