The independent, 31 July 2012
DHAKA, JULY 30: Tea exports from Bangladesh declined drastically following the substantial rise in domestic consumption, prompting many tea traders to even import the drink from abroad.
A number of local tea traders import tea from India, Kenya and Vietnam instead of buying from domestic auctions because of price competitiveness, according to sources. As a result, the total earnings from tea export fell to only $ 3.38 million during the immediate past fiscal year 2011-12. The earning, however, showed a slight upward as the figure was $ 3.20 million in the previous fiscal.
In 1990’s Bangladesh scored as the fifth largest tea exporters in the world. But the scenario has reversed and that the country became a tea importer.
Recently, the government imposed a 25 per cent duty on imports of tea to safeguard local industry. Bangladesh produces around 60 million kgs of tea a year against a local demand of 56 million kgs.
The local consumption of tea has been rising by 7-8 percent annually, in line with steady economic growth and changes in lifestyles. On the other hand, the tea production is rising at 1-2 per cent per year.
The local tea traders said they mainly import packet tea from abroad. Around five million Kg tea was imported in last fiscal.
Bangladesh has 156 tea gardens covering nearly 100,000 hectares of land. The tea gardens are mainly located in Sylhet, Moulovi Bazaar and Chittagong district.
Seeing the ever increasing demand, the Bangladesh Tea Board (BTB) has taken a plan to increase the yield to 100 million kg by 2021, but it may not be possible due to shortage of suitable planting gardens, a BTB official said.
Industry insiders said around a fourth of Bangladeshi tea is of poor quality and that prices of good tea are higher compared with those of other tea-producing countries.
Tea is sold at the country’s sole auction centre, in the main port city Chittagong, where most of it is picked up by domestic buyers.
A total of 56.70 million kgs of tea was sold at the auction in 2010, compared to 54.25 million kgs in the previous year. At present, good-quality tea sells at Tk165-180 per kg at Chittagong auction.
The government of Pakistan allowed duty free entry of 10.00 million Kgs of tea per year from Bangladesh since October 2002 and offered to increase the quota up to 15.00 million Kgs.
But Bangladesh could not utilise that quota fully as increasing internal demand pushes the price levels up in the local auction and discourages exports. Other tea producing countries like India, Sri Lanka, Indonesia, Vietnam, Kenya and some other African countries have relative advantages to supply better quality tea at lower prices that makes export market extremely competitive for Bangladesh Tea.
Some local brand, like, HRC also import tea from Sri Lanka and Kenya to meet fast-booming domestic demand.
“Local tea market is growing like anything. We imported tea to boost our domestic sale,” said a high official
of HRC.
In late-1990s earning from tea export had reached to 40 million dollars before started falling gradually. The decline was steep in the past five years as the beverage became top selling drinks in village bazaars and households.
The local production was also hampered due to lack of adequate rains and persistent drought-like situation in the country.
Early and pre-monsoon drought in the past five years has hit production even though the gardens have invested several crore taka to expand plantation.
James Finley, the second largest producer, has invested over Tk 50 crore to boost production in its 14 gardens.
“Had the weather been kind, we could have easily grown 17-18 million kilograms of tea. But prolonged drought in March-June meant we are left with around 11 million kgs. Seven out of ten bushes we planted in the past five years have survived,” said a high official of the company.
Sources said ownership disputes in dozens of smaller gardens and shrinking productivity at the state-owned National Tea Company, the third largest producer holding eight big-sized gardens, also contributed to low production.
Bangladesh Economy 
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