Ailing tea sector seeks lifeline

Having sold products at lower than the production costs for years, the Bangladeshi tea industry is now experiencing severe hardship and seeks the government's policy and financial support to survive.

Bangladesh Tea Association, a body of private tea garden owners, in a recent letter to Bangladesh Bank Governor Dr Ahsan H Mansur sought the assistance, saying "the industry would not survive unless the gardens are given low-cost loans".

Its Chairman Kamran T Rahman mentioned in the letter that the production cost of each kilogram of tea was Tk 260 in 2024, while the selling price was Tk 204 per kg.

Before the Covid-19 pandemic, the selling price of tea was Tk 261 per kg in 2018 against the production cost of Tk 202 per kg, he said.

The garden owners have been selling tea at lower than the production costs since 2019 and "due to the price fall of tea in 2023 and 2024, their cash flow and financial capability have largely squeezed," he said.

The industry incurred losses of Tk 4.0 billion due to the strike enforced by the workers in the peak season for the tea sector in August 2022.

The then prime minister raised the daily cash wage by nearly 42 per cent to Tk 170 from Tk 120 to help resolve labour unrest.

The daily total wage for each worker, since August 2024, stood at Tk 512, and the monthly amount was Tk 15,355, Mr Rahman mentioned.

In almost every auction, a large volume of tea remains unsold, and their prices further fall in the next round.

In 2024, the country grew some 93 million kilograms of tea, down from around 103 million kg in the previous year.

"Tea production in Bangladesh is much higher than the demand. Thus prices are lower than expectations," Mr Rahman told The Financial Express.

He put forward some demands to the governor as the industry is facing a severely hostile situation.

These include abolishing the provision of internal credit risk rating (ICRR) in case of the tea industry as the producers have no control on fixing tea prices and the prices are being fixed through auctions, keeping unpaid loans in a separate account and realising them by 2038, and creating a revolving fund of Tk 45 billion for providing loans.

He said Bangladesh Krishi Bank in early June sent some loan proposals to the central bank for approval.

However, until mid-July, the central bank did not approve them. Thus, the tea gardens are not getting loans, which caused labour unrest.

Mr Rahman also pointed out that due to the acute fund crisis caused by the sales of tea at lower than production costs, over 80 gardens have been failing to make payments for workers' provident funds for up to 26 months.

Some 20 gardens are failing to make regular payments of wages, bonuses, and instalments of due payments, while five have shut production.

According to Mr Rahman, some 2.0 million people are directly and indirectly involved in the tea industry.

The lives and livelihoods of some 0.5 million tea workers and their dependents will face severe problems if the tea gardens are forced to shut production due to fund constraints.

The country will have to meet the demand by importing tea worth Tk 20 billion annually if production in the local tea industry stops, he wrote.

"Any unemployment in the tea gardens may cause social unrest in that area," he told The Financial Express.

He said the tea industry is "neglected" by the government and needs proper attention to survive.

syful-islam@outlook.com