a year ago

Tea industry in Bangladesh at crossroads

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According to the Global Salary Report 2020-21, the monthly minimum wage in Bangladesh in 2019 was $48 or around Tk 4,070, the lowest among South Asian nations. Bhutan and the Maldives were not included in this poll. Using the Purchasing Power Parity numbers, the ILO report determined the "Gross Monthly Minimum Wage Levels in Asia and the Pacific." Globally, Bangladesh ranked fifth from the bottom among 136 countries. 

These salary scenarios demonstrate that we are far behind other nations. According to the findings of Wage Indicator Foundation's (a non-profit organization) 'A study of Tea estates, Ready Made Garment, Leather, and Construction' in 2020, construction is the industry where pay at or above the minimum wage is reported the most, while tea is the industry where it is reported to be the least. Therefore, the wage of tea workers should be the government's prime concern.

To determine the appropriate wage structure for the tea sector, we must first examine our production costs. We rely heavily on foreign machinery, chemicals, and fertilizers in the tea industry. Consequently, our production costs are often higher than those of neighbouring nations. In addition, the recent spike in diesel prices has caused a fifteen to twenty per cent increase in production costs, as fuel is used in tea plantations for generators, irrigation, and machinery. Alongside this, drastic growth of electricity and gas prices during last few years have created much complexity for tea producers. Heavy reliance on pesticides, fertilizers and chemicals is another factor contributing to production cost increases, as their costs have skyrocketed.

On the contrary, productivity of tea per hectare is comparatively lower than neighbouring countries. For example, in India where per hectare production is about 2,137 kg, it is merely 1,270 kg in Bangladesh. Vast majority of the tea plants have aged, producing very little. So, a huge amount of capital investment is also required every year to bring new areas under tea cultivation or replace old plants with new plants. Moreover, young plants need intensive care for at least five years, and at least 10-12 years is required to recuperate the investments involved.

Surprisingly, the selling price of tea in auction is almost stagnant for last ten years. From 2012 to 2021, the national average auction price of per kg tea has increased by only 32 paisa (Tk 197.03 in 2012 and Tk 197.35 in 2021). It is noted that all tea gardens must sell their produced tea at government recognised auction centres through various broker houses. Tea garden owners consistently emphasise that they are getting lower auction prices at the expense of higher cost. Usually, tea estate owners are merely tea growers, not tea auctioneers or tea traders. Only a handful of the growers are involved in tea packaging. They don't have broker house. The growers claim that in many cases they sell tea at a loss of Tk 20-30 per kg. So, the question is who sees the profit? Study reveals that between the auction price and retail price there is a significant gap! Are tea auctions the correct price setting platforms? The government can take this into consideration.

There are currently 167 tea plantations on 2.8 million acres of land in Bangladesh. According to the website World Atlas, Bangladesh's production ranked twelfth in the world in 2020. According to the Observatory of Economic Complexity (OEC), Bangladesh exported $4.33M worth of tea in 2020, ranking as the 56th largest exporter in the world. During the same year, Bangladesh imported $925,000 worth of tea. Tea imports into the country are subject to tariffs and levies amounting to 92 per cent. However, large quantities of illegally imported Indian tea reach Bangladesh each year. Bangladesh is losing revenue as a result. Our national newspapers' front pages bore evidence to this. Therefore, it is time to reform our tea industry.

There are further unheralded aspects that have a substantial impact on the tea industry's crisis. An unseen problem is brain drain or lack of interest of qualified individuals to pursue a career in the tea industry. Due to inadequate compensation and dwindling facilities, there is a severe shortage of qualified professionals in this industry. During the Pakistan period, we had a variety of teas with additional value, such as orthodox black and green teas etc. Today, however, production is primarily limited to CTC teas. Inclusion of lower quality tea from north Bengal in the mainstream market is another significant factor that has affected tea prices. Tea-centred tourism has emerged in India, Sri Lanka, and other countries. However, due to the terms of their leases in Bangladesh, tea producers cannot use the tea estates for tourism purposes.

Taking all of these factors into account, the government may create a short, medium, and long-term strategy as well as a commission. It may be difficult for the industry, but governments must find a solution with all of its stakeholders.

Hossien Muhammed Zaki is a researcher. [email protected]


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