Tea growers face high production cost, lower auction prices

Despite record production, tea garden owners in Bangladesh brace for growing losses owing to price hikes of diesel and coal that are used for processing tea leaves.

Besides, lower tea prices and piled up tea consignments unsold in auctions have added to their woes.

According to the Bangladesh Tea Board, tea growers produced around 8 crore kilograms of tea in the first ten months of this year.

In October alone, 1.4 crore kg of tea were produced, surpassing any previous month's production record.

Altamash Hasan, vice-chairman of the Bangladesh Tea Association, a platform of tea garden owners, said it was not the case that owners would be able to sell tea at higher prices if its production increased.

At present, the cost of tea production is more than Tk200 per kg compared to its auction price of Tk170-190. As a result, gardens are losing up to Tk30 per kg, he added.

Altamash Hasan said gas is used to dry tea leaves at some gardens in Sylhet while coal and diesel are used in Chattogram and Panchagarh. The increase in the price of diesel by Tk15 per kg has pushed up the cost of irrigating gardens, operating other equipment and various other expenses. In such a situation, production costs cannot be controlled in any way.

According to sources at the tea association, 30% of the tea remained unsold at the last auction. In some gardens, more than half of the tea is unsold. If this tea is added to the next auction, the price will go down further.

In the opinion of garden owners, demand for tea has declined due to the Covid-19 pandemic. Yet this situation has not been completely normal. As a result, despite the increase in tea production, tea garden owners are constantly facing losses.

According to the Bangladesh Tea Board, the average price of tea per kg at the beginning of the 2021-22 auction year was Tk213. Later, tea was sold at auctions for up to Tk191.

Owners at several tea gardens in Chattogram said transportation costs have risen due to an increase in fuel prices. Coal prices have gone up again in the local market due to rising transport costs. This will exacerbate the crisis.

Ebadul Haque, manager at Barmasia Tea Garden in Chattogram, said 11,000 kg of tea were put forward at the latest auction but a mere 50% of that was sold.

"At previous auctions too, 50% of tea from our garden was sold. As a result, maintaining the cost of production at tea gardens has become a challenge," he added.

Ebadul Haque said four months ago, the price of coal in the local market was Tk18 per kg and now it has risen to Tk26.

"Our garden needs 15 tonnes of coal daily, and an increase of Tk8 per kg has made us pay an additional Tk120,000 each day for coal purchase only," he added.

According to the Tea Traders Association of Bangladesh, there are 167 tea gardens in Sylhet, Habiganj, Moulvibazar, Chattogram and Panchagarh, employing more than 3 lakh people.

Besides, there are over 5,000 small farmers involved in tea cultivation in North Bengal and Bandarban, they added.