Tea sales decline, traders fear losses

Highlights:

• This year's tea production target is 7,59,40,000 kg
• The last 5 months of this year have produced 1,28,46,000 kg of tea
• The first 5 months of last year, production was 1,62,81,000 kg
• Last season (Apr 2019 - Mar 2020) 90.44 million kg of tea was sold at 45 auctions in Chattogram and Srimangal at an average price of Tk176.08 per kg
• This season, 6 auctions have been held in Chattogram and 3 in Srimangal
• 6.66 million kg of tea have been been sold at Tk155 per kg at auction
• Plan foresees 20 auctions to be held in Srimangal this year
• 2019's tea production broke the record of 165 years with 96.07 million kg

Last year, Bangladesh produced a record amount of tea and production has continued this year. However, tea sales have declined as most tea stalls, hotels, motels, and restaurants have been closed to curb the spread of Covid-19. As a result, unsold tea is piling up in warehouses and it has become a challenge for tea traders to keep garden activities operating.

Traders say if the tea is stored in warehouses for a long time the quality of the tea will deteriorate. Moreover, the price of tea is lower this year than in other years. If the situation does not change, it will be impossible for them to pay the tea workers. They think it will not be possible to get out of this problem if they do not get incentives from the government.

According to the Tea Board, the target for tea production in the country this year has been set at 7,59,40,000 kilogrammes.

In the last five months this year, 1,28,46,000 kilogrammes have been produced.

In the first five months of last year, the production was 1,62,81,000 kilogrammes.

Kajal Hazra, director of the Srimangal Padma Tea Supply Store, said tea sales have dropped several times this year compared to last year. At the same time, the price of tea has also come down. The quality of the tea stored in his warehouse will deteriorate in just a few more days and he will face huge losses.

Garden owners said a failure to sell tea will have an impact on workers' wages because all the expenses of the garden are met with the money that comes from tea sales.

Piyush Kanti, general manager of Nahar Tea Garden, said, "I have about 30,000 kilogrammes of tea stored at my warehouse. I can't sell it due to a lack of buyers. I have sold some amount but at an average price of Tk155 per kilogramme."

"I cannot get back the capital by selling tea at such a low price. Again, the wages of the workers cannot be kept in arrears. If it continues like this, I am thinking of how I will be able to pay the workers."

GM Shibli, president of the Bangladesh Tea Parliament Sylhet Valley, said tea sales have dropped more than three times due to Covid-19. While good quality tea is being sold, general quality tea – which is sold in tea shops or restaurants – is being sold less.

"About half of the tea that goes up at auction remains unsold. Those involved in the industry will have to face huge challenges to continue production by providing salaries and other allowances," he said.

Ahsan Habib, marketing officer of the Bangladesh Tea Board, said that last season (April 2019 to March 2020), 90.44 million kilogrammes of tea were sold at 45 auctions in Chattogram and Srimangal at an average price of Tk176.08 per kilogramme.

So far this season, six auctions have been held in Chattogram, and three in Srimangal, and 6.66 million kilogrammes of tea have been sold at Tk155 per kilogramme.

Sirajul Islam, manager of Hamidia Tea Garden, said, "Last year, we produced 1,85,000 kilogrammes of tea. Although the production of tea is a little lower this year, I have already stored 25,000 kilogrammes of tea in the warehouse.

"I am in dire straits. I am struggling to pay the workers. Banks are also not giving loans. Only government incentives can save us from this problem," he added.

Jahar Tarafder, member secretary of the Tea Planters and Traders Association of Bangladesh, said there were plans to hold 20 auctions in Srimangal this year. So far only three auctions have been held. Buyers' participation in the auctions has decreased – along with the price of tea.

An official of the Tea Board said on condition of anonymity that most of the tea companies are owned by foreigners. If they cannot sell them now, they can six months later.

The government has to first consider the industries that are currently on the verge of destruction, including dairy producers and farms, due to the pandemic. Although the salaries of many in the banking sector have come down, the salaries of tea gardeners have not come down yet. The situation of the tea garden is still very good, he added.

Munir Ahmed, deputy director (planning) of the Bangladesh Tea Board, told The Business Standard that the ministry and the tea board are aware of the current situation and necessary steps will be taken.

In 2019, the country's highest production in the tea industry broke the record of 165 years. The production target for that year was 80 million kilogrammes but by the end of the year, 96.07 million kilogrammes had been produced.