Tea growers face high production costs and lower auction prices

Despite record production, owners of tea gardens in Bangladesh are bracing for increasing losses due to rising prices for diesel and coal used for processing tea leaves.

In addition, falling tea prices and the accumulation of unsold tea lots at auction have compounded their problems.

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 was produced, surpassing the production record of the previous month.

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

At present, the tea production cost is over 200 Tk per kg compared to its auction price of 170-190 Tk. As a result, gardens lose up to 30 Tk per kg, he added.

Altamash Hasan said the gas is used to dry tea leaves in some gardens in Sylhet, while coal and diesel are used in Chattogram and Panchagarh. The increase in the price of diesel by 15 Tk per kg has increased the cost of irrigating gardens, operating other equipment and various other expenses. In such a situation, the production costs cannot be controlled under any circumstances.

According to sources at the Tea Association, 30% of the tea remained unsold in the last auction. In some gardens, more than half of the tea is unsold. If this tea is added at the next auction, the price will drop even more.

In the opinion of garden owners, demand for tea has declined due to the Covid-19 pandemic. However, this situation was not entirely normal. As a result, despite the increase in tea production, owners of tea gardens are constantly faced with losses.

According to the Bangladesh Tea Board, the average tea price per kg at the start of the 2021-22 auction year was Tk 213. Later, the tea was auctioned for up to 191 Tk.

The owners of several tea gardens in Chattogram said transportation costs have increased due to rising fuel prices. Coal prices rose again in the local market due to rising transportation costs. This will worsen the crisis.

Ebadul Haque, director of Barmasia Tea Garden in Chattogram, said 11,000 kg of tea was offered at the last auction, but barely 50% of it was sold.

“In previous auctions, too, 50% of the tea in our garden was sold. Therefore, maintaining the cost of production in tea gardens has become a challenge, ”he added.

Ebadul Haque said four months ago that the price of charcoal in the local market was 18 Tk per kg and has now risen to 26 Tk.

“Our garden needs 15 tonnes of charcoal per day, and an increase of 8 Tk per kg has made us pay an additional 120,000 Tk each day for the purchase of charcoal only,” he added.

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

In addition, more than 5,000 small farmers are involved in tea cultivation in North Bengal and Bandarban, they added.

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