Tea output almost static while local demand soars, exports fall

Nizam Ahmed

Tea exports from Bangladesh, the world's fifth-largest tea exporter until early nineties, gradually fell to a nominal 910,000 kg as a strong domestic market consumed almost all the year's yield of some 59.70 million kg in 2010, traders said on Saturday.

The exports of tea were 3.15 million kg and 8.4 million kg against yields of 59.99 million kg and 58.67 million kg in 2009 and 2008 respectively.

The growing demand also forced traders to import some four million kg of tea in the year to suit the taste of the consumers of quality teas in the country. The imports were around three million kg in the previous year.

The production of tea has been rising by only one per cent annually over the last one decade and yield reached nearly 59.70 million kg in 2010 from 52.64 million kg in 2000.

However, the drastic fall of exports over the past years does not worry the growers at all, because a strong internal market absorbs the country's entire produce.

Traders say the internal demand has been growing faster than the production. So to keep the internal market stable traders are likely to import more tea in the coming years.

"It doesn't matter whether there are exports or not. We have buyers for nearly all the yields," Rafay Nizam, director of the National Brokers Limited, the country's largest tea broking company told the FE.

"We see a very strong competition among buyers at the auction."

All the crops from some 163 tea estates are sold through Chittagong auction centre, the sole outlet operated by six registered brokerage firms of the country.

Bangladesh was among the top tea exporters between mid seventies to mid nineties exporting between 30 million kg and more than 34 million kg annually, data available with the Bangladesh Tea Board (BTB) says.

BTB formulates policies, regulates tea gardens and monitors production, exports and internal distribution.

The exports hit 34.4 million kg in 1982 and some 32 million kg in 1993 when the yields were 40.9 million kg and 51 million kg respectively. Local traders were timid at the auction dominated then by foreign buyers and local export traders.

Bangladesh tea vented to most European countries including former Soviet Union, Yugoslavia and Poland, also in the Middle East and the Central Asia in the hey days, but now only Pakistan, Afghanistan and the Commonwealth of Independent states import a paltry volume of Bangladesh tea.

Though the importers say that they have been importing tea to meet a growing domestic demand, BTB officials say Bangladesh still grows enough tea to meet the internal demand.

"Now tea is one of the listed items and we often handle it at the port," said a customs official at Chittagong port.

BTB says it has been planning to bring more areas under tea cultivation in the regions of southeastern Chittagong Hill Tracts and northwestern Panchagarh districts as the local demand has been rising by 3.5 per cent annually.

Traders say the imports are likely to rise further rise as the local demand has been rising.

In 2009 internal consumption was 53.75 million kg, following 52.10 million kg consumed in the previous year, against the yields of 59.99 million kg and 58.66 million kg respectively. In 2000 domestic consumers sipped 38.79 million kg out of the production of 52.64 million kg.

"Imports are growing gradually as internal demand for this cheap, aromatic drink is increasing fast across the country," said Mohammad Idris, an executive of a large tea trading firm.

Indonesia, South and Vietnam have been the sources of supply so far, traders say.

Earning from tea exports fell gradually and in (July-June) fiscal year (FY) 2010-11 it fell by 43.36 per cent to $3.2 million compared to the previous fiscal. In 2000 calendar year the export earning was some $21 million, BTB said.

Exports fell because the average price of teas increased to over $2.0 per kg in Chittagong auction due to strong domestic demand. As a result, foreign buyers are being elbowed out at the auction.

"At such price ($2.0 per kg) far better teas are available in South India, Vietnam and Kenya so the foreign buyers are reluctant to participate in Chittagong auction," a BTB official said requesting not to be identified.

Most of Bangladesh's nearly 160 million people, nearly 40 per cent of them living below the poverty line, sip two or more cups of tea everyday, and the number is going up, traders and tea-shop owners said.

Each cup of tea with milk and sugar costs Taka 3.0 ($0.04), in wayside kiosks and more than Taka 5.0 in urban tea-stalls, subject to their standards.

A total of 56.70 million kg of tea was sold at the auction in 2010, compared with 54.25 million kg in the previous year, Nizam said. The rest of the yield was sold directly from tea gardens and a small weight was carried over to the new tea growing season (April-March).

To maintain exports after meeting the growing internal demand, BTB has a plan to increase the yield to 100 million kg by 2021, but it may not be possible due to shortage of suitable planting area, another BTB official said.

Tea gardeners presently cover over 115,000 hectares (287,500 acres) of land directly cultivating some 75,000 hectares.

Bangladesh with annual yield of some 60 million kg is the 10th largest tea producer of the world lagging behind Argentina and Japan that produce 72 million and 93 million kg per annum. China and India are the two top tea growers in the world with annual production of 1,200 million and 981 million kg respectively.

In 2008 Bangladesh exporting some 3.0 million kg was the 15th among 16 main tea exporting countries topped by Kenya that exports some 383 million kg. Sri Lanka and China were in the second position, exporting some 297 million kg each. India was the fourth largest exporters with 193 million kg.

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