Tea Board hikes minimum auction price to support struggling gardens

Infograph: TBS

The Bangladesh Tea Board has announced a significant increase in the minimum auction price of tea, aiming to revitalise the country's struggling tea industry.

The new prices, effective from post-Eid auctions, will see an increase of Tk10 to Tk85 per kg depending on the liquor (quality) of the tea. This move is a crucial step to alleviate the continuous losses faced by tea garden owners despite increased production.

Following the news, open market tea prices have already risen by at least Tk20 per kg. Traders expect further increases in wholesale and retail prices once auctions resume.

For years, low auction prices have made most tea gardens unprofitable, leading to the shutdown of at least 30 out of the country's 170 tea gardens. Recognising this crisis, the Bangladesh Tea Board introduced a minimum auction price for tea for the first time during a meeting of the parliamentary standing committee on the Ministry of Commerce on 6 March 2024.

The revised pricing structure, finalised on 14 May under the chairmanship of the commerce adviser, aligns auction prices with the average cost of production, set at Tk245 per kg for Bangladesh's tea gardens.

Accordingly, the minimum price for tea from Sylhet and Chattogram regions is set at Tk245 per kg, while 'botleaf' tea from the northern region will have a minimum price of Tk170 per kg. Last year, a uniform minimum price was introduced on a trial basis in 20 auctions.

Industry insiders note that rising labour wages and increased costs of inputs such as gas, fertiliser, electricity, and coal have significantly driven up production expenses over the past decade. Tea packaging companies have also raised prices due to branding and associated costs. The prolonged period of low tea prices has left many gardens unable to repay loans, pay worker wages, or invest in new production, intensifying the demand for a fair pricing structure.

Kazi Arfan Ullah, manager of Neptune tea garden owned by MM Ispahani Ltd, welcomed the government's intervention, saying, "The tea market has been poor for the past three years. The initiative taken by the government is like giving saline to a patient on their deathbed. We welcome the decision to increase the minimum price of tea. Now the question is whether the traders will actually buy it – or will the produced tea just sit in the warehouse!"

Unlike last year's uniform pricing, the new rates have been adjusted region-wise. Auction prices for tea gardens in Sylhet and Chattogram have increased, while the minimum price for botleaf tea factories in the northern region has slightly decreased compared to the previous year.

Detailed grading by broker firms will determine specific price increases. For example, teas rated 4 and 4+ out of 5 will now fetch Tk315 per kg in Sylhet-Chattogram (up from Tk300) and Tk290 for botleaf tea. The lowest grade, 2-rated tea, has increased from Tk160 to Tk245 in Sylhet-Chattogram and to Tk170 for botleaf tea.

Yasmin Parveen Tibrizi, member (Finance and Commerce) of the Tea Board, affirmed, "The revised minimum price is a consensus-driven decision among all stakeholders, aimed at ensuring tea gardens receive a selling price that covers their production costs." 

She expressed confidence that this new pricing level will significantly alleviate the crisis faced by tea-producing gardens across the country.