Tea prices have marked a sharp rise in local market on its high demand, increased production cost and export and production shortfall in the first quarter of the season, according to industry insiders.
Traders said at the retail level packed tea of different brands were selling yesterday at Tk 180-Tk190 per kg against the rates of Tk 130-Tk140 just two weeks back.
At the auction level in Chittagong tea was selling at Tk 135-Tk145 per kg last Tuesday, the weekly auction date. A kg of tea was selling at Tk 170-Tk180 at the wholesale level yesterday.
Shantanu Biswas, chairman of the Tea Traders Association of Bangladesh (TTAB), said the local tea market now feels the pinch of the supply shortfall in the May auction due to the decline in production following a drought in tea gardens. At that time, the supply shortfall was 1.3 million kg.
Moreover, Pakistan, the major buyer of Bangladeshi tea, imported more than the usual, as Kenya, one of the major sources of tea, failed to fulfill the Pak demand for the item this year because of its less production.
Usually, Pakistan imports 10-15 million kg of duty-free tea from Bangladesh every year, according to Biswas.
He does not foresee any decline in the prices of tea this year to the last year's level because the cost of production goes high. However, he thinks that the price will soon come down slightly.
The average price may range between Tk 110-Tk115 per kg at the wholesale level this year, which was Tk 84.88 per kg in the last calendar year, the TTAB chief added.
Biswas, also a senior official of a large tea producing company, said by the year-end tea production may cross the last year's level as the weather condition is gradually improving.
“Tea output reached 57.60 million kg last year, while 60 million kg are expected to be produced this year,” he said.
Saiful Islam, former chairman of the TTAB and a director of the National Brokers Limited, a leading tea auctioneer based in Chittagong, attributed the high prices of tea to inclement weather, soaring prices of agri-inputs like fertiliser, pesticides and transport costs.
He said the demand for tea in the local market increases at 3-4 percent a year. The local customers consume 48-50 million kg of tea the year round, while the rest of the total production is exported, he said.
He said the dry weather in the February -April period caused a drought in tea gardens for which the production declined in May. “But, the situation has improved and the production is taking place usually,” he said.
Bangladesh Tea Board (BTB) statistics say HRC is the largest exporter of tea. The other major exporting companies are Elite, A Kabir, Consol, Duncan, Ispahani, Haji Ahmed, Shaw Wallace, Unilever, Monir Shah, AMCL-Pran, Azad Enterprise and Mukut.
The BTB sources said all the companies exported 3,126, 000 kg of tea up to March, 2008.
The Export Promotion Bureau (EPB) data shows that tea exports grew by 167.95 percent in July-April period of FY 2007-08, compared with the same period of FY 2006-07.
During the period of the just-concluded fiscal, tea worth US$13.96 million was exported against the target of $6.42 million, the EPB data said.