expansion of tea production and export from 4

Thoughts on EconomicsVol. 16, No. 3 & 4

Expansion of Tea Production and Export fromBangladesh :Some Policy Suggestion

*S.M. Nazmus Sa’adat Shabbir

Abstract : This paper presents a set of suggestions for raising production and export of tea from Bangladesh. The suggestions include modernisation of tea production, bringing new areas like Panchagarh and Chittagong under cultivation, production of organic and herbal tea. Some of these have already begun. This paper makes policy suggestion to advance these further.

I. Introduction Tea is a regular export item of Bangladesh. But due to slow growth of production growing consumption and stiff competition from other tea exporting courtiers, tea export of the country has declined. Export of tea to different countries by Bangladesh witnessed substantial changes over time. In order to cope with such changes, it is necessary to look for new buyers and pursue an aggressive policy in the world tea market. This paper examines the present position and contains several suggestions for raising tea export.

Domestic consumption of tea has steadily increased. This trend is likely to remain and even may gain momentum. In the face of rising domestic consumption, a stable level of tea export can be maintained only by a sustained increase in tea production. Various aspects of tea production and export have been dealt with, among others, by Khalid (1975), Majid (1991) and Sabur (2002).

II. Objectives

The paper aims at:i) Examination of the present status of production, domestic consumption

and export of tea of the country;ii) Exploration of the prospect of new areas for tea production; andiii) Policy measures to increase production and export as well as quality

improvement, and roles to be played by the government and national bodies.

Lecturer in Economics, Asian University of Bangladesh, Dhaka. This paper is written on the basis of an author’s Ph.D. thesis under Rajshahi University.

68 S.M. Nazmus Sa’adat Shabbir/Expansion of Tea Production …………..

III. Production

Production of tea in Bangladesh registered steady growth rising from 39.81 million kg in 1980 to 53.41 million kg in 2001. Many of the tea bushes in Bangladesh are well over 50 years old. This has resulted in loss of vigor and production. In the past, for achieving short-term gains, planting efforts were more concentrated on new areas than on replacements. As a result, the old areas did not receive proper care and attention. The result has been a sharp fall in the yield from these gardens. Infilling may be most profitably carried out in tea up to the age of 20-25 years. But infilling of young tea plants should get priority.

The world production of tea has increased tremendously over the last 50 years. It is interesting to note that the production increases in the major tea producing countries have been due to large increase in the yield per hectare. In the nineties, the yield per hectare in India was around 1500 kg, in Sri Lanka this was 1600 kg and in Bangladesh it was only 1000 kg. The net outcome has been a relatively high per kg cost in Bangladesh due to low yield and a consequent unfavorable competitive position in the world market.

Later on poor quality of Bangladesh tea has turned into a problem. A number of reasons account for this. First, the standard of leaf plucking is not satisfactory. To increase production, the producers resort to rough plucking. The second one is the age-old ‘Orthodox’ method of processing in the out-modeled factories and machines. Besides, the presence of high vacancies, poor quality plants, unchecked propagation of pests and diseases in the tea bushes, absence of shade trees, etc. are some other constraints to the yield of quality tea in Bangladesh.

Besides, there are too much fallow land in the tea estates. It can be said without hesitation that even half of the potentiality of the land under tea cultivation has not been exploited.

IV. Domestic Consumption

Amount of tea used for domestic consumption stood at 15.93 million kg in 1980 that declined to 8.72 million kg in 1984, and then rose to 24.31 million kg in 1994. The figure stood at 36.89 million kg in 2001. The wide fluctuation is due to the fluctuation in tea export.

India and China are the largest tea consuming countries in the world and the amount of their consumption was 615.33 and 420.43 million kg in 1996 respectively. Whereas consumption of tea in Bangladesh was only 25 million kg at the same time.

Thoughts on Economics 69

Consumption of tea has decreased in the U.k., Ireland Rep., Afghanistan, Pakistan, Kenya, Australia and New Zeeland in 1999 in comparison to 1995. While in other countries, consumption has increased at normal degree, but it increased tremendously in Bangladesh, Turkey and Canada. Increasing rate of consumption was the highest 49.45% in Bangladesh, while in Turkey and Canada it increased at 43.37% and 30.17% respectively. This high rate of consumption in Bangladesh gives the opportunity to the tea producers to fetch the captive market with the relative high prices of the tea of any quality. But in an open economy, good quality and low price are the main factors for the acceptance of a commodity. That is why Bangladesh needs to raise production of low priced and high quality tea to meet her increasing demand and to increase her export of tea.

Table 1

Number of Tea Estates, Area under Tea Cultivation yieldof Bangladesh Tea since 1947-2000

Year No. of Estates Area under Tea (hectare) Yield/hectare (kg)1947 103 28734 6561950 103 31890 8271955 127 30274 8301960 127 31418 6181965 151 36500 8391970 153 42685 7981975 153 42685 7401980 153 43528 9261985 156 44609 9761990 158 47385 10091995 158 47938 10841996 158 48100 11151997 158 48570 10401998 158 48616 11491999 158 48913 9702000 160 50470 1147

Source: Monthly Statistical Bulletin of Bangladesh Tea Board (BTB)


Table 2Production, Export and Surplus for Domestic Consumption

(Qty in mkg)Year Production Export Left for Domestic Consumption

1973-74 29.89 21.53 08.361974-75 31.28 23.50 07.781975-76 31.30 22.33 08.971976-77 35.64 29.42 06.221977-78 36.35 28.63 07.721978-79 36.70 27.10 09.601979-80 39.81 23.88 15.931980-81 41.90 29.85 12.051981-82 38.54 31.32 07.221982-83 42.86 30.81 12.051983-84 39.46 30.74 08.721984-85 42.89 25.85 17.041985-86 38.77 29.82 08.951986-87 40.36 21.41 18.851987-88 41.62 27.56 14.061988-89 41.27 25.12 16.151989-90 42.56 22.57 19.991990-91 44.61 26.45 18.161991-92 46.79 23.64 23.151992-93 49.30 33.09 16.211993-94 51.73 27.42 24.311994-95 47.04 26.72 20.321995-96 52.14 21.43 30.711996-97 52.67 25.39 27.281997-98 51.25 24.45 26.801998-99 50.26 23.50 26.761999-00 50.22 12.61 37.612000-01 53.41 16.52 36.89

Source: Bangladesh Tea Board, Statistics on Bangladesh Tea Industry, 2002

V. Tea Export of Bangladesh

Overall tea export fluctuated considerably over the period. It stood between 21.41 million kg in 1987 to 33.09 million kg in 1993. There is a need for an aggressive tea


selling policy for Bangladesh in order to stabilize this fluctuation. This calls for holding exhibition of Bangladesh tea abroad and granting special facilities like confessional shipment rate and tariff to exporter. Bangladesh Tea Board and the Ministry of Trade and Commerce can design some web pages in Internet jointly or separately to build up interest for Bangladesh tea in the world market. Seminars, symposiums and Bangladeshi tea festival may be organized by the Tea Board and the Bangladesh Parjatan Corporation can also play a vital role in this respect.

VI. Export of Tea to Different Muslim Countries

There has been a very great chance for Bangladesh in tea export to different countries. Several countries like Egypt, Iraq, Saudi Arabia and Kuwait do not either import Bangladesh tea or do so very irregularly. These are all Muslim countries having good relations with Bangladesh. Efforts should be made at the government level to raise tea export of Bangladesh to these countries both through bilateral contract and interaction of the business community.

VII. Modernization of Tea Production

‘Orthodox’, and an old method of tea processing are largely used by the tea estates in Bangladesh. From plucking to packing through this method makes a harmful delay that unfortunately presents the question of quality of the commodity. Cost of each and every item of tea production like fuel and power, stores and spares, chest, warehousing, freight and cartage, fertilizer and insecticide, and repairs and maintenance has increased. Weeds, poor drainage, inadequate shade, insufficient fertilizers, faulty pruning, and pests and disease reduce tea production by about 20% each year. Use of power and depreciation cost is also high for these back dated machines compared to modern machines. This causes the producers to set high price of the commodity.

VIII. Tea Production in New Areas- Chittagong and Pachagarh

Traditionally, tea was produced in the district of Sylhet only. Sylhet is situated in the northeastern part of Bangladesh. Of late, tea production has also begun in Chittagong on the southeastern part of Bangladesh and in Panchagarh that is situated on the northwestern part of the country. Panchagarh is near Darjeeling of India, where production of quality tea has a long history.


VIII.A. Prospect of Tea Production in Chittagong

Prospect of tea production in the southeastern districts of Chittagong and Cox’s Bazar seems to be quite great. Recently, the Tea Board and the Ministry of Commerce has jointly undertaken a plan of tea plantation in 32,000 acres of land in these two districts of Bangladesh. The authorities would like to preserve small private ownership so that there will be many beneficiaries rather than a few as with the case of big tea companies of Sylhet.

VIII.B. Prospect of Tea Production in Panchagarh

Tea production in Panchagarh has already begun. It was felt for a long time that this district, which is very adjacent to Jalpaiguri, Mayanaguri, Shiliguri, and Darjeeling of India famous for production of high quality tea, was suitable for tea production.

Tea plantation in Panchagarh began in 2000 when the Tetulia Tea Company Ltd. (TTCL) came forward with a plan of a small-scale tea production by the small and the marginal farmers. Since then, tea plantation has rapidly expanded here. At present, 21 companies have come forward to start tea plantation in Panchagarh with a prospect of bringing 16,000 hectares of land under cultivation.

IX. Colour and Flavour

Bangladeshi tea is known for its strong colour but it lacks flavour. Of late, there is a change in this respect. In Srimongal of Sylhet region, planters have succeeded in producing strong flavoured Darjeeling type tea. This tea has created great interest among bidders in the tea auction market.

Production of flavoured tea is done with orthodox machines. There is a need for modernizing this process. When this tea will be blended with other tea, there is the possibility of great increase in the demand for our tea.

X. Organic Tea

Production of organic tea, that is, tea produced naturally without using chemical fertilizer has begun in Panchagarh. The Kazi and Kazi Company have taken the lead in this respect. Recently organic production of agricultural products has become very popular, as these are free from the harmful effects of chemical fertilizer.


So, producing of organic tea in Bangladesh has gained immediate popularity and a Japanese firm has already bought the whole lot of tea in advance.

Organic tea here is produced in such puritan form that no chemical pesticide is used and mechanical vehicle is allowed. Only carts driven by cows and horses are allowed to enter the gardens and processing areas. It appears that organic tea has a great future here. In the developed world where labour is expensive and use of power driven machines is common then organic tea production is very expensive. So, Bangladesh can make dent into the world market of organic tea and Govt. efforts are needed in this regard.

XI. Herbal Tea- Ginger, Clove, Lemon Tea

There is a scope for producing tea that is mixed with and scented by citreous fruit like lemon and strong spices such as ginger and clove. Such tea is also known to have health benefits besides having specific fragrance that is like by different people. Since agents that are herbal scent tea here, these types of tea are likely to gain popularity in the countries both to the east and west of Bangladesh.

XII. Small Scale Production, Small Producers

An important feature of tea production in Chittagong and Panchagarh is the opportunity, it offers to the small farmers. Unlike the big tea estates of Sylhet, farmers in small plots cultivate tea here. This has far reaching poverty alleviation implications with positive distributional consequences.

It is recommended that government give necessary support for preserving this small scale nature of production so that it is not gobbled up by big producers, concern about which has already been expressed in the media (Daily Sangram, February 2, 2005).

XIII. RAKUB and EC

It is worthwhile to report that Rajshahi Krishi Unnayan Bank (RAKUB) had already extended substantial amount of loan to the small farmers of tea in Panchagarh. It appears that funding for tea production would be forthcoming from this important body. Production of tea on a small scale in this northern district has attracted international attention. The European Commission (EC) has announced that it will grant 30.3 million taka to fund three projects. These are: setting up of an office of the Tea Board in Panchagarh, establishing a Tea Research Institute here; and helping production of clone tea. The EC is also specifically helping the small and the marginal farmers. Due help is forthcoming to give fillip to this important development of tea production in Bangladesh.


XIV. Revitalization of Tea Export from Bangladesh

It is evident from Table 2 that there has been a decline in tea export of Bangladesh. This was due to several reasons, foremost among which are steady increase in domestic demand, stiff competition in the international market, lack of diversity in the quality of tea produced, and localization of tea production in a single district.

It appears now that Bangladesh is breaking away from these problems. The new varieties of fragrant tea, production of organic tea, possibility of producing herbal tea like clove and ginger-flavoured tea, and citreous tea like lemon tea will at last give Bangladesh the edge in the international market that it needs.

Very recently, Bangladesh researchers reported the development of a new variety, called BT-16, that is very high yielding (about 15% more than the conventional ones) and highly resistant to common diseases of tea leaves. When this variety will be ready for use in our gardens, tea production and export in Bangladesh will receive a great fillip.

The high demand for Bangladeshi fragrant tea and the selling out of all organic tea of Panchagarh in advance and the development of BT-16 indicate that the fall in tea export can effectively be reversed.

XV. Policy Recommendations

From the above discussion it becomes clear that for expansion of tea production and its export promotion, the following policy recommendations may be put forward:

i) A determined effort should be made to infill all tea gardens with young tea plants immediately to increase production of tea.

ii) Rough plucking of green tea leaves is to be avoided for quality production of tea.

iii) To meet the local demand of low priced quality tea and to increase export of tea appropriate measures coupled with government initiative should be undertaken.

iv) Use of modern technology and machine is an imperative to produce quality tea and to keep the cost lower. Tea producers should be encouraged to replace ‘Orthodox’ method gradually.

v) As Bangladesh can make a dent in the world market of organic tea, the industry may be given due support that it needs and deserves by the government.


vi) Attempts may be made at the government level to increase export of tea to Muslim countries through bilateral contract.

vii) The government should play its due role by giving adequate and timely credit, creating infrastructural facilities and preserving small-scale production by the small and marginal farmers.

viii) Appropriate weight and importance on research should be given to produce HYV tea and more new types of herbal tea.

ix) The Ministry of Forestry, the Ministry of Commerce and the Bangladesh Tea Board, for the successful implementation of bringing new areas under tea plantation, both in the northeastern and the southeastern part of Bangladesh may take coordinated approach. This may help poverty alleviation as the government would like to distribute land among small farmers in these areas.

x) Seminars, symposium and tea festivals on Bangladesh tea may be organized abroad by the Bangladesh Tea Board individually and in collaboration with the Bangladesh Porjoton Corporation.

Conclusion

The suggestions made above, if carefully pursued, can bring about tangible changes leading to a rise in both production and export of tea from Bangladesh. The measures that should be followed would give Bangladesh an edge in international competition.

The success of implementing these suggestions will can for government support in terms of tax exemption, creation of adequate infrastructure synchronized with an overall effort to modernize tea production and processing and a greater drive to increase our tea export.


Reference

1. Bangladesh Tea Board (2005), Monthly Statistical Bulletin.2. Bangladesh Bureau of Statistics (2004), Statistical Yearbook of Bangladesh.

3. Khalid, A.B.M. (1975), “Some Problems of the Tea Industry in Post Liberation

Bangladesh”, The Dhaka University Studies, Vol. 23 (Part A), 61-82.

4. Majid, Z. (1991), “Sri Lanka’s Tea Production and Exports During 1970s”, South

Asian Studies, Vol. 8, No. 2, 52-63.

5. Sabur, S.A. (2002), “Tea Industry in Bangladesh: Marketing System and Price

Behavior”, Journal of the Institute of Bankers, Bangladesh, Vol. 49, 20-39.

6. Shabbir, S.M.N.S. (2006), “An Economic Analysis of Tea Export of Bangladesh:

unpublished Ph.D. thesis, Rajshahi University, Rajshahi.

expansion of tea production and export from 4

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