Bangladesh’s Tea Production Rises but Exports Remain Low

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Bangladesh's tea sector was significantly impacted by the COVID-19 pandemic as production volumes fell, lockdowns were imposed restricting movement for tea processing, and domestic and international demand slumped. Although tea production has expanded in Bangladesh over the past decade, the outbound shipments of the major export earner have dropped in the face of growing domestic demand. The country exported 639 thousand kg of tea worth approximately USD 1.9 million in 2021-22, which is 48% less in volume and 54% less in value in comparison to the previous year. Given the current dynamics, Bangladesh can make the best of the situation by striking the right balance between profiting from international sales, as well as domestic sales.

Bangladesh’s tea sector was significantly impacted by the COVID-19 pandemic as production volumes fell, lockdowns were imposed restricting movement for tea processing, and domestic and international demand slumped. However, the tea sector in the country is expected to return to near pre-pandemic levels as production and processing pick up and so does the demand. This growing season, Bangladesh experienced a spring drought, high temperatures, aggressive pests, and lingering effects of the pandemic. Despite these setbacks, production starting in January through July is ahead of last year’s totals and is estimated to reach 86 million kg. The government has several initiatives in place that boost tea production directly or indirectly and help increase the market value of the industry.

Teais the second largest cash crop in Bangladesh and it is the 5th largest tea exporting country in the world. The country exports tea to over 23 countries and some of the largest markets include the US, UK, France, China, Japan, India, and Switzerland. Although tea production has expanded in Bangladesh over the past decade, the outbound shipments of the major export earner have dropped at the same time in the face of growing domestic demand. According to the Bangladesh Tea Board (BTB), in the fiscal year (FY) 2021-22, the country exported 639 thousand kg of tea worth approximately USD 1.9 million, which is 48% less in volume and 54% less in value in comparison to the previous year. On the other hand, domestic consumption has grown by over 6% during this period.

Bangladesh’s Tea Exports and Domestic Consumption

Source: Bangladesh Tea Board

The tea sector is prioritised under the National Industrial Policy 2016 to ensure that production increases and the country manages to earn foreign exchange through exports. The government has set a target to increase tea production to 140 million kilos by 2025, aiming to meet the country's growing demand and increase its exports. From the current trend it is clear that tea production has increased over the years to cater to local markets rather than those abroad. The government needs to re-evaluate its export strategy in the face of rising domestic demand. Given the current dynamics, the demand for tea in the global market is likely to be strong, and Bangladesh can make the best of the situation by striking the right balance between profiting from international sales as well as domestic sales.

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