Tea exports have regained their footing, and private tea gardens are gradually returning to economic normalcy, but the political environment in Bangladesh remains volatile, with recent clashes in the Chittagong Hill Tracts heightening tensions.
In a country where military coups are common, the grassroots rebellion by idealistic university students this summer was unprecedented. After the national protests that led to Prime Minister Sheikh Hasina's resignation in August, neither of the dominant political parties is in control.
Nobel laureate Muhammad Yunus is leading an interim government. The Army supports Yunus, who has pledged to hold local and national elections within 18 months.
The situation for the tea industry is mixed. Bangladesh remains a significant tea producer, ranked 12th globally. It has seen an increase in both production and exports in recent years now threatened by current conditions. Bangladesh produced a record 103 million kilos in 2023, up 9.7% — the highest yield in 170 years. Exports increased to 1.04 million kilos.
But Bangladesh Tea Association (BTA) Kamran Tanvirur Rahman reported that industry losses totaled Tk 4.65 billion (USD $38.9 million) as auction prices fell below the cost of production. Auction prices have declined to as little as Tk100-150 leading to a 12-year average low of Tk 171.24.
Production costs average Tk 200-250 according to garden owners who are asking for a fixed price minimum of Tk 300 and a temporary exemption from VAT (value addition taxes). Interest rates for loans from the Bangladesh Agricultural Bank have increased from 9% to 13% according to growers who say they are short on cash.
In Sylhet, delayed wages for thousands of Bangladeshi tea workers are fomenting unrest at 12 gardens, including Imam TE and Bawami TE in Habiganj and Fultala TE in Mouvibazar. Bangladesh Cha Sramik (BCSU), the only union representing tea workers, writes that 42 plantations are under threat.
Payments to more than 12,000 National Tea Company (NTC) workers are past due. On Aug. 12, workers received only Tk 595, half their weekly wage. According to The Daily Star, no further payments were distributed until Sept. 25, when arrears from early August were paid.
In response, tea workers at 11 factories remained on the job but blocked departing tea consignments until another installment was paid—a fourth payment in exchange for releasing consignments followed in October.
Negotiations with Bangladesh Cha Sramik (BCSU), the only union representing tea workers, continued for the payment of remaining past-due wages and the Durga Puja annual bonus. In August 2022, the previous administration froze tea workers' pay at Tk 170 (about $1.50 per day). Most tea workers are members of minority communities.
Md. Shaidur Rahman, managing director at Indigo Brokers Ltd., writes that he was relieved to see a new government formed in Bangladesh. He explains, "Tea in Bangladesh is not just an industry but a culture. So, everyone takes care to prevent any political party from entering the tea industry.”
Rahman said “Bangladesh has exported more tea in this financial year than in the last five years. Everyone wants to work in the tea industry and keep this trend going. Hopefully, the old market in the outer world will come back.”
NTC Woes
The situation at partially state-owned NTC is unique. State-owned at its founding in 1978, the government sold a portion of its majority to private shareholders in 2003. The tea and rubber-producing company is publicly traded on the Dhaka Stock Exchange. After several years of losses, the lack of operating capital forced NTC to re-capitalize, which it found difficult. The government then agreed to buy back majority control.
Shares closed at a Tk388 high in June, but a lawsuit by private stakeholders delayed the takeover. The High Court of Bangladesh eventually ruled in favor of the government. New shares will increase the government’s stake from 42.7% to 51%.
Stocks have dropped sharply amid uncertainty, but in September, NTC shares rose 61% to Tk486.9, leading the exchange to issue a “show cause” notice explaining the spike. Md Shakil Rizvi, a director of the Dhaka Stock Exchange (DSE), later said there was no evidence of manipulation.
NTC has lost money in the past four years, totaling Tk1.44 billion through FY2023. The company reported Tk687 million in losses through the first nine months of FY2024. The court approved approximately the issue of $23.5 million (Tk 2.8 billion) in shares priced at Tk119.5 per share, according to The Financial Express.