Tea producers in Bangladesh, the world's ninth-largest exporter, are banking on government loans to arrest a decline in exports and boost their contribution to the country's economy.
The Bangladesh Tea Board (BTB) was lobbying the government for long-term loans that would allow plantations to raise the quality of their output and secure a larger chunk of the global market, a senior official at the regulatory body said on Friday.
"To retain tea as a major export item, we must increase yield, improve quality and lower the cost of production," S.A.H.M. Thud, chairman of the BTB, told Reuters.
Tea is the fourth-largest foreign exchange earner in Bangladesh, after garments, frozen foods and jute. Exports of all four-combined yields nearly $6 billion a year towards an economy expected to grow 6.0 percent in 2004/05 from a targeted 5.5 percent for this fiscal year ending on June 30.
But tea exports have fallen by around 60 percent over the last decade, despite rising production. This was due to higher domestic consumption, Thud said. "In recent years, exports have been falling by 3.5 percent and production has been rising by one percent on average annually," he said of the tea industry.
"Due to a gradual fall in exports over the past few years, Bangladesh has lost its status as the world's fifth-largest tea exporter. It is now the ninth," he said.
The BTB, which monitors the performance of the country's tea gardens and recommends leasing of government land for planting, is pursuing long-term loans at favourable interest rates to help producer's plant high-yielding crops and install modern processing equipment.
"The government is considering the proposal, with the priority of retaining tea as an important export item," a senior commerce ministry official said.
Exporters said Bangladesh was facing stiff competition from the world's largest producer India, as well as Kenya, Sri Lanka and Malawi, where good varieties of tea were available at reasonable prices.
Bangladesh exported 12.2 million kg of tea in calendar 2003 against 13.7 million kg in the previous year and a record annual total of 34.4 million kg in 1982. Exports fluctuated between 30 million and 32 million kg a year until 1992, Thud said.
Importers of Bangladeshi tea include Pakistan, Afghanistan, Iran, the UK, Poland, United Arab Emirates and the CIS. Tea production was 56.22 million-kg in 2003 against 53.62 million kg in the previous year, the BTB said.
The BTB launched a plan early last year to cultivate 65,000 hectares of new land in the south-east Chittagong Hill Tracts and northern Panchagarh districts, with the aim of doubling national tea production in the next two decades.
The new land would be leased to private growers, Thud said. Bangladesh's 125 tea companies own 160 tea gardens covering a combined 48,800 hectares, mostly in the country's north and eastern regions.
The BTB's plan also includes replacing 26 percent of the old plants in existing gardens. Officials said tea plants yield for at least 100 years, but production decreases after 50 years.
Average production costs are currently around 55 taka ($0.91) a kg, while the average price at the country's weekly auctions is a little over 60 taka ($0.99) a kg.
"The improvement of infrastructures facilities, like road communication, uninterrupted power supply and telephones, are also needed in remote tea garden areas," said Nasiruddin Bahadhur, a tea garden owner and leader of the Bangladesh Tea Association.
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