Auction prices for tea are not rising in line with production costs. The problem is compounded by ageing and unproductive tea bushes, the effects of climate change and difficulties in securing bank loans, deepening the crisis facing the country’s tea industry. Garden profitability is consequently declining, while the investment needed to replant tea bushes and maintain plantations is being held back. If this situation persists, the industry’s long-term production capacity and competitiveness could weaken further.
Published in March, a Bangladesh Bank Research Department study titled “Tea Industry in Bangladesh: A Viability Study” highlights these challenges, analysing productivity, production costs, financing, climate change, market mechanisms and policy constraints. It says that although Bangladesh’s tea industry has growth potential, structural weaknesses and mounting operating costs have become major obstacles to the sector’s sustainable development.
According to the study, Bangladesh produced a record 102.9 million kg of tea in 2023, but production fell to 93 million kg in 2024, short of the 108 million kg target by about 15 million kg. Over the same period, average yield per acre declined from 709 kg in 2023 to 629 kg in 2024.
A large share of the country’s tea production still comes from the greater Sylhet region. In 2024, the region accounted for around 72 percent of total output. Moulvibazar alone produced 50 percent of the country’s tea, while Habiganj accounted for 18 percent.
Meanwhile, Panchagarh contributed 15 percent and Chattogram 12 percent. Tea production has also declined in the northern region in recent years. According to the study, output there fell from 17.9 million kg in 2023 to 14.3 million kg in 2024.
Bangladesh is the world’s eighth-largest tea producer, accounting for around 1.5 percent of global production. Citing data from the Bangladesh Tea Board, the study says that as of May 2025, the country had 170 registered tea estates, while around 2,500 registered small tea growers also operate across nine districts. Altogether, land under tea cultivation covers 294,142 acres. The industry directly employs more than 100,000 people, while around one million people depend on it for their livelihoods, either directly or indirectly.
Tea-producing companies have been struggling since the period following 2020 because of declining productivity and prices falling short of expectations. In response, the Bangladesh Tea Board has set a minimum auction price, or floor price, for the past two years. Tea prices consequently began to rise last year, and the upward trend has continued this year.
The average auction price of tea in Bangladesh was BDT 171.24 per kg in the 2023–24 fiscal year, rising to BDT 245.50 in FY 2025–26. Prices have climbed further at the auction stage in the current fiscal year. Retail prices have also increased as a result, with tea now selling for BDT 500–650 per kg.
The Consolidated Tea and Lands Company Bangladesh Limited, which markets tea under the Finlay brand, is one of the country’s leading tea producers and exporters. Its chairman, Azam J Chowdhury, told Bonik Barta, “The situation in the tea industry described in Bangladesh Bank’s study reflects reality. The British introduced tea to this country. Most of the country’s tea gardens are more than a century old. Soil quality is no longer what it used to be. Nothing comes cheaply any more, from labour to fertiliser. As a result, many tea gardens are still operating at a loss despite the price increases.”
He said alternative options were being considered to keep tea gardens profitable under the current circumstances. “We’re considering growing alternative crops alongside tea in the gardens. There are many unused spaces in tea gardens, and we’re also assessing the feasibility of installing solar panels there to generate electricity,” he added.
The Bangladesh Bank study also identifies the failure to secure fair prices relative to production costs as one of the tea industry’s key weaknesses and says rising expenses for fertiliser, labour, garden maintenance and other operations are driving up the cost of tea production. Auction prices, however, are not increasing at the same rate, putting pressure on garden revenues and profitability.
According to the study, declining profits have prompted many garden owners to cut investment in long-term activities such as removing old tea bushes and planting new saplings, regular pruning and land maintenance. Yet the future productivity of tea gardens depends largely on these activities. Reduced investment may help contain costs in the short term, but it increases the risk of lower production in the long run.
The study also identifies the financial capacity of tea gardens and limited access to bank loans as major challenges, saying many gardens struggle to secure the necessary financing because of weaknesses in their internal credit risk assessments. Working capital is particularly important at the start of the tea production season, when gardens need to pay workers’ wages and purchase fertiliser, pesticides and other supplies. Delays in obtaining loans at this stage can disrupt their regular operations.
The study recommends offering loans to the tea industry on easier terms, providing refinancing facilities and ensuring access to funds at the beginning of the season and also suggests allowing temporary flexibility when assessing the financial condition of tea gardens, so that those with viable production capacity are not denied necessary loans solely because of financial weaknesses.
Climate change has also emerged as a major factor behind declining tea productivity, according to the study. Irregular rainfall, prolonged droughts, rising temperatures and pest attacks are increasing both production and maintenance costs at tea gardens. Changes in weather patterns are disrupting the normal growth of tea bushes. Gardens must also spend more on irrigation, maintaining soil health and controlling pests and diseases.
The study identifies the prevalence of old and unproductive tea bushes as another major reason for declining output, saying productivity varies significantly across gardens because of differences in the age of tea bushes, soil quality, rainfall, terrain, workers’ skills and management practices. The gap is widening because pruning and replanting are not carried out on time.
To improve productivity, the study recommends improving soil health, regular pruning, replacing old bushes with new saplings and using climate-resilient varieties, and also calling for greater use of modern technology in garden management, the establishment of productivity benchmarks and expanded technical support at the field level.
The study also notes that the market structure of Bangladesh’s tea industry has changed. Although tea once played an important role as an export-oriented product, most of the production is now consumed domestically. Around 97 percent of locally produced tea is used to meet domestic demand, according to the study. In 2024, Bangladesh produced 93 million kg of tea but exported only 2.45 million kg.
Despite rising domestic demand, the industry has yet to fully capitalise on opportunities to improve its competitiveness in export markets. The study says producers need to focus on higher-value products, including green tea, orthodox tea, organic tea and speciality teas, alongside conventional varieties. Improving product quality, adopting modern processing methods and obtaining international certifications could open up opportunities to enter new markets.
The study also recommends modernising the tea auction system. The research team believes producers’ income and ability to manage market risks could be improved by fully digitising auctions and exploring long-term purchase agreements and forward contracts.
The team has also stressed the need to strengthen the capacity of small tea growers and factories that buy fresh leaves for processing, alongside large tea estates, recommending registering small growers, providing training and supporting them in adopting improved cultivation methods and producing quality tea leaves. It also calls for stronger oversight of factories to ensure quality standards are maintained during leaf collection and processing.
The study links improvements in tea workers’ living standards to the industry’s long-term sustainability and recommends addressing gaps in healthcare, safe drinking water, housing and secondary education in tea garden areas. It also calls for modernising existing regulations governing the use of tea garden land so that estates can increase their income through initiatives such as solar power generation, alternative crops and environmentally sustainable tourism where appropriate.
The study’s overall assessment identifies a skilled workforce, existing infrastructure, and favourable land and climatic conditions as key strengths of Bangladesh’s tea industry. Rising domestic demand, new export markets and opportunities to produce higher-value teas also offer growth potential. But rising costs, climate change, labour expenses, price fluctuations and limited access to bank loans are holding back these prospects.
The Bangladesh Bank research team believes a coordinated approach is needed to address these challenges by improving productivity while strengthening financing, market mechanisms, policy frameworks and workers’ welfare.