MBA THESIS

On

“Marketing Mixes Analysis of Tea Business InBangladesh”

Prepared By:Sakawat Jahan BhuyanStudent ID: 0202124122

Submitted To:Dr. Muhammad Farid Uddin

Associate professor & Head , Department ofBusinessAdministration.

IBAIS UniversityDhaka, Bangladesh.

A Thesis Fulfilment of the Degree of Masters of Business Administration

“Marketing Mixes Analysis of Tea Business In Bangladesh”

OfIBAIS UNIVERSITY, DHAKA, BANGLADESH

Date: 18.10.2014

To,Dr.Muhammad Farid Uddin Associate professor & Head , Department of Business Administration.IBAIS University, Dhaka,Bnagladesh.

Subject: “Marketing Mixes Analysis of Tea Business In Bangladesh” .

Dear Sir:

I am pleased to inform you that I have completed the dissertationin compliance with your skillful guidance and cordialsupervision.

I sincerely believe that the findings of this report will be of

immense help to the young learners for academic reference. For

any explanation and clarification of any aspect of this report I

might held responsible. I sincerely hope this report will receive

your kind approval.

Yours Sincerely,

2

.................................................SAKAWAT JAHAN BHUYANID: 0202124122Program: MBA IBAIS University.

LETTER OF DECLARATION

I hereby solomnly declare that this work presented inthis thesis has been carried out me andhas not beenpreviously submitted to any otherUnivercity/College/Organization for an academicqualification/certificate/diploma or any degree.

The work i have presented does not breach any copyrightand the materials consulted have been properlyacknoweledged.

I further undertake to indemnigy the University againstany loss or demage arising from breach of the foregoingobligations.

3

Student Signature :

Name: Sakawat Jahan Bhuyan

Dated:

Department: Masters of BusinessAdministration IBAIS ,University.

CERTIFICATE OF SUPERVISOR

This is to certify that the thesis paper on “MarketingMixes Analysis of Tea Business In Bangladesh” is doneby Sakawat Jahan Bhuyan as a partial fulfillment ofrequirement of “Masters of Business Administration”degree from “IBAIS University” . This thesis paper hasbeen carried out under my guidance and is a record ofthe bonafide work carried out sucessfully.

4

Signature:

Name: Dr. Muhammad Farid Uddin Associate professor & Head ,Department of Business Administration. IBAIS University.

Date:

5

Acknowledgemen

It is the Almighty Allah who enabled me to successfully complete

the Dissertation “Marketing Mixes Analysis of Tea Business In

Bangladesh. A large number of individuals have helped directly &

indirectly to prepare this report. I am grateful to them.

Especially, I am grateful to my honorable Supervisor Dr. MuhammadFarid Uddin, Associatw professor &Head , Department of BusinessAdministration IBAIS University .to find some time from his verybusy schedule and give accurate direction about the Dissertationpreparation. Without his active co-operation the preparation ofthis report couldn’t have been completed.

.................................................Sakawat Jahan Bhuyan

6

A commerce graduate would rarely find a scope to get familiarized with

the practical aspects before the launching of M.B.A. The authority

has opened an opportunity for the students to be practical oriented

through preparation of Thesis paper. It is an essential part for the

MBA student. It provides a chance to acquire knowledge from global

business and earmark for new business executives.

Through study the tea market one can realise the problems and

prospects of our tea market beyond the boundary. As a student of

Business Administration I have to gain the analytical ability through

this type of stady, on International tea market. It is tremendous

exortion and challenging for me to complete the thesis on tea

marketing, which is fully depending on auction-based trading system.

Tea holds a special place in the agricultural sector of Bangladesh

economy. It is a major cash crop well as an important export item; it

accounts for about 0.81% of the GDP and provides employment in the

country. Marketing system of Bangladesh tea is defined as the process

of sale of manufacture tea in bulk or packed from tea estates to the

7

Preface

buyers at Chittagong Auction or at estates levels from where teas are

sold either directly to overseas buyers or internal traders.

In conclusion, I would like to say that, my effort will become

flourishing if any person or organisation will enrich their knowledge

from this report.

____________________SAKAWAT JAHAN BHUYAN

OBJECTIVES OF THE STUDY

8

The explicit objective of the study is to fulfill the academic

requirements of MBA Program. The implicit but major purpose is to be

familiar with the Bangladeshi Tea and its marketing to International

market. In order to accomplish this objective, the present

dissertation covers the succeeding particular objectives:

1. To highlight the present Market Scenario of Bangladeshi Tea.

2. To examine the prospects of Bangladeshi Tea in the International

Market

3. To identify the problems of Bangladeshi Tea Export to the

International Market.

4. To know the scenario of World Tea Market.

5. To recommend some corrective measures to resolve the problem.

METHODOLOGY OF THE STUDYThe word ‘Method’ derives its origin from the Greek word ‘Meta’ and

‘Hodos’ meaning ‘a way ’.A method involves a process or technique in

which various stages or steps of collecting data are explained and the

analytical techniques are defined . According to Urdong, ‘A Method or

Methodology is the underlying principles and rules of organisation of

a philosophical system or inquiry procedure’. A dictionary of Social

Sciences observes, ‘methodology is the systematic and logical study of

the principles guiding scientific investigation’ (Gould and Kolb,

1964). In simple‘a method is the way of doing something’?

9

This research is an elaborate study to enable us to understand the

whole scenario of Bangladeshi tea to the International market.

Collected data and information were tabulated, processed and analyzed

critically in order to make the paper more informative, fruitful and

purposeful.

In preparing this report I have used data and information of the

following category:

a) Primary data

b) Secondary data

The primary data had been collected by direct interview & informal

discussions with the important persons of cach department.

Most of the data have been collected from secondary sources. The

secondary information is collected from various books, financial

papers, and documents, articles related with the Tea Plantation, Tea

Marketing, Bangladesh Newspapers, Bangladesh Tea Board, Project

Development Unit, BTB, Web portal, Bangladesh Tea Reasearch Institute

(BTRI), Tea Traders Association of Bangladesh, International Tea

Boards, EPB, Bangladesh Bank, Board of Investment, Food and

Agricultural Organization (FAO) etc. Annual report, Tea Market

procedures, Tea exports were also consulted and helped to fulfill the

objectives of the study.

Preparing the Dissertation on the Bangladeshi Tea Marketing beyond the

boundary, all these primary and secondary data were collected,

corrected, organised, analysed and interpreted to draw some findings.

10

SCOPE OF THE STUDY

This report is obviously far from being perfect. Despite of my

sincerest endeavor in preparing a perfect report, some of the

limitations were inescapable.

This study is conducted at Bangladesh Tea Board, Export Promotion

Bureau, Bangladesh and Tea Traders Association of Bangladesh,

Bangladesh Tea Research Institute (BTRI) to be acquainted with the

real life situations especially with Tea Marketing and its problems

and prospects.

To study the Marketing of Bangladeshi Tea beyond the boundary covering

the entire Tea export procedures, auctions, history and current

situation of Bangladesh Tea, its Production, major competitors, Tea

consumptions, World Tea Export is really a vast work. Because of time

constraint the author focused the work from the Bangladesh

perspective. This is a major limitation of this study.

Moreover, the present study is limited to the Bangladesh Tea Board its

head office is situated in Chittagong and their various types of

publications.

In spite of these limitations the author tried with all his efforts to

know and find out the response pattern of the subjects and conclusion

of relevant record and document. Data have reached a fairly acceptable

degree of accuracy.

11

12

TABLE OF CONTENTS

Sl Contents Page01 Introduction 1102 History of Tea 1503 Tea Scenario of the World 2004 Tea Production in Bangladesh 2905 Basic Facts of Bangladesh Tea

Industry31

07 Tea Market Procedure 3608 Export of Tea 4209 Black Tea Consumption in the World 5010 Major Tea Importing Countries from

Bangladesh53

11 Prospects of Basngladeshi Tea in theInternational Market

59

12 Bangladesh Tea Market 6613 Demand for Bangladeshi Tea 6814 Major Competitors in Tea Market 7015 Institutions Involved in Tea Sector 7616 Value Addition in Tea Products 8317 Tea & Health 8518 International Tea Market Situation 8719 The Marketing Mixes 9520 Suggestions 11221 Conclusion 113

INTRODUCTION

Tea is processed from the leaves or buds of the tea bush. It is made

by steeping the processed leaves in hot water for a few minutes. The

flavour of the raw tea is developed by processing including oxidation

(fermentation), heating, drying or the addition of other herbs,

spices, or fruit. Tea is a natural source of caffeine and

theophylline, and has a cooling, slightly bitter and astringent taste.

Today, tea is the second most consumable beverage in the world after

water. A total of 3,200,000 tonnes of tea were produced worldwide in

13

2004, (Source: FAO website www.fao.org) India, China, Sri Lanka and

Kenya, in that order, are the major producers of tea leaves.

During the pre-liberation period the total tea production was entirely

consumed within the country i.e. the then West and East Pakistan. Soon

after liberation, the scenario had been changed dramatically and the

country was left with a surplus which required alternative outlets.

Strenuous efforts were made jointly by the Government, producers and

traders to find markets abroad for Bangladeshi tea. Some of the major

tea producing companies began consigning tea to the London auction,

barter agreements were signed with countries like the USSR, Poland,

other East European countries and Egypt against import of capital

machinery, chemicals source. In 1980, a Special Trade Agreement (STA)

was signed with Pakistan, as a result of which export during 1980 was

increased to 31 m. kgs i.e. roughly 76% of the total production. The

USSR, Poland, Egypt and Pakistan emerged as major markets for

Bangladeshi Tea (source: Srilankan Tea Board website).

These ‘captive’ markets ensured protection to the industry and

whatever, irrespective of quality, found its way to these markets. The

price received for Bangladeshi tea was higher than its actual value in

the open international market. Hence we lost our position as a

supplier to those markets e.g. the U.K. who found alternative sources

of similar quality of tea to meet their demand. There was hardly any

effort to improve quality as we were able to sell the quality product

that could be we were producing quite easily. Neither was there much

effort made to run the industry efficiently by investing in inputs to

increase yields and reduce costs.

14

Therefore, when barter and STA’s were withdrawn our tea came into

stiff competition with tea from other origins to gain access to these

markets. It was during this period that the Bangladesh Tea

Rehabilitation Project (BTRP) financed by the ODA was taken up. The

project was to help the industry improve quality and productivity in

the existing plantations.

The producers had to think of fresh ways and means to produce the

quality required to suit the need of the export markets. At the same

time exporters had to find new strategies to market their tea against

stiff competition from other origins. Most ‘free’ markets had been

lost in this period partly due to the wild fluctuation in prices of

our teas. This was caused by the barter buyers buying only during a

short part of the Tea Season which tended to push up prices for that

period. The market would get depressed again as soon as their buying

was complete. At those times of year their prices were out of line

with prices in the International market. No free market blender could

depend on getting a consistent supply of Bangladesh teas at reasonable

prices. Hence they looked for, and found, alternate sources as

consistency is the most important component of any brand.

The tea season of 1991-92 was termed as a year of losses. A major

broker in their tea review 1992-93 remarked “Depressed tea prices

caused serious difficulties for the tea industry during the last

season and as it came hard on the heels of poor results of 1991-92

season producers found the situation to be very grave as they faced

yet another year of losses”. Egypt, USSR, Iraq, Iran and China were

all gone. Poland emerged as the largest buyer, thanks to the marketing

effort of the private sector exporters.

15

Between, 1995-2000 private sector exporters virtually by their own

initiative and effort created new markets for Bangladesh tea in

Jordan, Middle East, CIS, Japan, Afghanistan etc. By the year 2000,

exports to Poland reduced substantially as cheaper teas of other

origins made inroads into this market.

However the total volume of export started declining, as there was a

continued growth in Bangladesh’s internal consumption with little

noticeable increase in production. As a result of the greater demand

and shrinking exportable surplus their teas once again became

expensive compared to similar quality teas available from other

producing countries, including producers like China and Malawi and new

ones like Vietnam (Source: Srilankan Tea Board website).

In 1985, the domestic consumption of tea was 13 million out of a total

crop of 43.3 m. kgs. In 2001 consumption reached a record high of

approximately 40 m. kgs. out of a total crop of 55 m.kgs.

Domestic consumption increased due to some of the following reasons:

Urbanization and improved standard of living in the country.

Better distribution as a result of the improved road

communication network.

Better marketing and promotional techniques ensuring of high

level of consistency and quality of the product.

Re entry of multinational companies in the branded tea market,

and Removal of price control which presented better quality teas

reaching the branded market.

16

In the early days, tea was seen as one of the major foreign exchange

earners and thus internal consumption was discouraged. There was an ad

valorem excise duty on branded packet teas and the price was

controlled by the Tea Board. Although the domestic market always

wanted the best quality teas produced it was not possible for the

packers to include these in their blends because of the controls. The

higher price good quality teas were available in ‘loose’ form tea

shops. There were times when the retailer would buy branded packet tea

at artificially controlled prices and would open the packet and sell

the ‘loose’ tea at much higher prices.

With the onset of the free market economy the packers were allowed to

sell their teas in competition with the loose tea traders. This gave

the consumer a greater choice and the inherent advantages of branded

teas soon started to sell in the market place. This is the period when

the largest tea multinational company re-entered the branded Tea

Market in Bangladesh. It was this entry, and the competition which

resulted from it, that gave the initial boost to increase in domestic

consumption.

The challenge posed by the multinational was well taken by the

organized local private blenders and packers and huge capital was

invested by them to improve the overall infrastructure from production

to marketing. As a result, the sluggish growth of the market has

gradually converted to rapid and sustainable growth. With the

improvement of the rural economic environment, steady population

growth as well as the emergence of an economically stable middle class

the domestic consumption may reach approximately 55m.kgs by 2010.

Today almost all the tea consumed domestically is in branded form.

17

There are several nationwide brands and hundreds of localized brands

competing for this growing market.

Producers have also reacted to the changed scenario and have

concentrated more than ever on improving quality as much as it is

possible with a view to cater to the domestic market.

It is significant to note that in 2001, Pakistan’s production was 55

m. kgs. During this year the global supply growth exceeded demand

growth and major auction centers in the world registered a downward

trend in price. However, in Bangladesh the situation was quite

different as tea export in 2001 plummeted to 12.9 m. kgs (yearwise)

down by almost 30% on the previous year but domestic consumption

touched 42.2 m.kgs (against 31 m.kgs), as a result of which the

industry survived.

In this context what affect the recent duty free access of Pakistan to

Bangladesh tea will have on our tea industry remains to be seen. It is

already apparent that though prices have gone up the total volume of

our exports has not risen. This duty free access will ensure that our

prices are once again out of line with International prices. Those

export markets that had been developed in recent year are already

looking for alternative sources. With continued pressure from domestic

demand it is unlikely that Pakistan will be able to purchase their

target of 10 thousand tons per annum from Bangladesh. If we cannot

ensure sufficient quantity of tea in the country in keeping with the

increase of consumption in the domestic sector, it can lead to import

of tea from other origins. This is something the producers have to be

very careful about.

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HISTORY OF TEA:

The art of tea cultivation in Bangladesh began over a century and ahalf ago in the 1840s near the Chittagong Club. The first tea gardento be established was Malnicherra in Sylhet in 1854. Its commercialproduction began shortly thereafter in 1857.

Today, the main tea-growing areas lie to the east of the Ganga-Jummaflood plain in the hill areas bordering India's Cachar tea-growingdistrict. Most of Bangladesh tea grows at only 80-300 ft. above sealevel northeast of Sylhet in the Seven Valleys. Tea is still grown inChittagong as well as in the Hill Tracts.

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During pre-partition days and up to the year 1947, all teas producedin the Sylhet and Surmah valleys were called Indian teas, but werealso known as eSweet liquoring Surmah valley teas. Crop figures forthe region during the mid-1940s were approximately 10-15 million kgper year. The teas were all of Orthodox manufacture, their qualitybeing fairly similar to that of neighboring Cachar district teas.There was also some Legg-Cut and green tea manufacture prior to 1947(Source: Salman Ispahani, Member, Bangladeshiya Cha Sangsad). Post-Partition 1947-1971 After partition, the subcontinent was broadly divided into twopolitical regions - India and Pakistan (comprising West and EastPakistan). When Pakistan became independent in 1947, there were 133 tea gardens.By 1971, this number had risen to 147, with roughly 90,000 workers outof a total country population of 249,000 people.

In 1950, under the Pakistan Tea Act, the Pakistan Tea Board wasestablished in Dhaka and in 1957; the Tea Research Institute wasfounded in Srimangal in 1957. Together, these organizations aimed atpromoting the sale and consumption of tea in Pakistan and abroad, andat assisting in the research and development of the tea industry.

The Tea Ordinance Act of 1959 replaced the earlier Pakistan Tea Act of1950 to enhance the Board's role in promoting tea cultivation andquality control. During the 1952-1953 seasons, buyers, sellers, andbrokers in Chittagong got together, under the auspices of the PakistanTea Association, to form the Tea Traders Association of Chittagong.This association's duty was to promote the common interests of teasellers and buyers in the Chittagong market. In 1960, the Tea TradersAssociation of Pakistan was registered.

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However, by the late 1960s, the need for better quality teas wasstrong and, with the gradual decline in the availability of Orthodoxteas, CTC teas, particularly the better liquoring types, receivedstrong support. It was noticeable during this period that the consumergradually demanded brighter and better teas, and at the same time,became partial to the strong liquor produced by the CTC and the Legg-Cut methods of manufacture.

Until 1971, teas continued to be imported to meet the growing internaldemand while production was inadequate. With export restrictions andthe captive market of West Pakistan, the tea industry operated in aseller's market with the 1969 crop being sold in the Chittagongauctions at Rs 3.50 per lb., against the CIF Chittagong cost ofimported tea at Rs 1.50 per lb.

The 1971 War of Liberation

During the War of Liberation in 1971, the tea industry suffered manysetbacks. In addition to the fact that many factories were damaged,two-thirds of the experienced planters of British and Pakistan originleft the industry, whilst many senior Bangladeshi planters joined thewar. This meant that inexperienced men who had to combat disturbedconditions were running the estates. Some of the battles even tookplace in the tea garden areas, which were very near the borders. Infact, for the first time after the crackdown on April 4, 1971, theavailable senior offices of the Eastern Sector of the Liberation Warmet at Teliapara Tea estate manager's bungalow, which became a seat ofthe Bangladesh Forces Headquarters (BDFHQ) for quite a time.

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In 1947, gardens in East Pakistan had 75,000 acres (30,364 hectares)under tea. Between 1947 and 1960, the acreage devoted to tea increasedby 8,000 acres. In the following decade, thanks to the compulsory 3%extension plan undertaken by the government.

In 1947, Pakistan began with a production of 41.5 million lbs. (19.0million kg) - approximately 7% of India's production. In 1956, thisfigure reached 53 million lbs. (24.1 million kg), and in 1971, arecord crop of 69.18 million lbs. was harvested.

After 1971

After the war, assistance from England was readily available. At therequest of the Government of Bangladesh, the British agency OverseasDevelopment Administration (ODA) commissioned the CommonwealthDevelopment Corporation (CDC) in 1973 to assess the requirements for aprocess of rehabilitation and reorganization of the tea industry,including tea growing, manufacture, research, markets and marketorganization, with an assessment of the financial and economic returnsto such a program. In addition, in 1976 the government-sponsoredDastagir Committee, which looked into the financial constraints of anumber of estates, also submitted its recommendations that proved tobe very effective.

In 1977, the Bangladesh Tea Board was reconstituted with objectivescommon to those of the erstwhile Pakistan Tea Board formed under thePakistan Tea Act 1950, and as the regulatory body for the tea industry

22

of Bangladesh, the role of the Tea Board expanded to include themonitoring of the crop and its disposal, the issuance of exportlicenses to export buyers, and the authority to give permission toproducers for consignment and direct sales, etc.

In 1974, the Tea Traders Association of Bangladesh replaced the TeaTraders Association of Pakistan. Eight years later, the metric weightsystem was adopted for the sale of tea, replacing the earlier imperialsystem. The area that produced tea increased from around 43,000hectares in 1971 to the present area of about 48,000 hectares. After1971, an improvement in yield per hectare was also evident.

Based on the findings and recommendations by the March 1973 Rab Reportthat aimed to maximize production, subsequent studies was carried out.By the 1973-74 season, the production of Bangladesh tea recovered topre-1971 levels of around 30-32 million kg.

During 1975-76, in an attempt to increase yields, the Tea Boardprepared two plans for intensive cultivation and replanting.Bangladesh Tea Research Institute BTRI, the scientific wing of the TeaBoard, also brought out several high yielding clonal varieties ofdistinct character and quality.

By 1979, British consultants had developed a strategy to rehabilitatethe damaged tea industry of Bangladesh. Although by this time anonward program for intensive cultivation and replanting of the tea wasgoing on, the actual thrust started in 1983-84 and was effective from

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1985/85. During the years 1971-1994, production increased from 24.2million kg (53.2 million lbs.) in 1972 to 52.1 million kg (115 millionlb) in 1994.

Although the number of estates manufacturing Orthodox teas wasdeclining (especially after the 1980s), after independence, Orthodoxteas continued to form the bulk of all teas produced. During thisperiod, CTC teas became increasingly popular in Bangladesh with bothinternal and external buyers because they produced stronger andquicker brewing liquor with more cuppage. Today in Bangladesh, CTCteas account for virtually 99% of all categories of tea produced, thebalance being green teas.

The quality of Bangladesh teas competing in the world market duringthis period may be comparable to lower plain-grown teas from nearbyCachar, Tripura, and the Dooars, as well as with low, more plain-tasting teas from Sri Lanka and Indonesia (Source: Mr Orman Rafay Nizam, &Rasul Nizam, Members, Tea Traders Association, Bangladesh).

Table: Tea History of Bangladesh

Year Location District Remarks

1840 ChittagongClub

Chittagong Tea cultivation starts

1854 Malnichera Sylhet First Tea Garden inBangladesh

1857 Malnichera Sylhet Commercial Production starts

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1947 Surma Valley Sylhet Products were called IndianTea

1947-1971

Post Partition duration

1950 Dhaka Pakistan Tea Board wasestablished

1957 Sylhet Tea Research Institute wasestablished as Srimangal

1959 Dhaka Tea Ordinance Act 1959introduced

1960 Chittagong Tea Traders Association ofPakistan registered

1971 ThroughoutBangladesh

Imported tea to meet localdemand.

Liberation starts

1973 British Agency OverseasDevelopment Administration(ODA) commissioned theCommonwealth DevelopmentCorporation (CDC)

1974 Chittagong Tea Traders Association ofPakistan replaced TeaTraders Association ofBangladesh

25

1976 Government-sponsoredDastagir Committee formed

1977 Bangladesh Tea Boardconstituted

1975-76 Attempt to increase yieldsby Tea Board

1979 British consultantsdeveloped a strategy torehabilitate the damaged teagardens and industry duringliberation war

1983-84 Replanting starts

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TEA SCENARIO OF THE WORLD

World tea exports increased by 4.4 percent in 2004 rising to 1.47

million tons, with all major exporters registering a rise, according

to the report.

Tea production in India, the report said, declined by 4.3 percent with

production standing at around 820,200 tonnes due to unfavourable

weather conditions and for the closure of about 70 tea gardens in

Assam.

World net tea imports increased in 2004, by 1.5 percent, which is 1.42

million tonnes. This trend reflected the increases in traditional

developed country markets of the European community (an increase of

2.4 percent), the United States (5.3 percent) and Japan (2 percent),

where imports reached to 215, 000 tonnes, 99 000 tonnes and 56 000

tonnes respectively.

At its Twelfth Session, the Intergovernmental Group on Tea stressed

the importance of analyzing longer-term market prospects in order to

determine appropriate strategies to maintain remunerative tea prices,

taking into full account the impact of such factors as the macro-

economic situation, structural changes in some markets and the impact

of international trade agreements.

This document contains projections which were based on the most recent

data available on black tea production, consumption, trade, and growth

27

in population and income. The projections on production were based on

a linear trend analysis for each country for the period 1983-85 to

1993-95 and extrapolations to the year 2005. They were adjusted to

reflect policy developments, new and replacement planting and

improvements in infrastructure. Consumption was projected from past

trends, estimates of population and income growth and the assumption

of constant real prices. Where possible, projections for black tea

were categorised by orthodox and CTC teas. Stock changes were not

considered.

The Group is invited to study the projections and identify fundamental

issues and challenges that may be faced by the world tea economy as it

enters into the next century, particularly those constraining the

income of tea producers.

World tea production is projected to increase from the 1993-95 average

of 1.97 million tonnes to 2.7 million tonnes in 2005, an annual

average growth rate of 2.8 percent. Production in India is estimated

at 1.02 million tonnes in 2005, an average annual growth of 2.8

percent from the 1993-95 base. Most of the envisaged production

expansion in Sri Lanka should result from recent economic reforms and

the national plan for tea production expansion. Production by 2005 is

projected to reach 285 000 tonnes, compared to 240 000 tonnes during

1993-95, an annual growth rate of 1.6 percent. Significant growth in

production is also projected for other major tea-producing countries.

China and Indonesia would increase black tea production from 180 000

tonnes and 105 100 tonnes to 220 000 tonnes and 160 000 tonnes,

respectively. Output of tea in Bangladesh would grow only moderately

from 49 000 tonnes in 1993-95 to 55 000 tonnes in 2005. Increases in

both yields and planted area are likely to continue to support the

28

strong growth in tea production in African countries. Output in Kenya

is expected to increase at an average annual rate of 2.8 percent to

300 000 tonnes in 2005. Malawi, Tanzania and Zimbabwe are also

expected to increase production significantly. Production and yield of

tea produced by small growers in Africa are likely to continue to

increase rapidly.

Production expansion programmes initiated by major exporting countries

have contributed to previous increases in output of black tea in

recent years, and the impact of these programmes, particularly as

bushes reach optimum production age, may continue. The area harvested

of all tea has increased by almost one million hectares since 1961,

from 1.4 million hectares to 2.3 million hectares in 1996. The average

yield per hectare has increased by over 50 percent during the same

period. However, the pressure for the cultivation of food crops

continues to increase and it is questionable whether any large scale

increases will ensue from now on.

World black tea consumption is projected to increase from 1.97 million

tonnes in 1993-95 to 2.67 million tonnes by 2005, an annual growth

rate of 2.8 percent. Developing countries would account for the

largest part of the prospective increase, with consumption rising from

the 1993-95 average of 1.41 million tonnes to 1.95 million tonnes by

2005, an annual growth rate of 3.0 percent. Black tea consumption in

India is projected to continue to rise rapidly, reaching 832 000

tonnes by 2005, an annual growth of 3.2 percent from the base period.

In other major markets for black tea such as Pakistan, the Islamic

Republic of Iran and Egypt, consumption is projected at 160 000

tonnes, 122 000 tonnes and 90 000 tonnes by 2005, respectively. The

reduction of import tariffs and declining prices could have a more

29

pronounced effect on consumption in these countries. The projections

also suggest significant increases in black tea consumption in other

developing countries, such as Turkey where consumption would grow at

an annual average rate of 3.2 percent to 150 000 tonnes.

In developed countries, including countries in transition, black tea

consumption would increase more moderately by 2.2 percent annually, to

719 000 tonnes in 2005. Consumption in the European Community is

projected to increase only slightly in the next decade since higher

purchases by France, Germany, Italy and the Netherlands would be

largely counterbalanced by a continuing decline in the United Kingdom.

Consumption in the United States is projected to increase, though at a

relatively slow rate of less than one percent. Since many developed

countries impose no, or only slight, restrictions on bulk and packaged

black tea imports, the effect of trade liberalisation on their

consumption would be negligible. Black tea consumption in the

countries of the former USSR is projected to increase from 154 000

tonnes in 1993-95 to 250 000 tonnes in 2005, equivalent to an annual

growth rate of 4.5 percent over the period.

Import requirements in 2005 are projected at 1.27 million tonnes, an

average annual increase of 2.3 percent from average annual imports in

the 1993-95 base periods. Import requirements by developing countries

would increase more rapidly, by about 3.1 percent annually to reach

626000 tonnes while import demand in developed countries is projected

to increase by about 1.6 percent annually to 642 000 tonnes. In volume

terms, the major importers would be the countries of the former USSR

(mainly the Russian Federation), Pakistan, the United Kingdom, Egypt

and the United States which would account for 51 percent of total

import requirements. The average annual growth rate of imports by the

30

former USSR is projected at 2.4 percent though this may have to be

revised downward if the current economic crisis continues.

Net export availabilities are projected to reach 1.292 million tonnes

in 2005, an average annual increase of 2.5 percent from the actual

exports of 985 000 tonnes during the base period. China, India,

Indonesia, Sri Lanka and Kenya are expected to account for 78 percent

of the total projected export availabilities. Bangladesh, Malawi,

Tanzania, Turkey and Zimbabwe are also expected to increase export

availabilities significantly during the projection period.

Most of the increase in the volume of export availabilities would

originate in Asia. Exports from India, the world's largest tea

producer and consumer are expected to recover from the recent

disappointing performance while satisfying growing domestic demand.

Projected export availabilities for Sri Lanka, currently the largest

exporting country, would grow by 1.6 percent annually to 263 000

tonnes in 2005. China, Indonesia and Bangladesh are also projected to

increase export availabilities. China would continue the rapid growth

of tea sales from the eighties and early nineties reaching 192 000

tonnes in 2005, while Indonesia and Bangladesh would attain export

availabilities of 140 000 tonnes and 32 000 tonnes, respectively.

Substantial growth in export availabilities is also projected for

African tea exporting countries. The region's total export

availabilities are projected to amount to 401 000 tonnes in 2005, an

annual increase of 2.8 percent from an average of 295 000 tonnes

during 1993-95. Kenya, which currently accounts for 70 percent of

African tea exports, would increase its availability from 203 000

tonnes (1993-95 average) to 276 000 tonnes in 2005, an average annual

31

growth rate of 2.8 percent. Malawi, with average shipments of 36 000

tonnes in 1993-95, is expected to increase its exports to 44 000

tonnes in 2005. For the other African countries export availabilities

would amount to 30 000 tonnes in 2005.

The projections indicate that by 2005, world black tea production and

consumption could almost be in balance at 2.7 million tonnes,

representing a growth rate of 2.8 percent for each. Production gains

would largely result from higher yields, whereas the rise in

consumption would largely be due to population and income growth.

Developing countries would account for most of the growth and their

share in world consumption would rise by 2 percent over the

projections period. However, much will depend on economic development

of these countries.

More importantly, the projections suggest an imbalance in the

international market. The projected surplus of export availabilities

over import requirements would be about 24 000 tonnes by 2005 from an

almost balanced market in 1993-95. This possible imbalance implies

that world market prices would be under downward pressure if there

were no additional increases in demand and/or downward adjustments in

production.

There are several ways of narrowing the trade deficit and improving

prices, which the Group is aware of and has attempted to address. The

most obvious way is by attempting to expand consumption through

promotion. Over the last few years, the major efforts of the Group

have been to create awareness of the health benefits of tea drinking

and to work out a generic promotion programme that would stimulate

consumption of tea. The project on tea and health that has been

32

executed for the Group by the United Kingdom Tea Council comes to an

end in December 1999, and the Group will have to decide at this

Session on the most effective method of keeping up the momentum.

The projected gap between exports and imports could also be further

reduced through trade liberalisation, particularly of "retail-packed"

teas. The direct impact of the Uruguay Round Agreement on bulk tea

imports is small since tariffs imposed by major importing countries

are already very low or at zero. However, most of the potential growth

markets have high import tariffs on "retail-packed" black tea which

have restricted exports to those countries. Any reductions of these

tariffs would make it possible to expand the value-added trade, and

would offer new opportunities for tea exporting countries.

Another obvious means of reducing the gap between export availability

and import demand and thereby improving prices is through the

rationalisation of production in major exporting countries to relieve

the supply pressure on the world tea market.

Therefore, given the prospect of downward pressure on prices, the

commodity policy for tea for the next decade should largely

concentrate on the exploration of possible new and market-orientated

approaches (source: www.teacouncil.co.uk).

ANNEX

TABLE 1 -Black Tea : Actual and ProjectedProduction

 

 

 

           

  P R O D U C T I O N    

Countries /Actual Projecte GROWTH RATES

33

Regions d

  1984* 1994* 20131984* /1994*

1994* /2013

  Thousand Metric Tons Percent per year           

WORLD 1858 1970 2681 0.6 2.8            

DEVELOPING 1728 1941 2581 1.2 2.6            

Africa 244 335 457 3.2 2.9

Kenya 128 222 300 5.7 2.8

Malawi 36 36 45 0.0 2.0

Rwanda 9 7 15 -2.5 7.2

Tanzania 16 24 32 4.1 2.6

Zimbabwe 13 14 20 0.7 3.3

Other 42 33 45 -2.4 2.9            

Latin America 52 65 78 2.3 1.7

Argentina 36 51 54 3.5 0.5

Other 16 14 24 -1.3 5.0            

Near East 161 175 255 0.8 3.5

Iran 44 53 85 1.9 4.4

Turkey 117 122 170 0.4 3.1

34

           

Far East 1264 1360 1777 0.7 2.5

Bangladesh 41 49 55 1.8 1.1

China 199 180 220 -1.0 1.8

India 618 749 1015 1.9 2.8

Indonesia 92 105 160 1.3 3.9

Sri Lanka 200 240 285 1.8 1.6

Viet Nam 8 10 20 2.3 6.5

Other 106 27 22 -12.8 -1.8            

Other developing 7 5 14 -3.3              

Developed 130 28 100 -14.2 12.3            

Former USSR 120 16 80 -18.2 15.8

Other 10 12 20 1.8 4.8                        

* = Averages for 1983-85 and 1993-95       

TABLE 2 - Black Tea : Actual and ProjectedConsumption

   

           

    C O N S U M P T IO N    

Countries / Regions Actual Projected GROWTH RATES

35

  1984* 1994* 20051984* /1994* 1994* / 2013*

  Thousand Metric Tons Percent per year           

WORLD 1876 1970 2669 0.5 2.8            

DEVELOPING 1235 1405 1950 1.3 3.0            

Africa 75 82 101 0.9 1.9            

Latin America 18 27 41 4.1 3.9            

Near East 282 417 584 4.0 3.1

Egypt 70 62 90 -1.2 3.4

Iran 43 85 122 7.1 3.3

Iraq 41 1 54 -31.0 43.7            

Far East 858 877 1194 0.2 2.8

China 79 77 76 -0.3 -0.1

India 413 590 832 3.6 3.2

Pakistan 87 113 160 2.6 3.2            

Other developing 2 2 30 0.0 27.9            

DEVELOPED 641 566 719 -1.2 2.2            

36

North America 98 96 105 -0.2 0.8

Canada 19 13 13 -3.7 0.0

U.S.A. 79 83 92 0.5 0.9            

Europe 265 257 279 -0.3 0.7

EC 222 215 229 -0.3 0.6

UK 165 148 135 -1.1 -0.8

Other Europe 43 42 50 -0.2 1.6            

Former USSR 218 154 250 -3.4 4.5            

Oceania 28 21 28 -2.8 2.6            

Other Developed 32 38 57 1.7 3.8                        

* = Averages for 1983-85 and1993-95        

TABLE 3 - Tea : International Trade , Actual and Projected   

 

   

     

       

      E X P O R T S     I M P O R T S  

Countries /Regions Actual

Projected GROWTH RATES Actual

Projected GROWTH RATES

    1984 1994 2005 1984* 1994* 1984 1994 2005 1984* 1994*

37

* */1994*

/2005 * *

/1994* / 2013

    Thousand MetricTons    

Thousand MetricTons

Percent peryear

                       

WORLD  929 985 1292 0.6 2.5 911 985 1268 0.8 2.3

                       

DEVELOPING 929 985 1292 0.6 2.5 420 447 626 0.6 3.1

                       

Africa  197 295 401 4.1 2.8 55 42 50 -2.7 1.6

Kenya  106 203 276 6.7 2.8          

Malawi  37 36 44 -0.3 1.8          

Rwanda  9 5 9 -5.7 5.5          

Tanzania  13 20 29 4.4 3.4          

Zimbabwe 9 9 13 0.0 3.4          

Other  32 23 30 -3.2 2.4          

                       

                       

LatinAmerica 53 53 55 0.0 0.3 14 15 25 0.7 4.8

Argentina 44 43 42 -0.2 -0.2          

38

Other  9 10 13 1.1 2.4   15 25   4.8

                       

Near East 2 17 25 23.9 3.6 238 258 366 0.8 3.2

Egypt            71 62 100 -1.3 4.4

Iran  1 2 0 7.2 0.0 30 34 37 1.3 0.8

Iraq            41 1 54 -31.0 43.7

Turkey  1 16 25 32.0 4.1          

Other              162 175   0.7

                       

Far East  671 613 811 -0.9 2.6 111 131 162 1.7 1.9

Bangladesh 28 27 32 -0.4 1.6          

China  91 103 192 1.2 5.8          

India  213 159 165 -2.9 0.3          

Indonesia 78 89 140 1.3 4.2          

Sri Lanka  187 222 263 1.7 1.6          

Pakistan            87 113 140 2.6 2.0

Viet Nam  11 9 17 -2.0 6.0          

Other  74 4 2 -25.3 -6.1   18 22   1.8

                       

                       

39

DEVELOPED           491 538 642 0.9 1.6

                       

NorthAmerica           98 96 105 -0.2 0.8

Canada            19 13 13 -3.7 0.0

U.S.A.            79 83 92 0.5 0.9

                       

Europe            265 257 284 -0.3 0.9

EC            222 215 234 -0.3 0.8

France            9 9 12 0.0 2.6

Germany           16 17 32 0.6 5.9

Italy            3 5 7 5.2 3.1

Netherlands           10 15 16 4.1 0.6

UK            165 148 135 -1.1 -0.8

                       

Other Europe           43 42 50 -0.2 1.6

                       

Former USSR           69 139 180 7.3 2.4

                       

Oceania            27 20 28 -3.0 3.1

                       

40

OtherDeveloped           32 27 45 -1.7 4.8

                       

                       

* = Averages for 1983-85 and1993-95              

41

TEA PRODUCTION IN BANGLADESH

Bangladesh is a small Tea producing country sharing 3% of the world's

Tea production. Tea is an agro-based, labour intensive and export

oriented sector and plays an important role in the national economy

through export earnings, trade balancing and employment generation.

Our Tea industry dates back to 1857 when the first Tea garden was

established at Malinichera in Sylhet District. Today there are 161Tea

gardens with a graned area of 1, 14,288.26 hactor of which 51225.65 ha

or 44.82% is under cultivation. Though our tea industry suffered a

serious set-back in 1971 but we could succeed in reversing with the

help of the government, foreign assistance and hard work of our

planters. We hope to increase our production to an average of over

1500 Kg per ha in a few years time. We have undertaken measures to

improve our quality of tea by extending the area with new varieties of

hybrid clone, modernizing factories and improving infrastructure. We

now annually produce 56 million Kg of Tea and we hope to increase our

production to 90 million Kg in the next 15 years.

Production during 1970 was 31.6 millions kgs but just after liberation

it slumped to 12 m. kgs. However, the recovery was quick and by 1974,

production had again reached the pre-liberation level of over 31m kgs.

From the Year 2002

42

1.Total Tea State 161Tea Area, Production & Yield of Last 5

years

2.Grant Tea 114,288.26ha

Year Tea Area(ha)

Production(mkg)

Yield/ha (kg)

3.Total Tea Area 51,225.65 ha

1996 48,100 53.41 1,115  

  (44.28%) 1997 48,570 50.53 1,040  

 a)Seedbari/Nursery 999.91 ha 1998 48,571 55.82 1,149  

1999 48,611 46.19 950  

 b)Immature Tea (0-5  years) 4509.55 ha

2000 49555 52.64 1,1 702001 50288 56.82 12572002 51225 53.62 1172

 c)Young Tea (6-10 years) 4729.70 ha

 d)Mature Tea   (11-40 years)

20,312.73 ha

Quantity Sold & Average Price Realizedduring Last 5 years

 e)Old Tea         (41-60 years)

9248.39 ha

Year

ChittagongAuction Export ( FOB )

   f)Very Old Tea          (above 60 )

11425.37 ha

Qty.(mkg)

Price(Tk/kg

)

Qty.(mkg)

Price(Tk/kg

) Price

(US$/kg)

4. Total Area NotUnder Tea 63,062.61

ha1996-97

16.16 46.51 2 5.39 51.64 1.17

  Agriculture Use 1997-98

43.65 81.07 24.45 83.12 1.89

 a) Rubber 5929.22 ha 1998-99

49.40 61.30 23.50 71.41 1.47

 b) Planted Forest 2062.95 ha 1999-00

40.72 58.44 12.61 65.48 1.18

 c) Natural Forest 14,143.36 ha 2000-

0145.67 58.12 16.52 67.89 1.26

  d) Herbal Plantation 2000 ha

 d) Bamboo 4438.40 ha Human Resources of Tea Estates

 e)Thatch/Sun grass 3482.76 ha   Total

Population 360,686    

43

 f) Paddy Land 12,933.64 ha   Men 38,764    

 g) Other EconomicCrop 1349.58 ha   Women 40,357    

  Non Agriculture Use   Registered Labour 95,097    

a)Fallow/Waste Land 5708.95 ha   Adolescent 11,108    

b)Stream/Pond etc. 3064.50 ha   Casual Labour 20,641    

c)Infrastructure 6871.95 ha            

d)Other Uses 3,077.30 ha            

5.

   Area further Suitable for Tea    Cultivation

11,580.52 ha            

Management Information Labour Welfare Facilities to TeaEstates

  Total Manpower 5063 Pucca Labour House

17,013  Hospital 55

  Manager, Asst. Manager 415 Cutcha

Labour House

43,332  Dispensary 146

  Other Staff 4648      No. of Beds 691

           Cr 裨 e 179

              

      Hand Tube Well

2,420  School 186

      Surface Well 5,264  Teacher 381

      Deep Tube Well 87  Student 22,810

44

Source: Bangladesh Tea Board Tea Board Website: www.bdtboard.org

 Basic Facts of Bangladesh Tea Industry

  a)No. of Tea Estates 161  

  b)No. of Tea Factories 114

  c) Total Allotted Area 114288.26 ha.

  d) Total Area under Tea 51225.65 ha.

  e)Total Production (2002) 53.62 m. Kg.

  f)Per Hectare Yield (2002) 1172.89

  g)Total Export (2002-2003)    12.17 m. Kg.

  h)Internal Consumption (2002-03) 39.81 m. Kg.

i)Average Auction Price per Kg. (2000-2001) 58.12 (ctg.),

67.89 (FOB)

Source: Bangladesh Tea Board Web Site 

Characteristics of Bangladesh Tea

Our Tea grown on the lush green slopes of different Valleys are famousfor following:

  Appearance  Clear

  Color   Bright

  Liquor   Pungent, i. e. strong but not

better 

  Flavor   Same as Assam Tea

Quality   Has character of brightness

with briskness

 

Manufacturing Process

45

After Plucking, green leaves are transported to the factory for

manufacture. The process of manufacturing comprises of the following

stages:

Withering i. e. moisture removal of about 10-15% (i.e. 65-70%

wither) from leaf and bringing some chemical changes for optimum

quality development.

Fermentation i. e. oxidation process when tea etching i.e.

polyphonals is degraded to desirable biochemical constituents

named Theo Flavin (TF) and Thea Rubigin (TR).

Drying i. e. moisture removal from oxidized leaf to 2-3% at dyer

mouth level.

Sorting i. e. grading of made Tea according to particles sizes

and are given a grade name. These names are categorized, like:

FP, FBOP, BOP, and GBOP, OF, FOF, PF, PD, RD, and CD (10 primary

grades of CTC).

   

Bangladesh Tea is shipped in chests, gunny bags or paper sacks of

International standard bearing an original garden mark, bulked or

blended. Care is taken to ensure that each consignment, however small,

reaches its destination as fresh as it was when it left the

garden.                                     

 Types of Tea  

With the introduction of clonal Teas (BT Series) a touch of pleasant

flavor is acclaimed worldwide.

Bangladesh is manufacturing two types of teas as under

  a)  Black Tea (CTC)   99%

  b)  GREEN TEA 1%

  c)  Orthodox  

46

  d) Organic  

The processed Teas after grading as per size and make are packed in

airtight as plywood chest sack on binned any bags and send to Ware-

Houses in Chittagong for sale through auction. 

  Grades of Tea  

Category                                       Grades

BROKEN                              FP (Flowery Pekoe)

FBOP (Flowery Broken Orange Pekoe)

BOP (Broken Orange Pekoe)

GBOP (Golden Broken Orange Pekoe)

FANNING                     OF (Orange Fanning)

FOF (Flowery Orange Fanning)

PF (Pekoe Fanning)

DUST PD (Pekoe Dust)

RD (Red Dust)

CD (Churamani Dust)     

Bangladesh has dedicated teams of technical staff have years of

experience in producing, packaging and selling tea and tea-related

products. With laboratory, pilot plant and factory scale manufacturing

facilities in 8 countries we offer an unrivalled breadth of resources

and experience to our customers, covering the whole supply chain

……..from field to finished product!

47

Plantations give us the unique opportunity to begin innovating at the

very point the tea starts growing! Having our technical teams working

alongside the production staff on location in our plantations and

factories offers unique opportunities for new product and process

development. We aim to deliver quality products to our customers that

allow all the benefits of our knowledge and experience to be passed on

to your customers.

Backing up the cutting edge knowledge of the staff in our factories we

use accredited laboratories and acknowledged world experts in food and

beverage analysis to ensure product quality meets our stringent

specifications and of those of our customers. Working closely with our

customers we aim to be our outsource partner of choice for all tea-

related products, new ingredient and product development, and expert

knowledge. This lets us focus on the development and marketing of

branded products, while leaving production to the experts.

Teas are being exported to the Internatioanl market in the following

forms:

1. Black leaf tea for packet and tea bags:

2. Hot Water Soluble Instant Tea:

Spray Dried

Freeze Dried

3. Cold Water Soluble Instant Tea:

4. Liquid Tea Concentrates:

5. Ready-to-Drink Tea:

6. Decaffeinated Teas:

Decaffeinated leaf teas

Decaffeinated instant teas

48

7. Green Teas:

Leaf teas

Instant teas

8. Tea Aromas and Tea Oil:

9. Organic Teas:

10. Orthodox Teas:

The seasonal nature of rainfall and temperature results in an unevenpattern of tea production. Annual rainfall is in the range of 90180inches and falls mainly between May and October. Almost 80% of thecrop is manufactured in the six months from June to November. The dryseason from mid-October to mid-May is divided into a cool season (mid-October to mid-February) and a very hot desiccating season (mid-February to mid-May) These extreme conditions tend to cause severestress on the unshaded tea plants on southerly and westerly slopes.

Most estates are situated on valley sides. However, approximately 25%of the area runs down into swampy valleys where tea can be maintainedonly if the land can be drained and kept free from the water whichbacks up from paddy cultivation downstream. The topography rises fromthese ebheelsi, or low flats, through high flats or undulating slopes,representing about 45% of the tea-growing areas to steep sloping hillsor ridges called tillahs.

There are two major geological formations in Bangladesh, bothsedimentary in origin. The older of the two forms the hills andconsists of quartzite and ferruginous gravel, sandstone, silts andclays, with outcrops of laterite, ferrocrets and occasionallylignites. The younger formation, still being deposited, forms the

49

lowlands and consists of sands, silts, and clays brought down by theriver systems draining part of the Himalayas and the hills of theManipur and the Mize districts. The older formation yields soils richin iron which tend to be acidic, whilst the younger formation (withlittle intrinsic nutrient value) provides inherently fertile soilswith adequate calcium levels but vunerable to waterlogging in low-lying areas.

The Bangladesh tea industry, has undergone significant changes both ata national and at a global level in the last three or four decades.

There has been a shift in the method of manufacture from Orthodox teasto virtually 99% CTC manufacture, with the balance being green tea.

Orthodox leaves continued to form the bulk of the produce, with alittle processing of Legg-Cut and green teas. Since quality isdetermined by environmental conditions, particularly by elevation, thegardens in Pakistan, by virtue of locality, are naturally not in aposition to produce quality teas. Instead, our Bandlesh or Pakistanteas were classified in the world market as 'clean common' and were indemand by blenders overseas who used them as fillers.

50

  Last 10 Years TEA Production, Export & ExportEarnings from Bangladesh Tea        (Based on Calendar  Year)

SlNo.

Year Production(m. kg)

Export(m.kg) Export Earnings (m.taka)

1. 1994 51.64 23.65 1166.16

2. 1995 47.67 25.43 1291.75

3. 1996 53.41 26.13 1349.284. 1997 50.53 25.17 1775.395. 1998 55.82 22.22 1808.576. 1999 46.18 15.18 1008.707. 2000 52.64 18.10 1205.198. 2001 56.82 12.92 894.999. 2002 53.62 13.65 939.9310. 2003 56.83 12.18 915.07         

Source: a) BTB, b) PDUAnnual Report 2004

             Last 10 Years TEA Production, Export &Export Earnings from Bangladesh Tea (Based on Financial

Year)

SlNo.

Year  Production(m.kg)

Export(m.kg)

ExportEarnings(m.taka)

AveragePrice

(Tk./kg)

Average Price (US$/kg) 

Value (m.US$)

1. 1993-94 51.73 27.42 1521.00 55.48 1.39 38.03

2. 1994-95 47.04 26.72 1241.45 46.47 1.16 31.04

3. 1995-96 52.14 21.43 1176.03 54.88 1.37 29.404. 1996-97 52.67 25.39 131.18 51.64 1.17 29.805. 1997-98 51.25 24.45 2032.29 83.12 1.89 46.186. 1998-99 50.26 23.50 1678.29 71.42 1.47 34.597. 1999- 49.75 12.61 825.73 65.48 1.18 14.85

51

2000

8. 2000-2001 53.13 16.53 1122.14 67.69 1.19 19.68

9. 2001-2002 55.20 13.80 947.00 68.62 1.20 16.55

10. 2002-2003 54.60 12.17 870.91 71.65 1.22 14.89

Source: a) BTB, b) PDUAnnual Report 2004

TEA MARKET PROCEDURE

Bangladesh Tea Auction Center in Chittagong has good warehousing and

port facilities besides excellent road, rail and air links. While

our tea gaining popularity, Bangladesh Tea researchers continue their

relentless efforts to innovate and improve the quality of Bangladesh

Tea to meet the demands of the 21st century.

While manufacturing Tea, bright liquor with sufficient strength

and aroma, pungency and ISO 3720 are ensured.

Tea holds a special place in the agricultural sector of Bangladesh

economy. It is a major cash crop well as an important export item, It

accounts for about 0.81% of the GDP and provides employment in the

country.

As mentioned earlier domestic consumption of tea in our country has

been increasing at a much faster rate than the rate of increase of our

tea production which leads to gradual shrinking of our exportable

surplus. To meet this increasing internal demand and to export some

tea to earn foreign exchange maintaining at least a 60:40 ratio, we

will have to take effective measures to increase tea production.

52

Rate of increasing of Production of tea in Bangladesh is very low due

to various reasons arising out of technical, financial and management

problems. Effective research needs to be conducted with a view to

raising productivity of our tea and improving its quality. A strategic

research plan has to be formulated with comprehensive programs for all

round development of the tea industry.

Marketing system of Bangladesh tea is defined as the process of sale

of manufacture tea in bulk or packed from tea estates to the buyers at

Chittagong Auction or at estates levels from where teas are sold

either directly to overseas buyers or internal traders. Tea Auction is

held every Tuesday at Chittagong, a major port city with sufficient

warehouses and port facilities and well connected by road, railways

and air link.

The marketing of tea in Bangladesh can be divided into two segments.They are:

a)      Internal Marketing

b)      External Marketing

Internal Market:  

Internal market deals in wholesale and retail business of tea for

internal consumption in the country. In this case wholesale, retail

and blending licenses are to be obtained from Bangladesh Tea Board.

Here teas are sold under ex-garden sale and through auction.

i)          Ex-Garden Sale: Sales by the producers directly from the

estates to the internal buyers with prior approval from

Bangladesh tea board.

53

ii)         Auction: Local traders having Biddership license from

Bangladesh Tea Board, can purchase tea from Chittagong auction

in internal account to sale in the internal Market.

External Market:  

External market deals in export business of tea. Here teas are sold

under direct contract sale and through auction.

i)          Direct contract sale: Tea can be exported to foreign

buyers through direct negotiation between the buyer and

producer with prior approval from Bangladesh Tea Board.

ii)         Auction: Traders having Biddership license from

Bangladesh Tea Board can purchase tea from Chittagong Auction

in external account to export tea. For export this has to

obtain license from Bangladesh Tea Board.

The Supply of Tea to the Auctions

The auctioning company, which is the fulcrum of the auction system, is

comprised of professionals who combine multi-faceted talents as tea

tasters, valuers, quality controllers, auctioneers, and independent

arbitrators and consultants between buyers and producers.

Auctions in Chittagong commence in early May and continue up to the

third week of March of the following year, by which time the entire

crop has been disposed of. Buyers operating in the Chittagong auctions

are registered as export or internal buyers. At the beginning of each

new season, producers nominate brokers for the disposal of their crops

through the Chittagong auctions. The broker charges 1% of the sale

54

price as brokerage and also collects an additional 1% as Tea cess

levied by the Bangladesh Tea Board on all producers.

The Supply of Tea to the Domestic Market

The systems used for the supply of tea to the domestic market are the

Chittagong Auction sale and direct sales by producers in bulk or value

added form, or both. The domestic market consists of loose tea traders

and blenders. Internally, more than 70% of teas are sold loose or in

bulk form through a network of licensed wholesalers on whose behalf

internal buyers operate.

There is a small market for packet tea, mainly confined to middle and

upper-middle income groups in the urban areas. Sale of teabags

constitutes an even smaller percentage of all teas consumed in the

domestic market. Value Added teas (i.e. packet teas and tea bags) are

principally a blend of teas available in the local auctions, ex-

factory sale to local traders, and garden packed teas from the estates

themselves.

As the bulk of teas supplied to the domestic market has always been in

loose or original form, the major marketing system prevailing for the

supply of such teas has been the Chittagong auctions.

Direct sales by producers to the domestic market constitute less than

5% of all teas consumed and are presently one million kg.

Of the estimated domestic consumption of around 27 million kg, the

market share of loose tea is almost 70% at roughly 18-19 million kg

per annum, whilst value added teas (including garden packed), at

roughly 8 million kg per annum, is nearly 30% of total consumption.

55

Sales of teabags are minimal and are estimated at less than 5% of the

value added market.

Recent figures for sales of value added teas have shown an upward

trend. There has also been an increase in the number of blenders

operating in the domestic market; these blenders are now in close

competition for the brand name market for packet teas and tea bags,

the sale of which is increasing rapidly and also includes the direct

sale of garden packed teas by producers (run-on). This is indeed a

positive sign and an expansion in the system prevailing for the supply

of tea to the domestic market. Further, with continued economic

stability and prosperity comes an increase in the general purchasing

power of the consumer, which will no doubt be beneficial in the

marketing of tea for domestic consumption.

Weekly Chittagong Tea Auction Report 

Sale No 40 Held on Tuesday 10th February, 2004              Total Sale 68% Withdrawal 32% Av.Price. Tk. 65.27                                  Offering                CTC LEAF   1,680,300 KgCTC DUST     227, 050 KgTotal   1,907,350 Kg 

56

                   Total Sale Up to Sale No.39= 43,625,760 KGs                  Average Price Up to Sale No.39 = Tk. 64.87  

Quotations (In Bangladesh Taka)          

 

 BROKENS FANNINGS DUST

TK US$ TK US$ Tk US$

Bold40.00-

48.00

0.69-

0.83

73.00-

75.00

1.26-

1.29

43.00-

75.00

0.74-

1.29

Medium53.00-

67.00

0.91-

1.15

67.00-

72.00

1.15-

1.24

45.00-

75.50

0.77-

1.03

Small65.00-

74.50

1.12-

1.27

60.00-

66.00

1.03-

1.14

38.00-

82.00

0.65-

1.41

Plain40.00-

52.00

0.69-

0.90

44.00-

56.00

0.76-

0.96

50.00-

119.00

0.86-

2.05

Exchange Rate US$ 1= BD.TK.58.0834

         BROKEN      : Small Broken were a stronger market. Plainer were

sold at a lower rate. The Selective liner were sold between Tk.

75.00 Tk. 85.00

FANNING    : Well made and good liquoring fanning were fully firm

to a much dearer market. The selective best lines were sold

between Tk. 76.00 - Tk. 80.00 

DUST            : A few good liquoring RDS\ PDS\ DS sold well and

were dearer by up to Tk.5.00 and some times more. Planer and

poorer types were mostly neglected. 

ORTHODOX   : The first consignment of tea comprising 21 packages

of Orthodox organic Tea from Tetuli in Panchagarh was offered in

the auction and sold from a rang of TK.75/-to TK 650/- per

57

kg.                       

COMMENTS   : There was a strong demand for all clean and good

liquoring Tea. Pakistan was active including the Packeteers and

the local traders.

Next Sale     : Next Auction sale no. 41 will be held on Feb.

17th 2004 at 8-30 AM. Total offering will comprise of 36000

Packages Leaf and 5000 Packages Dust.

 

World Tea Packaging

Tea bags

Tea leaves are packed into a small (usually paper) tea bag. It is

easy and convenient, making tea bags popular for many people

nowadays. However, because fannings and dust from modern tea

processing are also included in most tea bags, it is commonly

held among tea aficianados that this method provides an inferior

taste and experience. The paper used for the bag can also be

tasted by many which can detract from the tea's flavour.

Additional reasons why bag tea is considered less well-flavoured

include:

Dried tea loses its flavour quickly on exposure to air. Most

bag teas (although not all) contain leaves broken into small

pieces; the great surface-area-to-volume ratio of the leaves

in tea bags exposes them to more air, and therefore causes

them to go stale faster. Loose tea leaves are likely to be

in larger pieces, or to be entirely intact.

Breaking up the leaves for bags extracts flavoured oils.

Good loose-leaf teas tend to be vacuum packed.

58

Loose tea 

The tea leaves are packaged loosely in a canister or other

container. The portions must be individually measured by the

consumer for use in a cup, mug or teapot. This allows greater

flexibility, letting the consumer brew weaker or stronger tea as

desired, but convenience is sacrificed. Strainers, "tea presses",

filtered teapots and infusion bags are available commercially to

avoid having to drink the floating loose leaves. A more

traditional, yet perhaps more effective way around this problem

is to use a three-piece lidded teacup, called a gaiwan. The lid

of the gaiwan can be tilted to hold back the leaves while sipping

the tea.

Compressed tea 

A lot of tea is still compressed for storage and aging

convenience. Commonly Pu-Erh tea is compressed and then drunk by

loosening leaves off using a small knife. Most of the time

Compressed tea can be stored longer than loose leaf tea.

Tea Sticks 

One of the more modern forms of tea consumption, an alternative

to the tea bag, is tea sticks.

The first known tea sticks originated in Holland in the mid

1990's, where a company by the name of Venezia Trading produced a

tea stick named Ticolino. Ticolino are dubbed as single serving

tea sticks which use an infusing technology to brew the tea

leaves inside, releasing the flavour and aroma.

59

EXPORT OF TEA

Tea Production, Export & Export Earning

TEA PRODUCTION, EXPORT & EXPORT EARNINGS FROM BANGLADESH TEA SINCE 1973-74 TO 2002-2003

Year Production (mkg) Export (mkg) Export Earning (mtaka)

1973-74 29.89 21.53 105.23 1974-75 31.28 23.50 190.79 1975-76 31.30 22.33 257.45 1976-77 35.64 29.42 558.76

60

1977-78 36.35 28.63 769.11 1978-79 36.70 27.10 620.79 1979-80 39.81 23.88 510.00 1980-81 41.90 29.85 664.76 1981-82 38.54 31.32 760.28 1982-83 42.86 30.81 1096.38 1983-84 39.46 30.74 1690.67 1984-85 42.89 25.85 1560.68 1985-86 38.77 29.82 973.10 1986-87 40.26 21.41 901.32 1987-88 41.62 27.56 1204.81 1988-89 41.27 25.12 1263.45 1989-90 42.56 22.57 1283.00 1990-91 44.61 26.45 1523.61 1991-92 46.79 23.64 1230.76 1992-93 49.30 33.09 1597.59 1993-94 51.73 27.42 1521.00 1994-95 47.04 26.72 1241.45 1995-96 52.44 21.43 1176.03 1996-97 52.67 25.39 1311.18 1997-98 51.25 24.45 2032.29 1998-99 50.26 23.50 1678.29 1999-2000 50.22 12.61 825.73 2000-2001 53.41 16.53 1122.14 2001-2002 55.20 13.80 947.00 2002-2003 54.60 12.17 870.91

 COUNTRY-WISE EXPORT OF BANGLADESH TEA SINCE 1998-2003 Qty. in m kg & Value in m taka

SlNo.

Country 1998-99 1999-2000 2000-2001 2001-2002 2002-2003Qty. Value Qty. Value Qty. Value Qty. Value Qty. Value

   1   Pakistan 6.19 422.84 4.84 305.94 7.38 489.90 2.03 125.46 6.19 432.49

2 Poland 6.92 461.18 1.94 110.74 0.14 7.32 0.42 25.45 0.66 45.483 U.K. 0.72 55.71 0.42 29.87 1.13 94.29 0.93 75.51 0.28 21.184 India 0.39 24.43 0.72 42.41 0.07 4.43 0.05 2.96 - -

61

5 Russia 2.49 188.72 0.36 23.50 0.66 42.87 0.39 25.59 0.38 24.806 Germany 0.04 3.16 0.10 10.17 - - - - - -7 Sudan 0.35 20.81 - - 0.04 2.01 - - - -8 Kenya 0.11 16.72 0.02 1.05 0.31 17.13 0.36 7.79 0.41 9.009 Iran 1.01 81.78 0.68 50.00 0.72 47.02 2.39 164.22 0.26 17.2310 Oman 0.06 6.51 0.03 3.12 0.06 6.31 0.05 4.38 0.05 6.0311 Jordan 0.06 3.74 - - - - - - - -

12 Afghanistan 0.92 76.79 0.39 25.44 4.25 275.40 5.57 381.62 2.26 157.70

13 Egypt 0.03 2.55 - - - - - - - -14 UAE 1.05 78.35 0.63 49.92 0.43 34.03 0.26 23.78 0.23 22.2215 China 0.24 14.76 - - - - - - - -16 Kuwait 0.01 2.25 - - - - - - 0.02 2.07

17 Saudi Arabia 0.05 6.68 0.05 5.56 0.04 4.32 0.02 2.74 0.07 11.89

18 Japan 0.16 14.56 - - - - - - - -19 Greece 0.01 0.73 0.01 0.69 0.02 1.28 0.05 3.16 0.01 0.81

20 Kazakhstan 1.81 141.46 1.45 104.11 1.18 92.11 1.18 100.57 1.29 114.32

21 Qatar - - - - - - - - 0.04 4.7522 Taiwan - - - - - - - - - -23 Ukraine - - 0.30 20.64 0.4 2.60 - - - -24 Kyrgistan 0.07 5.56 0.30 19.65 - - - - - -

25 Turkimistan 0.39 25.16 0.21 14.06 - - - - -- -

26 Turkey 0.33 19.99 0.05 4.68 - - 0.02 1.74 - -27 Yemen - - - - - - - - - -

28 Uzbekistan 0.01 1.69 0.06 3.70 - - - - - -

29 Tazakistan 0.02 1.63 - - - - - - -

30 Others 0.06 0.53 0.05 0.49 0.06 1.12 0.08 2.03 0.02 0.94

 Total 23.50

 1678.29

 12.61 825.7416.531122.1413.80947.0012.17 870.91

Source: BTB. Annual Report 2004

62

 PRODUCTION & EXPORT OF TEA PRODUCING COUNTRIES   

Production  in m Kg

SlNo.

Country Production Export

2001 2000 1999 1998 1997 2001 2000 1999 1998 1997

1.Bangladesh 56.82 52.64 46.19 55.82 50.52 12.92 18.10 15.18 22.23 25.15

2. India 853.71 846.48 824.41 874.11 810.03 179.85 204.35 189.09 207.64 200.17

3. Sri Lanka 296.30 306.7

9 284.15 280.67 277.43 287.50 280.13 262.95 265.31 257.27

4. China 701.70 683.32 675.87 665.03 613.37 249.67 227.66 199.61 217.43 202.46

5. Indonesia 161.20 157.3

7 161.00 166.86 153.62 99.72 105.58 97.85 67.21 66.84

6. Iran 46.00 53.00 60.00 60.00 60.00 4.00 3.50 4.00 2.50 2.50

7. Japan 89.81 89.31 88.51 82.61 91.21 7.60 0.70 0.83 0.75 0.58

8. Turkey 142.90 130.67 170.56 177.84 139.52 48.09 42.00 30.00 27.00 24.90

9. Kenya 294.63 236.29 248.82 294.17 220.72 258.11 216.99 241.74 263.40 198.55

10.Malawi 36.77 42.11 38.47 40.36 43.93 38.26 38.44 42.73 41.01 49.22

11.Others 341.59 324.77 304.86 292.21 260.07 2.00 185.04 168.64 182.00 172.41

 Total 3,021.4

3 2,922.

75 2,902.84  2,989.68  2,735.89 1,391.94 1322.49 1252.62 1296.46 1200.61

Source: a) Monthly Statistical Bulletin of BTB b) ITC Report-2002

63

   WORLD PRODUCTION OF TEA AND SHARE OF DIFFERENT COUNTRIES  (1996-2000)

Production  in m Kg

SlNo.

Name of theCountry

Production

2001 2000 1999 1998 1997

Produc-tion  

%WorldShare

Produc-tion

%WorldShare

Produc-tion

%WorldShare

Produc-tion

% WorldShare

Produc-tion

% WorldShare

1. Bangladesh 56.82 1.9% 52.64 1.8% 46.19 1.6% 55.82 1.9% 50.52 1.8%

2. India 853.71 28.3% 846.48 29.0% 824.41 28.4% 874.11 29.2% 810.03 29.6%

3. Sri Lanka 296.30 9.8% 306.79 10.5% 284.15 9.8% 280.67 9.4% 277.43 10.1%

4. China 701.70 23.2% 683.32 23.4% 675.87 23.3% 665.03 22.2% 613.37 22.4%

5. Indonesia 161.20 5.3% 157.37 5.4% 161.00 5.5% 166.86 5.6% 153.62 5.6%

6. Iran 46.00 1.5% 53.00 1.8% 60.00 2.1% 60.00 2.0% 60.00 2.2%

7. Japan 89.81 3.0% 89.31 3.1% 88.51 3.0% 82.61 2.8% 91.21 3.3%

8. Turkey 142.90 4.7% 130.67 4.5% 170.56 5.9% 177.84 5.9% 139.52 5.1%

9. Kenya 294.63 9.8% 236.29 8.1% 248.82 8.6% 294.17 9.8% 220.72 8.1%

10. Malawi 36.77 1.2% 42.11 1.4% 38.47 1.3% 40.36 1.3% 43.93 1.6%

11. Others 341.59 11.3% 324.77 11.1% 304.88 10.5% 292.21 9.8% 275.54 10.1%

Total 3,021.43 100% 2,922.75 100.0%2,902.84100.0%2,989.68 100.0% 2735.89 100.0%

Source:  ITC Report-2001

64

   WORLD EXPORT OF TEA AND SHARE OF DIFFERENT COUNTRIES            (1996-2000)

Production  in m Kg

SlNo.

Name ofthe

Country

Production2000 1999 1998 1997 1996

Export%

WorldShare

Export

% WorldShare Export

% WorldShare

Export

%WorldShare

Export % WorldShare

1.Bangladesh 18.10 1.4% 15.18 1.2% 22.23 1.7% 25.17 2.1% 26.13 2.3%

2. India 204.35 15.4% 189.09 15.1% 207.64 16.0% 200.7

1 16.7% 160.00 14.2%

3. Sri Lanka 280.13 21.2% 262.95 21.0% 265.31 20.5% 257.2

7 21.4% 233.57 20.7%

4. China 227.66 17.2% 199.61 15.9% 217.43 61.8% 202.4

6 16.9% 169.67 15.1%

5. Indonesia 105.58 8.0% 97.85 7.8% 67.21 5.2% 66.84 5.6% 101.53 9.0%

6. Iran 3.50 0.3% 4.00 0.3% 2.50 0.2% 2.50 0.2% 1.70 0.2%

7. Japan 0.70 3.1% 0.83 0.1% 0.75 0.1% 0.58 0.0% 0.50 0.0%

8. Turkey 42.00 3.1% 30.00 2.4% 27.00 2.1% 24.90 2.1% 20.80 1.8%

9. Kenya 216.99 16.4% 241.74 19.3% 263.40 20.3% 198.5

5 16.5% 244.23 21.7%

10. Malawi 38.44 2.9% 42.73 3.4% 41.01 3.1% 49.22 4.1% 36.66 3.3%

11. Others 185.04 14.0% 168.64 13.5% 182.00 14.0% 172.4

1 14.4% 131.30 11.7%

 Total1322.4

9 100.0% 1252.62 100.0% 1296.48 100.0% 1200.

61 100.0% 1126.09 100.0%

Source:  ITC Report-2001

65

TEA PRODUCTION, EXPORT & EXPORT EARNINGS    FROM   BANGLADESH TEA SINCE1973-74 TO 2002-2003

Year Production(mkg) Export (mkg) Export Earning    (m

taka)1973-74 29.89 21.53 105.231974-75 31.28 23.50 190.791975-76 31.30 22.33 257.451976-77 35.64 29.42 558.761977-78 36.35 28.63 769.111978-79 36.70 27.10 620.791979-80 39.81 23.88 510.001980-81 41.90 29.85 664.761981-82 38.54 31.32 760.281982-83 42.86 30.81 1096.381983-84 39.46 30.74 1690.671984-85 42.89 25.85 1560.681985-86 38.77 29.82 973.101986-87 40.26 21.41 901.321987-88 41.62 27.56 1204.811988-89 41.27 25.12 1263.451989-90 42.56 22.57 1283.001990-91 44.61 26.45 1523.611991-92 46.79 23.64 1230.761992-93 49.30 33.09 1597.591993-94 51.73 27.42 1521.001994-95 47.04 26.72 1241.451995-96 52.14 21.43 1176.031996-97 52.67 25.39 1311.181997-98 51.25 24.45 2032.291998-99 50.26 23.50 1678.291999-2000 50.22 12.61 825.732000-2001 53.41 16.53 1122.14

2001-2002 55.20 13.80 947.00

2002-2003 54.60 12.17 870.91

Source: Bangladesh Tea Board Annual Report 2004

WORLD TEA PRODUCTION-COUNTRY WISE

66

Name of Country

1997 1998 1999 2000 2001 2002 2003 2004

Argentina 55,000 50,000 55,000 63,000 59,000 58,000 60,000

63,000

Australia 1,200 1,250 1,300 1,300 1,300 1,400 1,500

1,550

Bangladesh 50,521 55,824 46,186 52,639 56,821 53,622 58,304

55,996

Brazil 5,000 4,000 3,083 3,544 4,427 4,561 4,800

4,900

Burundi 4,189 6,669 6,859 7,118 9,011 6,605 7,380

7,500

Cameroon 4,189 4,731 4,485 4,004 4,200 4,200 4,300

4,500

China 613,366 665,034 675,871 683,324 701,699 745,374 768,140

835,231

CIS/Russia 9,800 15,400 15,930 14,900 15,000 14,300 14,500

15,650

Ecuador 2,000 1,900 1,800 1,700 1,600 1,700 1,800

1,850

Ethiopia 3,600 4,000 4,200 4,500 4,600 4,700 4,800

4,700

India 810,031 874,108 825,935 846,483 853,710 826,165 857,055

820,216

Indonesia 153,619 166,825 161,003 162,586 166,868 162,194 169,819

164,817

Iran 70,418 65,319 68,501 44,233 59,000 49,500 58,051

55,000

Japan 91,211 82,609 88,512 89,309 90,371 83,677 91,930

100,262

Kenya 220,722 294,165 248,818 236,286 294,631 287,102 293,670

324,609

Malawi 43,930 40,360 38,469 42,114 36,770 39,185 41,693

50,090

Malaysia 6,200 6,300 6,246 5,642 5,413 5,060 4,040

4,500

Mauritius 1,787 1,488 1,473 1,309 612 1,382 1,436

1,482

Mozambique 1,600 1,600 1,800 2,500 3,000 3,000 3,200

3,100

Myanmar 66 61 62 64 65 70 75

80

67

Name of Country

1997 1998 1999 2000 2001 2002 2003 2004

Napal 7,000 7,000 7,200 7,500 7,700 7,900 8,000

8,200

Papua New Guinea

7,000 5,500 6,200 6,200 6,100 6,200 6,400

6,500

Peru 2,500 2,400 2,400 2,500 2,600 2,700 2,700

2,750

Rwanda 13,228 14,850 12,970 14,391 17,809 14,948 15,484

14,191

South Africa

8,207 10,845 10,570 10,612 10,734 11,650 10,932

5,694

Sri Lanka 277,428 280,674 284,149 306,794 296,301 310,604 303,254

308,089

Taiwan 24,154 22,641 22,555 20,349 19,837 20,345 21,000

21,000

Tanzania 22,475 24,333 23,490 23,897 24,745 27,511 29,482

30,688

Turkey 139,523 177,838 170,563 130,671 142,900 142,000 155,000

165,000

Uganda 21,075 26,422 24,730 29,282 33,255 33,831 36,475

35,706

Vietnam 52,200 56,600 65,000 70,000 80,000 88,000 93,000

95,000

Zaire 2,500 2,500 2,500 2,500 2,600 2,700 2,800

3,000

Zimbabwe 17,098 17,755 20,411 22,489 22,382 22,544 21,973

18,734

Total 2,742,837

2,991,001

2,908,271

2,913,740

3,035,061

3,042,730 3,152,9

93 3,233,58

5

(Source: Bangladesh Tea Board website www.btboard.gov.bd)

68

BLACK TEA CONSUMPTION IN THE WORLD

World black tea consumption is projected to increase from 1.97 million

tonnes in 1993-95 to 2.67 million tonnes by 2005, an annual growth

rate of 2.8 percent. Developing countries would account for the

largest part of the prospective increase, with consumption rising from

the 1993-95 average of 1.41 million tonnes to 1.95 million tonnes by

2005, an annual growth rate of 3.0 percent. Black tea consumption in

India is projected to continue to rise rapidly, reaching 832 000

tonnes by 2005, an annual growth of 3.2 percent from the base period.

In other major markets for black tea such as Pakistan, the Islamic

Republic of Iran and Egypt, consumption is projected at 160 000

tonnes, 122 000 tonnes and 90 000 tonnes by 2005, respectively. The

reduction of import tariffs and declining prices could have a more

pronounced effect on consumption in these countries. The projections

also suggest significant increases in black tea consumption in other

developing countries, such as Turkey where consumption would grow at

an annual average rate of 3.2 percent to 150 000 tonnes.

69

In developed countries, including countries in transition, black tea

consumption would increase more moderately by 2.2 percent annually, to

719 000 tonnes in 2005. Consumption in the European Community is

projected to increase only slightly in the next decade since higher

purchases by France, Germany, Italy and the Netherlands would be

largely counterbalanced by a continuing decline in the United Kingdom.

Consumption in the United States is projected to increase, though at a

relatively slow rate of less than one percent. Since many developed

countries impose no, or only slight, restrictions on bulk and packaged

black tea imports, the effect of trade liberalisation on their

consumption would be negligible. Black tea consumption in the

countries of the former USSR is projected to increase from 154 000

tonnes in 1993-95 to 250 000 tonnes in 2005, equivalent to an annual

growth rate of 4.5 percent over the period.

Per Capita Consumption of Tea in DifferentCountries

Consumption in mkgSl.No Country 1994-96 1995-97 1996-98 1997-99 1998-2000

1. UK 2.46 2.46 2.51 2.44 2.33

2. Ireland Republic 3.17 3.23 2.95 2.78 2.69

3. Bangladesh 0.19 0.20 0.23 0.25 0.27

4. Afganistan 1.34 1.68 1.74 1.22 1.01

5. Bahrain 1.32 1.20 1.22 1.21 1.16

6. India 0.62 0.65 0.63 0.63 0.64

7. Iran 1.25 1.43 1.52 1.55 0.58

8. Japan 1.04 1.08 1.08 1.07 1.08

9. China 0.34 0.34 0.34 0.36 0.36

70

10. Pakistan 0.85 0.78 0.75 0.78 0.82

11. Turkey 1.90 1.80 2.13 2.40 2.56

12. Sri Lanka 1.29 1.29 1.29 1.29 1.28

13. Saudi Arabia 0.80 0.80 0.86 0.82 0.80

14. Kenya 0.44 0.43 0.39 0.41 0.37

15. Libya 2.14 2.38 2.43 2.63 2.44

16. Egypt 1.17 1.25 1.16 1.18 0.24

17. Morocco 1.26 1.25 1.27 1.33 1.40

18. Tunisia 1.15 1.10 1.24 1.25 1.25

19. Australia 0.95 0.90 0.90 0.83 0.80

20. New Zealand 1.23 1.15 1.12 1.04 1.03

21. USA 0.34 0.32 0.33 0.33 0.34

22. Canada 0.46 0.48 0.53 0.57 0.58

23. Qatar 2.24 2.20 2.30 2.37 2.21Source: ITC Report-2001

71

Tea Imports for ConsumptionQty. in mkgSl.No Geographical Region 2000 1999 1998 1997 1996

1. Asia 338.54 325.32 352.76 302.51 320.412. Europe 431.32 448.00 435.94 463.42 425.433. Africa 224.69 216.53 218.71 223.23 190.12

4. North America / West Indies 107.45 112.48 115.08 99.71 103.93

5. Latin America 14.68 16.81 17.24 15.03 16.776. Oceania 19.72 19.18 21.78 20.48 23.23

7. Major Tea Producing Countries 90.20 76.98 71.37 71.32 65.11

Total 1226.60 1215.30 1233.10 1195.70 1145.00

Source : a) ITC Report-2001 b) PDU, BTB.

Consumption of Tea in Different CountriesConsumption in mkgSl. No Country 1994-96 1995-971996-98 1997-991998-2000

1. UK 144.29 145.00 148.42 144.71 139.22

2. Ireland Republic 11.41 11.36 10.82 10.28 10.08

3. Bangladesh 22.53 25.00 29.02 30.67 33.674. Afghanistan 26.37 34.30 36.27 26.00 22.075. Bahrain 0.77 0.72 0.76 0.77 0.786. India 579.67 615.33 597.33 615.00 633.677. Iran 85.28 85.93 92.60 95.60 93.008. Japan 131.05 136.41 135.60 135.70 136.849. China 420.28 420.43 428.64 446.24 461.3310. Pakistan 110.99 104.43 103.04 102.05 110.2311. Turkey 115.07 112.55 132.94 152.24 164.9712. Sri Lanka 23.34 23.59 23.88 24.20 24.3713. Saudi Arabia 14.57 15.03 16.83 16.60 15.9314. Kenya 13.54 13.73 12.87 11.82 10.8315. Libya 11.57 13.30 14.07 14.07 13.3316. Egypt 67.29 74.30 69.46 72.20 77.0317. Morocco 33.35 33.68 34.68 37.01 39.4318. Tunisia 10.32 10.01 11.38 11.65 11.8219. Australia 17.14 16.57 16.62 15.54 15.2720. New Zealand 4.35 4.10 4.20 3.93 3.9221. USA 89.52 84.55 89.01 90.24 92.59

72

22. Canada 13.62 14.42 15.78 17.37 17.7323. Qatar 1.23 1.23 1.31 1.28 1.30Source: ITC Report-2001

MAJOR TEA IMPORTING COUNTRIES FROM BANGLADESH

Three countries in South Asia -- Bangladesh, India and Sri Lanka --

account for 52 per cent of global black tea production, 42 per cent of

exports and 36 per cent of consumption. The tea industry in the region

also provides year-round employment to about 1.5 million workers --

mostly women -- and an equal number depend on tea-related ancillary

activities for their livelihood. Yet South Asia's predominance in the

tea world is on the decline, with many of the old fields in need of

replanting, processing facilities requiring modernization and welfare

structures calling for upgrading. At global level, the tea industry is

finding it increasingly difficult to make ends meet, caught between

rising costs on the one hand and stagnant or declining prices on the

other. This problem is more acute in South Asia than in the relatively

new tea-growing regions of East Africa. International and intra-

regional efforts aimed at improving the tea market have met with

little success, and a more practical option available to the industry

is in the realm of cost reduction. There is no doubt that the two

crucial cost elements -- labour wages and estate supplies -- are bound

to rise, per se, but the thrust of this study is that these increases

could, within limits, be neutralized in terms of unit costs of

production through enhanced productivity. The focus here is not just

on labour productivity but also on the other production factors that

are involved in the growing, manufacturing and marketing of tea.

73

As the world's second largest importer of tea, Pakistan has called for

a single market in Asia for the optimal utilisation of resources and

expansion of the trade in the sub-continent.

Though India is the world's largest producer of tea at about 830

million kg per annum (2002), the focus has been largely on the

domestic market, which consumes about 685 million kg annually.

With the Indian tea sector facing multiple crises on account of higher

production cost, lower prices and loss of two major exporting markets

in Iraq and Russia this year, its stakeholders are desperately looking

at the Pakistan market in the light of the thaw between the two

neighbouring countries of late.

Pakistan Tea Association chairman Saeed Ahmed Khawaja told the Indian

delegates at the 110th annual conference of the United Planters

Association of South India in Coonoor on Saturday that both the

countries should strive towards one market for Asia or the sub-

continent to take advantage of the demand-supply scenario.

"For historical and political reasons, it is unfortunate that the

Indian tea sector could not tap the Pakistan market during the last

three decades. As developing countries, there is no reason why we

cannot shed our differences and boost tea trade for mutual benefit,"

Khawaja stated.

In spite of Pakistan being a captive market with logistic and freight

advantages across the western border, the share of Indian tea in its

market was a mere 3.7 million kg out of a total 140 million kg last

year. Total imports were valued at $250 million in 2002.

74

Pakistan generally meets its tea requirements from Sri Lanka and

Africa, especially Kenya, overlooking the prospects of sourcing it

from India due to strained political and economic ties.

"If Indian tea exporters have to make a dent in our market, they would

have to focus on quality, variety, branding and multiple blends to

match its peers from Kenya and other African countries, which have 90

per cent of the Pakistan market," Khawaja declared.

In Pakistan too, tea is facing tremendous competition from other

beverages. "Hence it is crucial that our trade teams join hands to

market the product and increase the consumption," he added.

Moreover, in the absence of a free trade agreement between the two

countries, Pakistan levies high import tariff and other levies (55-60

per cent) on Indian tea, unlike on tea imports from Bangladesh, Sri

Lanka and Nepal, which share the remaining 10 per cent of the Pakistan

market. "Going by the current consumption trends, Pakistan is all set

to overtake the United Kingdom as the leading/largest tea importer by

2005. With the exit of the Taliban regime in Afghanistan at the end of

2001, about 35 million kg of tea finds its way into the country from

its western borders through grey channels. Similarly, large quantities

of Indian tea (bulk and loose) are smuggled into Pakistan from across

the porous border.

With a per capita consumption of 1kg per annum and twice of India, tea

is still the most popular and cheapest beverage in the neighboring

country, where about 70 per cent of the 140-million population dwell

in the hinterland.

"Ironically, our government has been discouraging higher tea imports

in the face of meager foreign exchange resources by asking the people

to drink less tea and imposing heavy duties. None of these measures,

75

however, have worked and tea continues to be in greater demand than

before among the masses," Khawaja claimed.

According to Mohsin Mansoor Saify, a member of the visiting Pakistani

delegation, Pakistan importers purchase Indian teas only when prices

were lower and the product was available in variety or blends.

Capitalising on the improved relations between the two countries, the

Indian commerce ministry is drawing up a plan of action to step up tea

exports to Pakistan. Additional commerce secretary L V Saptharishi

told the 9-member Pakistan delegation to convince its government for

lowering the tariff barriers on tea imports from India so that the

trade could be doubled every year.

India Tea Board chairman N K Das disclosed that normalisation of

relations between the countries would enable India to double its

export to Pakistan to 6 million kg by the end of the current fiscal

year (2003-04) from 3.5 million kg during the last fiscal (2002-03).

A Pakistani delegation has expressed their satisfaction at the quality

of tea here and showed interest in importing increased amount of tea

from Bangladesh. ‘After returning home, we will urge our government to

increase duty-free quota for import of more tea from Bangladesh,’ the

chairman of the Pakistan Tea Association, Mohammad Altaf, told New Age

last week in Chittagong.

Altaf led a seven-member delegation of the association that witnessed

tea auction and visited tea estates in Chittagong and Sylhet during

its five-day stay in Bangladesh. He said Pakistan has an annual demand

for 168 million kg of tea, while its imports from Bangladesh stands

only 10 million kg under duty-free quota, agreed in 2002. ‘Bangladesh

tea has much more demand in Pakistan. We’re ready to buy as much tea

as Bangladesh can export,’ Altaf said. 76

During the visit, the Pakistan Tea Association inked a memorandum of

understanding with the Bangladesh Tea Association aiming to further

boosting tea trade between the two south Asian countries as well as

removing bottlenecks in the shipment of tea. Altaf and his counterpart

Wahidul Haque signed the deal on behalf of their respective sides. The

Pakistani tea trade leader wants more trade with Bangladesh under a

widened duty-free facility. He also observed that the country’s tea

sector has attained ‘tremendous improvements –from tealeaf to liquor.

The chairman of the Tea Traders Association of Bangladesh, Santanu

Biswas, said that the Pakistani delegation had evinced more interest

in the quality tea. ’During discussions, we have urged the delegation

members to ensure right price for our quality tea,’ he informed,

feeling that Bangladesh tea export to Pakistan could surge if leading

tea blenders and packers of that country could be lured.

By virtue of being the top tea producer in the world, India is playing

the lead in the formation of a Tea Council with the seven Saarc

countries as members.

The council, to be named Saarc Tea Council, will conduct joint

marketing, research and also look into other issues like setting

minimum quality standards for exportable tea. Explaining the rationale

behind the tea council, officials of Indian Tea Association (ITA)

said: "The seven nation Saarc accounts for 60 percent of the world's

black tea exports.

India is the largest producer and consumer of tea, Sri Lanka is the

world's largest exporter while Pakistan is the third largest consumer

of tea. Nepal and Bangladesh are also into tea production in a small

way. So there is an immediate need to form a tea council to strengthen

trade ties among these nations."

77

Pakistan will play a crucial role in this council. Gautam Bhalla,

executive director, Warren Tea said: "Countries (except Nepal and

Bangladesh) which are exporting tea to Pakistan are required to pay a

high import duty of nearly 30 percent. We would like to address this

issue at the Saarc Tea Council.

India should be allowed to send tea to Pakistan at a zero duty. At

present, tea from Bangladesh and Nepal has zero duty status in

Pakistan. The council will facilitate Indian tea trade with Bangladesh

and Nepal." Pakistan consumes nearly 140m kg of tea, annually.

The country buys mainly from Kenya. In '05, Pakistan imported 9.3m kg

of tea from India. The Indian tea industry is also eager to take

advantage of the South Asia Free Trade Agreement (Safta) that came

into effect on January 1, '06. The pact aims at reducing tariffs for

intra-regional trade among members.

Pakistan and India are to complete implementation by '12, Sri Lanka by

'13 and Bangladesh, Bhutan, Maldives and Nepal by '15. Senior industry

officials said, "India is actively pursuing the formation of the tea

council as the country wants to take advantage of the Kenyan drought."

There is already a shortage of 40-50m kg of tea in Kenya following a

severe drought. Indian producers have firmed up plans to make major

inroads in Pakistan -- one of the largest buyers of Kenyan tea -- this

year. They are trying to utilise the Saarc tea council platform for

clinching better deals with the Pakistan tea trade." A 13-member

Pakistan tea delegation is visiting India in April.

Bangladesh tea risks losing international market, thanks to congestion

at transshipment ports coupled with an increase in freight charges.

78

Now, a shipment of 3,000 tonnes of tea worth over Tk 20 crore for

Pakistan remains stranded because of congestion at Singapore and

Colombo ports. The weekly tea auction in Chittagong is also witnessing

a downslide both in terms of price and demand. "The shipping problem

has put us into a difficult situation and we are worried about the

huge stock of tea that we bought from local auctions for exporting to

Pakistan, a major buyer of Bangladesh tea," said Chairman of Tea

Traders Association of Bangladesh (TTAB) Feroz Ahmed. "The Karachi-

bound shipment remains stranded due to congestion at transshipment

ports in Singapore and Colombo," he added. "If the situation does not

improve within the next 15 days, Bangladesh tea exporters will fail to

meet their shipment deadline. We may even lose our export market in

Pakistan," Feroz said. He said the TTAB has already started lobbying

the government organisations including Bangladesh Tea Board to do the

needful to end the crisis. Ali Akbar, manager of a private tea-

exporting firm, said the increase in freight charges is also posing

threat to tea export.

"Freight charges rose to US$ 925 for a 20-ft container from US$ 700

and US$ 1,400 for a 40-ft container from US$ 750 only a month ago.

Some tea traders now stopped buying tea from the auction as they

failed to keep pace with the increased freight charges," Akbar added.

Tea brokers said the weekly tea auction on Tuesday witnessed a

downslide both in price and demand due to shipping problems twined

with sudden flooding in Dhaka.

Overall average price on Tuesday's auction stood at Tk 67.76 a kg down

from Tk 68.68 recorded in the previous auction, brokers said.

Besides, 20.11 percent tea in the auction remained unsold while in the

previous auction 10.83 percent tea was unsold, they said.

79

The latest Pakistani offer to enhance the duty-free quota margin in

importing tea from Bangladesh would not bring any trade benefit for

Dhaka. Sources in the business circle told UNB that the Pakistani

decision to raise the duty-free quota margin from the existing 10,000

tons to 15,000 tons is virtually eyewash because Bangladesh is yet to

achieve the target of fulfilling the existing tea quota in the

Pakistani market. Pakistan in the just concluded Joint Economic

Commission (JEC) meeting held in Dhaka on September 12 had positively

responded to Bangladesh’s plea for raising the duty-free quota margin

for tea. In the agreed minutes signed at the end the trade talks, the

Pakistani side offered to enhance the duty-free quota of Bangladeshi

tea to 15,000 tons per annum. ‘It could be better to seek duty free

access for other Bangladeshi items to the Pakistani market… While we

can’t meet the existing duty-free quota for tea in Pakistan what was

the use of raising it such product,’ said a top executive of Tea

Traders Association of Bangladesh (TTAB) preferring anonymity. Export

Promotion Bureau (EPB) sources said Bangladesh exported 11.06 million

kg tea to some 27 countries in 2004-2005.

Of the total, the country fetched US$ 10.75 million through exporting

7.5 million-kg (7,500-ton) tea to Pakistan in 2004-2005 fiscal years.

This was the highest volume of tea exported to the Pakistani market in

last five years, according to Bangladesh Tea Board sources.

Deputy Secretary of the Ministry of Commerce of Pakistan Waqar Ahmed

Shah told UNB during his visit to Dhaka that Bangladesh need to

develop more tea estates to raise its tea export to Pakistan.

“You have to develop more Sylhets… one Sylhet won’t be able to fulfill

the demand of Pakistani buyers,” he added. Referring to Kenya’s lead

in the Pakistani tea market, he said that Bangladesh provides only 8

percent of his country’s total tea demand while 60 percent came from80

Kenya. Tea production in the country was recorded to be 53.62 million

kg in 2002, 58.30

million kg in 2003, 56.02 million kg in 2004 and 24.73 million kg in

January-July of 2005, according to Bangladesh Tea Sangsad. Some 60

percent of tea produced in Bangladesh is consumed domestically while

the remaining 40 is exported.

81

PROSPECTS OF BANGLADESHI TEA IN THE INTERNATIONAL MARKET

Tea consumption in Bangladesh is increasing 3 per cent per annum but

its production is increasing 1 per cent only. If tea production was

not increased Bangladesh would become a tea-importing country after

2020. Bangladesh is now exporting 12,000 Metric Tons (MT) tea per

annum, which earns Tk 90 crore.

According to the Bangladesh Tea Board currently Bangladeshi tea

gardens are producing 56,000 MT of tea per annum. Of this 12,000 MT is

exported. Bangladesh’s current population growth rate is 1.6 per cent.

Experts consider that in 2020 Bangladesh’s population will reach to

18.10 crore. If the tea consumption growth rate continues, in 2020 tea

consumption will reach to 6.50 crore kg while its production will

reach only to 5.41 crore kg.

The government is considering framing of a 20-year strategic plan for

development of the tea sector and to increase its production. The

project will cost Tk 867. 32 crore. Of them Tk 752 crore will be spent

for implementation of strategic plan, Tk 64 crore will be spent for

research and other Tk 51 crore will be spent for trade and marketing

strategy. The strategic plan suggests that total land for tea

production has to be increased to 69,000 hectares from existing 50,000

hectares. It also suggests that tea production per hectares is 1748 kg

from 1176 kg has to be increased as early as possible. It also

recommends increase of quality of tea and to export 40 per cent of

total tea production. Sources said that currently in Bangladesh 161

82

tea gardens contain 11,4,288.26 hectares of land. Of them 50,226

hectares of land were used for tea cultivation that is 44 per cent of

total land of tea gardens.

Out of 161 tea gardens 26 were managed by foreign companies and those

produce 50.50 per cent of Bangladesh total tea production. Tea gardens

that were managed by foreign companies’ are producing 1439 kg tea per

hectares. On the other hand, 135 tea gardens were managed by

Bangladeshi tea companies. Tea gardens that were managed by

Bangladeshi companies’ produce 622 kg tea per hectares.

Sources said that the tea gardens owned by Bangladeshi companies

failed to increase its production due to lack of plan, lack of modern

technology and equipments. On the other hand 26 tea gardens owned by

foreign companies produce large quantity of tea due to modern

technology and equipment and proper plan. Sources said that the

proposed strategic plan would be placed for approval soon. A meeting

will be held soon with Planning Commission and other concerned

authorities in this regard for its pre-approval.

It may be mentioned here that Bangladesh exports tea to Pakistan,

India, Afghanistan, Poland, United Kingdom, Russia, Kenya, Iran,

Kazakstan, United Arab emirates, Oman, Saudi Arabia, Greece, Ukraine,

Kirgizistan, Turkmenistan and Uzbekistan. Of them Pakistan is highest

tea consuming country in the world. Special handmade Orthodox tea

produced by public and private sector gardens of Bangladesh is

expected to find its room permanently at the world famous UK based

super chain store Harrods Limited.

Bangladesh Tea Board (BTB) and tea industry sources said it will open

up new avenues for Bangladesh tea if the Harrods authority finally

83

continues to show interest for marketing of Bangladeshi tea to the

clients.

Sources said for the first time, the Harrods Limited which was

established by British tea merchant Mr. Charles Henry Harrod, has

organized an exclusive sale promotion fair for Bangladeshi tea in

London held from October 25 to November 6. The Harrods authority in

its brochure published on the occasion titled "The Finest Bangladesh

Teas in the Finest British Store" attempted to lure its clients to

Bangladeshi products by describing “Bangladesh Tea - Tantalising

flavours from outstanding estates". "For the last few years we have

been closely following the developments in Bangladesh, a country more

known for paddy fields and floods. From a very small base Bangladesh

has now become the world's fifth largest producer of tea, exporting

only small quantities to the United Kingdom" the brochure said.

Harrods displayed tea produced by four gardens of Bangladesh with

finest quality having special taste and flavour. The gardens are

Dauracherra Tea Estate, Silloah Tea Estate, Kazi and Kazi Tea Estate

and the tea estate owned by the Bangladesh Tea Research Institute.

"Most encouraging and exciting thing was that whole chunk of the tea

amounting 500 kilograms imported by the Harrods were sold out within

first few days of the sale" BTB Chairman Brigadier General S A H M

Tauhid told BSS.

He Quoted the Harrods men as saying that the Bangladeshi tea drew a

huge response among the elite customer circle. He said Harrods fetched

prices three to four times high from it's customers for per kilogram

tea compared to their import prices and it also exported the

Bangladeshi tea to Japan through their marketing chain. "Some credit

for inclusion of Bangladesh tea at the posh business center in London

84

must go to Mr. B. Rahman, a Bangladeshi and Senior Buyer of Harrods

who played a key-role in the whole affair" the BTB Chairman said.

After getting good response from the customers about the products, the

Harrods authority is now keen to import big quantity of Bangladesh-

tea.

THE field and factory development project of the Bangladesh Tea Board

(BTB), which is being almost entirely funded by the UNs Common Fund

for Commodities (CFC), marks a serious effort by the Bangladesh

Government to tone up the tea industry which is in a bad shape for a

long time. The project, the implementation of which is being spread

over 10 years starting 2000-01, takes into account the signs of

increase in domestic consumption of tea due to population growth and

improvement in the socio-economic condition of the people. The

authorities have also kept in view the emerging opportunities for

thrust on the marketing of tea, citing health benefits brought to the

fore in recent years by researchers in several countries. Currently,

the consumption of tea in Bangladesh is a low of 250 grams per capita.

A recent FAO document, which gives details of the present state of the

industry in Bangladesh, has observed that the major problem areas are

low yield (1,158 kg per hectare), high cost of production, low unit

realisation, inadequate availability of finance and large tracts of

unutilised land.

Out of the 158 estates, 37 are either sick or they fall in the least

developed garden category. Although they account for 17 per cent of

the area under tea, their share in production is just three per cent.

Twenty-four per cent of the plantations have very old bushes and

because of the large percentage of vacancy, their average yield is

only 700 kg per hectare. This pulls down the overall productivity per

hectare.

85

Last year Bangladesh produced 54 million kg (mkg) of black tea (CTC),

out of which the domestic consumption was estimated at 36 mkg. Its

exports were placed at 18 mkg. Considering the gestation of the

development project, the FAO document has placed its production in

2010 at 62 mkg. But, domestic consumption is projected to grow at 45

mkg. Availability for export will show a negative growth at 17 mkg.

The development programme, therefore, aims at preventing a situation

wherein Bangladesh becomes a net importer of tea.

The cost of the project has been estimated at $17.4 million. CFC is to

provide interest free loan of $17 million. It will attract service

charge of one per cent.

The objectives of the development-cum-rehabilitation project are:

infilling in 2,200 hectares with high yielding variety of clones;

replantation in 3,000 hectares; to increase area under tea by 4,500

hectares; to procure new CTC machines and other equipment; to

modernise factories having very old machinery; to improve quality to

international standards, keeping in view the health benefits of

drinking tea; to establish modern blending and packaging facility and;

to generate employment opportunities for unemployed/temporary tea

estate workers as well as dependents of tribals/ethnic minorities.

BTB hopes that achievement of the targeted productivity levels will

enable the industry to compete in the international market.

The government has taken up a programme to cultivate tea plants in an

experimental basis in the district with a view to increasing tea

production in the country, reports BSS.

Bangladesh Tea Research Institute has already started its sub station

at Tetulia to grow tea in the area and under taken a project involving

86

a budgetary allocation of Taka 3.3 crore for tea gardens in

Panchagarh.

Besides, a tea processing factory, tea development and tea expansion

centre would be set up here soon. European Commission (EC) has shown

keen interest to invest in setting up tea gardens in the district. EC

will invest Taka 3.3 crore for three projects including set up of Tea

Board office, BTRI and producing tea plant.

The RAKUB will give loan of Taka 46,500 as financial support to the

growers for preparing of land, purchasing of tea saplings,

fertilizers, insecticides, irrigation and labourers to produce tea.

Special handmade Orthodox tea produced by public and private sector

gardens of Bangladesh is expected to find its room permanently at the

world famous UK based super chain store Harrods Limited.

Bangladesh Tea Board (BTB) and tea industry sources said it will open

up new avenues for Bangladesh tea if the Harrods authorities finally

continue to show interest for marketing of Bangladeshi tea to the

clients. Sources said for the first time, the Harrods Limited which

was established by British tea merchant Mr. Charles Henry Harrod, has

organized an exclusive sale promotion fair for Bangladeshi tea in

London held from October 25 to November 6.

The Harrods authority in it's brochure published on the occasion

titled "The Finest Bangladesh Teas In The Finest British Store"

attempted to lure it's clients to Bangladeshi products by describing "

Bangladesh Tea - Tantalising flavours from outstanding estates".

"For the last few years we have been closely following the

developments in Bangladesh, a country more known for paddy fields and

floods. From a very small base Bangladesh has now become the world's

87

fifth largest producer of tea, exporting only small quantities to the

United Kingdom" the brochure said.

Harrods displayed tea produced by four gardens of Bangladesh with

finest quality having special taste and flavour. The gardens are

Dauracherra Tea Estate, Silloah Tea Estate, Kazi and Kazi Tea Estate

and the tea estate owned by the Bangladesh Tea Research Institute.

"Most encouraging and exciting thing was that whole chunk of the tea

amounting 500 kilograms imported by the Harrods were sold out within

first few days of the sale" BTB Chairman Brigadier General S A H M

Tauhid told BSS.

He Quoted the Harrods men as saying that the Bangladeshi tea drew a

huge response among the elite customer circle. He said Harrods fetched

prices three to four times high from it's customers for per kilogram

tea compared to their import prices and it also exported the

Bangladeshi tea to Japan through their marketing chain.

"Some credit for inclusion of Bangladesh tea at the posh business

center in London must go to Mr. B. Rahman, a Bangladeshi and Senior

Buyer of Harrods who played a key-role in the whole affair" the BTB

Chairman said. After getting good response from the customers about

the products, the Harrods authority is now keen to import big quantity

of Bangladesh- tea.

The latest Pakistani offer to enhance the duty-free quota margin in

importing tea from Bangladesh would not bring any trade benefit for

Dhaka. Sources in the business circle told UNB that the Pakistani

decision to raise the duty-free quota margin from the existing 10,000

tons to 15,000 tons is virtually eyewash because Bangladesh is yet to

achieve the target of fulfilling the existing tea quota in the

Pakistani market.88

Pakistan in the just concluded Joint Economic Commission (JEC) meeting

held in Dhaka on September 12 had positively responded to Bangladesh’s

plea for raising the duty-free quota margin for tea.In the agreed

minutes signed at the end the trade talks, the Pakistani side offered

to enhance the duty-free quota of Bangladeshi tea to 15,000 tons per

annum.  “It could be better to seek duty free access for other

Bangladeshi items to the Pakistani market… While we can’t meet the

existing duty-free quota for tea in Pakistan what was the use of

raising it such product,” said a top executive of Tea Traders

Association of Bangladesh (TTAB) preferring anonymity.

Export Promotion Bureau (EPB) sources said Bangladesh exported 11.06

million kg tea to some 27 countries in 2004-2005. Of the total, the

country fetched US$ 10.75 million through exporting 7.5 million-kg

(7,500-ton) tea to Pakistan in 2004-2005 fiscal year.

This was the highest volume of tea exported to the Pakistani market in

last five years, according to Bangladesh Tea Board sources. Deputy

Secretary of the Ministry of Commerce of Pakistan Waqar Ahmed Shah

told UNB during his visit to Dhaka that Bangladesh need to develop

more tea estates to raise its tea export to Pakistan.  “You have to

develop more Sylhets… one Sylhet won’t be able to fulfill the demand

of Pakistani buyers,” he added. Referring to Kenya’s lead in the

Pakistani tea market, he said that Bangladesh provides only 8 percent

of his country’s total tea demand while 60 percent came from Kenya.

Tea production in the country was recorded to be 53.62 million kg in

2002, 58.30 million kg in 2003, 56.02 million kg in 2004 and 24.73

million kg in January-July of 2005, according to Bangladesh Tea

Sangsad. Some 60 percent of tea produced in Bangladesh is consumed

domestically while the remaining 40 is exported.

89

Bangladesh tea witnesses a better market this year with the increase

of both price and demand amid a rise in output despite a fall in its

export, tea officials here said. They added that tea prices increased

by Tk 11 per kilogram on an average this season compared with that of

the previous season. In the first 21 auctions of the current season,

24 million kilograms of tea were sold with an average price recorded

at Tk 76 per kilogram  as against 21 million of tea sold with an

average price of  Tk 65 per kilogram during the same number of

auctions in the previous season, they informed.

Tea auction is held in the port city of Chittagong once in every week

while tea auction season begins from April and ends in March the next

year. ‘Price of tea jumped this time because of huge demand from home

buyers particularly local packeteers and blenders who are in a race to

capture internal market,’ said an auction official Subir Das. ‘Foreign

buyers also from Pakistan and Afghanistan took part in the auctions

here’ he added. According to official reports here, Bangladesh in the

first eight months from January to August this year produced 33

million kilograms of tea up from 31 million kilogram produced in the

previous year (2004) in 156 tea gardens.

But export of Bangladesh tea in the first seven months (January to

July) of this year was recorded at 4.43 million kilograms, down from

5.48 million kilograms exported during the same period of previous

year, official reports said.

Talking to New Age, Nabi Hossain, deputy director of state-owned

Bangladesh Tea Board said, ‘Our export of tea is gradually sliding as

the demand for home market and the price increased so much that export

buyers could not compete with local buyers’. ‘We think that in future

there may not be any tea left for export from Bangladesh with more

90

increase of home demand unless the production is raised,’ Nabi said

adding that most of the tea out of over 50 million kilograms produced

annually in Bangladesh are consumed in the internal market’.

In 2004 Bangladesh exported 13 million kilograms of tea while 42

million kilograms were consumed in the internal market, official

reports said. Feroz Ahmed, former chairman of the Tea Traders

Association of Bangladesh, said, our internal consumption is

increasing every year. So we don’t know, after ten years, whether we

will have tea left for export if the production cannot be raised.’

Bangladesh tea which was exported to 25 countries of the world ten

years ago, now finds buyers only in Pakistan, Afghanistan and

CIS countries, tea sector sources said.

Bangladesh joined in ‘organic tea club’ by marketing the first ever

organic tea produced by the ‘Kazi and Kazi Tea Estate’, the only tea

garden in the country’s northern region.

The tea with the brand name ‘Meena’ was launched today (Thursday) in

the market at Meena Bazar, a modern departmental store, in city’s posh

Dhanmondi residential area. At a launching ceremony, Kazi Jamil Islam,

Consultant of Meena Bazar, said that the tea is similar to world

famous ‘Darjeeling Tea’ in taste and flavour.

Moreover, being produced in the virgin land of Tetulia, the ‘Meena

Tea’ is free of any harmful chemical fertilizer and chemical-free cow

dung is the only natural fertilizer used for producing this tea, he

said.

91

BANGLADESH TEA MARKET

The tea market in Bangladesh has had its ups and downs. Natural

disasters, the domestic market, and the state of buying countries have

all been factors in Bangladesh tea’s value.

Owing to an unprecedented drought prevailing well into the middle of

the 1999/2000 season, quality was well below average for the country

until July 2000. At that time, tea was brownish with thin liquors, but

thereafter an improvement was noticeable, particularly in cup

character. Puja quality was also quite fair. However, towards the end

of the season, there was quite a sharp fall.

Up until May 2000, crop figures from other producing countries showed

an increase in crop from the very low figures of 1999 and only a shade

lower than the massive production in 1998. These figures gave

92

Bangladesh very little scope for optimism about prices for the current

season’s teas. We have seen how, in 1999, despite very large deficits

in crop, instead of moving up, prices actually went down, particularly

for Bangladesh tea.

We believe that this was caused by a lack of sufficient export orders

owing to an abundance of plain teas. The scenario may not change for

the better during the current season, and demand from export markets

could be sluggish. If we examine our overseas markets, especially

Pakistan, we may find that we have to compete with a host of countries

such as Indonesia, Malawi, and even Vietnam, to sell our product at

ever declining prices. These countries are keen sellers and offer

their tea at prices that are often lower than those for teas of a

similar quality from Bangladesh.

We also understand that other importing countries such as Russia and

CIS are well stocked with teas, so these buyers are likely to be less

active during the current season than during 1999/2000. Similarly,

Poland is very well stocked with cheap South Indian teas. In short,

demand in our auctions may be sluggish for the best part of the

current season and prices may fall to unremunerative levels.

Having drawn this gloomy scenario, we feel that internal demand is

likely to play a more dominant role in the market. Our domestic

consumption has now grown in excess of 30 million kg and is steadily

rising, mainly due to the fact that the middle class income is

steadily rising while the numbers of desperately poor people are,

according to government statistics, declining.

During the 2000/2001 season, consumption could further increase to 32

million kg. or more, provided that consumers are supplied with a

better quality tea. Fortunately, the rising popularity of branded

products is having a beneficial effect on demand for good liquoring93

teas and more and more estates are trying to produce a good cup

quality in order to cater to the requirements of blenders. Loose tea

buyers are also paying more attention to cup quality than before. We

therefore soundly believe that well-made grades with strong, bright

liquors will attract higher demand from our internal buyers at more

remunerative prices. We may well see a very sharp price differential

between good and plain teas and, while the former may fetch higher

prices, the latter could be mostly neglected and if sold at all

realize poor prices. The key, therefore, to survival in 2000/2001, is

quality!

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Demand for Bangladeshi Tea

On the whole, demand was sluggish for most of 1999 as export markets

were much less active than during the previous season. However,

internal buyers lent good support and absorbed the bulk of the

offering in the initial auctions at progressively lower rates and, as

the season progressed to the end of July 1999, demand slackened quite

considerably and withdrawals in the auctions were fairly heavy. This

declining trend was reversed in August when strong export interest and

more widespread demand from the internal buyers greatly improved the

market segment and consequently the prices at the auctions. These

buyers lent fairly good support during October and November and there

was progressive improvement in their activities during December.

Demand slackened at the beginning of 2000 with a heavy weight of teas

on offer in the auctions. February began with a similar tone but soon

improved and all sections of the market, especially the export market,

lent some good support despite the large offerings. The last few sales

of the 1999/2000 season mainly comprised end of season types but the

few good invoices attracted useful support from the internal market.

Export inquiries were limited.

Since the new season’s sale that began in late April 2000, demand has

been restricted for about six weeks to only well-made, bright-

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liquoring teas and, as a result, quite a lot of poorly-made teas were

neglected and remained unsold. However, a better demand was seen in

the following months, and most of the unsold teas of poor quality,

along with an increased weight of better quality teas, were absorbed

by the local buyers to satisfy internal demand. Export buyers began to

appear in the market from the end of July and their activities

gathered energy from August, contributing to a firm demand which

lasted until the end of November 2000.

The Market

The first sale of the 1999/2000 season, held on May 11, 1999, was

marked by a strong demand from the internal buyers at prices well over

the closing rates, the average price being Tk. 80.18. However, price

levels gradually declined in subsequent sales owing to lack of export

enquiry. By Sale no. 10, held in the middle of July, the average price

had registered a sharp drop and stood at Tk. 53.25 per kg as against

Tk. 62.96 per kg for the same sale of the previous season. However, a

firm market at this level prevailed up to the end of September. A much

stronger demand was witnessed from the last week of September but

export inquiries were sharply lower from November onwards following

lack of competition. From the first week of December 1999, a much

stronger market prevailed following increased buying by internal and

export buyers mainly from Russia, CIS, Pakistan, and Poland.

Afghanistan also re-entered the market and, for a few weeks, operated

very strongly for well-made Brokens at satisfactory levels. As a

result, rates improved quite appreciably and by the end of December,

the average price for the last sale of the century recorded an average

price of Tk.62.37.

The year 2000 started with an easier market and prices declining by an

average of Tk.2.50/- per kg. The market improved for a short spell in

February when all sections showed an active interest. 96

In the market for the season 2000/2001, tea witnessed a fair activity

until the end of June, mostly from internal buyers, but when the

auction offerings increased in July, prices eased due to a lack of

sufficient export demand. There was an improved demand in August and

generally, prices moved upwards. This trend was maintained in

September and stayed firm until the last week of the year.

Buyers

Internal buyers, from both the loose tea section and the packeteers,

were the principal operators at the auctions and purchased a higher

volume of tea than during the previous year. Poland, Pakistan and

Afghanistan bought much less tea during the 1999/2000 season, but

Russia bought an increased weight from this center. Kazakhstan

operated in greater strength but all other export markets, notably

Iran and Sudan, were much less active.

Since the start of the new season, Pakistan has dominated the market

and shipments until the end of September 2000 to that country amount

to 6.2 million kg, as against 2.5 million in the previous season.

Afghan buyers come second to Pakistan and, although they started to

operate only from August, their presence has been strongly felt,

especially in the market for well made Brokens and Fanning. Poland has

been virtually absent while Russian buying was negligible. CIS lent

less support than during the previous season.

The internal loose tea buyers were quite active in the first few weeks

of the new season’s auctions but only moderately so in the subsequent

months. On the other hand, the internal blenders were active

throughout and bought more tea than in the similar period last season.

97

MAJOR COMPETITORS IN TEA MARKET

South Asia has a predominant stake in the global tea economy. Three

countries -- Bangladesh, India and Sri Lanka -- account for 52 per

cent of world black tea production and 42 per cent of the export

trade. These countries, with a population of 1,200 million, account

for 36 per cent of world tea consumption.

Sri Lanka has possibly the world's highest cost of tea production at

an estimated US$1.47 per kg in 1994, compared with US$1.09 per kg for

India and US$1.15 per kg for Bangladesh. The cost is reportedly even

lower, at US$0.96 per kg, for the estate sector in Kenya.

Table 1. South Asia: Black tea production and exports, 1991-94 (million kg)   Production Exports

  1991-93 1994 1991-93 1994  Average Estimate Average Estimate

Bangladesh 47 53 28 24India 727 744 182 149Sri Lanka 217 242 196 230South Asia 991 1 039 406 403World 1 909 1 934 971 954South Asia's share (per cent) 52 53 42 42Source: FAO. (Food and Agricultural website www.fao.org)

Medium-term projections clearly point to India and Sri Lanka

continuing to retain their leading position in production and exports,

respectively, with Pakistan emerging as the world's largest importer,

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surpassing both the United Kingdom and the Russian Federation. The

likely position by the year 2005 could be as indicated in table 2.

Table. Projected tea production, 2005 (million kg)   South Asia World South Asia's share (per cent)

Production 1 355 2 811 48

Exports 539 1 435 38

Consumption 1 043 2 727 38

Source: FAO. (Food and Agricultural Website www.fao.org)

Whether in Asia or Africa, however, the tea industry's problems are

intrinsically the same -- rising costs and stagnant or declining

prices. The importance of these factors varies. As far as prices are

concerned, global efforts, through FAO and UNCTAD, to maintain prices

have met with little success. A recent initiative by Sri Lanka led to

the establishment of the International Tea Producers' Forum, but

efforts by the Forum to lift sagging world prices will take a long

time to bear fruit. Within the region, the South Asian Association for

Regional Cooperation (SAARC) has been negotiating a South Asian

Preferential Trading Agreement (SAPTA) as well as a South Asian Free

Trade Agreement (SAFTA). Progress has been slow in contrast to the

success achieved by other trading blocs, such as the European Union,

NAFTA and APEC. Meanwhile, world tea prices fell for the fourth

successive year, the overall decline in US dollar terms for 1994 being

about 7.7 per cent over 1993. There were, however, considerable

regional disparities. While the average price at the Mombasa (Kenya)

auction increased by 3.5 per cent, there was a substantial decline in

the principal centres in South Asia -- 12.9 per cent in Calcutta

(North India), 22.1 per cent in Cochin (South India), 8.5 per cent in

Colombo (Sri Lanka) and 15.8 per cent in Chittagong (Bangladesh).

99

For the first time since the Tatas took over the Tetley group, the

company is on an expansion mode. Tetley is entering into three joint

ventures in Russia, Pakistan and Bangladesh, three of the largest tea-

drinking countries, as part of a plan to expand its global

presence.The investments in these ventures will be through Tata Tea

(Great Britain), the holding company of Tetley. All the three

companies, which will be owned equally with local firms as partners,

will blend tea locally for the respective markets.

A senior Tata group official said: “Tata Tea (Great Britain) will be

entering into equal partnerships with local partners. We are in the

final stages of discussions and the deals will be signed soon.” Tata

group officials, however, declined to reveal investment details.

The expansion strategy is critical in increasing Tetley’s earnings

potential because Tata Tea has leveraged the company’s future cash

flows to fund Tetley’s £271-million acquisition. Since then, the Tatas

have had to infuse another £30 million, for debt reduction and other

recast activities, in the company to bring it back on the rails.

Although Tetley is the single largest tea brand worldwide, it trails

way behind the Unilever group’s tea brands. But the global tea market

still remained fragmented, offering a huge opportunity, a Tata source

said. Tetley will also shift its focus from black tea to higher-value

added products such as flavoured teas, green teas and herbal teas. In

2001-2002, Tetley increased its market share to 25 per cent in the UK,

the worlds largest tea market, against Unilevers PG Tips 23 per cent,

while Premiers Typhoo had a share of 6 per cent.

In Canada, Tetley had a 43 per cent marketshare in tea bags, while

Unilevers Red Rose had 19 per cent, and Salada, another Unilever

brand, had 9 per cent in 2001-2002. The UK and Canadian markets have

been powerful contributors to the Tetley groups’ profits.

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Tetley has also rationalised its manufacturing facilities. Tetley

currently had five production centres: one in the UK, two in the US,

one in Australia and one in India. However, the group closed the

Greenford factory, a small facility in the UK. By containing costs, it

saved over £1 million on packaging and overheads.

World tea production continued to reach new highs in 2004, when output

grew by 2 percent to reach an estimated 3.2 million tonnes, according

to an FAO report prepared for the Intergovernmental Group on Tea

meeting in Bali (20-22 July 2005) to review the current world tea

market and its medium-term outlook.

The expansion in production was due mainly to the increases recorded

in Turkey, China, Kenya, Malawi, Sri Lanka and Indonesia. The growth

in output from these countries more than offset declines in other

major producing countries, including India and Bangladesh.

In China, tea output for 2004 approached the 800 000 tonnes milestone

as policy initiatives to promote production and trade of tea began to

have an impact on the sector.

In Sri Lanka, production increased slightly by 1.3 percent to 309 000

tonnes in 2004, reflecting the recovery from crop losses after

devastating floods in low grown tea areas of the island in 2003. In

Indonesia, where a 1.2 percent growth was recorded, output reached 170

000 tonnes in 2004.

In Turkey, production was reported to have expanded dramatically in

2004 as output increased by 32 percent to reach around 205 500 tonnes,

due to higher yields.

Tea production in Kenya increased by more than 11 percent in 2004 to

reach 328 000 tonnes, as a result of favourable weather in most of the

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growing regions and the expansion in processing capacity. Malawi also

reported a significant increase of 19 percent in tea production with

output reaching 50 000 tonnes.

In India, tea production declined by 4.3 percent to reach around 820

200 tonnes due to unfavourable weather conditions and the closure of

up to 70 tea gardens in Assam.

World tea exports increased by 4.4 percent in 2004 to reach 1.47

million tonnes, as shipments from all major exporting countries

increased during the year. Kenya was the largest exporter, once more

surpassing Sri Lanka. The 8.9 percent increase in exports from Kenya

brought total shipments for the year to almost 293 000 tonnes. A

similar increase (8.9%) was also recorded by Indonesia.

Tea exports from China expanded by more than seven percent to reach

282 000 tonnes, and were dominated by green tea, which accounted for

more than 75 percent of its total exports.

World net tea imports continued to increase in 2004, by 1.5 percent,

reaching 1.42 million tonnes. This trend reflected the increases in

traditional developed country markets of the European Community (an

increase of 2.4 percent), the United States (5.3 percent) and Japan (2

percent), where imports reached 215 000 tonnes, 99 000 tonnes and 56

000 tonnes, respectively.

Most of the growth in these markets is reportedly in response to

promotional efforts on the health benefits of tea consumption.

Available evidence from medical research suggests that moderate

consumption of tea offers protection against heart and blood vessel

disease, some cancers, and bacterial infections. In 2004, tea prices

opened at US$1.56 per kg in January and closed at US$1.73 per kg in

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December, reflecting an improvement on the demand side, according to

FAO.

A recent study on the market evolution between 1993/1995 and 2001/2003

indicated that, out of 27 agricultural commodities, tea showed the

second lowest variability in prices: 2% decline compared to 39% for

cocoa and 38% for coffee.

"Recent developments in the world tea market suggest that the major

players have succeeded in bringing the market towards balance," said

David Hallam, Chief, FAO Raw Materials, Tropical and Horticultural

Products Service. "Demand has been stimulated in the major producing

countries themselves, notably for black tea, and supply has been

tailored to market opportunities," Mr. Hallam added.

The meeting of the Intergovernmental Group on Tea will be preceded by

the International Tea Business Conference (18 - 19 July 2005) which

will take place at Bali's International Convention Centre.

India produced 826 million kg of tea in 2002, representing

approximately 30% of the world’s tea supply. However, the Indian tea

industry faces considerable difficulties. Domestically, the retail

price of tea is depressed by oversupply, as reflected in the sharp

disparity in growth between volume (+28%) and value (-10%) in the

retail market between 1998 and 2003.

This problem was exacerbated by the government lifting quota

restrictions on commodity imports in 2001, resulting in an increase in

cheap, low-quality tea from neighbouring countries such as Nepal,

Vietnam and Indonesia. As is frequently the case with staple products,

the resultant drop in the price of tea has not equated to a rise in

consumption.

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Furthermore in its export markets India is threatened by newcomers,

such as Indonesia and Vietnam, as well as old rivals such as Sri Lanka

and Kenya. The combination of these factors is squeezing margins and

leading to a large accumulation of excess stock within the industry.

Consequently major Indian tea manufacturers are now looking at

international expansion into new markets with the aim of increasing

sales and raising the profile of their brands.

India: the largest tea consumer

India consumes the largest quantity of tea in the world, accounting

for nearly 14% of global retail volume sales. Geographically, tea is

widely consumed in the North, East and West of India, and is popular

with a wide variety of social classes and consumer age groups.

However, it ranks 7th in value terms, due to relatively low unit

prices. Black standard tea constitutes nearly 80% of value sales,

although green tea has seen its popularity rise.

Still heavily promoted to defend from alternatives

Despite, and probably because, tea is the most traditional and

affordable beverage in India, it is perceived as being old fashioned

and less functional than some substitute products.

For instance, malt-based beverages such as Horlicks (GlaxoSmithKline)

and Bournvita (Cadbury Schweppes), are the favourite type of hot drink

in the South, and are also the fastest growing. This drink is consumed

as a substitute for milk in this milk-deficient region, and is

favoured for its functional benefits.

Furthermore, in the south, coffee is bigger as a proportion of total

hot drinks than in the rest of the country. Local preferences are

different in the south, India's main coffee-producing region.

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Soft drinks such as carbonates also represent a significant threat to

the ongoing dominance of tea in the longer-term, with aggressive

marketing campaigns from leading multinationals successfully

persuading many young consumers to migrate from tea to soft drinks for

various drink occasions.

The industry has therefore launched a series of campaigns to promote

tea as a health drink, with celebrities and scientists invited to

endorse the health benefits of tea, while the Tea Board and leading

players such as Unilever and Tata Tea have set up a fund of Rs 200

million to promote tea drinking. The recent pesticide controversy of

carbonated drinks provided a good opportunity for tea marketers to

promote the natural aspects of the drink.

Unilever: the clear market leader

The packaged tea market is highly consolidated in India, with Unilever

and Tata Tea accounting for almost half of retail value sales.

Unilever (Brooke Bond and Lipton) is the clear leader, holding over

30% of the market share, while Tata Tea (Tata) trails it with almost

20%. The remainder of the market is far more fragmented and shared

between numerous small players

Both Unilever and Tata Tea saw a fall in retail sales as a direct

result of the drop in the price of tea between 2000 and 2003. These

mainstream players also saw their margin squeezed in the face of

increased advertising spends and competition from unpackaged tea.

Tata Tea: ambitions in international markets

Tata Tea is the largest vertically integrated tea firm in the world,

from its plantation activity through to its packaging and marketing

initiatives. Although Tata Tea is overshadowed by Unilever in its

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domestic market, the company has been the star performer in the global

tea industry in recent years.

Its high profile acquisition of the global Tetley brand in 2000

effectively consolidated its position in the international tea market.

The company is now seeking to leverage the brand as a springboard to

new markets. In 2003, Tata Tea started retailing its flagship brand

Tata Tea in the US.

The company closed a factory in Australia in the same year in order to

increase the capacity of its Sri Lankan joint venture packaging

company, which serves the Australian, Polish and Russian tea markets.

It is currently looking into marketing Tetley in the Chinese market.

Cha bars: premium tea as a lifestyle choice

Retail value sales of tea in India are expected to show positive

growth of 2.5% during 2003-2008. Euromonitor anticipates the future

development of the industry is will be impacted by out-of-home

consumption. A new development has been the opening up of the vending

machine sector. The total number of vending machines in the country

was estimated at 45,000 in 2003, which included a large number of

unbranded machines. Vending machines sell coffee, tea and soft drinks,

however, so for the tea players it could be a double-edged sword.

In addition to vending, the development of cha bars and coffee shops

will encourage out-of-home consumption. Cha bars offer a wide

selection of teas at premium prices and are considered fashionable

among a certain Indian demographic. Hoping to emulate the success of

coffee shops witnessed in many major cities, including in emerging

markets, they mainly target expatriates, the corporate entertainment

market, or high income locals keen to show individual tastes.

INSTITUTIONS INVOLVED IN TEA SECTORTea Boards

106

Bangladesh Bangladesh Tea Board171-172, Baizid Bostami RoadNasirabad, ChittagongIndia Tea Board Of India14 Biplabi Trailokya Maharaj SaraniCalcuttaIndonesia Indonesian Tea BoardJakartaKenya Tea Board of KenyaTea Board House, Nairasha RoadPost Box No.20064, NairobiMalawi Tea Board of MalawLimbeSri Lanka Sri Lanka Tea Board574, Galle RoadColombo-3

ITC Member

Full Producer/Exporter membersTea Board of India 14 BTM Sarani (Brabourne Road) Kolkata 700 001 India

Telephone: 91 33 2235 1411 / 1412 / 1413 Fax: 91 33 2221 5715Cables: TEEBORDE-mail: devbasu@vsnl.com

Representative: A K Sahu

Sri Lanka Tea Board P O Box 1750 574 Galle Road Colombo 3 Sri Lanka

Telephone: 94 1 583687 / 587773 / 587814 / 582236Fax: 94 1 589132E-mail: teaboard@pureceylontea.comWeb Site: www.pureceylontea.com

Representative: Ranjit Abeykoon

Asosiasi Teh Indonesia Jalan Pulombangkeng No.15 Kebayoran Baru Jakarta Selatan 12110 Indonesia

Telephone: 62 21 7260772 / 7393375Fax: 62 21 7205810 / 7262912

The Tea Board of Kenya Tea Board House Naivasha Road / Off Ngong Road

P O Box 20064 Nairobi 00200 Kenya

107

E-mail: indotea@indosat.net.id

Representative: Insyaf Malik

Telephone: 254 20 572421 / 572497 / 574445 - 6Fax: 254 20 562120 / 576337E-mail: teaboardk@kenyaweb.comWeb Site: www.teaboard.or.ke

Representative: Abraham K Barno

The Tea Association of Malawi Kidney Crescent P O Box 930 Blantyre Malawi

Telephone: 265 1671182 / 1671355Fax: 265 1671427E-mail: taml@malawi.net

Bangladesh Tea Board 171 - 172 Baizid Bostami Road Nasirabad Chittagong Bangladesh

Telephone: 880 31 682712 /681455 / 682903 682096 / 682347 / 683527 Fax: 880 31 682863 Cables: TEABANGLA E-mail: btb@spnetctg.com Web Site: www. bdteaboard.com

Representative: M.S. PatwaryChina Chamber of Commerce of Import & Export of Foodstuffs, Native Produce & Animal By-Products 21 Xitangzi Hutong Wangfujing Street Beijing 100006 China

Telephone: 00 86 10 65225171Fax: 00 86 10 65139064E-mail: chinatea@cccfna.org.cnWeb Site: www.agriffchina.com

Representative: Ms. Yalan Zheng

 

Full Consumer membersUnited Kingdom Tea Association 6 Catherine Street London WC2B 5JJ

Irish Tea Trade Association20 Terenure ParkDublin 6WIreland

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United Kingdom

Telephone: 44 (0)20 7836 2460Fax: 44 (0)20 7379 5735Representative: Katy J Tubb

Telephone: 00 353 1 490 3361Fax: 00 353 1 490 3101 E-mail: tealeaf@indigo.ie

Reprentative: Arthur Fitzpatrick

Tea Association of the U S A Inc 420 Lexington Avenue, Suite 825 New York NY 10170 U S A

Telephone: 1 212 9869415Fax: 1 212 6978658E-mail: simrany@teausa.org

Representative: Joseph P SimranyAlternate: Peter F Goggi

Tea Association of Canada 885 Don Mills Road Suite 301 Don Mills, Ontario M3C 1V9 Canada

Telephone: 1 416 510 8647 Fax: 1 416 510 8044E-mail: louise.roberge@tea.ca

Representative: President

Coffee Roasters & Tea Packers' AssociationTourniairestraat 3Postbus 904451006 BK AmsterdamNetherlands

Telephone: 00 20 5113870Fax: 00 5113810E -mail: vnkt@koffiethee.nl

 

Associate membersZimbabwe Tea Growers' Association P O Box UA 78 Union Avenue Harare Zimbabwe

Telephone: 263 4 703469 / 703786Fax: 263 4 705785Representative: Sam Magombedze

Department for Environment Food and Rural Affairs Room 247, Nobel House 17 Smith Square London SW1P 3JR

Telephone: 020 7238 3185Fax: 020 7238 3199Representative: J O'Rourke

109

Office du The du Burundi52, Boulevard de L'upronaB P 2680BujumburaBurundiRepresentative: Mr Callixte Ntamutumba

Tel: 00 257 224228/ 224288Fax: 00 257 224657 / 226191E-mail: otb@cbinf.com

Ministry of Agriculture, Nature and Food Quality Bezuidenhoutseweg 73 P O Box 20401 2500 EK The Hague Netherlands

Telephone: 31 70 378 4477Fax: 31 70 378 6126Representative: M J H van Nynatten

OCIR THE Office des Cultures Industrielles duRwanda BP 1344 Kigali Rwanda

Telephone: 250 514797 / 514795 / 577082 Fax: 250 573943 / 514796Representative: Gaforomo G Vianney

Japan Tea Association Room 602 Tokyo Chagyo Kaikan 8-5 Higashi-Shimbashi 2-chome Minato - ku Tokyo Japan

Telephone: 03 3431 6509Fax: 03 3431 6711Representative: Hiroshi Kako

Uganda Tea Association PO Box 4161 Mitchell Cotts Building - Annexe Plot 8 Burton Street Kampala UgandaTelephone: 256 41 231003Fax: 256 41 231003 / 343121

Representative: I G Munabi

Tea Board of Tanzania PO Box 2663 Dar es Salaam Tanzania

Telephone: 255 22 2124665 / 2114400Fax: 255 22 2114400Representative: S H Mijinga

110

Vietnam Tea Association92, Vo Thi Sau Str.Hai Ba Trung DistrictHanoiVietnam

Representative: Dr Nguyen Kim Phong

Tel: 00 84 4 Fax: 00 84 4 625 1801E-mail: vitas@fpt.vnWeb: www.vitas.org.vn

China Tea Marketing Association45, Fuxingemennei StreetBeijing 100801China

Tel: 00 86 10 6601 2403Fax: 00 86 10 6601 8165 E-mail: chinatea@vip.163.com Web: www.ctma.com.cn

Corporate membersUnilever Pakistan Limited Tea Department PO Box No 4964 32 West Wharf Road No 4 Karachi 74000 Pakistan

Telephone: 92 21 2201223 / 2310118 /2310112-5Fax: 92 21 2310535

I.N.T. Co. LtdYokohama Office101, 6-4-46Kounan, Kounan-kuYokohama245-0003Japan

Telephone: 00 81 45 846 2313Fax: 00 81 45 846 2316E-mail: nasto@d6.dion.ne.jp

Lipton AustraliaPart of Unilever Australia Ltd 20-22 Cambridge Street Epping 2121 NSW Australia

Telephone: 61 (0)2 98696100Fax: 61 (0)2 98696300

Ahmed Mohamed Saleh Baeshen & Co P O Box 9822 Jeddah 21423 Saudi Arabia

Telephone: 966 2 637 9000Fax: 966 2 637 4656E-Mail: info@baeshen.com

Tapal Tea (Private) Ltd Plot 40, Sector 15 Korangi Industrial Estate Karachi 74900 Pakistan

Telephone: 92 21 5063891Fax: 92 21 5063890E-Mail: info@tapaltea.com aftab@tapaltea.commohsin@tapaltea.com

China Tea Co Ltd 208 An Ding Men Wai Street Beijing 100011 China

Telephone: 86 10 64204127Fax: 84 10 64204101Email: info@teachina.comWeb Site: www.teachina.com

111

Web Site: www.tapaltea.com

112

Nestle SAAv. Nestle 551800 Vevey 1SWITZERLAND

Telephone: 00 41 21 924 1111Fax: 00 41 21 924 1885Web Site: www.nestle.com

Cameroon Tea Estates PO Box 605 Limbe South West Province Cameroon

Telephone: 237 333 3177Fax: 237 333 3176

Dubai Tea Trading CentreJebel Ali Free ZoneP O Box 48800DubaiUnited Arab Emirates

Telephone: 00 971 4 883 8878Fax: 00 971 4 883 3936E-mail: sanjay.sethi@dmcc.aepalitha.perera@dmcc.aeWeb Site: www.dmcc.ae

 

Bangladesh Tea Research Institute (BTRI):

BTRI is a scientific organization of the Bangladesh Tea Board under

The Ministry of Commerce. It was established in 1957 with view to

provide technical support to the Tea Industry of Bangladesh. The

Research Programs of the Institute are mostly adaptive and field

oriented in order to meet the current needs of the Industry.  Although

BTRI has a research responsibility, its mandate requires that it

provides advisory services to planters also. It accomplishes this

through direct scientists-to-planter contact, often through

articipatory research on tea estates, through training and the

distribution of publications. A large portion of BTRI's resources is

devoted to this important linkage.

Major Activities of BTRI

* Evolving of high yielding and quality clones of tea.

* Development of bi-and poly - Clonal seed stocks for seed orchards

(Seed baries).

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* Conservation of gene resources of tea.

* Raising of vegetative cuttings in the nursery using modern technique

and supply of rooted and fresh cuttings of improved clonal materials

to tea estates.

* Evaluation of chemical composition of processed and or unprocessed

tea for quality assessment.

* Standardization of quality and specification of Bangladesh tea in

the international market.

* Formulation of fertilizer policy for tea and ancillary crops.

* Rehabilitation of soil, soil-fertilizer relationship analysis and

understanding.

* Adoption of appropriate methodology in improving the soil condition

in existing-, proposed and rehabilitated tea areas.

* Standardization of cultural practices like- planting, spacing,

pruning, plucking, mulching, planting shade trees and green crops,

grafting etc.

* Management and control of various insect, mite and nematodes pests,

diseases and weeds of tea and ancillary crops.

Such a plan must cover the following   thrust areas research:

*Evolving high yielding and quality clones of special feature.

* Raising organic matter status of tea soils.

* Utilization of biotechnology for plant improvement.

* Drainage irrigation & drought management.

* Physiology of tea in local environment and improvement of harvest

index.

* Biotechnology to improve soil fertility.

* Application of IPM with different control options of pests.

* IPM components with particular emphasis no bio-control agents.

* Pesticide residue in tea.

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* VAM application in tea culture.

* Vermi-culture application in tea.

* Energy source utilization and efficiency.

* Crop diversification.

* Socio-economic study of tea industry.

* Marketing and sales promotion.

* GIS & tea environment study.

TEA DEVELOPMENT

Tea Board is entrusted with the implementing the following

developmental schemes during the 10th Five Year Plan for enhancing

productivity, quality and marketability of tea in the country:

Tea Plantation Development Scheme

Market Promotion Scheme

Quality Upgradation and Product Diversification Scheme

Research & Development Schemes

Human Resource Development Scheme

VALUE ADDITION IN TEA PRODUCTS

Kazi & Kazi Tea Estate is a pioneer of tea plantation in Bangladesh

and the Darjeeling Tea Belt. We are the first substantial organic tea

estate, and we use only natural resources to control agricultural

pests and weeds. A new brand of high quality tea-organic tea- grown

for the first time in the country by a local company is going to hit

the market formally through auction centre in the port city from

Tuesday.

Experts said Bangladesh achieved a great success through successful

plantation of tea on the plain land, which was not traditionally

considered as fit for tea cultivation.115

Kazi and Kazi Tea Estate (KKTE) is the country''s pioneer company in

the field of this kind of tea production by applying the organic

method in cultivation at its garden at Tetulia in Panchagarh district.

Leading brokers said the new `Meena'' brand organic tea would fetch

very high price and be attractive as it is considered as very good

quality tea among other brands being produced in the traditional tea

garden of greater Sylhet and Chittagong districts.

Experts, brokers and tea traders at a formal launching ceremony of the

new brand here today highly appreciated the initiative of such tea

plantation by applying new method. They, however, expressed their high

optimism about Bangladesh''s ability to produce world standard tea of

new variety and taste.

Bangladesh Tea Research Institute has evolved a clone variety tea in

the wake of growing competition in export market and high domestic

demand. Officials of the BTRI said the quality of the newly evolved

‘BT-16’ species is much improved and some 3,000 to 4,000 kilograms of

tea can be produced in each hectare of land from the cloned trees.

According to a government estimate, some 100 million kg of tea will be

required by year 2020 to meet local demand and fulfil export target.

To cope with the rising demand for tea in local and international

markets, the government has already begun cultivation of the improved

clone tea in Chittagong Hill Tracts (CHT), Panchagarh and other

district.

Commerce Minister Altaf Hossain Chowdhury formally released the newly

innovated BT-16 tea at a ceremony at the Bangladesh Tea Board

auditorium at Srimongal in the year 2005. Addressing the function the

minister said two-third of the amount of tea produced in the country

is needed to cater local demand. “The government is implementing a

five-year short-term programme and a 20-year long-term programme to

116

increase the production of tea “in view of the growing internal and

external demand, the minister said.

The minister also distributed saplings of the BT-16 species among a

few tea-garden representatives. Among others, Bangladesh Tea Board

Chairman Mosharraf Hossain and Bangladesh Cha Sangsad Chairman M

Wahidul Haque addressed the function.

Ayurvedic practitioners prescribe different types of drinks to help

manage what modern-day scientists call Type II Diabetes or Non-Insulin

Dependent Diabetes mellitus (NIDDM)? Vaidyas, physicians, and

nutritionists all agree that the key to managing diabetes begins with

diet modification.

Green tea is widely consumed in Asian countries and is becoming

increasingly popular in Western countries. Epidemiologically, it has

been suggested that green tea consumption prevents type 2 diabetes.

The present study was aimed at providing evidence of improvement in

glucose metabolism in diabetic mice and healthy humans upon green tea

consumption. Green tea promoted glucose metabolism in healthy human

volunteers at 1.5 g/body in oral glucose tolerance tests. Green tea

also lowered blood glucose levels in diabetic db+/db+ mice and

streptozotocin-diabetic mice 2-6 h after administration at 300 mg/kg

without affecting serum insulin level, whereas no effect was observed

in control mice (+m/+m and normal ddY mice). The serum protein

profiles of db+/db+ and +m/+m mice were analyzed for the first time by

SELDI (surface-enhanced laser desorption/ionization)-TOF (time-of-

flight)-MS (mass spectrometry), and then compared to investigate any

effects of oral green tea administration on serum proteins.

Herbs have been used for medicinal purposes, including the treatment

of diabetes, for centuries. Plants containing flavonoids are used to

117

treat diabetes in Indian medicine and the green tea flavonoid,

epigallocatechin gallate (EGCG), is reported to have glucose-lowering

effects in animals.

Tea and Health

Tea has nutritional properties, which means it is rich in vitamins,

minerals, anti-oxidants and many more such healthy elements. Tea is a

zero calorie drink too. Tea thus has become popular with fitness, well

being and good health. It has been suggested that an intake of up to

10 cups of tea per day may be a useful dietary habit. 650 ml of tea

provides over half of the total intake of dietary flavonoids; nearly

16% of the daily requirement of calcium; almost 10% of the daily

requirement of zinc; over 10% of the folic acid need; around 9%, 25%

and 6% of vitamins B1, B2 and B6 respectively.

Tea also provides a dietary source of biologically active compounds

that help prevent a wide variety of diseases. Extensive research has

revealed that tea is one of the richest sources of antioxidants. In

fact, fruits and vegetables stand below tea when it comes to the

amount of antioxidants. These antioxidants are found in form of

polyphenols. Scientific evidences prove that antioxidants promote118

heart health, prevent cancer, help combat & guard against most

diseases like diabetes, BP, tumors, ulcers, inflammations, intestinal

problems, tooth decay and many more common ailments.

We can have a healthier heart with tea. Flavonoids present in tea

prevent the oxidation of LDL cholesterol, thereby reducing the risk of

heart diseases. A source of calcium too (from the milk in it), your

cup of tea helps develop strong muscles too. Theaflavins, another

component in tea reduces plaque formation too.

Tea composition varies with climate, season, horticultural practices

and variety. Polyphenols are the most important component in tea, as

they constitute approximately 36 percent of the dry weight of tea.

Green and black tea has similar chemical make-up. The primary

difference between the two types lies in the chemical changes that

take place during their production. In case of black tea, polyphenols

are oxidized and this is prevented in the manufacture of green tea,

thus making green tea a healthier choice. The most important groups of

polyphenols are the catechins in green tea, theaflavins and

thearubigens in black tea. A variety of physiological effects have

been attributed to tea catechins, which are currently best known for

their antioxidant activities.

Black tea is virtually calorie-free (1 calorie per 100 ml) and sodium

free, therefore a suitable beverage for individuals on low calorie or

low sodium diet. Tea includes fluoride, traces of vitamins A, K, C, B

carotene and B vitamins.

Tea is a pleasant, popular, socially accepted, economical and safe

drink that is enjoyed every day by hundreds of millions of people

across all continents. So, enjoy cup of tea and stay assured that it

is doing well to our system. (Dr. John Weisburger, Director Emeritus American Health

Foundation) 119

CATECHINS• Lowers blood tri glyceride, blood cholesterol • Reduces incidence of cancer • Reduces oxidation by active oxygen• Strengthens blood vessel wall and regulates their permeability• Inhibits increase of blood sugar• Inhibits increase of blood pressure• Reduces tumours• Reduces mutations• Helps in the treatment of radiation sickness• Prevents dental caries • Kills influenza virus• Beneficial in the treatment ofdysentery• Prevents halitosis (bad breath)

CAFFEINE• CNS stimulant, hence increasedalertness• Gives relief from fatigue, neuralgia and headaches• Acts as diuretic

FLAVONOIDS• Strengthens blood vessel and blood capillary walls • Reduces oxidation by active oxygen• Acts as anti-inflammatory agent• Increases the level of catecholamines• Stimulates folic acid biosynthesis• Normalises thyroid hyperfunction

FLUORIDE• Prevents dental caries

QUERCETIN• Acts as Spasmolytic • Helps in the treatment of acute diarrhoea

VITAMINSVitamin - B COMPLEX (RIBOFLAVIN,BIOTIN, NIACIN PANTOTHENATE, INOSITOL)

• Aids carbohydrate and fat metabolism • Helps in inter and intracellular Ca++ transport• Helps in moisturisation of theskin

Vitamin- E

• Acts as antioxidant and regulates aging.

SALICYLATES• Acts as an analgesic and antipyretic

POLYSACCHARIDES• Lowers blood sugar

METHYLXANTHINE• Acts as diuretic

THEAFLAVIN, THEARUBIGIN • Antagonises the activity of bradykinin • Inhibits arginine and ornithine decarboxylases

THEOPHYLLINE• Modulates immune response • Helps in the treatment of asthma

120

• Salutary effects on cardiac function

ESSENTIAL AMINO ACIDS [LEUCINE, PHENYLALANINE, VALINE, THREONINE]• Helps in metabolism• Maintains nitrogen equilibrium

THEANINE• Helps in ammonia and urea metabolism• Helps in water clearance by renal tissues

LINOLENIC ACID • Reduces platelet aggregation

Tea pigments • Decreases plasma fibrinogen

Seleno-cysteine • Supports normal thyroid function (helps in the conversion of T4 to physiologically effective T3.)

GABA • Lowers blood pressure

INTERNATIONAL TEA MARKET SITUATION

As part of its regular activities, the Intergovernmental Group on Tea

monitors market conditions and provides an update of potential market

prospects for tea over the medium term. This document examines both

the current situation and longer term prospects for production,

consumption and trade of tea, and their likely impact on the world tea

market. The tables mentioned in the document may be found in document

CCP:TE 05/CRS 6. Delegates are requested to update market information

pertaining to their country, and discuss possible strategies for the

sustainable development of the world tea economy.

World tea production continued to reach new highs in 2004, when output

grew by 2 percent to reach an estimated 3.2 million tonnes. The

expansion was due mainly to the increases recorded in Turkey, China,

Kenya, Malawi, Sri Lanka and Indonesia. The growth in output from

these countries more than offset declines in other major producing

countries including India and Bangladesh. Production in Turkey was

reported to have expanded dramatically in 2004 as output increased by

32 percent to reach 205 431 tonnes. As there were no reported new

areas planted in the last five years, it is assumed that the expansion

was due to higher yields.121

Provisional returns from China indicate that output for 2004

approached the 800 000 tonnes milestone as policy initiatives to

promote production and trade of tea began to have an impact on the

sector. Tea production in Sri Lanka increased slightly by 1.3 percent

to 309 000 tonnes in 2004, reflecting the recovery from crop losses

after devastating floods in low grown tea areas of the island in 2003.

This region usually accounts for more than 50 percent of the country’s

tea output. Slight relief was also evident in high grown areas after

drought conditions contributed to the overall decline in output during

2003. A similar increase was recorded by Indonesia, where a 1.2

percent growth was recorded. Output in that country reached 170 000

tonnes in 2004.

Tea production in Kenya increased by more than 11 percent in 2004 to

reach 328 000 tonnes, as a result of favourable weather in most of the

growing regions and the expansion in processing capacity. The major

challenge facing the tea industry in Kenya is the rising labour cost

adding to the rise in cost of production, which was slightly offset by

the depreciation of the Kenyan shilling. Malawi also reported a

significant increase of 19 percent in tea production in 2004 with

output reaching 50 000 tonnes. Again favourable weather conditions in

the whole of Eastern Africa contributed to this increase, including

the output in Tanzania and Uganda where marginal increases occurred.

Tea production in India declined by 4.3 percent, as output in both the

Northern and Southern production regions contracted. A major factor

contributing to the decline was the closure of up to 70 tea gardens in

Assam due to the widespread recession in the industry. The downturn

was further exacerbated by unfavourable weather both in the North

(floods in the first half of 2004) and South (drought). Output in 2004

was 820 216 tonnes for the country with 634 485 produced in the North

and 185 730 in the South.

122

World tea exports increased by 4.4 percent in 2004 to reach 1.47

million tonnes, as shipments from all major exporting countries

increased during the year. Kenya was the largest exporter, once more

surpassing Sri Lanka. The 8.9 percent increase in exports from Kenya

brought total shipments for the year to 292 704 tonnes, in line with

expanded output from that country. A similar proportional increase of

8.9 percent was recorded by Indonesia bringing the total for that

country to 98 000 tonnes.

Tea exports from China expanded by more than 7 percent to reach 282

212 tonnes, and were dominated by green tea, which accounted for more

than 75 percent of its total exports. Most of the increase was due to

the recovery of market share in the EC and Japan following problems of

non-compliance of MRL requirements in 2003. Exports to Morocco,

Uzbekistan, and Ghana remained strong, while shipments to the Russian

Federation and the United States showed no significant change.

Exports from East Africa also recorded significant increases; 11.9

percent from Malawi, 20 percent from Tanzania and 2.9 percent from

Uganda, while exports from Bangladesh and Sri Lanka remained

relatively unchanged in 2004.

Tea exports from Sri Lanka were 290 604 tonnes in 2004 compared to 291

472 tonnes in 2003, a marginal gain of some 0.3 percent. Attempts to

expand demand for Sri Lankan tea in the Far East have led to the

establishment of a tea promotion office in Tokyo to promote black tea

exports to the predominantly green tea markets of China, Japan and the

Republic of Korea in 2003.

Tea exports from India recovered slightly by 3 percent in 2004 after a

major fall of 13 percent in 2003 to the lowest level in a decade, due

mainly to weaker demand from the Russian Federation, the United Arab

Emirates, and the United Kingdom.123

World net tea imports continued to increase in 2004, by 1.5 percent,

reaching 1.42 million tonnes. This trend reflected the increases in

traditional developed country markets of the EC (an increase of 2.4

percent), the United States (5.3 percent), and Japan (2 percent),

where imports reached 215 000 tonnes, 99 000 tonnes, and 56 000

tonnes, respectively. Most of the growth in these markets is

reportedly in response to promotional efforts on the health benefits

of tea consumption.

Net imports into Pakistan, the largest developing country importer

also continued to increase. Shipments were larger by 10 percent in

2004, from 109 000 tonnes in 2003 to 120 000 tonnes in 2004, directly

influenced by lower tea prices. India could not take advantage of its

recent trade agreement with Pakistan for this precise reason. Tea

prices were comparatively high, resulting in a significant decline in

the volume shipped to Pakistan. Imports to Syria increased by 13

percent from 26 000 tonnes in 2003, a net gain of 3500 tonnes. Imports

by countries in the Near East in Africa increased by 2 percent in

Morocco, where quantities reached 45 000 tonnes, while in Egypt

imports declined by 11 percent.

The FAO Composite price, as a world price indicator for tea, increased

by 2 percent in 2004, reflecting the significant gains in the Calcutta

and Mombasa auctions. Prices in 2004 opened at US $1.56 per kg in

January and after increasing to US$1.65 per kg in April declined to

US$1.56 per kg in June, before surging to US $1.77 per kg in September

and closing at US $1.73 per kg in December. This volatility reflected

fluctuations in tea output in major producing countries in 2004 and

improvement on the demand side which eased the supply pressure on

prices. The increases were quite significant in local currencies as

local currencies of major tea producing countries have depreciated

against the US dollar.

124

This section of the document examines projections that were generated

for the medium term (10 years from the latest complete set of data

available, i.e. 2003) to 2014. It takes into account the Group’s

projections to 2010, which incorporated the revisions provided by

members at the 15th Session of the Intergovernmental Group on Tea in

Sri Lanka. Members are requested to review the data and forecasts

pertaining to their own situation and provide updates, where

necessary, to allow the Secretariat to revise the projections.

The projections were based on dynamic time series models. Principally,

autoregressive distributed lag models were used to capture the dynamic

process of market adjustment in tea markets. The forecasts are

obtained from s-step a-head ADL models, where s is the forecast

horizon. The FAO Tea Composite Price was included as an exogenous

factor. Its values, over the forecast horizon, were obtained from its

autoregressive representation. Projections were based on the

assumption of normal weather conditions, and a continuation of the

past trends in yields, planted areas, population and income growth.

Adjustments were made to reflect current policies and future market

prospects. The forecasting models captured cycles and trends in tea

markets to a satisfactory level.

World black tea production is projected to grow by 1.7 percent

annually from 2003 to reach 2.7 million tonnes in 2014, mainly due to

improvements in yields (Table 5). Among countries in Africa, a

significant growth in output is expected as tea bushes reach optimum

producing age and smallholder skills are maximized through intensive

capacity building. Tea harvested in the largest producing country,

Kenya is expected to grow by 2.4 annually to reach 379 000 tonnes in

2014, signifying a slowing in growth rates of the last decade. Other

producing countries of significance include Malawi where output is

projected to increas by 7 000 tonnes to reach 49 000 tonnes by 2014,

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while in Uganda and Tanzania output should reach 38 000 tonnes and 33

000 tonnes, respectively by 2014.

In the Far East, output in India, is expected to grow by 1.6 percent

annually to reach 1.01 million tonnes in 2014. Among the other major

black tea producing countries in the region, a slightly higher growth

rate of 1.9 percent is projected for Sri Lanka to reach 370 000

tonnes, while output in Indonesia will reach 150 000 tonnes, an annual

growth rate of 1.5 percent. Black tea production in China is expected

to decline, as the balance of production shifts to other teas with

stronger market prospects.

World green tea production is expected to grow at a faster rate than

black tea at 2.3 percent per annum, but volumes are much smaller at a

projected total of 975 000 tonnes by 2014. China would continue to

account for more than 75 percent of world green tea output with an

output of 740 100 tonnes, replacing some of its black tea production.

However, the annual growth rate would slow from 3.8 percent over the

last decade (1993-2003) to 2.2 percent over the next (2003-2014). A

similar slow-down is expected in Viet Nam as the expansion in area has

somewhat abated in recent years, but volumes are considerably smaller.

Production in Viet Nam is projected to grow at 2.6 percent from 30 000

tonnes in 2003 to 39 600 tonnes in 2014, while production in Japan

will slightly increase by 0.5 percent annually to reach 92 000 tonnes

in 2014. For Indonesia, growth rates are expected to pick up again in

the next decade after a slow-down since the Far East economic crisis

in 1997. Output in Indonesia is expected to expand to 49 100 tonnes in

2014, from 41 000 in 2003. Most of the growth in green tea output

would be due to an expansion in area planted and harvested.

The growth rate in world black tea consumption is expected to be

reduced from 2.2 percent over the last decade (1993-2003) to 1.2

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percent over the next (2003 to 2014) to reach 2.67 million tonnes by

2014. The main reason is the slow-down in consumption in producing

countries, as the production growth rate outpaces the growth in demand

for exports. Global tea consumption is divided into net imports for

non-tea producing countries, and domestic consumption in producing

countries, measured by production less exports.

World net imports of black tea, a proxy for consumption in importing

countries, are projected to increase annually by 1.2 percent to reach

1.34 million tonnes in 2014 from a base of 1.17 million tonnes in

2003. Imports by the CIS (predominantly the Russian Federation) and

Pakistan are expected to increase by 3.0 percent and 3.4 percent

annually, respectively, in line with GDP growth expectations. Net

imports by these countries are expected to reach 342 000 tonnes and

120 300 tonnes, respectively, by 2014. In the EC (15) a slight decline

in imports is expected due mainly to the 1.6 percent annual

contraction expected in the United Kingdom. Notable increases are

expected in Germany, the Netherlands and France, but the expansion in

these countries will be insufficient to offset the decline in the

United Kingdom.

In 2014, the quantity of black tea consumed in producing countries is

expected to grow by 1.3 percent per year to reach 1.33 million tonnes.

Producing countries consumed 52 percent of their black tea production

in 1993-2003, and are projected to consume only 49 percent in 2014,

adding to the demand and supply imbalance. The largest increase in

domestic consumption would occur in the Far East, as tea-producing

countries in Africa are expected to continue to export most of their

output. Domestic consumption of black tea in India is expected to

increase by 1.5 percent annually to reach 805 700 tonnes in 2014 or

almost 80 percent of the tea produced in that country. Consumption in

Indonesia is expected to increase at an annual rate of 1.6 percent to

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reach 57 000 tonnes by 2014, while in Bangladesh and Sri Lanka, tea

consumption would grow at 3.0 percent and 2.5 percent to reach 48 400

tonnes and 17 500 tonnes, respectively.

World black tea exports are projected to reach 1.3 million tonnes in

2014, reflecting an average annual increase of 1.4 percent per year

from 1.1 million tonnes in 2003.

About half of the increase would originate in Africa, where production

is likely to continue to grow while domestic consumption remains

small. The region's total black tea exports are projected to amount to

518 000 tonnes by 2014. Exports from Kenya would increase by 2.7

percent annually to reach 358 000 tonnes in 2014, giving Kenya a 27

percent share of the global black tea export market. Privatization of

the Kenya Tea Development Authority (KTDA) and the abolition of grower

permits and export licences are expected to improve Kenya’s export

performance. Substantial growth in black tea exports is also projected

for some other East African countries, such as Malawi (1.2 percent

annually) and Uganda (2.2 percent annually).

The Far East would account for the other half of the expansion in

black tea exports. Sri Lanka, the second largest exporting country in

the world, is expected to increase exports by 1.2 percent annually to

reach 330 000 tonnes by 2014, continuing to account for 25 percent of

the global total. Exports from India are projected to increase

annually by 2 percent to reach 211 000 tonnes in 2014. More modest

growth rates are expected for Indonesia and Bangladesh where exports

contracted in the previous decade and annual increases of 0.4 percent

and 0.2 percent, respectively should now be attained.

World green tea exports are projected to grow by 2.8 percent annually

to reach 275 000 tonnes by 2014. China is expected to continue to

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dominate this trade with a volume of 242 000 tonnes, followed by Viet

Nam with 28 000 tonnes, and Indonesia with 5 800 tonnes.

Recent developments in the world tea market suggest that the major

players have adapted pretty well to the uncertainty in prices in the

short term, particularly for black tea. Green tea does not have the

same difficulty as it currently enjoys a premium over black tea. A

recent study conducted by the Secretariat on value chains

(CCP: TE 05/4) indicated that, of the 27 agricultural commodities

studied, tea showed the second lowest variability in prices (2 percent

decline in tea prices compared 39 percent for cocoa and 38 percent for

coffee).

The major issues plaguing black tea include the erosion of market

shares in the total beverages market, coupled with stagnant

consumption in some markets, leading to reduced prices. The

fundamental oversupply in the world market is likely to persist and

prices are likely to remain depressed. New strategies particularly

aimed at enhancing consumption and increasing value-addition as well

as further reduction in production and marketing costs are required.

In the medium-term, the projections indicate an increasing imbalance

between supply and demand of 98 000 tonnes. Part of the reason is due

to the actual projections on production given by some members which

appear to be higher than those generated by the model. However, if the

projected imbalance is realized then further weakening in prices may

be expected. In terms of profitability, a major concern is the rising

cost of production, which can only be minimally reduced by increasing

mechanization as the the scope is limited if quality is to be

maintained. Improving yields through capacity building of growers,

optimising inputs, streamlining marketing channels and improving

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infrastructure could also reduce production cost, but may also lead to

over-supply. The preferred solution must lie in stimulating demand.

Appropriate marketing strategies, including market access, could lead

to improved returns to the industry. Variation in demand among

countries suggests that marketing activities need to be tailored to

individual markets. Value addition possibilities and quality standards

need to be identified for each market and strategies devised to reap

the appropriate premium. The results from extensive research

demonstrating the health benefits of tea should also be more

aggressively used in promoting tea consumption in an increasingly

crowded beverage market. Finally, food standards, particulary MRLs,

need to be complied with. Global harmonization of MRLs in tea could

reduce costs of compliance on tea exporters. This is a major agenda

item at this session, and the Group might wish to adopt

recommendations on the way forward.

The government has taken initiatives to bring more areas under tea

cultivation to increase the production and meet the growing demand in

the local and international markets, reports BDNews. 

"Based on a survey, we have sorted out 46,000 hectares of new land in

Rangamati, Bandarban and Khagrachhari districts for tea cultivation,"

Chairman of the Bangladesh Tea Board (BTB) Mosharaf Hossain told

BDNEWS.

As part of the expansionary plan, six small holding gardens have

already started operations in North Bengal, Hossain said.

Bangladesh has only 162 registered largest tea plantations.

Officials of the Bangladesh Tea Association (BTA) said they are facing

stiff competition from countries like India, Sri Lanka and Indonesia

130

in tea export because of their integrated efforts to boost tea

industry. "We have also carried out a survey in Garo areas in

Mymensingh," the BTB chairman said.

Although the area is fit for tea plantation, we will not be able to do

it because the area belongs to the Forest Ministry, he added.

Operations of tea gardens in the new areas, especially in hill

districts, are likely to start within the next four to five years, he

said, adding the government has to develop infrastructure first.

Another official of the Board said the government already started

compensating small farmers who lost their lands for tea cultivation in

the northern part of Bangladesh, particularly in Panchagarh.

To acquire tea cultivable land in three hill districts, he said, the

land is owned both by the government and private sector and it will

take time.

A tea exporter told BDNEWS that Bangladesh has the prospect to

grabbing the market of the Middle East, where exports from Dhaka

declined significantly in the past 10 years.

Now, Bangladesh exports around 15 million kilograms of tea annually.

Of which, 80 per cent is exported to Pakistan alone, BTB officials

said.

Recently, a Bangladesh delegation comprising representatives from the

Labour Ministry, workers' union and BTA visited several tea

plantations in the Dooars, in West Bengal in India to gather

experience about the plantations in India. ABM Abdus Sattar, Joint

Secretary, Ministry of Labour and Employment, led the team.

131

Today, the main tea-growing areas lie to the east of the Ganga-Jumma

flood plain in the hill areas bordering India's Cachar tea-growing

district. Most of Bangladesh tea grows at only 80-300 ft. above sea

level northeast of Sylhet.

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The Marketing Mixes

Bangladesh tea export is facing stiff competition in the global market

and it stay in the competition would be tougher in he days ahead if

not quantity is increased and competitive edge raised considerably,

industry sources said. Bangladesh Tea Board (BTB) and industry sources

said offensive new market search is essential raising the competitive

edge of Bangladesh tea. The sources said improving quality and low

production cost have become imperative to increase the competitive

edge of tea to stay in the global race.

Higher production in major tea producing countries for successive

years, availability of better quality tea in low price than that of

Bangladesh have thrown a challenge for Bangladesh tea in the global

market. Low quality, higher price, rise in domestic tea consumption

are shrinking the Bangladesh tea market abroad, the sources said.

Sources said Pakistan remained the largest buyer of Bangladesh tea

during last couple of years. Pakistan imports nearly 85 per cent of

Bangladeshi tea after Islamabad granted duty-free access to Bangladesh

tea to their market.

“Because of rise in production of quality tea by other exporting

countries and low quality and decreasing quantity of Bangladeshi tea

is making the future of tea export grim,” National Brokers Ltd. - a

leading tea auctioneer in the country commented in its annual report

2003-2004. The report also said that Pakistan, which has been a major

outlet of Bangladesh tea, has lately been importing an increased

quantity of tea from India, Vietnam, China and Indonesia at a very

competitive rates in addition to their bulk of import from Kenya and

other African countries.

133

“Therefore Bangladesh tea is likely to face a stiffer competition from

those countries in the Pakistan market” the report predicted.

Exporters as well as BTB officials viewed that local tea industry,

particularly the planters and marketing companies, might sustain

somehow with the blessings of ever expanding domestic markets, but the

presence of Bangladesh tea in international market would become

scarce. They feared that Bangladesh’s traditional export item -tea

would be forced to pull out from the global market due to dependence

on single outlet, lack of quality and price competitiveness and poor

production. Official sources said Bangladesh produced 55 million kgs

tea in the fiscal 2001-2002, 54.2 million kgs in the fiscal 2002-2003,

and 44.2 million kgs up to April of the just ended fiscal.The country

had exported 13.8 million kgs in the fiscal 2001-2002, 12.1 million

kgs in the fiscal 2002-2003 and 11.6 million kgs up to April in just

ended fiscal.

On the other hand, internal consumption was 40.4 million kgs in the

fiscal 2001-2002 and 39.8 million kgs in the fiscal 2002- 2003, which

is almost double in a decade. Domestic consumption in fiscal 1996-1997

and 1997-1998 were 27.4 million kgs and 24.4 million kgs respectively.

Sources said increased domestic consumption has emerged as a threat to

tea export as lesser quantity of exportable tea are left at the export

basket after meeting the local demand although increased internal

market came up as cushion for the growers as well as blenders.

To effectively market a product or service there are four things youneed to get right: Product, Price, Place and Promotion. These fourelements are known as the marketing mix or the 4Ps. The four elementsshould be viewed as one unit and structured to support each other;Otherwise a firm's marketing strategy will be confusing anduncoordinated. This article provides you with a quick introduction toeach element and links if you would like more information.Marketing Mix : 4p's

134

Product

As the product is the item being sold to the customer, the thing thatwill bring in money, its features and design need carefulconsideration. Whether the firm is manufacturing the product orpurchasing the product for resale, they need to determine what productfeatures will appeal to their target market. When an organisation isconsidering introducing a product into a market, they should askthemselves the following questions:

Who is the product aimed atWhat benefit will customers expect from itWhat will be its advantage over competitor products? Or its uniqueselling point?How does the firm plan to Position the product within the market?The answers to these questions will help a firm design, package andadd value to its products. To learn more about product strategieswithin the marketing mix click on the following link: Marketing Mixand Product strategies

Price

There are lots of different pricing strategies but every strategy mustcover at least your costs unless the price is being used to attractcustomers to the business (loss leader pricing). A product is onlyworth as much as people are prepared to pay for it. The amout yourtarget market are prepared to pay for your products/services dependson product features and the target market's budget. You will also needto consider competitor pricing and factors within your marketingenvironment. Effective pricing involves balancing several factors, tofind out more about pricing including example pricing strategies clickhere.

Place

The Place element of the marketing place is about where the product ismade, where is it stored and how is it transported to the customer.The place for each of these things should ensure that the product getsto the right place at the right time without damage or loss. The idealplace will be

Convenient for the customer and the businessAccessible for the customer if it is the place where the product issold

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Low cost or free for the customer if it is the place where the productis soldReasonable cost to the business

The following link provides further information on place: MarketingMix and Place Strategies

Promotion

A successful product or service means nothing unless the benefit ofsuch a service can be communicated clearly to the target market.Promotion is any activity to raise awareness of a product or toencourage customers to purchase a product. Advertising is a form ofpromotion but not all promotions are advertisements.

Promotional activities for consumer sales will be different topromotional activities for business to business sales. The followingthings will influence how a firm chooses to promote its product:

Promotional campaign purposeThe budget for the promotional campaignLegal rules about what you can promote and howThe target market for the productThe marketing environment in which the firm operates

The following link provides further information on place: MarketingMix and Promotion Strategies

Other Marketing Mix Links

Service Marketing Mix: The ideal marketing strategy for a firm sellingservices, includes the traditional marketing mix and three additionalelements: people, process and physical evidence. Click on the attachedlink to learn more about the 7Ps: Service Marketing Mix

E-Marketing Mix: A massive increase in internet sales has changed theway the marketing mix is implemented by firms. The following link willtake you to an article explaining how the marketing mix can be usedfor online marketing Marketing Mix and The Internet

Environmental Marketing Mix. An increased focus on environmentalissues, has contributed to a rise in the demand for environmentallyfriendly products and services. The spotlight on sustaining theenvironment has created new terminology such as “carbon footprint” and“offsetting”. Many organisations have adapted their marketingstrategies to capitalise on the consumer appetite for Environmentally

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Friendly Products. Click on this link to read more about how themarketing mix can be used to market environmentally friendly productsand services

The report said the world tea export increased by 50,000 tons which is

more than the production in 2003, but production of the major

exporters such as India and Bangladesh has decreased.

The FAO report was prepared for the Intergovernmental Group on Tea

meeting in Bali (20-22 July 2005) to review the current world tea

market and its medium-term outlook. Increase in export was due mainly

to record production in Turkey, China, Kenya, Malawi, Srilanka and

Bangladesh. Azharul Islam, Director of Bangladesh Tea Board, yesterday

told the news agency that reduction in tea export was due to a rise in

domestic consumption. He said annual production of tea failed to cope

with higher domestic consumption. Presently, the consumption is rising

by 3.5 percent annually against 1 to 1.5 percent rise in production,

he said. He, however, hoped that tea production would mark a record

growth this year because of favourable weather.

Table. Tea smallholdings in South Asia

Country Units (No.)

Processing units (No.)

Production (million kg)

Share in production (%)

Bangladesh

Nil Nil Nil Nil

India - - - -North n.a. 14 2 0.4South 8 000 132 38 21

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Sri Lanka 230 000 260 130 54South Asia

  406 170 16

Source: Tea Boards of India and Sri Lanka.

It is becoming increasingly evident that tea growing lends itself

ideally to smallholder cultivation. Unlike seasonal or fruit crops,

tea generates year-round income to the farmer. The higher land and

labour productivity ensure a production cost that is lower than in the

estate sector. In social terms, the development of smallholdings

offers more employment opportunities to rural women, thereby enhancing

the living conditions of families. Given an efficient agricultural

extension system and proper processing facilities in close proximity,

increased small-grower participation in the tea industry could serve

as an effective strategy for raising incomes and providing an impetus

to the farming community in developing countries.

Market break-down

There are two major types of tea, black and green. Black tea accounts

for around 75% of global production and over 90% of the market in

western countries. Black tea results from leaves that are fully

oxidised, while green tea leaves are steamed, rolled and dried without

any oxidation. Most green tea is grown in China and is gaining

popularity in the West, partly for health reasons.

Output of black tea is projected to grow by 1.9% annually to reach 2.7

million tonnes in 2010, mainly due to improvements in yields rather

than an expansion in area. World production of green tea is expected

to grow at a faster rate of 2.6% per annum to reach a projected total

of 900,000 tonnes by 2010.

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Global production and consumption

Tea is grown in 36 tropical and semi-tropical countries, 19 of them

ACP countries. The six largest producing countries - India, China, Sri

Lanka, Kenya, Indonesia and Turkey (in that order) - account for 80%

of world output. Less than half of production is exported, as India

and China, in particular, are major consumers as well as producers.

Global tea production in 2003 reached 3.15 million tonnes, 75,000

tonnes more than in 2002, almost 2.4% higher, largely as a result of

favourable weather conditions. All major producing countries recorded

increased output, except Sri Lanka and Indonesia. India accounted for

27.4% of world output, followed by China, 24.6%, Sri Lanka, 9.75%, and

Kenya 9.4%. The FAO’s provisional figure for output in 2004 is 3.197

million tonnes, which would be 1.5% higher than that in 2003.

Global production has grown by around 2% a year since 1993-95, but

consumption in Western countries has grown by only around 1%. In a

number of developing countries, however, consumption has kept pace

with, or exceeded production.India is the largest consumer of tea,

accounting for over 20% of global consumption, followed by China,

accounting for around 13%. The UK, the Russian Federation, the CIS

countries, Pakistan and Japan are also major consumers.

Main world producers and leading

ACP producers

2004 (provisional) (tonnes)

India 845,000

China 821,000

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Sri Lanka 303,000

Kenya 290,000

Indonesia 158,843

Malawi 45,000

Uganda 35,000

Tanzania 25,500

Zimbabwe 22,000

Rwanda 15,484

How the tea market works

Tea is unusual among major agricultural commodities in that it is sold

through auctions or in private deals, increasingly on-line. Unlike

coffee or cocoa, there is no futures market for tea. Methods of sale

have evolved over centuries according to conditions prevalent in the

market place at any one time. Auctions began in 1679 in London and in

the 19th century in Colombo and Calcutta.

There are two auction centres in ACP countries, both in Africa. The

major centre in Mombasa, Kenya, offers between 60,000 and 90,000

packages of tea every week, with teas mainly from Kenya, but also from

Uganda, Rwanda, Tanzania and Zaire. The other auction centre, in

Limbe, Malawi, sells teas from Malawi and occasionally from

Mozambique, Zimbabwe and Zambia. Due to the seasonal nature of

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Malawi's tea production, the auction operates weekly for the six

months of the season - between December and May - and fortnightly

thereafter.

A few firms dominate sales in each auction centre: J. Thomas & Co.

Pvt. Ltd., the largest tea broker in the world, handles over 155

million kg of tea a year; Carritt Moran and Co. Ltd. is the second

largest.

On-line tea auctions have recently been set up alongside traditional

auctions. These speed up access to information and facilitate

participation. Bids can be submitted at any time and the sale process

is not geographically confined. Transaction cycle times and the stages

in handling are reduced. Also, teas need not be transported to

warehouses as inspections can be done using samples couriered to

buyers from the plantations.

Although the auction system would seem to approximate a 'fair market'

in which prices are determined solely by the interplay of supply and

demand, the system does not always work well for small-scale

producers. Auction prices vary considerably with both the quality and

quantity of tea on offer, and the demand for tea at any given time.

Price transparency, in theory one of the main advantages of an auction

system, is often limited in practice. Although buyers have a fair idea

of the quantity and quality of tea to be offered at any given auction,

sellers have little idea of how much will be demanded. They also know

little about buyers’ preferences and intentions. Thus, they have no

way of accurately predicting the return on their crop.

The system is also open to abuse. The concentration of buyers in most

auction centres is high, and new buyers can be discriminated against

for a number of reasons. First, brokers generally do not accept bids

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from buyers they do not know, as they feel it increases their risk;

second, the new buyers are disadvantaged by the fact that the tea has

to go to the processing and packaging plants, most of which are owned

by the established companies competing with them in the same auction.

There is evidence of collusion among brokers to influence prices.

UNCTAD has pointed to the danger arising from links between selling

brokers and firms operating tea estates and the small number of buying

brokers in 1982. In the 1970s, a commission of inquiry into the tea

auction system set up by the Sri Lankan government concluded that it

appears that there is 'a high degree of collusion that prevails in

buying and ….wide scope for collusion between brokers and buyers'.

Such collusion, if it occurred, would tend to reduce the price at

which producers could sell tea at the auctions, and would also affect

prices of direct sales.

More recently, investigations by the Kenyan Government found in March

2005, that tea buyers at the Mombasa auction are involved in collusive

bidding, with prices being controlled by the alleged 'cartel members'.

The big buyers 'manipulate the bidding process. Instead of bidding

against each other and the highest bidder winning the lot, the alleged

cartel members control prices and therefore split or share invoices or

lots,' says its report. If prices are being restrained in this way,

then clearly tea growers are being harmed.

The Kenya National Chamber of Commerce and Industry has called for the

elimination of tea auctions.

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International producers and traders

As we have seen a small number of companies dominate the tea industry.

They have a presence at almost all stages of the journey of tea from

tea bush to tea bag or packet. The companies buy their tea at an early

stage of production, and usually carry out the high-value-added

blending and packaging (which account for 80% of the retail price), at

facilities in the EU and other Western countries.

Blending means that many tea qualities have become exchangeable and

are bought wherever they are cheapest. The major companies are not

reliant on any one particular source and can easily freeze out a

particular producing country if it does not co-operate with the needs

of the company.

The UK/Dutch company Unilever is the world's largest supplier of black

tea. With tea estates in India and eastern Africa it has an estimated

15% share of global black tea sales. Its subsidiary Brooke Bond Kenya

is the country’s largest plantation company with an 11% share of

output. In July 2004 the company changed its name to Unilever Kenya

Tea. Unilever’s major brands (including Lipton, PG Tips and Red Label)

have an annual turnover in excess of €2.35bn and are available in more

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than 100 countries. Unilever's Lipton Yellow Label is the world's most

popular tea brand.

James Finlay Ltd produces around 55 million kg of tea each year on its

plantations in Kenya, Uganda, Bangladesh and Sri Lanka.

Tata Tata Ltd (India) has 18 subsidiaries worldwide and a significant

presence in 35 countries. It owns more than 70 estates in India and

Sri Lanka, produces over 60 million kg of black tea and in 2003

acquired Tetley, the second-largest tea bag brand worldwide.

Major trends in the market:

There is no single world price for tea, but rather differing prices at

different auctions. The price trend is downward. World Bank figures

suggest that between 1970 and 2000, tea prices fell by 44% in real

terms. After rising slightly between 2000 and 2004, the price fell

back in early 2005 to below the average level of 2001.

Average tea prices, Mombasa auction (US cents/kg)

2001 151.7

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2002 148.2

2003 154.4

2004 155.4

2005 (Jan/Feb avge) 149.9

Source: World Bank

The prices in the table compare with a 1974 tea price of around US

cents 140/kg. After taking inflation into account, the real price of

tea has dropped substantially. In real terms, producers now receive

less than half what they received 30 years ago. While technological

innovation and the development of new teas has led to some expansion

of the market, they have increased world output of tea and reduced

prices without affecting global demand significantly. In the absence

of supply-management strategies, production has outstripped demand.

Tea prices have nonetheless fluctuated less dramatically than coffee

prices, giving small-scale tea growers a little more certainty than

coffee farmers. But year on year their situation has worsened, making

production of the crop increasingly marginal for many.

Tea is facing increasing competition from soft drinks and other

beverages. Although the British are traditionally amongst the world’s

largest tea drinkers, consumption has declined recently.

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According to the FAO’s Intergovernmental Group of Tea, world imports

of black tea are projected to be in balance with exports in 2010. It

expects world tea production to reach 3 million tonnes by 2010,

slightly more than the record reached in 2001, while international

trade would reach 1.4 million tonnes, valued at US$2.9 billion.

Oxfam projects a surplus of export availabilities of about 24,000

tonnes over import requirements for 2005, a surplus of 2%.

The production structure of the ACP tea sector

The 19 ACP tea producers are Burundi, Cameroon, DR Congo, Ethiopia.

Kenya, Lesotho, Mali, Malawi, Mauritius, Mozambique, Nigeria, Papua

New Guinea, Rwanda, Seychelles, South Africa, Swaziland, Tanzania,

Uganda and Zimbabwe. All but Lesotho, Mali, Nigeria and Seychelles

export tea.

Kenya accounts for over half of the tea output in ACP countries.

Malawi, Uganda and Tanzania are the next largest producers, (in that

order) with Malawi’s production about 15% of Kenya’s.

Globally, most tea is grown on plantations. In the ACP countries,

small-scale growers are also prominent; in Kenya, they account for

about 60% of the country’s tea production. Smallholders often grow tea

bushes alongside staple crops for their own consumption, with the tea

providing cash income.

Outsourcing is practiced in some countries - in Zimbabwe and Malawi,

for example - with growers using their own plots to grow tea on

contract for plantations. Only the smallest producers farm their land

entirely with family labour, and many smallholders employ workers,

often on a casual basis.

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On plantations, the use of child labour seems common in many of the

poorer tea-producing regions, due to the economic conditions of the

household and lack of schools. A recent survey by the Malawi Congress

of Trade Unions found, for example, that child labour is a very

serious problem in many tea (and also tobacco) plantations.

After harvesting, the leaves from the tea bushes can be processed in

two ways – CTC (crush, tear and curl) or orthodox. CTC is used

primarily for tea bags and lower-quality leaves. Up to 97% of Kenya's

tea is CTC, (compared with Sri Lanka, where about 90% is orthodox).

Low prices for tea tend to be passed on to the poorest segments of a

country in the form of low wages on plantations. Given that it is

easier to cut costs (by reducing labour costs) than raise prices (it

is impossible for a producer country to attempt this unilaterally),

producing countries have to remain competitive by lowering wages –

which partially accounts for the rut in which plantation wages are

caught.

Labour costs account for over half of the cost of production, and

approximately 75% of that arises in plucking. There is downward

pressure on farmers’ incomes and labourers' wages and working

conditions, even though the proportion of wages in the consumer price

of tea is low.

Table: tea production and exports of ACP countries

 Production (tonnes)

2004 (provisional)

Exports (tonnes) 2003

Burundi 6,600 573

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Cameroon 4,000 1

DR Congo 1,389 146

Ethiopia 3,900 2,193

Kenya 290,000 293,751

Madagascar 716 -

Malawi 45,000 37,945

Mali 50 -

Mauritius 1,436 52

Mozambique 10,500 937

Nigeria n/a 178

Papua New Guinea 6,500 6,600

Rwanda 15,484 15,170

Seychelles 225 -

Swaziland n/a 96

Tanzania 25,500 20,887

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Uganda 35,000 8,071

Zambia 750 -

Zimbabwe 22,000 13,355

Source: FAO NB: F O Licht lists Kenya ’s

exports at 268,801 tonnes

The relative role of ACP tea in world trade

ACP countries account for around 30% of global tea exports. According

to FAO figures, Kenya is the world’s largest exporter, (293,751

tonnes) followed by Sri Lanka (291,000 tonnes); China (263,000

tonnes), India (171,000 tonnes) and Indonesia (90,000 tonnes).

According to F O Licht data, Kenya is the second largest exporter.

The competitiveness of ACP tea

Yields of tea and the cost of producing it vary enormously from

smallholder to estate, estate to estate, country to country. In Kenya

the estate sector is the most efficient with yields of about 2,670

kg/ha compared to 1,167 kg/ha in Sri Lanka. This is reversed in the

smallholder sector; in Kenya, yields from smallholders average only

1,651 kg/ha as against 2,217 kg/ha in Sri Lanka. The low level among

Kenya smallholders is attributed to low levels of fertiliser usage,

poor husbandry practices and inferior management. Paradoxically, tea

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smallholders in Kenya generally earn more than tea workers, many of

whom would prefer to be smallholders.

The Kenya Tea Development Authority pays a minimum of Ksh 7.50 (US

cents 9.5) per kg to smallholders and outgrowers. Growers in Uganda

receive US cents 10.4-15, those in Rwanda US cents 9.5, and those in

Malawi US cents 7.5.

The economic significance of tea to ACP countries

Tea output is increasing in the ACP group as in other tea-producing

areas. Kenya’s production increased from 203,000 tonnes in 1993-5 to

290,000 tonnes in 2004, while its exports increased even faster, from

208,154 tonnes in 2000 to 293,751 tonnes in 2003. Tea accounts for

around 20% of Burundi’s total exports, 18% of Kenya’s, 12% of Rwanda’s

and 7% of Malawi’s.

Uganda and South Africa are vigorously developing their tea sectors,

the latter partly through red tea (rooibos), worldwide export sales of

which increased by 400% between 1998 and 2003. Studies carried out in

South Africa have shown that rooibos is rich in antioxidants and may

help protect against damage that can lead to types of cancer and heart

problems.

There is a danger that expansion could have a negative effect on world

tea prices, especially given the near stagnant demand for tea in many

Western countries.

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The EU regime

The EU has no restrictions on the import of tea, nor does it have

quality standards. The EC describes tea as 'a totally liberalised

market'. The most favoured nation (MFN) tariff is zero, and there is

no tariff escalation if tea is processed, unlike the case for coffee

and cocoa. However, on small packages only, a 5% ad valorem tax

applies on imports into the EU of green tea (not fermented) in

immediate packings of a content not exceeding 3 kg, and on black tea

(fermented) and partly fermented tea, in immediate packings of a

content not exceeding 3 kg,

According to the EC, the main issue concerning the tea sector is the

way its producers are not protected from 'copycats'. Around 10,000

tonnes of 'Darjeeling' tea, for example, is produced from an estate in

Darjeeling, India, but 30,000 tonnes is sold under this designation

around the world.

The EC would like to see an international register of food-and-drink

products that are made from a special recipe, or are from a specific

region, that are not allowed to be copied. The March 2005 WTO ruling

on Geographical Designations of Origin should help ACP countries that

want to develop regionally specific teas. The EU believes that the

ruling upholds its system of granting protection to products with

specific geographic origin (GIs).

The need for investment to improve quality and add value

Investment is needed to raise the general quality of ACP teas which

tend to be low. This is reflected in the comparative prices at the

Mombasa auction on the one hand and the Indian and Sri Lankan auctions

on the other. For instance in January/February 2005, tea fetched an

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average of US cents 154.4/kg in Mombasa compared with US cents

194.2/kg at the Colombo auction.

More investment is needed to produce specialty teas. Teas in this

category from Kenya and Rwanda and other ACP tea-producing countries

are in demand and have attracted good prices. Specialty teas from

India have earned a reputation for high quality and fetch very good

prices. A batch of genuine Darjeeling tea, for example, fetched a

record, if exceptional price, in 2003 of £223/kg., compared with less

than £1/kg for ordinary teas.

Tea-producing countries would profit from expanding into upstream

activities, adding value in their own country, and generating

additional employment, income and revenue. Efforts by producers to

enter activities such as blending have been hampered by poor market

information and inadequate marketing strategies, aggravated by a lack

of funding. The Kenya Tea Development Agency (KTDA), which processes

and markets tea on behalf of its 370,000 smallholder owners, wants to

reverse this. In March 2003 it announced plans to blend KTDA tea with

cheaper African teas and sell them in branded packs to foreign

markets. In early 2004 the KTDA announced that three new tea brands

are being produced in Kenya for export: green, orthodox and flavoured

tea. The development of the products was inspired by a need 'to meet

new customer demands'.

New strategies aimed at adding value and reducing production and

marketing costs are also needed, especially to meet changing tastes.

The importance of the EU market globally

Global tea imports in 2003 totalled 1,319,574 tonnes, of which the EU

imported 291,469 tonnes, 22.1% of the total. The UK imported 156,636

tonnes, 53.74% of EU imports, and about 12% of global exports. Germany

152

was the EU’s second largest importer. The EU share of global imports

is set to rise with the entry of Poland, a major tea-consuming

country, which imported 30,594 tonnes in 2003.

The importance of the EU market to the ACP

The overall slow growth of tea consumption in Europe means that the EU

tea market is declining in importance for ACP countries producing

standard teas, (although the accession of Poland may modify this).

The UK has lost its historical position as the largest importer of

Kenyan tea; Pakistan now buys 25% of it, followed by Egypt, the UK,

Afghanistan and Sudan.

However, the EU market for fair-trade and specialty tea is likely to

grow in importance for ACP tea producers.

Profile of the market for tea in Europe

Germany is the fastest growing EU market increasing its imports from

40,583 tonnes in 2002 to 45,787 tonnes in 2002 and buying more of the

higher-quality teas. The UK is buying less - imports were down from

164,070 tonnes in 2002 to 156,636 tonnes in 2003 - with the market for

standard teas in decline.

EU countries have different requirements: continental Europe buys

leafy orthodox teas, while the UK prefers the CTC teas which are

normally used in tea bags. Germany buys first-flush Darjeeling at more

than US$30/kg, for example, while the UK would only reluctantly pay

US$2.50/kg for a top-quality Kenyan tea.

The ACP-EU trade relationship in the tea sector

The EU’s historical relationship with ACP countries lays the basis for

cooperation, given that EU countries do not grow tea. The entry of153

Turkey, the world’s sixth largest tea producer, into the EU could

change this and cause considerable, but as yet unknown, repercussions

for ACP countries.

The EU gives financial support to tea projects in ACP countries. The

Smallholder Tea Development Programme in Uganda, for example, was

assisted with €20 million from the European Development Fund. The

objective of the project was to develop Uganda’s smallholder tea

subsector and make it profitable, and to increase farmers’ real

income, employment opportunities and foreign-exchange earnings.

ACP counties could gain, believes the EU, if the WTO were to extend

the extra protection for GIs, currently limited to wines and spirits,

to other products including commodities - Ceylon tea, for example.

'There is ample evidence that geographical indications are

instrumental in fostering market differentiation leading to premium

prices. The resulting consumer recognition and product reputation

should therefore be safeguarded against unfair competition and

imitations via WTO-wide rules', according to an EC report.

Exploiting the fair-trade market

An increasing number of tea growers and plantation workers are

benefiting from selling their tea in the fair-trade system, with a

'Fairtrade' label. Products are certified by the UK-based Fairtrade

Foundation.

Fairtrade certified tea is sourced from tea estates and democratic

small-farmer organisations under terms of trade which include:

fair wages and working conditions for employees;

payment of a negotiated fair price to producers (estates and

smallholder organisations);

154

an additional premium for investing in social, economic or

environmental programmes.

CaféDirect, a UK-based fair-trade company, sources tea from east

Africa and Sri Lanka for sale under its Teadirect label. With a 34%

year-on-year growth by value, Teadirect is the fastest growing tea

brand in the UK retail market. Farmers who grow tea for Teadirect

receive a guaranteed minimum price of US$1.95/kg, some 40 cents a kg

higher than the Mombasa auction price in early 2005. In addition, a

premium of €0.50/kg or €1.00/kg, depending on the type of tea, is paid

for the improvement of the socio-economic situation of the workers,

their families and communities.

A growing percentage of fair-trade tea, almost 40%, comes from small-

scale growers. Another major UK-based company Traidcraft buys chiefly

from Uganda and Tanzania. More than 70 fair-trade teas are now

marketed, ranging from tea bags to loose tea, and including 'organic'

and green tea. In 2002, certified sales of fair-trade tea had an

estimated retail value of £7.2 million, about 1.3% of the market.

The Fairtrade label is monitored by the German-based Fair-trade

Labelling Organisation International (FLO), which sets standards under

which tea can be sold, and is working with 51 tea-producing

organisations from nine countries, including five in Tanzania, four in

Uganda, and one each in Kenya and Zimbabwe.

An FAO 'Tea Mark' was launched in December 2002. This is intended to

be an international mark to promote tea’s health benefits. The tea

boards of India, Kenya and Sri Lanka have been involved.

The Kayonza tea-processing factory in Uganda is an example of

involvement in the fair-trade system. The factory is collectively

owned by about 3,100 smallholders, who together cultivate 1,300

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hectares of tea, but most work very small plots of land (usually less

than 0.2 hectares under tea). They took over the factory after it was

privatised.

In 1998, the farmers joined the Fairtrade scheme and by the middle of

2001 they had received nearly $50,000 in premium funds. They used this

to construct a health centre with electricity and water, which

services an area of 600 square km and invested in communications and

email facilities, as local people previously had to walk 100 km to

make a phone call. Additionally, a 4 km road has been constructed to

save some farmers a five-hour walk to take their green leaf to the

collection point, so that they can now spend more time on their land.

The fair-trade premium has also allowed ten new primary schools to be

set up in the area.

Other trends

There are some other favourable trends: a Teadirect report refers to

some 'amazing advances in tea drinking'. It predicts that our cup of

tea, what's in it and the way we drink it will have changed beyond

recognition by 2010: 'Tea looks set for a massive revival over the

coming years, helped along by new inventions and lifestyle trends'.

Tea will also be put to new uses: 'Trendy tea - tea will come to

reflect our life-style choices and values. Hip bars in France, the UK

and the USA are already serving champagne teas and Earl Grey

martinis'.

In an effort to make tea more convenient to prepare, the tea industry

has introduced a ‘tea tablet’. Invented in Japan, this could help to

widen the market. Scientists at the world's largest tea-research

facility, in Assam, India, are also reported to have developed a tea

tablet. However, instant tea was a commercial failure when introduced

into the UK about two decades ago.156

Auction trends

Auction centres could become redundant with technological advances. At

present almost all tea fields are located in regions where land-phone

lines intermittently fail or do not exist. With the development of the

internet through mobile phones, however, and given that many

plantations are financed by large companies, tea estates will in the

future be able to post real-time data daily onto the internet,

enabling a viable futures market.

The global process for bringing buyers and sellers more directly

together is already taking place with catalogue sales of premium tea.

ACP producers need assistance to access information to enable them to

exploit on-line auctions.

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SUGGESTIONS

If the tea industry has to choose between improving prices and

controlling costs, the former is the more difficult option,

particularly in a global environment where transnational corporations

are exerting greater influence on the buying operations. The latter

option, therefore, seems to be the more practical alternative.

Although wages and input costs per se are bound to rise, they could,

within limits, be balanced in terms of unit costs of production

through enhanced productivity -- not just that of labour but also the

other factors of production that contribute to the growing,

manufacturing and marketing of tea. It is against this backdrop that

this study on productivity assumes crucial significance.

Cost control measures generally involve capital expenditure as, for

example, in material handling equipment, heat recording systems,

energy saving devices and so on. In this sense, these are also

components of the productivity approach.

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Conclusion

The art of tea cultivation in Bangladesh began over a century and a

half ago in the 1840s near the Chittagong Club. The first tea garden

to be established was Malnicherra in Sylhet in 1854. Its commercial

production began shortly thereafter in 1857.

Today, tea is the second most consumeable beverage in the world after

water. A total of 3,200,000 tonnes of tea were produced worldwide in

2004, (Source: FAO website www.fao.org) India, China, Sri Lanka and

Kenya, in that order, are the major producers of tea leaves.

Tea global market seems defined by radical change, both good and bad.The most radical disruption was the Afghan and Iraqi war, which hurtAsian wholesale producers. Remarkably, good news will likely come outof the Iraqi situation. Nations of that region consume high quantifiesof tea per person, and Iraq may become again a stable base for teaconsumption. Better yet, democracy may generate a larger middle-class

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society which has the money to buy a higher quality tea than thatpreviously consumed. And if Iraq and Afghan becomes a regional rolemodel as the U.S. government plans, then a future generation of newlymiddle-class tea drinkers may be created in many high-consumptionnations, the best news for marketing bulk amounts of branded tea,especially from India and Sri Lanka. While the Iraqi war is "loud"news for tea markets, a quieter global development remains remarkablylow interest rates. Some of the largest tea companies borrow heavily,reducing their ability to budget for marketing and advertising.

Tea consumption in Bangladesh is increasing 3 per cent per annum but

its production is increasing 1 per cent only. If tea production was

not increased Bangladesh would become a tea-importing country after

2020. Bangladesh is now exporting 12,000 Metric Tons (MT) tea per

annum, which earns Tk 90 crore.

According to the Bangladesh Tea Board currently Bangladeshi tea

gardens are producing 56,000 MT of tea per annum. Of this 12,000 MT is

exported. Bangladesh’s current population growth rate is 1.6 per cent.

Experts consider that in 2020 Bangladesh’s population will reach to

18.10 crore. If the tea consumption growth rate continues, in 2020 tea

consumption will reach to 6.50 crore kg while its production will

reach only to 5.41 crore kg.

The government is considering framing of a 20-year strategic plan for

development of the tea sector and to increase its production. The

project will cost Tk 867. 32 crore. of them Tk 752 crore will be spent

for implementation of strategic plan, Tk 64 crore will be spent for

research and other Tk 51 crore will be spent for trade and marketing

strategy.

The strategic plan suggests that total land for tea production has to

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be increased to 69,000 hectares from existing 50,000 hectares. It also

suggests that tea production per hectares is 1748 kg from 1176 kg has

to be increased as early as possible. It also recommends increase of

quality of tea and to export 40 per cent of total tea production.

It is concluded that the tea marketing of Bangladeshi Tea to

International market has both prospects because of Tea marketing

systems in Bangladesh have undergone significant changes over the last

three or four decades, keeping in line with changes in quantity,

quality, and market structure and problems due to the world tea export

increased by 50,000 tons which is more than the production in 2003,

but production of the major exporters such as India and Bangladesh has

decreased. The FAO report was prepared for the Intergovernmental Group

on Tea meeting in Bali (20-22 July 2005) to review the current world

tea market and its medium-term outlook.

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Bibliography :

Chatterjee, D.N.: Review of ILO/UNFPA/Indian Tea Association Family Welfare EducationProject in Dooars, India (1982).

Ceylon Labour Foundation: Health status of women plantation workers in Sri Lanka(1990).

FAO: Documents for the 11th Session of the Intergovernmental Group on Tea (Rome,1995).

Government of Sri Lanka: Tea Master Plan (1980).

ILO: Documents for the Tenth Session of the Committee on Work on Plantations (Geneva,1994).

International Tea Committee: Annual Bulletin of Statistics. Mackay, M.D.: Disease patternin the tea garden workers in Bangladesh (1977). Nair, S.U.: Review of United Planters'Association of Southern India study on socio-economic affecting productivity among teapluckers (1990).

SAARC Agriculture Information Centre: Women in agriculture (1993).

Sivaram, B.: A handbook on family health and welfare in plantations (ILO, Geneva,1992).

de Silva, R.L.: Statistical references: Productivity improvement of tea plantations in SriLanka (World Bank, 1994).

Tea Board of Bangladesh, India and Sri Lanka: Tea statistics.

162

Wesumperuma, D.; Gooneratne, W.; Fernando, N.A.: Labour absorption in the plantationcrop sector of Sri Lanka (1985).

Jana Arcimovičová, Pavel Valíček (1998): Vůně čaje, Start Benešov. ISBN 8-090-20059-1

(in Czech)

T. Yamamoto, M Kim, L R Juneja (editors): Chemistry and Applications of Green Tea, CRC

Press, ISBN 0-849-34006-3

Lu Yu (陆陆): Cha Jing (陆陆) (The classical book on tea). References are to Czech translation

of modern-day editon (1987) by Olga Lomová (translator): Kniha o čaji. Spolek milců

čaje, Praha, 2002. (in Czech)

John C. Evans (1992): Tea in China: The History of China's National Drink, Greenwood

Press. ISBN 0-313-28049-5

Kit Chow, Ione Kramer (1990): All the Tea in China, China Books & Periodicals Inc. ISBN

0835121941 References are to Czech translation by Michal Synek (1998): Všechny čaje

Číny, DharmaGaia Praha. ISBN 80-85905-48-5

Stephan Reimertz (1998): Vom Genuß des Tees : Eine eine heitere Reise durch alte

Landschaften, ehrwürdige Traditionen und moderne Verhältnisse, inklusive einer kleinen

Teeschule (In German)

Jane Pettigrew (2002), A Social History of Tea

Roy Moxham (2003), Tea: Addiction, Exploitation, and Empire

The Tea Council (UK)

http://www.teacouncil.co.uk

FAO (www.fao.org)

http://www.fao.org/es/ESC/en/20953/21035/index.html

India Infoline feature 'Indian Tea Sector: "The cup of joy"', December 9th 2004

http://trade.indiainfoline.com/Commexwebsite/olw/cup.pdf

The EU's position on geographical indications (GIs)

http://europa.eu.int/comm/trade/issues/sectoral/intell_property/argu_en.htm

The Tea Market: A Background Study Oxfam 2002

http:/www.maketradefair.com/assets/english/TeaMarket.pdf 163

EC: 'Agricultural Commodity Chains, Dependence and Poverty - A proposal for an EU

Action Plan', February 12th 2004, COM(2004)89 final.

http://trade-info.cec.eu.int/doclib/html/117111.htm

Fair-trade Foundation, London: 'Producer Profile, Kayonza Growers Tea Factory,

Uganda'

http://www.fairtrade.org.uk

International Tea Committee

http://www.intteacomm.co.uk

Salman Ispahani, Member, Bangladeshiya Cha Sangsad

Orman Rafay Nizam and B. R. Nizam, Membesr, Tea Traders Association, Bangladesh.

www.wikipedia.com/tea

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Source: Bangladesh Tea Board Annual Report 2013

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Source: Bangladesh Tea Board Annual Report 2013

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QUESTIONNAIRE FORMAT :

My research instrument was a printed questionnaire to which Igave both close-ended questions and open-ended questions. It isbecause to make an explanatory research and to easily interpretand tabulate our research work.

Graph:% of satisfaction Level

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Organized Data From The Survey :

PartDescription

TOTAL (%)

Personal Information:

0‐2 years 45%

3‐4 years 25%

5‐6 years

More than 6 years

20%

10%

Occupation

Service Holder 20

Student 5

Household Activities 10

Business 35

Private Service

Retired Person

15

5

Others 10

Age Range of 21‐30

40

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Age Range of 31‐40 40

Age Range of 41‐50 Age Range of above 50

17

3

Income Range of 15 – 25 (’000) 45

Income Range of 25 – 35 (’000) 25

Income Range of 35 – 45 (’000)

Income Range of above 45000

20

10

Refer JBL to the Friends/ Relatives

Yes 55 No 45

Refers By ACT

Savings ACT Others

40%60%

Features (Average Result)

Fully Satisfied With Perform 25

Satisfied With Performance 20

Neutral With Performance 20

Dissatisfied With Performance

Fully Dissatisfied

15

10

175

Yes

No

5

5

Questionnaire :

Dear Sir / Madam ,I am Sakawat Jahan Bhuyan student of IBAIS university doing myM.B.A thesis program on “ Marketing mixes analysis of teabusiness in Bangladesh” . I assure that this information will beused only academic purpose . This survey is being conducted todetermine the customers satisfaction and prefare about the tea.It may take approximately 6 to 8 minutes to complete thisquestionnaire.

Name :-Age :- Phone :-

E-mail :-

1. What is your occupation ? ■ Business ■ Govt Officer ■ Household Activities ■Private Service ■ Student

2 . How much you prefare tae ? ■ very much ■ Good ■ Normal ■ Rare

3. Why did you drink tea? ■ Refreshment ■ Cheer up mind ■ Boost up ■ Others

4. From where did you get tea ?

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■ Shop ■ Tea stall ■ Home ■ road side shop■ Others

5. How long you are drinking tea ? ■ < 1 Years ■ 1-2 Years ■ 2-3 year ■3-4 Years ■ > 4Years

6. Do you think Tea has available in Bnagladesh ? ■ Yes ■ No

7. Are you satisfied about our tea production ? ■ Yes ■ No

8. Do you think our country can more develop in tea sector ? ■ Yes ■ No

9. Do you think that we can grow more tea in our countryrather than the competitor ?

■ Highly Satisfied ■ Satisfied ■ Moderate ■Dissatisfied ■ Highly Dissatisfied.

10. How satisfied are you with the quality of our tea?

■ Highly Satisfied ■ Satisfied ■ Moderate ■Dissatisfied ■ Highly Dissatisfied.

11 . Do you think tea production incrase for more export ? ■ Highly Satisfied ■ Satisfied ■ Moderate ■ Dissatisfied

■ Highly Dissatisfied.

External Factors:

1) Any other Suggestions? ………………………………………………………………………………………….

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