A surge in demand for tea in the market has triggered the recent price hike, according to sector insiders

Prices of tea usually slide in the country's markets in June-October, during the peak season of production, but this year the prices have gone up.  

According to industry insiders, tea prices have increased by Tk30-40 per kg in the last two weeks in the auction and market levels as leaves picking in the country's tea gardens remained closed for three consecutive weeks last month due to workers' movement demanding higher wages.

The average price of tea in the 17th auction held in Chattogram on 5 September was over Tk220 per kg. In the previous auction on 29 August, the average price was Tk210. In the previous 10th to 15th auctions, the prices ranged between Tk190 and TK200, said auction sources.

Around 25.54 lakh kg of tea was brought for sale in the 17th auction, which was 5.15 lakh kg less than the auction a year earlier. Broker houses said a lower amount of tea will be available for sale in the next auctions too.

Earlier, on average, around 60%-65% of tea brought at the auction was sold usually but around 80%-85% of tea has been sold in recent auctions. This surge in demand for tea in the market has triggered the recent price hike, according to wholesalers and retailers.

The prices of coarse tea in different gardens of the country, including in Panchagarh, have increased by Tk20 per kg. On the other hand, the prices of other varieties of tea, including clone tea, have increased by around Tk40 per kg.

Mohammad Yusuf, former vice-president of the Tea Traders Association of Bangladesh, told The Business Standard (TBS), "If the supply decreases against the demand, the price will naturally be affected. Although tea production in the country has increased every year, it is still low compared to the population. Besides, the recent strike has disrupted production. Low rainfall this season has also affected tea production."

According to sources at the auction, the companies announced to supply more tea than the previous auctions in the peak season this year which they could not deliver. The quality was also comparatively lower.

Moreover, buyers have shown more interest in procuring good quality tea from the recent auctions anticipating that the impacts of the labour strike may last longer.

Tea garden owners said that tea leaves with a size of three inches are best for producing quality tea. The leaves are plucked every seven to 10 days. But no leaves were plucked in the gardens for three weeks during the labour protest, leaving the leaves to grow up to six to 15 inches. As a result, the quality of these leaves declined.

Md Karim, the owner of Planters Brokers, said that the supply of tea in the market is normal for now and the average price of tea has increased slightly in the last few auctions. The recent labour movement may have an impact here.

He also said the garden owners are not being benefitted from this price hike as much as the retail and wholesale dealers. "There can be some hoarding issues involved here," he mentioned.

Traders said more than 95% of the country's total tea is sold in the auction in Chattogram. In the last few auctions, 85%-90% of the tea has been bought by the buying houses. That is, only 10%-15% of the tea has been returned from the auctions.

Buyers are racing to increase their procurement due to fear of a further reduction in tea supply in the upcoming auctions, they said.

Md Abdur Rahman, the owner of Pabna Tea House in Chattogram, said, "The best quality tea is supplied from the garden in the middle of the year. But in the last two auctions, the price of tea has gone up. The price of good clone tea has increased the most."

Tea garden workers in the country carried out a strike in their workplaces demanding higher daily wages for 19 days from 9 August. On 28 August, they returned to work after the prime minister fixed their daily wages to Tk170.