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Bangladesh Tea Market Review: 1999-2000
By Rasul Nizam

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 teaís 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 Bangladesh very little scope for optimism about prices for the current seasonís 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 liquoring 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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