Bangladesh’s tea industry is passing through a critical phase. Auction prices have strengthened significantly; the hike in the minimum auction, or floor price, last year has added a new dimension; and demand for quality tea remains strong. Yet, beyond these positive developments lies a bigger question: can higher prices be converted into higher productivity, better worker welfare, stronger brands, and sustainable growth? This question becomes pertinent, especially amid the ongoing protests by tea workers for fair wages, while rising production costs, climate-related issues, and uneven productivity across tea-growing regions remain challenging.
To answer this question, it is crucial to understand how the tea industry works.
After tea leaves are plucked and processed in factories, the finished tea is graded and divided into different lots. These lots are presented at organised tea auctions, where tea companies, traders and other buyers compete to purchase them, offering prices influenced by quality, grade, supply, demand, prevailing market conditions, etc.
The auction therefore creates a market-based price signal. When auction prices rise, the cost of raw tea can increase throughout the value chain, eventually affecting processors, packaged-tea companies, traders, and ultimately, consumers.
Recent auction performance illustrates this changing environment. On August 3, 2026, tea produced by 12 estates of the state-owned National Tea Company Ltd achieved an average auction price of Tk 280.59 per kilogramme for 151,560 kilogrammes of tea—Tk 35.59 above the government-set base price of Tk 245 per kilogramme.
For producers, stronger prices can provide much-needed financial breathing space and allow investment in plantation maintenance, replantation, irrigation, and factory operations, but such prices do not necessarily result in higher profit. Labour, fertiliser, energy, irrigation, transportation, factory processing, maintenance, and replanting all add to the production cost. The industry’s true health should therefore be judged by profitability after costs, not by auction prices alone.
Meanwhile, a floor price or a minimum auction price protects producers from exceptionally low market prices, which move according to supply and demand. So, the floor-price mechanism provides a degree of stability and reduces the risk of tea being sold at prices unsustainable for producers. It can also provide greater confidence for investment in tea gardens.
However, if production costs continue to rise while productivity remains low, simply maintaining a minimum price will not solve the industry’s fundamental problems. The mechanism should therefore be reviewed periodically in light of inflation, labour costs, energy prices, fertiliser costs, and other changes in the cost of production.
Bangladesh produced approximately 94.91 million kilogrammes of tea in 2025, around 2.01 percent higher than 2024. Yet production remained below the record level of more than 102 million kilogrammes achieved in 2023.
The national figure also conceals an important regional shift. While tea cultivation is expanding in northern districts, some traditional tea-producing areas are facing difficulties. In 2025, production declined in Moulvibazar, Chattogram, and Sylhet, largely because of irregular rainfall.
Moulvibazar produced approximately 44.85 million kilogrammes of tea in 2025, compared with around 46.33 million kilogrammes in 2024. Meanwhile, five northern districts produced more than 20 million kilogrammes of processed tea, representing around one-fifth of national production. This changing geographical pattern should encourage the industry to think not only about producing more tea, but also about producing it more efficiently.
However, no discussion about the future of tea can be complete without considering the people who produce it. Tea is one of Bangladesh’s most labour-intensive agricultural industries. Thousands of workers depend directly on tea gardens, while many others earn livelihoods through transportation, processing, trading, packaging, and distribution.
In July and August 2026, tea workers in several regions intensified demonstrations demanding a daily wage of Tk 500, along with land ownership rights and other demands. Workers have argued that their existing income is increasingly inadequate amid rising living costs. The industry’s response should not be limited to a debate over wages.
A sustainable solution requires that fair wages, higher productivity, and better conditions move together. Better field management, worker training, irrigation, appropriate mechanisation, and improved work practices can help raise productivity while creating room for better wages.
The other aspect of higher auction prices is that they create pressure throughout the tea value chain. Packaged-tea companies face rising costs not only for raw tea but also for packaging, transportation, energy, labour, warehousing, financing, distribution, and marketing, subsequently increasing the price consumers pay, which should remain rational and transparent. The industry needs a balanced value chain where producers receive sufficient returns to maintain their gardens, workers receive fair compensation, businesses remain viable, and consumers receive quality tea at reasonable prices.
For decades, the success of Bangladesh’s tea industry has often been measured by total production. That is no longer enough. We must ask harder questions: how much tea is produced per hectare? What is the production cost per kilogramme? How much premium-quality tea is being produced? How productive is each worker? How effectively are water and other resources being managed? How competitive is Bangladeshi tea internationally?
Bangladesh needs to move from a “more production” strategy to a “more productive production” strategy. Replanting old and low-yielding sections, introducing suitable high-yielding and climate-resilient clones, improving irrigation and soil management, strengthening field practices, and adopting appropriate technology can improve long-term competitiveness.
Rising auction prices provide an opportunity for the tea sector, while the floor-price mechanism offers some protection. But climate change, rising labour costs, worker rights, uneven productivity, and international competition remain challenging. Therefore, it is imperative to look beyond the auction price and answer the question: what kind of tea industry do we want Bangladesh to have over the next 20 to 30 years?
A sustainable tea industry must provide fair returns to producers, dignity and decent wages to workers, quality tea at reasonable prices for consumers, and an environment capable of supporting tea production for generations.
Md. Rashidul Islam is a tea master and trainer at the Bangladesh Tea Board, currently working as manager-operations at Tea Business (Pusti Brand) of T.K. Group.
Views expressed in this article are the author's own.
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