Bangladesh Tea Exports Choked by Low Yields and High Production Costs: TBS Report

Dhaka, August 25, 2026 — Bangladesh's tea industry is producing more tea than ever, yet it is struggling to compete in the global market as stubbornly low yields per hectare and high production costs undermine export competitiveness, according to a detailed investigation published by The Business Standard on 25 August 2026. The sector's core dilemma is that higher output alone will not make Bangladeshi tea more competitive internationally without significant improvements in productivity and cost efficiency.

📊 The Productivity Gap

Bangladesh produces around 1,400 kg of tea per hectare, compared with approximately 3,500 kg in Kenya and 3,200–3,300 kg in Vietnam, according to Tahsin Ahmed Chowdhury, Chief Operating Officer of Finlay Tea Company. This yield gap is the single biggest factor driving up costs and eroding Bangladesh's position in global tea markets.

• 🌿 Bangladesh: ~1,400 kg/hectare
• 🇰🇪 Kenya: ~3,500 kg/hectare (2.5x higher)
• 🇻🇳 Vietnam: ~3,200-3,300 kg/hectare (2.3x higher)

"Because of the low yield, production costs rise, making Bangladeshi tea less competitive in the international market," Tahsin said. The productivity gap translates directly into cost differences that price Bangladeshi tea out of key export markets.

💰 Production Cost Disparity

Producing a kilogram of tea costs Tk 200–220 in Bangladesh, against Tk 100–150 in India and Sri Lanka, according to Mohammad Moazzem Hossain, member and joint secretary of the Bangladesh Tea Board's Research and Development Department. That cost gap makes it difficult for Bangladesh to compete on price, particularly against producers extracting far more tea from the same land area.

• 🇧🇩 Bangladesh: Tk 200–220 per kg
• 🇮🇳 India: Tk 100–150 per kg
• 🇱🇰 Sri Lanka: Tk 100–150 per kg

📨 Export Earnings Decline Despite Rising Production

Bangladesh's tea export earnings have declined over the past decade despite fluctuations in production. The data reveals a persistent gap between output growth and revenue generation:

• 💰 FY2016-17: $4.47 million (highest in decade)
• 💰 FY2021-22: $2.14 million (decade low)
• 💰 FY2024-25: $4.10 million (recovery)
• 💰 FY2025-26: $3.33 million (down 18.8% YoY)
• 📉 10-year decline: 25.5% ($4.47M → $3.33M)

Overall tea production has continued to rise, but the increase in output has failed to translate into higher export earnings. Much of the additional production is being absorbed by strong domestic demand, while the industry also faces a narrow product mix and a lack of strong international brands.

🍶 Domestic Demand Absorbs Exportable Surplus

Bangladesh produces around 95 million kg of tea annually, while more than 90 million kg is consumed domestically, according to Moazzem. That leaves a shrinking surplus for export — meaning Bangladesh's growing production is largely consumed at home rather than earning foreign exchange. The domestic market, while valuable for the industry's survival, is limiting the sector's export potential.

• 📊 Annual production: ~95 million kg
• 👥 Domestic consumption: ~90 million kg
• 🌐 Exportable surplus: ~5 million kg (only 5.3% of production)

🌿 Product Mix and Branding Challenges

The industry is also stuck heavily in black tea, even as global demand expands for green, white, dark, and jasmine varieties. Tahsin noted that Chinese and Japanese producers command higher prices by branding and adding value to organic, white and jasmine teas. "Bangladesh also needs to focus on value-added tea alongside black tea to increase exports," he said.

A weak international brand presence compounds the problem. Kazi Arfan Ullah, manager of MM Ispahani Ltd's Neptune Tea Estate, said Bangladeshi producers lack internationally recognised brands. Tea bought through local auctions is generally marketed abroad by distributors, leaving Bangladesh without a strong global tea identity that would command premium pricing.

📈 January Production Surge

Production figures show a different trend from export earnings. Tea output in January increased from 175,000 kg in 2024 to 309,000 kg in 2025 and 573,000 kg in 2026. January 2026 production was 264,000 kg higher than a year earlier and 398,000 kg higher than in January 2024, making it the highest January output in the three years. The figures underline the sector's central dilemma: Bangladesh can increase overall tea production, but unless productivity improves and production costs fall, higher output alone will not make its tea more competitive internationally.

🌞 Stakeholder Recommendations

Industry stakeholders say raising productivity and efficiency must be the priority, alongside cutting costs, diversifying products and building international brands. Key recommendations include:

• ⚙ Raise yields per hectare — invest in better cultivation practices, pruning, and plant replacement
• 💰 Lower interest rates on industry loans — reduce financing burden on tea estates
• 🏢 Build international brands — move beyond bulk auction sales to branded export products
• 🌿 Diversify into value-added teas — green, white, organic, and jasmine varieties
• ☀ Install solar power in tea estates — reduce energy costs and create additional income
• 🌾 Use unused estate land — for solar power generation and other agricultural activities

Moazzem said initiatives are being taken to reduce tea prices, improve workers' living standards and install solar power in tea estates. Tahsin also called for lower interest rates on industry loans to ease the financial burden on tea estate owners.

🌐 Strategic Context for Bangladesh's Export Economy

For Bangladesh's export economy, the tea sector's struggles highlight a recurring pattern: the country can increase production volumes across multiple sectors but often fails to capture proportional export value due to productivity gaps, cost inefficiencies, and lack of branding. The tea industry's experience mirrors similar challenges in jute, leather, and agro-processing — where Bangladesh has natural advantages but cannot translate production volume into premium export earnings.

The BNP government's broader economic reform agenda, including the Invest Bangladesh Authority formation and the push for export diversification beyond RMG, will need to address these structural productivity gaps if Bangladesh is to build a more resilient and diversified export portfolio. The tea sector, with its 25.5% decade-long export decline, serves as a cautionary case study of what happens when production growth is not matched by competitiveness improvements. Without targeted investment in yield improvement, product diversification, and international branding, Bangladesh's tea industry risks continued export stagnation even as domestic consumption grows and production volumes rise.