Tea consignments pile up at brokerage houses as two consecutive tea auctions were suspended due to the coronavirus pandemic
The prolonged coronavirus-led shutdown deepens worries over sales of 9 lakh kilograms of tea currently piled up at brokerage houses.
The closure has slashed tea consumption as restaurants and tea stalls have been closed for nearly a month. As many as 167 tea estates of the country are bearing the brunt as the last two consecutive tea biddings in the current auction year were suspended owing to fears of the virus.
The Bangladesh Tea Board is also not sure when the first bidding of the new auction year will take place. The board therefore permitted the brokerage houses to sell the unsold tea stocks as "out-lot" worth around Tk23 crore.
Chattogram and Moulvibazar host four tea auctions per month with 12 brokerage houses taking part. The Tea Board postponed the 46th and 47th auctions of the 2019-20 auction year on March 24 and March 31 respectively.
As an alternative measure, the board permitted the houses to sell the stocks in out-lots — a sale without bidding. In this process, the houses will bargain with customers according to the agreed prices between the houses and estate owners.
The estate owners believe such sales will help minimize their losses.
Of the 167 tea gardens, Chattogram has the highest of 22 tea estates. The other estates are in Sylhet, Sreemangal, Rangamati and Bandarban.
The tea estates send their yields to the brokerage houses. The tea board then assesses the quality and determines their grades and prices. The grades and prices are then put on brokerage house catalogs.
Buyers registered with the Bangladesh Tea Board start the bidding in line with the prices mentioned in the catalogues.
Sujit Bhattacharyya, senior manager of Produce Brokers, told The Business Standard that the canceled 46th auction had a catalogue while the subsequent 47th did not have any. The 47th auction will follow the previous catalogue when it takes place in the new auction year.
"We are yet to announce the 2020-21 tea auction year. We will announce the first auction of the new auction year once the office resumes functioning," said Kula Pradip Chakma, secretary of the Bangladesh Tea Board.
According to the board, Bangladesh's tea production in 2019 was 96.07 million kilograms of yield. The country produced 1.83 million kilograms of tea in the first three months (January to March) this year.
Per kilogram tea price was Tk250 on average at the first auction in the 2019-20 auction year. The average tea price was Tk262.96 in the 2018-19 auction year.
The brokerage houses fear that tea prices will fall further in the 2020-21 auction year owing to low demand.