The Financial Express

Tea Association seeks loan at 4.0pc interest rate

| Updated: April 21, 2021 19:31:39

Tea Association seeks loan at 4.0pc interest rate

The apex trade body of tea producers has requested the Bangladesh Bank (BB) to provide loan at 4.0 per cent concessional interest rate for the survival of the pandemic-hit tea industry, officials said.

The Bangladesh Tea Association (BTA) recently sought the loan facilities and urged the central bank to immediately take necessary steps in this regard.

It had also requested the BB to grant long-term loan for the development of the tea sector, they added.

At present, the farmers get loan at 4.0 percent interest rate for cultivating their crops from the scheduled banks against the disbursement of agriculture loan. The government provides 5.0 per cent subsidy to the banks concerned as interest loss.

According to circular-1 of Agricultural Credit Department dated July 31, 2016, some 60 per cent tea production related activities have been treated as the agricultural sector and the rest of 40 per cent activities including processing of green tea leaves as the industry sector.

As per the circular, the country's tea sector should be treated as the agriculture sector and given the existing concessional interest rate loan facility for the tea industry to make the sector profitable and sustainable, sector insiders said.

The Covid-19 has put a negative impact on the tea sector. The cash flow and financial capacity of the tea industry declined, they added.

As a result, it was very difficult for the tea sector to continue production, pay wages, collect capital and maintain jobs, they said.

They also fear a long-term negative impact on the tea sector. They said it might not be possible for them to complete the development work of the sector with limited resources due to revenue deficit and non-payment of loans.

The sector had been facing multifarious problems including continuous price fall, and unsold tea, they mentioned.

Earlier, BTA chairman M. Shah Alam had requested the commerce ministry to bring the pandemic-hit tea industry under the government's fiscal stimulus package.

The association had also sought additional working capital and a special fund for the sector at 4.5 per cent rate of interest annually.

The tea sector is a prioritized industrial sector under the National Industrial Policy 2016.

Bangladesh produced around 86.39 million kilogrammes (kg) of tea in 2020, of which 84.22 million kgs were consumed locally.

The government has set a target to increase tea production to 140 million kgs by 2025, aiming to meet the country's growing demand and increase its exports, according to the commerce ministry.

The volume of export was 2.17 million tonnes in 2020.

Over 100,619 permanent and 28,254 temporary workers are involved with the tea industry. Of them, 51 per cent are women, according to BTA documents.

Around 0.5 million workers and their dependants are living in the tea garden areas. Some 146 tea gardens are registered with Bangladesh Tea Board.

The domestic demand for tea is rising rapidly due to urbanisation entailing, a change in consumer taste along with the population growth.

Market diversification is necessary to increase tea production and contribution of tea to national export earnings, according to a Bangladesh Bank review.

The primary importers of tea from Bangladesh were the United Arab Emirates, Pakistan, the USA, Saudi Arabia, Kuwait, Bahrain, Japan and China in January-March 2019.

Once a tea exporter, Bangladesh has recently turned into an importer of the popular commodity.

It imported tea to the tune of 6.5 million kgs in the calendar year of 2018.

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