Abstract
Tea is the most popular and the cheapest beverage in Bangladesh. It is one of the country's important export commodities,
contributing over 0.41% export earning in foreign exchange. The industry offers rural employment opportunities specially to
women and contributes to poverty alleviation in rural areas. The industry and related trade are providing employment for
about 0.09 million people, which are nearly 3.3% of the total industrial employment in the country. Tea plantation started in
Bangladesh in the early 1840's. The introduction of tea in Chittagong dates from 1829-40. A few years later, tea was found
"wild" in Khashia and Jaintia hills bordering Sylhet. The first tea plantation in Sylhet was at Malnicherra in 1854.Tea is one of
the largest agro based industries in Bangladesh. There are 160 tea estates having about 50 thousand hectare of land under
tea plantation producing about 57 million kilogram of made tea. As an agro-industry, economic research on tea should have
been carried out from the very beginning of the tea estate. As a matter of fact, Bangladesh Tea Research Institute
conducted a good number of studies, but most of its research are being conducted on various biological aspects such as
agronomic practices, adoption of improved clones in place of seeds, improved seeds, soil and pest management, etc.
Systematic economic study on tea industry in Bangladesh is very scanty. That is why an in-depth economic and financial
study on the tea industry of Bangladesh is highly esteemed. Therefore, the present study focused and examined critically
the technical, allocative and economic efficiency of tea estates, cost, returns and profit, estimation of the growth of area,
production and yield of Bangladesh tea, temporal price behaviour of Bangladesh tea and adequacy, utilization and
repayment behaviour of tea loanees. This study has made use of several analytical techniques to address the different
objectives. These are growth estimation, decomposition of growth, price behaviour analysis, standard farm management
cost-return and break even yield analysis. For addressing technical, allocative, cost and scale efficiencies as well as optimal
combination of inputs, Data Envelopment approach (DEA) was applied. The study reflects that the growth rates of area,
production and yield of tea grew @ 1.12, 1.95 and 0.83 percent respectively during 1947-2000. The growth rates of
production and yield were significantly higher during post-liberation period than that of the pre-liberation period. Area
expansion and yield were the main vehicles for increased tea output. Real prices did not play significant role in increasing
yield levels. The average per kilogram and per hectare cost of made tea was Tk 48.41 and Tk 49,015 respectively. The
highest cost component was the labour wage constituting 25.64% followed by manufacturing (15.53%), labour welfare
(15.37%), establishment (11.75%) and others 31.71%. The average per hectare yield of Bangladesh tea was 1115 kilogram.
Tea estates managed by Bangladesh Tea Board (BTB) had the highest yield (1413) and the lowest was (958 Kg/ha) at
Proprietary tea estates. The average per kilogram and per hectare gross margin of Bangladesh tea was Tk 16.91 and Tk
23,817 respectively. The highest gross margins gained by BTB managed tea estates, were Tk 29.55 per kilogram of made
tea and Tk 41,762 per hectare of the same respectively. When all the costs were brought under consideration the average
benefit cost ratio of Bangladesh tea became 1.49. The benefit cost ratio was the highest in case of BTB managed tea
estates (1.71) whereas it was the lowest at National tea company (1.25). Jury valley circle obtained the highest benefit cost .
ratio (1.78) while it was the lowest was at Lungla valley circle (0.87). Break-even yield for Bangladesh tea came out to be
667 kilogram, which lower than their average per hectare yield. The mean technical (TE), allocative (AE), cost efficiency
(CE), scale efficiency (SE) and Pure Technical efficiency (PTE) of the tea estates were 86% 60%, 55%, 94% and 91%
respectively. There are significant possibilities to increase overall efficiency levels of tea estates in Bangladesh. The average
overall technical inefficiency could be reduced by 14 percent, on average by operating at optimal scales by eliminating pure
technical inefficiencies. PTE contributes more to the overall technical inefficiency in the tea estates of Bangladesh.Size of
tea estates show negative correlation with TE, AE, CE and PTE. The mean efficiency level was the highest for tea estates
managed by Private Company. Fifty seven percent of the tea estates achieved increasing returns to scale, 35% displayed
optimum returns to scale whereas only 8% obtained decreasing returns to scale. The application of urea, TSP, labor and
number of bush per hectare was higher by about 4, 4,12 and 109 percent respectively than the cost minimizing level. This
indicates that urea, TSP and number of bush were over used than the cost efficient level. However, actual application of all
inputs was higher than the TE level. The technically efficient level requires that urea, TSP, MP, labor and number of bush be
reduced by 12, 39, 19,13 and 14 percent respectively. The growth rate of nominal price in Bangladesh tea was 7.13 %. The
growth rate of nominal price of tea was higher during post-liberation period as opposed to the pre-liberation period. The
nominal price of Bangladesh tea increased but the real price remained almost same during the study period. Prices of
Bangladesh tea in the domestic market is acting as a cushion to protect tea producers from worst situation of keen
competition to be faced by tea producers in the international market. The study also showed that larger tea estates
proportionately received higher amount of credit. The pattern of loan utilization did not show any deviation from the
stipulated. Tea estates were good repayers of loans. The effective cost of credit for an average amount of loan Taka 100
including official rate of interest stood at Tk 11.84. Policy recommendations include expansion of tea area as far as possible,
reduce technical inefficiency, improve per unit productivity and conducting similar research in different agro-ecological zones
and valleys.