Tim Worstall says Bangladesh's tea estates should die because they can't pay market rates for capital. He built that on a price that was, for years, not a market price at all: Whatever a small pool of buyers felt like paying that week, with no floor underneath.
In 2023, Bangladesh produced a record 102.9 million kilograms of tea, while the corresponding auction year delivered a 12-year low average price of Tk171.24 per kilogram. Then the Bangladesh Tea Board introduced minimum auction pricing.
By 2025-26, the average auction price had risen to Tk245.50, up 43% -- and total auction revenue had increased by roughly Tk562 crore, even though less tea was sold through auction.
That's a broken pricing mechanism, not a verdict on tea.
Everything else in his argument rests on that price being honest. It isn't, and the rest of this piece works out the consequences.
I come to this from both sides; I studied economics and political science, have come from a family that has grown tea for four generations, and work in venture capital for emerging and frontier markets.
I've watched capital wasted propping up businesses that should have died. Worstall isn't wrong to worry about that. He's wrong about where the disease sits.
A tea estate is not a spreadsheet
My favourite economics joke: Assume rationality. Frictionless markets, perfect information, the model hands you the answer you wanted before you built it.
That's Worstall's picture -- capital and labour gliding from tea to whatever earns more this quarter.
Bangladesh's tea sector employs roughly 102,000 permanent workers and 40,000 seasonal ones. Close to half a million people live inside estate boundaries.
These are not abstractions to me. Factories my family has run, land my grandfather planted, and my father and uncles have managed. There are names and faces I know behind those numbers.
An estate isn’t just tea bushes. It includes housing, schools, roads, water systems, embankments, farmland, factories -- none of it fungible.
A tea company is not the same as any other factory or office. It’s a strange combination of agronomy, microeconomics, political systems, and many things hard to explain in a single article, best explained over a few cups of tea and a long afternoon. Anyway, I digress.
What I mean is that an estate doesn't deserve to survive simply because people depend on it. But exit has a cost, and it lands on people, not a balance sheet.
The sleight of hand
A 6% loan when inflation runs at 8% is concessional financing. Fine. But Worstall treats a subsidy's existence as proof of what it's used for.
That doesn't follow: Bangladesh's own garment industry was built on duty-free imports, bonded warehouses, and tax holidays before it became the country's largest export earner.
Some subsidized spending is waste. Some are why an industry exists at all. A subsidy tells you nothing about which bucket you're in. The real question is what the concession buys.
Another year of losses with nothing changing is a slow bleed with a government signature on it -- fair criticism. But financing replanting, irrigation, or debt restructuring is transition capital. Priced correctly, that's how you fix things.
There's a second case for keeping capacity alive that has nothing to do with restructuring math: Import substitution. Bangladesh's domestic tea consumption has been closing in on production for years, and the country already imports tea most seasons to cover the gap.
Every estate that goes under doesn't just cost jobs and export earnings; it widens a shortfall the country then has to fill in foreign exchange.
That's not a reason to keep a terminal estate on life support. But it is a reason the value of a marginal estate can't be read off the auction price alone.
Now the receipts
Once the Tea Board introduced a minimum price to correct that twelve-year low, the average price rose by roughly Tk74 per kilogram within two years, adding hundreds of crores in producer revenue -- without a single bush growing better tea.
When the Board pushed the floor further, buyers boycotted an auction outright, leaving more than half the tea offered unsold that day.
The price was never an unimpeachable verdict on value. It was the output of a lopsided buying process, and the buying side had enough leverage to walk away from half a season's output rather than pay more.
What the price actually measured was leverage, not tea.
Between the producers and the retail shelf sits a long chain -- brokers, blenders, packeters, whoever finally puts a brand name on the box -- each taking a cut. Ordinary commodity economics, not a scandal.
But it means the auction price captures only one point in a much longer chain, with no guarantee the margin is split fairly between growers and everyone downstream.
If an estate can't produce tea at a cost the market will sustainably bear, that's structural, and Worstall's remedy applies.
If it produces something worth far more than it's paid, but the value leaks out between garden and shelf, that's a market failure -- and closing the garden doesn't fix a market failure. Fixing the market does.
The test that actually matters
None of this means every estate survives -- that would be as lazy as Worstall's conclusion. Some will need restructuring more radical than a rate cut can provide, some need new ownership or a different use for the land. Let the evidence decide, estate by estate.
So far it doesn't look terminal: Production hit 95 million kilograms in 2025, against a record 102.9 million in 2023, the same year prices bottomed out. A sector producing more than ever and getting paid less than ever for it -- a margin problem, not a dead one.
There's a real difference between "a business with no credible path to viability should exit" and "needing concessional financing proves a business destroys value." The first is analysis. The second is an assumption wearing analysis as a costume.
The task force behind this financing paired it with replanting, export strategy, and debt restructuring. Cheap credit without reform is life support; tied to performance, it's a turnaround.
Estates that can't show a credible path shouldn't get it indefinitely. On that, Worstall is right.
The right test: Can this estate become productive and sustainable? Where yes, finance the transition and measure results. Where no, let the capital move.
Less satisfying than "things that lose money should close down." But having spent a career on the investing side of exactly this question, I'll take the answer that's actually correct.
Farhan A Rahman is the founder of Lontana Consulting, an emerging-markets advisory firm, and a fourth-generation tea planter. He is obligated to have an opinion on tea economics.
