The Tea Board of India wants 100% of the country’s tea output (except the quantity meant for direct exports) to be routed through the auction system, saying that this is considered to be the most secured way of marketing.
The board recently issued a notice seeking comments from the industry and trade on the matter by June-end. Currently, all registered manufacturers have to sell 50% of their produce through public auctions.
‘Purpose not served’
However, it is increasingly being felt that this measure, introduced last year to improve price-realisation, may not have achieved its objective. “Allowing partial routing through auction is leading to offering low quality tea which is affecting the entire price realisation mechanism,” the board said.
It also said that a detailed analysis of auction participation by the manufacturers was being carried out at present by the industry regulator. The Tea Marketing Control Order of 2003 was amended in October 2015 through a notification to put in place the 50% mandatory system. The regulator noted in this context that the initial proposal to implement 70% routing was diluted to 50 following industry representations.
Trade and industry sources were not very happy with the proposal saying that low tea prices were not directly linked with the amount being offered in auctions. “There is a wide variation from auction to auction and from producer to producer on the offering,” they said.
However, small tea growers were happy with the proposal since it would help them get better prices.