The Hindu Business Line : Govt tea marketing order a complete failure

FIFTEEN months back, when the Tea (Marketing) Control Order, 2003 was in the early implementation stage, trade and industry were totally opposed to it. The buyers even went to the extent of boycotting the auction process to express their resistance to some of the directives issued by the Tea Board.

Now there is total silence. The trade and industry, while not quite willing to discuss the fate of the TMCO, said that it has no relevance in its current form.

Stating that the objective of promulgating such an Order has since been diluted, trade sources said that it would be better to shelve it and allow the industry stakeholders to conduct their affairs in line with the current market trend and reforms process rather than compel them to adhere to the unrealistic rule book.

The Tea Board had appointed AF Ferguson and Company (AFF) to study the tea auction system and suggest ways to a true price discovery mechanism besides instilling greater transparency in the system.

Based on the report submitted by AFF, the Commerce Ministry issued an Order that necessitated all primary buyers of tea (either from auction or direct from producers) to register with Tea Board within 60 days from the date of the Order (January 1, 2003).

The registration was not limited to primary buyers of bulk tea but included buyers and manufacturers of value-added products like packet teas and tea bags as well.

While the Order contemplated registration of the tea buyers with the Tea Board, it was not viewed with great seriousness in reality.

No action appears to have been initiated against the unregistered regional players and dealers.

Yet another directive that provoked the buyers' spirit was the divisibility norm. (This norm was valid only up to January 1, 2004.)

Traders alleged that the purpose with which it was initially drawn up had not been achieved.

The stipulation of five per cent divisibility premium appeared only on paper and was hardly reflected in the prices realised for teas.

According to industry insiders, it created a rift between the trade and industry.

They lamented that the auction centres have lost their status and image built over the last century. "They are operating more like a retail market or a grocer's shop."

On proxy bidding, a source said: "This is the biggest hoax. Proxy bidding has been diluted to such an extent that it has become free for all. It is no more mandatory for a tea buyer to become a member of an auction centre (Tea Trade Association).

"Accordingly, anybody and everybody can be and is allowed to enter the saleroom and bid for teas. In fact the term `proxy' has been misinterpreted and misapplied from the beginning. Presumably, both AFF and the Tea Board have not understood it correctly."

All auction centres stuck to their rules and regulations before the order came into the picture.

With the passage of time, the new TMCO appears to have given rise to varied interpretations to rules. Industry sources said that there is apparent misuse of rules now in the conduct of the auctions.

According to sources, a Government-sponsored auction centre (licensed recently) was said to be following its own rules, ignoring the stipulations of the TMCO and the directives issued there under by the Tea Board.