The Hindu Business Line : Tea trade, industry spat over mandatory sales

EVEN as the Tea Board has said it will introduce e-auctions at all the six auction centres in the country by December at a cost of Rs 23 crore, the industry and trade are divided on the very use of auctions as the principal mode of selling teas. While some North Indian producer interests have asked the Tea Board to make it mandatory to sell all the teas produced through only these auctions, the prominent Southern interests are dead against this.

But, the Government has not made its view open on the matter. The United Planters' Association of Southern India (Upasi) argues that the producers' have got involved in direct marketing whenever it gave them better returns. On the contrary, they suffered some Rs 15 to 25 loss per kg when sold through the auctions as the prices were lower than the production cost. Some segments of the trade have, however, objected to their being held responsible for the lower returns in the auctions. Observing that even the teas of the bought leaf factories in the small scale sector are getting good prices in the auctions (better than the company estate teas), they point out that many individual producers are happy to sell their teas through the auctions.

In fact, making the teas to be sold compulsorily though the auctions can be done just by invoking the relevant provisions in the Tea Marketing Control Order (TMCO). This is the typical case of the producers paying a heavy price for blindly welcoming the TMCOwhen it was introduced with the provisions to regulate the buyers at the auctions. They failed to oppose the TMCO totally on the ground that any control cannot go hand in hand with a free market regime. Now, they are unable to digest any proposal to curtail their freedom in marketing albeit quite rightly so. The TMCO has many such enabling provisions which, when evoked, can bring back the inspector, control and regulatory raj for the producers (sellers), dealers (buyers) and the brokers (auctioneers).

In fact, considering that the traders are an essential side of the same coin, the producers could have asked for optional auctioning rather than opposing it totally. For, when one asks for optional auctioning, the reasons built in would be positive enough as to highlight the benefit to the producers. But, when one seeks to totally oppose the auctions, the representations would be loaded against the brokers and the buyers. Already, this has caused a lot of ripples in the industry. The Nilgiris MP, Mr. R. Prabhu, for instance, at the UPASI Conference blamed the brokers for the poor returns to the growers and openly warned them that if they failed to play fair in one year's time, he would directly take action. The brokers later called on him to explain that they had no role in lowering the prices at the auctions.

Even as such interesting sidelines are noticed, the first electronic auction - Teaserve - which completed one year of existence recently has reported a shortfall of Rs 2.15 on every kg of teas sold compared to the outcry auctions of the Coonoor Tea Trade Association (CTTA). For the volume sold through Teaserve, the producers lost over Rs 3.6 crore for not selling the same through the CTTA auctions.

The Tea Board-sponsored first electronic auctions were launched at the Tea trade Association of Coimbatore on May 29 and the second at Guwahati on June 21. The Board has announced that it would bring in electronic auctions in the other four centres - Coonoor, Kochi, Kolkata and Siliguri - by the end of this year. To promote this, a number of sessions have been held for the benefit of the players in the other auction centres. The idea is that the Government would support the system for the first two years and thereafter, they should be self-supporting at the centres.

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