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The Tea Buyers’ Association has taken issue with certain provisions in the newly introduced Pan-India tea auctions, saying they would affect several small tea traders at the Kochi auction centre.
“We are not able to participate in the Kochi auctions because of some provisions in the Pan India rules, especially with regard to division of lots, absence of any terms in splitting the lots and banning of proxy bidding,” Dharmendra D Vora, the association President, told BusinessLine.
This, he said, is evident from the lower participation of small and medium traders at the recently concluded Kochi auctions, where the quantity of dust grades sold was 3,32,000 kg in sale no 26 against offerings of 11,88,000 kg, that, too, with only eight buyers.
The implementation of minimum lot size of 20 bags to be purchased by a single buyer will hinder purchasing/competing power of small and medium traders. It will result in the reduction of competition and more over, the small and medium buyers will be out of trade. Out of 120 active tea traders in Kochi, about 100 constitute small and medium buyers, he said.
The minimum lots size of purchase has been fixed arbitrarily without considering the ground realities prevailing in the Kochi centre. In North Indian centres, he said the weekly offerings during the season were 1,50,000 to 1,70,000 packages, whereas in the Kochi centre, the figure was in the range of 25,000-35,000 packages. With the fixation of minimum 20 packages, small traders are finding it difficult to purchase single graded tea product in huge quantity.
Under the new rules, buyers will have to invest three times as much as in the old system. This will hinder small buyers from participating in the auction. In the long run only big players will be able to participate, says the association.
Referring to proxy bidding, he said Kochi buyers used to buy for inter-state buyers, who are registered with the Tea Trade Association as CST buyers.
Though the Association has approached the Kerala High Court seeking a stay on the implementation of the Pan India auction rules, the judge directed the Tea Board to consider the representation of the association and pass appropriate orders within two months.
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