Indian Tea Board cracks the whip on Coonoor tea trade over compliance issues

The Tea Board, for the first time, has suspended all the five auctioneers, two tea warehouses and five tea manufacturers from Coonoor auctions on the ground of some anomalies in sampling of teas placed for auctions. The suspension of auctioneers is for one week, while it is 14 days for warehouses and a month for five tea factories.

Coonoor is the second biggest tea trading centre in India after Kolkata and mainly caters to the domestic market.

The Tea Board, in its notification to each auctioneer, said the availability of stocks/tea bags of auction No. 6 was neither physically “present” in the warehouse nor dispatched from the factories. It is alleged that the auctioneers in the absence of physical stocks had taken samples from the fictitious lots.

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No auctions this week?

Quoting Bharat Auction rules, Tea Board said the auctioneers should draw the samples from the lots after cataloguing and they should inspect each lot entrusted to them for sale.

One of the stakeholders in the Coonoor tea trade told businessline that the current practice of tea sampling has been happening in Coonoor for the last 60 years and is being continued till now. Coonoor is the only centre in India where the sale happens within 10 days of catalogue closing whereas in North India, it takes almost a month and 15 days in Kochi. The delay in the sale can impact the quality of stored teas, affect the fund flow and may delay the timely payment to small tea growers. Moreover, the delay in future auctions will have a cascading effect on the trade.

It is unclear that in the absence of any operation of all the five auctioneers whether the auctioning, tea cataloguing, sampling, tasting of teas and tea deliveries will happen due to such stringent action by the Board, another stakeholder said.

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‘Trust broken’

Dipak Shah, Chairman, South India Tea Exporters Association said the suspension of auctioneers will definitely hinder the sales at least for this week and it is going to be a grim situation.

According to him, the auction system works totally on a trust and that trust has been broken. The suspension after proper verification has amply proved that this was a practice going on for many days. Sampling which is the essence of the whole auction process was handled in a shabby way. The buyer community feels cheated. Till things are normalised, producers with good credibility should catalogue their teas in such auction centres where there are more regulated compliances. This will ensure more credibility for their teas, Shah said.

Dhananjayan Krishnamurthy, president of Bought Leaf Tea Manufacturers Association, said since all the five auctioneers have been suspended, most probably one sale will be affected. “We have called for a meeting and are trying to represent the Tea Board to resolve the crisis. We are trying to see that the auctions can be conducted without the involvement of these brokers”.

“Though the Tea Board’s action is a welcome move, it is too much and too late as it affects other sellers, and buyers for no fault of theirs,” a tea producer said.

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