Agri Business

Planters oppose mandatory routing of tea sale through auctions

V Sajeev Kumar Kochi | Updated on July 28, 2021

Tea planters’ body Upasi describes the move as retrograde in a free market economy

The United Planters of Southern Association of India (Upasi) has opposed the Tea Board directive to mandatorily route 50 per cent of manufactured tea through public auctions. The planters’ body says the move will be counterproductive, given the wide divergence in auction prices vis-à-vis retail prices.

Prashant Bhansali, Upasi President, described the mandatory routing of tea as a retrograde step in the free market economy the country has adopted since 1991. The Government had, in 2001, repealed mandatory routing of tea through auctions, in line with the economic liberalisation policy. As a result, many tea producers developed their domestic markets, thereby getting much better price realisation for their produce, he said, adding that any business must have the liberty to decide whom it wants to sell to and on which platform.

India consumed over 89% of its tea production

On one hand, the Tea Board has taken positive steps such as reducing the regulatory compliances for several mandatory licences, while on the other the mandatory routing of tea through auctions is completely counterintuitive, he said.

The Tea Board views the mandatory routing as a means to make the auction system robust and stabilise price realisation. However, tea auctions in India have a finite load capacity, as was evident from the steep fall in prices witnessed presently. Further, there is no guarantee that manufacturers will get fair prices to cover even the cost of production, the Upasi president said.

In 2020-21, India spent all-time high to import tea

He also said that it increases the transaction cost in the form of warehousing charges, brokerage, lot money, free trade samples and so on.

Upasi wants the board to roll back its directive and allow manufacturers to decide the mode of sale.

Published on July 28, 2021

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