Agri Business

Review tea auction system, says Parliamentary panel

Santanu Sanyal Kolkata | Updated on March 12, 2018 Published on August 14, 2012

Revisit needed: A woman plucking tea leaves at a tea garden in Dibrugarh in this file photo. The present auction system does not necessarily always guarantee remunerative prices to growers, it is felt.   -  PTI

The department related Parliamentary Committee on Commerce, in a report on the tea industry submitted to Parliament a few days ago, has urged the Commerce Ministry and the Tea Board to take a fresh look at the tea auction system in general and the e-auction system in particular.  

The committee feels that the present auction system does not always guarantee remunerative prices to growers who often find it hard to pass on the cost to consumers once tea is offered at auction where prices are determined by free interplay of market forces.

The electronic auction system on the other hand, the committee notes, causes problems for sellers not connected electronically and access to computers and Internet is a problem in many parts of the country. The committee has, therefore, urged the Commerce Ministry and the Tea Board to “revisit the present e-auction system and come out with an ptimal solution”.

The committee has expressed grave concern over the Commerce Ministry’s “unpreparedness” to deal with unscrupulous exporters importing cheap tea from other countries and re-exporting it without any significant value-addition under false certificates as Tea of Indian Origin, thus, eating away at the value of Indian tea by undercutting. It, therefore, suggests strict monitoring system for tea for exports and import of tea for exports. Also, utmost care must be taken in regard to issue of licences in this regard.

The committee, comprising more than 40 members both from the Rajya Sabha and the Lok Sabha and headed by Shanta Kumar, was constituted in August 2011 and it submitted its report to Parliament a few days ago.

The committee has noted with concern that between 2007 and 2010, the country’s tea production steadily declined from 986.43 million kg to 966.4 mkg, whereas during the same period China’s production increased from 1,140 mkg to 1,475 mkg. The gap in production between China and India thus widened from 154 mkg to more than 500 mkg during the period.

The age profile of our tea bushes is another area of concern.  An estimated 37 per cent of tea bushes are more than 50 years old whereas in Kenya younger plantations account for more than 70 per cent of the total tea area and in Sri Lanka it is 68 per cent. In Vietnam, the entire tea area is not more than 20 year old, whereas, nearly one-third of China’s tea bushes are less than 10 years old. The special purpose Tea Fund created by the Tea Board in partnership with the Commerce Ministry, it is felt, needs to be recast to meet present-day requirements.  

The share of Indian tea in the world market declined from 48 per cent in the 1950s to 12 per cent in 2011. One major reason for this is growing domestic demand. But apprehensions have also been expressed over tariff reduction and tariff removal by according Most Favoured Nation status to Sri Lanka and signing of Free Trade Agreements with ASEAN countries.

Assam, West Bengal, Tamil Nadu and Kerala are the four major tea producing States and the committee is upset to note that tea production in States other than these four has not developed. “It is saddening to see that tea growing region remains by and large unchanged since the pre-Independence days and, even after 65 years of Independence, the Tea Board has failed to ensure addition of new areas under viable cultivation in a significant manner,” the report adds.  

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Published on August 14, 2012
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