E-trading for packaged tea soon
The government has initiated steps to enable the packaged tea industry, especially premium varieties like Darjeeling and Assam tea, to operate on e-auction mode from next year.
By Amiti Sen & G Ganapathy Subramaniam, TNN |
NEW DELHI: The government has initiated steps to enable the packaged tea industry, especially premium varieties like Darjeeling and Assam tea, to operate on e-auction mode from next year.
The move is expected to benefit plantations that are currently selling through middle-men by improving their revenue realisation. E-auctions will also help establish a credible price-discovery mechanism.
The Tea Board of India has circulated a draft discussion paper for new market design for e-auction among all concerned and has invited comments.
While stakeholders provide the comments, the government plans to put in a place a software system in place soon to facilitate e-auctions in which participants could take part from any location.
Talks are on with the IT division of National Stock Exchange (NSE) to prepare the software necessary for the system, said minister of state for commerce Jairam Ramesh. As of now, tea auctions have been computerised in key centres like Siliguri, Guwahati, Kolkata, Koonur, Chennai and Coimbatore.
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However, premium grades like Darjeeling, Assam and organic teas are not covered by the electronic auctions. Public tea auctions in India primarily handle tea only in the form of loose tea in bulk packages. Over the years, the manufacturers of tea from tea leaf are producing packet tea for marketing to create awareness about their identity amongst consumers. Such act of value addition is beneficial to the estate, bought-leaf and cooperative factories. Public tea auction does not handle such packet tea at present.
Even for selling loose tea, producers are increasingly shifting from trading through the public tea auction route to private sale to save on transaction time and reduce transaction cost. E-auctions would improve the realisation of plantations, Mr Ramesh said. Therefore, producers would get better returns while margins of intermediaries would be reduced.
Disadvantages of the existing system include accommodation for limited number of registered buyers in the auction hall for bidding on any auction day, dominance of buying agents (commission agent) in the auction room and shorter time for price discovery.
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Issues being considered for re-design of e-auction include allowing registered manufacturers and buyers to sell and buy any category, quantity and grade of tea through the public auction system, doing away with the concept of “lot”, ensuring participation of all registered eligible buyers in the tea auction process to enable competition towards fair price discovery and maintaining anonymity of buyers and sellers.The information in catalogue may include total quantity of tea in kilograms, of any particular grade, date/week of manufacturing, grade of tea, name of tea garden owners, storing place, the detailed address and invoice number and date.
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