Tea auction throughout the whole country has gone under dead lock

All the tea auction centers in India witnessed an unprecedented situation today when almost all the buyers refrained from lifting any stock with a warning to continue this in forthcoming auctions too. It was on protest against few clauses in the new Pan Country Tea Auction system introduced by Indian Tea Board( ITB).

“We did not ask to stop auction. But practically none of us bought anything at any of the seven auction centers in the whole country. This will continue until ITB amends the system,” said Ankit Lochan, Secretary, Siliguri Tea Traders Association.

“At Siliguri Tea Auction Centre(STAC), only 3% of total stock brought on floor today could be sold today. All other centers also had similar kind of dismal,” said Lochan. Out of over 1200 million kg national annual production, around 550 mkg made tea is sold through around 50 auctions in each of 7 centers. STAC, an important one, alone sales around 3.5 mkg worth around Rs 50 crore per auction.

Interestingly, sellers and brokers, the major sufferers of the situation, have also held Indian Tea Board responsible for the situation.

“The new system is going to ruin whole trade chain,” said K K Mintri, Chairman of Terai India Planters Association. “We appreciate the new system. But incidentally, registered tea brokers have become one of the worst victims of situation,” said S Misra, DGM, Percon India Pvt Ltd. a leading tea brokerage firm.

As per existing system, sellers receive ad- hock payments from brokers against the stock left under broker’s control before auction. This is utilized by seller to meet up production expenses including workers payment. But, under new system, payments are to be made directly by buyers to sellers only after auction.

Naturally, brokers have lost their control and stopped this ad-hock payment putting sellers at all tiers including small growers, factories or set gardens under financial deadlock. “The situation may force many of us to go for even closer,” said Mintri.

According to Indian Tea Board(ITB) Chairman S Sarangi, under new system, any buyer from anywhere can participate in electronic auction of any center under single registration and uniform rules.

“We appreciate the policy. But many modalities incorporated in it are extremely detrimental to the interest of whole trade chain. These could have been discussed with stake holders before finalization,” said Lochan. And same was the view of almost all.