Tea producers suffer Rs 70 crore loss due to e-auction failure

KOLKATA: Tea producers who offer teas at the Kolkata auctions are in a fix. A link failure at the e-auction has resulted in teas worth Rs 70 crore piled up at the auction centre last week. They cannot sell teas through the manual open outcry system as the entire process has been replaced by electronic auction. This has pushed down prices of teas at the auctions at a time when there is a shortfall in production.

A senior member of Calcutta Tea Traders Association ( CTTA) said: "Last week there was a link failure due to some disturbance in Reliance Communication network. So 5.5 million kg of tea worth Rs 70 crore could not be sold. Now these teas will be offered for auction this week."

Calcutta auction centre had migrated from the manual open outcry system to e-auction in 2009. The major advantage of e-auction is the ability of the auctioneer to significantly improve the efficiency of the auction process, thus ensuring that every auction becomes able to put in place a fair price discovery process.

Its other benefits include ability of the bidders to be able to participate from their geographical location(s) at their convenience thereby increasing the chances of participation in auctions.

Therefore, one can expect cost reduction in procurement also. On the other hand, the buyers will get reasonable time for bidding any lot in this system. The system also reduces transportation time and cost for both the sellers and buyers.