E-Travails for Kerala small tea players; but will it be a David Vs Goliath dream ending?

By: | Updated: June 25, 2016 8:50 AM

Small tea-buyers in Kerala are up against the new pan-India e-auction of tea, which they say discriminates against small buyers. The minimum volume (lot) a buyer can buy independently has been increased and this works against small buyers, members of the Cochin Tea Buyers Association said. The association has approached the high court against the new norms. India is the leading producer of black tea in the world with 25% share of the total production. Interestingly, India consumes 75-80 % of its own production.

Small tea-buyers in Kerala are up against the new pan-India e-auction of tea, which they say discriminates against small buyers. The minimum volume (lot) a buyer can buy independently has been increased and this works against small buyers, members of the Cochin Tea Buyers Association said. The association has approached the high court against the new norms. India is the leading producer of black tea in the world with 25% share of the total production. Interestingly, India consumes 75-80 % of its own production.

The state-run Tea Board decided to go for a new pan-India auction in order to connect all the auction centres throughout the country and overcome the constraints of the existing electronic auction system, to increase wide participation of buyers and sellers in the auctioning process. Earlier, there were seven registered e-auction centres in the country where auctions were conducted through an electronic platform provided by the board, with about 534 million kg of tea sold through the system last year.

Ajith MK, member of Cochin Tea Buyers Association and a buying agent, told FE that in the old system, a single buyer could bid for nine lots and this has been increased to 20 lots. A lot consists of a minimum of five bags with each bag “Small tea buyers buy from different sellers and blend it to get the ideal tea. If the lot size is increased, he is forced to buy more bags at a higher cost, which he is unable to do. This system favors big corporate buyers and discriminates against small buyers,” he added.Tea trade sources said that some buyers buy tea from 25 different sources and blend it according to the consumers’ preference.

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Tea auctions at the Kochi centre was muted in the last two days with only four–five buyers participating from a total of 192 active members, Ajith said.

Tea Board executive director C Paulrasu said that the participation in other centres have been positive and the problems in Kochi would be sorted out soon.

Board sources say that the earlier electronic auction had certain limitations that are believed to be major causes for stagnancy of the auction system.

“Prevalence of different auction rules across the centres, which in turn makes the system complicated for a tea buyer; restrictive participation of buyers as only registered buyers of the

centre can participate in the auction process of that centre; longer time to catalogue made teas in the auction after its production; less

participation of sellers and buyers in the auction process; cancellation of deals after knocking down of lots; and presence of a proxy bidding system are some of the drawbacks,” board sources added.

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