The Federation of All India Tea Traders Association (FAITTA), the apex body of tea trade in the nation, has urged the Tea Board to undertake a thorough evaluation of the e-auction program just before rolling it out considering the fact that the public auction program could have significant ramifications posing many challenges for tea purchasers.
The tea trade, which migrated from a manual auction program to e-auction format in 2016 as component of the auction reform initiative, has been implemented in Coonoor and the Board has proposed, furthering the program to the remaining 5 auction centres.
The goal of introducing the e-auction program by the Tea Board was fair cost discovery, to guarantee trades take location at the industry-determined costs. But with many lacunae in the program, it has ended up working like a tender approach, mentioned Viren Shah, chairman of FAITTA, adding that in mock trials, the tea lots went to the purchaser who had entered the highest bid cost, regardless of the actual auction bidding trend and cost increments major up to the second highest bidder cost.
“The faulty logic of knockdown of lots is required to be revised. The maximum bid price logic for knockdown could have serious disadvantages in the long-run and impact buyer participation in the auctions,. This could be counterproductive to the Tea Board’s intent, and interest of stakeholders,” Shah mentioned.
Among the most likely impacts of the new auction program are tea costs that do not reflect the ground reality. The auction program can lead to an unnecessary hike in tea costs,” he mentioned. Tea auction costs in 2020 have been about 35% greater as compared to 2019 or about Rs 80 per kg greater. This was the outcome of a fair cost discovery mechanism primarily based on demand and provide. Tea production final calendar year was 1,250 million kg, about one hundred million kg reduce than the prior year’s output of 1,350 million kg. Retail tea costs rose by an typical Rs 70 per kg in the course of the year.
“We have conveyed our concerns to the Tea Board. We have demanded that the features of the new auction system be communicated to all stakeholders in a transparent manner. Any system should not be implemented without wider consultation with the trade,” Shah mentioned.