The Telegraph
Since 1st March, 1999
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Govt stirs heady brew for tea auction

Calcutta, Jan. 3: The Union commerce ministry has once again woken up to the merit of the tea auction system. In its new Tea Marketing Tea Control Order (TMCO) 2003, the ministry has delegated powers to the Tea Board to determine the amount of tea that will be sent to the auctions.

This is a deviation from the earlier order issued in January 2001 that abolished clause 17 of the TMCO and gave full freedom to tea producers to sell their produce either through auctions or any other method of their choice.

The new TMCO, notified on January 1, has also given powers to the Tea Board to make it mandatory for buyers to lift a certain percentage of tea from the auctions. The changes in the TMCO follow several representations made by auctioneers to the commerce ministry.

“We have not yet decided the amount of teas that should go to the auctions. We will discuss the matter with all industry members before taking a decision,” Tea Board deputy chairman Basudeb Banerjee said.

Prior to the abolition of clause 17, it was mandatory for producers to sell 75 per cent of their produce in the auctions. However, in all practicality, only 55 per cent of the teas were being sold through that route. The abolition of the clause has not triggered a sudden rise in tea prices. Senior industry officials said producers were not gaining enough through private sales of tea.

“There is no major difference in prices between private and auction sales,” they added.

Moreover, producers of value-added tea like tea bags have been included as ‘manufacturers’ in the new TMCO. They will have to be registered with the Tea Board.

The new order has also empowered the Tea Board to fix reasonable prices for tea produced by the small-growers.

“We now have a framework within which we can work out the prices. We will have to see if the prices will be linked to the auction and whether the pricing will be according to the Sri Lankan model,” Banerjee said.

Under the new order, organisers of the tea trade who are bound by their own rules, will have to inform the Tea Board if they issue any new directive. Registered buyers have also been asked to inform the Tea Board of any purchases made outside auctions within a month. This is being done to enable Tea Board to have more control over the industry.

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