Khaitan: Booster dose

Calcutta, Aug. 8: The Indian Tea Association (ITA) wants to regulate the supply of tea to the auction centres so that it can fetch better prices and an oversupply situation does not arise.

It has submitted a proposal to the Calcutta Tea Traders’ Association (CTTA) ? the apex body of traders at Calcutta auctions. The proposal will be discussed at CTTA and will be placed before the Tea Board of India soon.

“Offering at the auction should be more in line with demand. That way, the consumer gets good tea throughout the year and the producer can realise better prices. This will act as a boost to the dampening mood of the tea industry,” B. M. Khaitan, chairman of McLeod Russel, told The Telegraph.

McLeod Russel, the largest integrated tea firm in the country, supplies most of the tea sold at the Calcutta auction.

According to the Tea Marketing Control Order 2003, tea that is up for sale is catalogued 19 days ahead. Within these 19 days, sampling of tea is done and the buyers and sellers get a feel of the tea on offer.

The Tea Board allows 1.10 lakh packages of fresh tea to be put up for sale at the Calcutta auction and 1.30 lakh packages of fresh tea at the Guwahati auction.

The industry wants this rule to be relaxed. At times, some of the tea sold stays back as buyers are not able to pay within two weeks of purchase. As a result, the producers do not get the money back.

This adds to the woes of tea producers who are affected by low price realisation and a spiralling cost of production.

The bulk of north Indian tea is produced in the first four months and most of it is offered at auctions within this time. “If the offerings are regulated then tea will be available at auctions throughout the year,” Khaitan added.

Khaitan, who has spent more than 40 years in the tea business, is hopeful that the industry will see a comeback in the second half of this financial year.

“The demand-supply position is expected to correct itself by December 2005. Domestic consumption is showing an upward trend,” he added.

The situation will further improve as cheap imports from Indonesia and Vietnam have been stopped.

Iran is opening up and exports to the Wana nations are expected to be higher this year. The Pakistan market is also looking better, he added.