The Tea Board of India has decided to revive the old English system of tea auction, replacing the one that bore the name “Bharat” within six months of its launch, after complaints of losses under the new system by stakeholders of the tea industry.
On Monday, the Board issued a letter to the auction centres and stakeholders, saying that at a meeting held with Union commerce minister Piyush Goyal with the stakeholders on September 22, in Delhi, “instruction was passed to bring in practices of the erstwhile English Auction model".
“In this regard, necessary timelines for reverting back to English Auction in respect of all auction centres across India have been worked out…” reads the letter.
The letter brought loud cheers in the tea industry.
“We were apprehensive whether the Centre would buy our logic, particularly because of the recent infatuation expressed by certain quarters of the government over the term ‘Bharat’ on some occasions... We all saw how the 'Bharat' name was pushed during the G20 meetings recently. It is good that the Union commerce ministry has decided to revive the old system,” said a senior tea planter based in Siliguri.
In April this year, the Bharat auction system was introduced in the auction centres of Calcutta, Siliguri and Guwahati.
Since then, associations of tea planters have been expressing concerns on certain modifications in the new system, which replaced the English system in place since 1861, their earnings had dropped.
The planters had mentioned that in the Bharat auction model, bids were to be entered before the lots (each lot containing 30 packages) went live for auction. In the English system, bids could be made till a lot was “knocked off” or sold, which helped in price discovery in a dynamic process.
Also, in the English system, the division of lots was allowed and smaller buyers could participate.
“It could not be done under the present (Bharat) system and hence these smaller buyers could not participate. Thus, the competition was less and the prices were low,” the planter added.
The tea board’s data validated the claim of the planters. According to the data, the average auction price in north India (the Calcutta, Siliguri and Guwahati auction centres are clubbed under 'north India') was Rs 206.07 per kilo from January to August. But in 2023, the average price in the corresponding eight months had reduced to Rs 189.09. In August, the average price was Rs 227.65 per kilo in 2022, which declined to Rs 194.85 this year.
Sources in the industry said as it was decided to restore the old system, the Tea Board has decided to stop two auction sales from September 25 to 29 and from October 3 to 6.
“This is because installation of servers for the English auction system has to be done. The idea is to conduct a live auction on the English model on October 17,” said a source.
Senior trade union leaders, who had also expressed concern that the Bharat system of auction could jeopardise the financial stability of the industry, said the Centre should refrain from doing experiments.
“The decision to replace the old English system with the new system was yet another obstinate act by the BJP government to promote the term “Bharat.” They have spent government money to launch the new system, and now are wanting to get back to the old system. Government funds were spent on (something with) no use, while the tea industry also suffered losses. Such practices have to stop,” said Alok Chakraborty, the chairman of Siliguri (organisational) district Trinamul and a senior trade union leader in the tea industry in north Bengal.
Planters and small tea growers are relieved.
“We hope that the prices rise once the teas are auctioned through the old English system. During the past six months, the reduction in tea prices affected most gardens,” said Chinmoy Dhar, the chairman of the Dooars branch of the Tea Association of India.
Additional Reporting by Anirban Choudhury in Alipurduar