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Planters, industry strongly oppose Tea Board's circular on mandatory auction

28 Jul 2021 11:54 am
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Kochi 28 July (Commodities control) Tea Board’s recent circular on routing 50 per cent of the total tea manufactured through public auctions opened severe criticism from manufacturers and big planters across the country.

The Tea Board in a circular asked all producers to sell 50 per cent through public auctions, prompting companies to urge the commodity board to keep exports out of the purview of the order.

In the circular on Tea Marketing Control Order (TMCO), 2003, the board said routing 50 percent of the produce through auctions will bring stability in the price realisation process. It also said if any producer does not comply with the order, strict action will follow.

Reacting to the circular, Prashant Bhansali, President, United Planters Association of Southern India (UPASI) said that the move will be counterproductive given the wide divergence in the auction prices vis-à-vis retail prices.

The mandatory routing of 50 per cent of the tea is a retrograde step in the free market open economy, the country adopted since 1991.

In fact, the Government in the year 2001 repealed the mandatory routing of tea through auctions, in line with the economic policy of liberalisation and free trade which was subsequently amended in 2015. Tea Board has recently taken positive steps towards the Government’s current policy on “Ease of doing Business” and has reduced regulatory compliances related to a number of mandatory licences.

But this circular is a step away from what is necessary and completely counterintuitive. Further, routing of teas through auction increases the transaction cost, such as warehousing charges, brokerage, lot-money, free trade samples, etc. Having incurred all these additional costs, there is no guarantee that the teas would fetch better prices, he added.

Rudra Chatterjee, managing director of Luxmi Tea, which manufactures premium Darjeeling tea like Makaibari, said it should not be made applicable for exports and value-added tea (packet tea). Whole-time Director of McLeod Russel, Azam Monem, said the directive has been in existence and organised producers have been adhering to it. Monem also said the directive should not be made applicable to exports and packet tea and this aspect should be examined by the Board.

However, small tea growers have welcomed the new circular. Bijoy Gopal Chakaraborty, president, CISTA, a small growers association said that the circular would enhance transparency in trade and price realisation. In September, 2016 the board released a similar circular, later withdrawn amidst strong criticism from the industry.

(By Commoditiescontrol Bureau: +91-22-40015505)

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