India set for a record with tea e-auction

The face of tea auction in India, which accounts for 53 per cent of total sales, is set to change.

The electronic auction of tea would be the first in the world and there is apprehension from stakeholders as it calls for a complete overhaul of a system, which dates back to 1861. The pilot in Kolkata is slated for introduction over the next few weeks though there is leeway up to the first week of April, which is when the new season teas would come up for sale. In South India it would be launched within a month.

Though the government has not made e-auction mandatory, it has made it clear that this would be the preferred route that it would want to see functioning. Inaugural e-auctions have been held at all six centres, Kolkata, Siliguri, Guwahati, Coonoor, Coimbatore and Cochin.

A major buyer said, “Hope the e-auction does not drive the buyers towards private sales, which in any case is half of the sales now.” The contention is anonymity in the process. “If I don’t know what my competitor is buying, how do I get the feel of the market. The current physical auction system is a barometer to prices and demand. For the seller, if he does not know who the buyer is, he could be underselling,” said another industry representative.

The industry appears to be divided over the merits and demerits of e-auction. Kiran Desai, who heads the blending and buying at Tata Tea said, it was too futuristic for the present. Tata Tea buys about 50 million kg tea from the auctions. However, Aditya Khaitan, MD, McLeod Russel India, the world’s largest bulk tea producer said, it was step in the right direction.

His only apprehension was whether the system could take on the workload of the auction system. In 2007, of a total production of 945 million kg, 503 million kg were physical auction sales.