02nd November 2024 (9 Topics)
2
Dec
Government’s Tea Auction Mandate
Context
The North Eastern Tea Association (NETA) has raised concerns over the Central government's new mandate, requiring 100% of dust-grade tea to be sold exclusively through public auctions, set to take effect on April 1, 2024. NETA argues that this policy limits producer flexibility and could harm the diverse tea industry's operational needs.
What’s the issue?
- The Central government of India has introduced a new policy that mandates 100% of dust-grade tea produced in specific states, including Assam and other northeastern states, to be sold exclusively through public auctions.
- This policy is part of the Tea (Marketing) Control (Amendment) Order, 2024, and is set to come into effect on April 1, 2024.
- The North Eastern Tea Association (NETA), which represents tea producers in the region, has raised concerns about the policy, arguing that it restricts the freedom of producers to choose between public auctions and private sales, both of which have coexisted for over 150 years in the Indian tea industry.
NETA’s Opposition to the Mandate
- Freedom of Choice in Sales Mechanisms: Tea producers should have the autonomy to decide between selling through public auctions or private sales. A one-size-fits-all policy does not suit the diverse business models of tea producers in different regions. Some producers may find private sales more efficient based on their operations, while others may prefer public auctions.
- Inefficiencies in the Auction System:
- Extended Printing Times: In Sale No. 48 at the Guwahati auction, the printing time for results was extended to 28 days, instead of the usual 17 days.
- High Unsold Inventory: Around 40% of CTC (crush, tear, curl) teas remained unsold at the Guwahati auction due to factors like lot size and divisibility rules.
- Lot Size and Divisibility: NETA suggested that the minimum lot size for peak production months should be fixed at 20 bags (instead of the current rule of 30), and divisibility for lots exceeding 30 bags should be allowed.
- Impact on Diverse Business Models: There is need for flexibility in the tea sales mechanism, allowing producers to choose the most efficient model based on their unique business needs. Imposing a single, mandatory system would limit operational flexibility and could be detrimental to certain producers.
Tea Consumption in India:
Tea Crop
Tea Board of India
North Eastern Tea Association (NETA)
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