'Present tea auction system not helping in optimum price discovery in North India'

KOLKATA: Tea producers have opined that the new Bharat auction system introduced in North India from April this year is not helping in the discovery of optimum prices of the brew.

According to Tea Board data, average price realisation in North India from April to July in 2023-24 was lower at Rs 205.10 per kilogramme as compared to Rs 220.74 per kilogramme in the same period of 2022-23, when auctions were conducted using the English system.

The Bharat auction system was introduced in Kolkata, Guwahati and Siliguri from April this year replacing old the English auction system.

Anish Bhansali, immediate past chairman of Calcutta Tea Traders Association (CTTA), which provides the auction platform in Kolkata, said "the English auction system was better for the users. He said the auction prices have been lower in the current year because of the poor demand conditions.

"At the end of the day, the issue boils down to the question of demand and supply. Having said that, I feel the English auction system should be again brought back as the brokers, buyers and sellers have been used to this for so many years since online auction was introduced".

The issue was also flagged by the apex tea producers' body, the Indian Tea Association (ITA).

Immediate past chairperson of ITA Nayantara Pal Choudhuri had pointed out that the Bharat auction did not have the desired impact of aiding fair price discovery.

"The price rediscovery session (PRS) at the auctions is hardly attracting participation and declaration of base price weeks in advance is impacting market trends. Pursuant to our request for discontinuation, the Tea Board has modified the rule and made it optional for sellers", she stated.

She had also said that the suggestion of producers if taken on board will make the platform attractive to all the stakeholders.

An official of CTTA said that in the present auction system, division of lots are not allowed for which smaller buyers are not able to participate.

"In the previous English auction system, division of lots were allowed. One lot is more than 30 packets. If these lots are divided, then the smaller buyers would be able to participate. But they are not able now in the present model. As a result, competition is less and hence price discovery is not to the optimum extent", the official said.

He said the main thing is participation by all stakeholders. "If that happens, then only optimum price discovery will take place", he said.

Tea Board implemented the Bharat auction system in North India as the mandate was given to it for a pan-India auction. The Bharat auction was in South India before it was implemented in North India.

Despite attempts no comments were available from the Tea Board on the issue.