Tea Board wants better e-auction system, but won't lead overhaul process

Instead, it wants stakeholders in tea industry to lead e-auction modernisation drive and evolve requisite software and platform

The Tea Board of India is working towards reforming the e-auction system it introduced 11 years ago but wants to minimally intervene in this process.

The Board wants various stakeholders in the industry to lead the e-auction modernisation drive and come up with the requisite software and platform, which is expected to better price realisations.

“The Tea Board would like to have the best system in the world but it will intervene minimally in the process,” Arun Kumar Ray, deputy chairman of the Tea Board, said during the annual general meeting of Indian Tea Association.

Ray clarified it was better if stakeholders from the sector came up with a platform to address the nitty-gritty of the trade and the practical problems they face in the process. 

In May 2016, the Board had launched a pan-India auction module, which aimed at creating a common marketplace for the buyers and sellers and improve prices. However, the module snapped for sometime on the day of its launch. Later, the buyers, sellers, and brokers raised issues such as settlement of payment problems to cataloguing to price discovery.

Although it is in place, improvisation of the auction process has been suggested by stakeholders in the tea industry. Ray said the Board can provide for necessary funds to implement upgrading the current e-auction mechanism, but the industry has to take the leadership.

Azam Monem, the outgoing chairman of ITA, said: “The digitalisation of the auction system way back in 2007 held the promise for a reduction in transaction costs and fair price discovery for the producer.  The system needs an overhaul and reforms brought in to eliminate wastage and bring in more efficiencies. There is, thus, a need to re-examine the high transaction costs, including free sampling, bidding processes, and efficient logistics.”

Tea producing firms are seeking a single platform for buyers and sellers to operate irrespective of where the produces are stored, and want the Board to do away with the mandatory norm of selling 50 per cent of theproduce via auctions. 

The association has undertaken a pilot project engaging a consultant to carry out trials of a swap mechanism, which is in its eighth week of trials. 

China foray 
 

Tea companies, including McLeod Russel, are in discussions with e-commerce giant Alibaba and other portals for its global foray into packet tea space in China and other countries. While McLeod is working on its packaging to mark its big retail trade push, Ray advised such companies to treat China as a different specialised market and cater to niche demands.