Four centres have already moved to full e-auction.
Five out of six tea auction centres across India will move to 100 per cent e-auction by April.
The three centres in South India and the Guwahati centre have already moved to full e-auction, while Kolkata is in the process of doing so.
Tea Board of India Chairman Basudeb Banerjee said, “We had asked them (a year earlier) to set a deadline, and they set April.” There are six auction centres: Kolkata, Guwahati, Siliguri, Coonoor (in the Nilgiris), Coimbatore and Kochi.
The government has spelt out its intention of routing auction sales through only the electronic method. However, 100 per cent implementation may take some more months.
At present, Kolkata is routing 20-30 per cent sales through e-auction, which will increase to at least 80 per cent by April with CTC leaf being brought under its ambit. Siliguri showed some initial resistance and therefore the government is not counting on it for April implementation. Only 10 per cent of sales is being routed through e-auction there at present.
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Banerjee said around 150 million kg was being presently routed through e-auction. Auctions have been a major source of routing sales. Of a total annual production of 978 million kg, more than half is routed through auctions.
In Kolkata, buyers are prepared for the change. “There were some initial technical glitches, but there is understanding from all sides that the trade would move to e-auction,” said sources in Tata Tea, one of the major buyers.
Aditya Khaitan, managing director, McLeod Russel India said, “E-auction is the way auctions will be done.” His group is the world’s largest bulk tea producer, with about 100 million kg annual output.
Buyers and sellers admit the apprehensions were more of a mindset issue. Auctions houses were also being prepared to meet the challenges. “It was in the development stage, and is now being implemented,” said a source in J Thomas & Co, the single largest tea auctioner in the world.
One reason for moving to e-auction was better price discovery, but it is difficult to ascertain how far that objective has been achieved. “The market is buoyant and is difficult to figure. One will know when the going is not so good,” said a producer.
The industry saw one of the best years last year, when there was a global shortage. Going by weather conditions, this year would also see major shortage. Khaitan said, “The shortage was likely to be more than anticipated.” The new season tea, which should have made its way to the market by now, is yet to do so because of the dry weather.”