 "Mandatory 100% auction of dust tea grades heats up debate in tea industry")
The Centre-mandated 100 per cent auction of dust tea grades from North India is being backed by most of the stakeholders. But there are fissures.
On February 23, the Centre notified an amendment to the Tea (Marketing) Control Order, 2003, saying that 100 per cent of dust grades tea manufactured in a calendar year in its manufacturing units located in the geographical area of the states of Arunachal Pradesh, Assam, Bihar, Himachal Pradesh, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Uttarakhand, and West Bengal is to be sold through public tea auctions. It is effective April 1, 2024, for three months.
The suggestion came up during a stakeholder meeting chaired by Union Commerce Minister Piyush Goyal in Kolkata on January 6. Subsequently, the notification was issued. The main considerations behind the move were demand generation, better price discovery, and compliance with Food Safety and Standards Authority of India (FSSAI) norms.
On Tuesday, the Indian Tea Association (ITA), the oldest and largest association of tea producers in the country, said that during the interaction with the Union Commerce & Industry Minister, it had supported the idea mooted for a three-month trial for 100 per cent dust auctions in North India. “By default, it appears to be the only solution to detect and test Maximum Residue Levels (MRL) transparently, that is by channelising this category (being representative of the overall production) to pass through a funnel where testing and detection would be possible,” said the association.
“ITA pledges its unequivocal support to the Tea Board and the Commerce Ministry in this endeavour,” it added.
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Support from traders’ body
The move has gathered support from the Federation of All India Tea Traders Association (FAITTA), the apex body of tea traders, buyers, packers, and retailers of tea in India, the Indian Tea Exporters Association (ITEA), and small tea growers’ association, Confederation of Indian Small Tea Growers’ Association (CISTA).
FAITTA in a statement said that it ‘unequivocally’ supports the decision to conduct 100 per cent dust tea auction trial for three months. “It is the only solution to detect and deter the use of banned chemicals in our national drink, tea, transparently and serves the interests of 150 crore Indian tea consumers,” the association said.
Anshuman Kanoria, chairman of the Indian Tea Exporters Association, said, “The ITEA believes that this trial will afford much-needed transparency, comprehensive and legitimate testing of all production units as per FSSAI protocol, and incentivise better quality production for the benefit of Indian tea lovers.”
The gazette notification will also generate demand in a central marketplace, resulting in better price discovery.
Contrarian voice from Assam
However, a discordant note has come from the Assam Bought Leaf Tea Manufacturers’ Association (ABLTMA), which has rejected the notification and said if required, it will stop operations. Gautam Beria, secretary of ABLTMA, said that the association was not invited to the January 6 meeting.
“As bought leaf factories, we have our own system of marketing that we have created for the past 30 years. How can we divert from it and go to auction?” Beria questioned.
Bought leaf factories buy green leaf from small tea growers and process it. More than 50 per cent of Indian tea is produced by small tea growers. Beria said that the association would abide by the order if it was assured of the cost of production and minimum margin.
Former Tea Board chairman Prabhat Bezboruah said some packet tea players who wish to make private contracts with bought leaf factories are putting pressure on the latter to oppose the 100 per cent dust grades in auctions regulation being proposed by the government.
“The auction prices are used as a barometer for all prices. By selling privately, we are removing at least twice that quantity of demand from the auctions, as a multiplier factor is in operation, and auction prices come down. In effect, private sales impact auction prices, which are the barometer for private sale prices also,” he said. Bezboruah is the managing director of Bokahola Tea Co, which produces around 10 million kg of black tea.
Some handholding can help
However, the Indian Chamber of Commerce (ICC) tea committee chaired by Vikram Singh Gulia, met the Tea Board chairman on March 1 and said that some aspects need a little handholding and a constructive approach so as not to financially cripple the supply chain.
It was also said that the auction platform should be efficient to ensure that buyers are not inconvenienced and that the supply chain operates seamlessly.
On the infrastructure front, consultations may be required if the three-month trial is extended. J Kalyana Sundaram, secretary of the Calcutta Tea Traders Association (CTTA), said the auction system in Kolkata is equipped to handle additional quantities of dust tea in the lean season, which is April and May. The concern for tea producers is the peak season, which is June onwards.
“Currently, the 100 per cent auction of dust grades has been mandated for three months. Beyond that, it will require increasing the infrastructure," he said. At present, the registered tea warehousing space in Kolkata is about 2 million square feet.