Tea firms work out hedging mechanism

Tea companies in the Dooars-Assam area have proposed hedging in tea auctions.

The proposal, which is yet to be placed before the Tea Board of India, allows sellers and buyers to set prices in auction centres. If the price falls below that set by the producer, a swap broker will sell the tea and pay the differential to the estate owner. 

If the price is higher than the producer’s listed price, the garden will have to pay the differential to the broker.

According to the Indian Tea Association (ITA), this will help mitigate market volatility and help tea producers as well as swap