Tea producers should retain freedom to choose between public auctions and private sales: NETA tells Piyush Goel
Guwahati: The North Eastern Tea Association (NETA) has expressed concerns over the Central government’s mandate requiring 100% of dust-grade tea produced in specified states, including Assam and other northeastern states, to be sold exclusively through public auctions.
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The policy, outlined in the Tea (Marketing) Control (Amendment) Order, 2024, is set to take effect on April 1, 2024.
In a representation to Union Minister for Commerce and Industry at Hotel Radisson Blu in Guwahati on Saturday, NETA chairman Ajay Dhandharia opposed the mandate, arguing that producers should retain the freedom to choose between public auctions and private sales, as both systems have coexisted for over 150 years.
The association contended that compelling producers to use only public auctions contradicts the Government of India’s policy “ease of doing business”.
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“Producers rely on market conditions to decide the mode of sale, and a one-size-fits-all policy does not accommodate the diverse business models within the tea industry. Some producers may find private sales more efficient and suitable to their operational needs, while others might prefer auctions,” the NETA said.
The association also said the current auction system faces inefficiencies, such as prolonged printing times.
For example, in Sale No. 48 (November 26) at the Guwahati auction, the printing time was extended to 28 days instead of 17 days.
Also 40% of CTC teas remained unsold. Lot size and divisibility rules were highlighted as contributing factors.
The NETA suggested that the minimum number of bags per lot for peak production months should be fixed at 20 bags.
It also advocated that divisibility should be allowed for lots exceeding 30 bags, rather than the current threshold of 20.
The NETA emphasized the need for producers to have autonomy over sales mechanisms.
The association urged the government to repeal the mandate requiring 100% auction sales for dust-grade tea, to retain the dual system of auctions and private sales to accommodate varying business models and improve auction efficiency by addressing operational bottlenecks such as printing times and minimum lot size requirements.
The NETA also appealed to avoid early production closure in Assam from next year. The crop patterns of Assam and Bengal varies.
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Even within Assam, the crop pattern of Tinsukia and Nagaon vary, and individual companies have different business models.
“If there is over-supply then rather than curtailing production effort should be made to increase consumption through generic promotion of tea in the domestic market,” it said.
The NETA said that Tea Board has hired BDO India LLP to conduct a pilot study on tea consumption in India’s domestic market.
The study found that per capita consumption of tea in India is low compared to other countries.
BDO suggested promoting tea as a sustainable plant-based beverage, focusing on health and wellness, aspirational, part of India’s cultural fabric, and popular among youth.
The association said the share of tea exports in production has reduced from 60% in 1960s to 16% in 2023 with export volume largely stagnant.
“Export from India was 231.08 million kgs in 2022 and 231.69 million kgs in 2023. A target to reach 300 million kgs exports from India would help demand-supply mismatch in the domestic market,” the NETA said.
Highlighting on impact of climate change in tea prodution, the NETA added that climate change is affecting tea production, with reduced annual rainfall and higher temperatures.
The Tocklai MET station recorded temperatures above 35°C for 38 days in 2023, with monthly maximums nearly 1°C higher than long-term normal.
Mitigation measures, such as climate-smart cultivars, proper shade, irrigation, and rainwater harvesting, are needed with government support.
“Therefore, mitigation measures to face the challenges of climate change have to be taken by industry with support from the Government – climate smart cultivars, proper shade status, irrigation (sprinkler/drip), rainwater harvesting etc,” it added.