Tea Board moots e-auction of 100% Darjeeling tea

Kolkata: The Tea Board of India will meet the producers of Darjeeling tea to propose 100% mandatory sales of the iconic brew via auction, which, according to it, would make each gram of the India’s first Geographical Indication (GI)-tagged product count in terms of traceability or authenticity and real price realisation.
Tea Board deputy chairman Arun Kumar Ray on Wednesday said: “There is a need to intervene for proper logo administration through 100% e-sales.Post-Diwali, we shall meet Darjeeling Tea Association (DTA) — which controls its 66 member gardens in the Hills — so that the full value of the GI tag is exploited via fair price realisation…we would like to ensure this to happen.”
Reacting to the proposal, Binod Mohan, chairman, DTA, told TOI: “Practically speaking, this may result in price crash of Hills tea and most of the members may not agree with this proposal. But, before making a comment, we need to see the modalities thoroughly. The meeting is crucial.”
Currently, just 3-3.5 million kg (mkg) — less than 50% of total 8 mkg Hills tea produced across 87 gardens — is put on the block and over two million kg of tea produced in a neighbouring country is unlawfully imported and mixed to be passed on as Darjeeling tea, said a Tea Board official. The Tea (Marketing) Control Order (TMCO) stipulates that 50% of the crop must be routed through the auctions though it is 100% in Sri Lanka.
“However, an amendment of TMCO is not necessarily needed to change the rule. Only a Union commerce ministry approval to this new proposal is required here,” said Tea Board controller of licensing Rajngandha Seal Naskar.
If strictly implemented, this will practically end the era of private sales of exclusive Darjeeling beverage, she added.
The Tea Board deputy chairman rued the fact that the Darjeeling tea on average fetches a lesser price ($3-3.5/kg) than that ($4-5 a kg) of the Sri Lankan tea.
On the probable opposition to this new proposal, Ray added that quite a few Darjeeling garden owners — almost 40% — are open to the new idea.
“Some doubts about the functioning of the system have been raised by producers’ body Indian Tea Association (ITA), which has 18 member estates in Darjeeling. In fact, ITA has sent a letter to us about this,” he said.
On whether enforcing all the Hills gardens to go for 100% sales via auction would satisfy an open market economy, the Tea Board deputy chairman said: “There is a feeling in the Central government that the dues of the labourers are not being paid properly despite the good value realisation of Darjeeling tea. Here the problem is that only 10 owners run 87 Darjeeling gardens undercutting each other. We want to make their business remunerative.”
Hills tea planters blamed it on last year’s 104-day strike along with erratic weather, shrinking manpower and low subsidy.
However, Ray reasoned, “It is question of transparency. It appears that despite selling tea at Rs 2000 a kg, you are unable to offer a 20% bonus. In Assam, producers have paid 18.5% bonus, but they could fetch just one-third of the prices sold by the Darjeeling tea planters. In this new system, we would get to know the floor price of the whole produce.”
On whether this will end the private sales regime, the Tea Board top official clarified that a producer can buy back his own tea and then re-sell it to a particular buyer — domestic or overseas — on one-on-one basis via negotiation. “However, there will be a little chance of undervaluing own tea in the auction,” he said.
Meanwhile, the board has made arrangements with e-auctions settlement lender ICICI Bank for providing 45-day credit to the buyers and also to facilitate bill discounting by the sellers to tide over the liquidity crunch and payment defaults.