The United Planters’ Association of Southern India (UPASI) has termed as ‘retrograde’ the recent circular issued by Tea Board India, directing manufacturers to comply with the order of mandatory sale of 50% of the total output through public auctions.
There is a wide variation between auction and retail prices, said Prashant Bhansali, president, UPASI, in a statement.
In 2001, the government repealed the mandatory routing of tea through auctions in line with the policy of economic liberalisation and free trade. This was amended in 2015, he added.
However, tea producers have, during this period, developed a domestic market where they get better prices.
The Tea Board says its order will make the auction system robust and bring stability to prices. But, tea auctions in India have a finite load- handling capacity as is evident from the steep fall in prices witnessed presently. Also, there is no guarantee that the manufacturers will get fair prices to cover even the cost of production. Routing of teas through auction increases the transaction cost too.
The Association said the mode of sale of tea should be left to the choice of the producers.