Kochi: Tea auctions in Kochi have halted due to a face-off between traders and the Tea Board of India over moving to a fully electronic system.
Traders are unwilling to go ahead with electronic auctions even as the government trade promotion body insists on doing so. Auction centres at Coimbatore and Coonoor have already implemented fully compliant e-auctions earlier this month.
The Tea Buyers Association has moved the Kerala high court against the Tea Board’s decision to implement 100% electronic auction beginning this week. M.K. Ajit, president of the association, said that since the court was on vacation, the matter will be heard on Thursday.
Auctions for tea leaf varieties scheduled for Wednesday did not take place and the board has said it will have to cancel the licences of brokers unwilling to use the electronic platform and also close down the Tea Trade Association, or TTA, office in Kochi where the auctions are held.
The suspension and cancellation of auctions last week in preparation for full electronic auctions from this week has led to piling up of inventory worth at least Rs65 lakh. Ajit cautioned that the onset of the monsoon, expected a week ahead of schedule on 26 May, would adversely affect the quality of the stock.
R.D. Nazeem, executive director of the Tea Board based at Coonoor in Tamil Nadu, said the association has been asked to pass whatever contracts were made on Tuesday during the start of electronic auction for the tea dust varieties. The auction was suspended in an hour.
He added that NSE.IT Ltd, the information technology arm of the National Stock Exchange that has written the software, had over the past few months provided training to the trade and had informed the board that there was no case of any technical issue, as has been alleged by traders.
Traders allege that the operational system of the e-auction platform is not smooth and provides limited time for bidding. Buyers who want to select a particular tea for a blend will need time before they can decide to bid for it. But by then, other lots will have come up for auction, Ajit said.
Also, the last selling price is fixed as the base price for the next auction, he claimed, giving the buyers little option but to bid at a higher price, even if there is no demand for the tea at that price.
Unlike at Coimbatore and Coonoor, Ajit said the quantity at the Kochi centre was as high as 130,000-140,000kg every week and had at least 200 buyers. The quantities at Coonoor and Coimbatore were as low as 700,000 kg, with only about 80 people in the trade. Also, total electronic auctions were yet to be implemented at the centres in Kolkata and Siliguri in West Bengal and Guwahati in Assam, he pointed out.
Kumar J. Shah, chairman of the Kochi TTA, said the majority of the trade was not against electronic auction but wanted its implementation in a phased manner.