Estates usually produce just 1-5 kg of these specially manicured teas, often foregoing bigger harvests of regular teas
Estates usually produce just 1-5 kg of these specially manicured teas, often foregoing bigger harvests of regular teas | Photo Credit: RITU RAJ KONWAR

The Tea Board has turned down the proposal of the Nilgiri Bought Leaf Tea Manufacturers Association for fixing a base price at ₹85/kg for all teas in Coonoor auctions.

Rajanigandha Seal Naskar, Controller of Licensing, Tea Board, said the proposal cannot be considered as it will compromise the auction system. By doing so, the manufacturers are trying to fix the minimum benchmark price for their made teas in a different way which is not acceptable by the Board.

Generally, the auction price is determined by the market trend, demand and supply scenario of quality teas and hence there is no logic of fixation of fixed base price in the auction system, she said in the reply letter to the Association.

In the Bharath Auction model, presently being executed in South India, the base price is calculated by the auction system as per pre-defined logic with a 10 per cent (+ or -) correction. Further on top of 10 per cent correction, the brokers are again correcting the base price in the auction system from the back-end based on the market condition as when required. Therefore, the base price incorporated in the system is quite logical and market driven, she said.

Long-pending issue

K Dhananjayan, president of Nilgiri Bought Leaf Tea Manufacturers Association, told BusinessLine that fixation of green leaf price payable to small tea growers by bought leaf tea factories in the Nilgiris has been a long pending issue.

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If the auction system is being compromised by fixing a benchmark price for teas, he said the functioning of the bought leaf factories is also being compromised by the fixation of a benchmark price for the green leaf. This has been the view point of the Association since 2015 when the district average price had been introduced.

Similar issues on green leaf pricing in Assam have been resolved by Tea Board and the Association expects the Board to carry out a similar exercise here with all the stakeholders to fix a green leaf price as done in Assam and Arunachal Pradesh.

It was decided in the Assam meeting that the price will be governed by a bilateral agreement between small growers and manufacturers in the event leaf of fine count less than 65 per cent is supplied, he said.

“We are pleased that the Tea Board Chairman has taken the initiative in resolving the issues of small tea growers and bought leaf tea factories of Assam with regard to fixation of price, while we are at a loss to understand why such solutions have not been explored for the South Indian tea industry”, Dhananjayan said.

With regard to the fixation of base price for teas coming up for sale 26 in Coonoor auctions, he said it has been decided to fix the base price in accordance to market conditions as advised by the Tea Board.

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