Amid apprehensions from the buyer fraternity, the Tea Board’s 2022 Bharat Auctions commenced in Kochi on Tuesday with major changes in bidding, base price, price re-discovery and other aspects.
In the CTC dust category, over seven lakh kg was on offer, witnessing good participation from stakeholders.
However, buyers said the new auction system could neither be claimed as an auction or a tender. Bensy Jose, president, Cochin Tea Buyers Association, said it was devised without consultation with stakeholders.
In protest against the forceful implementation of the model rules, the seven committee members representing the buyer fraternity in the Tea Trade Association of Cochin have resigned.
Jose said the main stakeholders in the tea trade are buyers, sellers and brokers, and, without their wholehearted participation the industry could not move forward. But the Tea Board has paid attention only to sellers’ concerns while ignoring the apprehensions of the buyer fraternity.
The model rules favour sellers over buyers and consumers, he said. There is no provision for the buyer to ‘opt out’ when he is the only bidder on a lot. There will be situations where the buyer has bid on multiple lots and they become active at the same time, and all of these are sold to him.
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It is necessary for a buyer to bid on many lots, as there is no guarantee that he will get the lot to cover his requirement. Likewise, there is no provision to compensate the buyer if there is a mismatch between trade and lot samples.
Japanese vs English models
Venkataraman Anand, CEO, Harrisons Malayalam Ltd, said the new system has a transparent price discovery mechanism, which will, in due course, benefit all sections of the trade. The vital difference is that the existing system was based on the English auction system, while Bharat auction is based on the Japanese model, he said.
In the English auction, bidders can participate any time and the bidding price increases as per the bids placed. In the Japanese auction, bidders have to show interest in the lot before it becomes active to be able to participate, and the bidding price auto increments at a fixed interval by the increment price set by the auctioneers. This will be beneficial for buyers who plan in advance and not the impulsive price-sensitive buyer, he said.
The bidder can quit the auction at any time. There is also a provision to bid for lots at the best price, which was not possible earlier, he added.