The Aryavarth Express
Agency(New Delhi): The North East Tea Association, representing tea planters in the region, has openly challenged the central government’s recent directive mandating the sale of 100 percent of dust tea and 50 percent of other tea grades through auction each year. Advisor Bidyanand Barkakoty voiced the association’s concerns, arguing that such regulatory measures are unsuitable in a liberalized and globalized economic environment, particularly for a sector like tea production, which is subject to complex market dynamics.
The directive, encapsulated in the Tea (Marketing) Control (Amendment) Order, 2024, issued on February 26, applies to tea production units across several states, including Assam, Arunachal Pradesh, and West Bengal, among others. The regulation exempts mini tea factories but imposes significant auction participation requirements on larger producers.
Barkakoty highlighted the fundamental objection to the government’s intervention, emphasizing the inability of the government to guarantee price realization and timely sales through auctions. He pointed out the critical risk tea producers bear in managing cash flow to timely pay wages and purchase green leaves from small tea growers, cautioning that any disruption could lead to social unrest.
The tea industry in Assam, a major contributor to this discourse, employs around 10 lakh workers directly and encompasses over 1,25,484 small tea growers, accounting for 48 percent of the state’s total green tea leaf production. With producers traditionally leveraging three sales channels — public auctions, direct factory sales, and exports — the mandated shift towards auctions is criticized for its inefficiency, expense, and the limited buyer pool, which often results in less competitive pricing for producers.
Barkakoty also criticized the auction process as slow and costly compared to direct sales, expressing concern over the potential financial strain on producers due to working capital and cash flow challenges. He further argued that the mandated auction sales could render the industry unviable, impacting profitability and the ability to service bank loans.
Concluding his critique, Barkakoty advocated for a redesign of the current e-auction system, suggesting that improvements could naturally encourage more producers to opt for auction sales. This call for a more efficient and attractive auction system underscores the industry’s need for flexibility and support in navigating market challenges without stringent regulatory constraints.