Old world charm fades as Darjeeling tea heads to e-auction

It was one of the few charms left of the bygone era where traders got to sample the world's most expensive tea with aroma of the heady brew wafting from the lush gardens.

Darjeeling tea, whose first pluck often fetches over Rs 1 lakh/kg, is joining its lesser value brethren into the staid world of e-auctions that offer better price discovery, but no personal touch of bidding while savouring a hot cuppa.

The e-trading that is set to begin in the last week of June.

E-auction of other varieties of tea has been in practice since 2009, with approximately 534 million kg being sold every year through the platform run by the Tea Board. However, it is for the first time that traders of the costliest tea in the world are coming on board to auction their produce on the platform created by IT wing of the National Stock Exchange.

The resistance was on several grounds including doubts on the desirability of converting into the faceless form of electronic trade for something which was so far kept mostly restricted to what is popularly called “private sales”.

Off-site auctions for these finest varieties are lavish events where sampling is also provided. In Kolkata, there is also a dedicated building – Nilhat House – which hosts these auctions. In a private sale a year ago, the famed Makaibari tea estate got a price of Rs 1.12 lakh a kg with a Japanese client.

The trade of Darjeeling tea has so far been very exclusive, where elite buyers from Japan, the UK, the US, Germany and elsewhere enter into deals with specific Indian traders for the super-premium first flush teas that come from the very first plucking of a tea plant's harvest season which starts early April.

While Darjeeling tea regularly sell for Rs 10,000 a kg, the highest price achieved for a kg of normal tea during e-auction during the whole of 2015 was just Rs 182.96 kg as per data provided by NSE-IT.

“The whole process of the development of this pan India tea e-auction has been developed in consultation with all the stakeholders. We couldn’t go ahead unless everybody weren’t part of this. The chairman of tea board and traders had sat down to find the best way in which the auction should be done. An effort has been made to address all these concerns,” commerce secretary Rita Teaotia told dna at the launch of Pan-India e-auction system when asked whether the concerns, particularly of the Darjeeling tea traders, have been taken care of.

Post the coming of electronic trading, private sales would continue still, clarified an official of a tea traders’ body.

“While there is a provision under Tea (Marketing) Control Order that 50% of the crop of a registered planter has to be routed through auction, it doesn’t bar such private sales,” the official said.

With e-auction replacing open out-cry system, there would be fair and transparent traders and possibly better price realisation, Teaotia said.