"Tea Auction--- My Experience"- By Neha Gupta

Visit to Tea Board on 31 July 07

When I first saw “Tea Auction”, organised by ‘BLASH’ in our schedule for one full day, I got really excited. With the learning involved was a day off from classes.The alarm set off at 6am. I woke up with much ado to be in time for the bus. With a lot of inquisitiveness, around 35 of us hopped onto the IIFT bus and headed towards the tea board.

We all assembled in the last two rows of the room and awaited the auction to begin. In came the auctioneers and started off at a pace, which was difficult for us to follow initially. Slowly, we started following the process. We witnessed a part of the auction of a seller who had over 1000 varieties of tea! The bidders represented big names such as Tata tea, Hindustan Lever Ltd. and some export oriented firms such as Gokul, Madhu Jayanti and others.

It was interesting to see how the auctioneer and the bidders were trying to get the best price. Such Tea auctions are held simultaneously in various cities across the country such as Guwahati, Siliguri, Bangalore etc.

Amidst all this commotion, I turned around to find a couple of us snoring silently. After about an hour, we left the place to have some tea along with scrumptious samosas to satisfy our hunger pangs. The enthused team then moved on to rock Victoria memorial. It was a great way to spend the last day of the month.

Here’s a brief account of the auctioning process -

The Tea board is a regulated body where buyers and sellers (brokers – intermediaries between the buyers and producers) meet to buy and sell tea. Auction starts at 9 am and goes on till 6 pm and is a thoroughly professional set up. One or two more persons accompany the auctioneer.

Samples are given to prospective buyers at least 3 weeks prior to the date of the auction. The buyers taste the samples and carry out their valuation. Tea is sold in predetermined lot sizes, which is the minimum quantity that has to be purchased. Sometimes, a lot is purchased by one buyer but is actually shared by two or more parties if the each one’s requirement is smaller than the lot size.

One question that kept lingering in my head was why do the buyers and sellers come to the tea board for their transactions inspite of having to pay a sum of money as membership fees. This was answered during my discussion with Mr. Partha Protim Bhattacharya, Vice President (Export), The North Western Cachar Tea Co. Ltd. The primary reasons –

· Why does the seller come here?

Producer is required under the law to sell a portion of his produce through the tea board (Regulated auctioning). Also, the seller obtains the advantage of accessing an organised group of buyers under one roof.

· Why brokers prefer to sell through the tea board?

o Open market – When the broker buys from the producer, he is obliged to pay him whether the final buyer pays him or not.
o Tea Board – In this regulated market, when the broker buys from the producer, he has to pay the producer only when the final buyer pays him. In case the final buyer defaults, the broker is not obliged to pay the producer.

· Why does the buyer come here?
Recognised sellers and access to a number of sellers under one roof at one time.

It was a very informative endeavour and has enriched our knowledge of the tea auctioning process greatly.


Neha Gupta
MBA-IB (07-09) batch
IIFT-Kolkata