Tea buyers make a quiet comeback

Tea exporters and buyers, who had cited “lack of clarity in billing system” after the GST rollout and abstained from the auctions in the Coonoor and Coimbatore centres in Tamil Nadu, made a quiet comeback last week, although nothing had changed in reality.

Ask them what actually brought them back to the ring elicits no response apart from complaints that that the system followed by the two auction centres in Tamil Nadu were not in line with the system followed by the other four centres such as Kolkata, Guwahati, Siliguri and Kochi.

Industry insiders, however, point out that in Tamil Nadu, they have been trading with sellers’ contracts for the past nine years and the sellers/ producers could not understand why the buying/ exporting community was now insisting on brokers’ contracts.

After the initial resistance, most buyers and exporters except Tata Global and Unilever returned and traded quite actively in the just-concluded weekly sale.

An industry insider told Business Line that “100 per cent of those exporters, except the big corporates “who boast of ethical practices” have since come back. The biggies say that under sellers’ contract, they would have to handle large number of sellers and reconciliation of the statement would be a time-consuming and laborious task.”

“Their reasoning sounds funny, as compared to small buyers, the corporates would have a full-fledged team to do the job”, the source said and pointed out that in 2014, both Tatas and HLL went on record by stating that they would henceforth buy only “Trust Tea” certified teas.

“The certificate is endorsed by the Tea Board, the process in good but the sellers/producers had to shell out quite a sum to improve the quality standards. Such certified teas would fetch the seller a premium of ₹1 to ₹2 a kilogram, but the corporates did not vouch these teas.”

“This issue was raised in different forum, but to no avail,” the source said and added that the “so-called apprehension that they were voicing is funny”.

Reverting to the issue, the source said “unfortunately, the Tea Board, which controls the licensing, has stated that both the systems – under sellers contract and buyers contract – are GST compliant. The Board does not talk about the Tea Marketing Control Order, which categorically states that the broker can act only as an agent and cannot claim ownership of the tea.

“The Tea Act can be amended only through an act in Parliament and this could take months. Till such time, it remains to be seen if the other centres will contravene the Act,” he said.

Meanwhile attempts by this correspondent to get the Tatas and Unilever to react to the issue got no response.

(This article was published on July 25, 2017)

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