TMCO Amendment: City tea brokers worried

GUWAHATI, February 12: Majority of tea brokers operating in Guwahati are worried over the future of their business in the wake of amendment effected by the Union Ministry of Commerce to the Tea Marketing (Control) Order (TMCO), 1984, according liberty to tea companies to decide on their own whether to route their produce through registered public tea auction centres or go for private selling outside the auction centre. As per the TMCO, 1984 every registered tea manufacturer in Assam, West Bengal, Tamil Nadu and Kerala were required to sell not less than 75 per cent of the tea manufactured by it in a year through any of the public tea auction centres in the country. However, following amendment which was put into effect from January 12, 2001, to the TMCO, 1984, the tea manufacturers are now free to sell any percentage of tea manufactured by it in a year through public auction centres in the country. There is a rider to the amendment which reads, "such percentage as may be specified from time to time by the registering authority, the Tea Board of India, with prior approval of the Central Government." B Chaliha of the Eastern Tea Brokers (ETB) said the amendment was definitely not an encouraging development for the brokers. He said, "business of tea brokers is basically dependent on the volume of tea traded through tea auction centres every year. Now, the tea companies taking advantage of the amendment to the TMCO, 1984, choose to go for massive private selling of tea instead of routing the commodity through the auction centre, the brokers will be hit hard." Arup Mahanta of Paramount Tea Marketing said although the brokers were yet to feel the pinch of the amendment made to the TMCO, 1984, eventually they might have to suffer if tea companies resort to direct marketing of the tea manufactured by them. However, he sounded optimistic and said the tea companies were aware of the risk involved in direct marketing of tea without engaging broker firms. "When tea is sold through brokers, the sellers, the tea companies get the payment from the broker on the prompt date irrespective of whether the broker have succeeded in finding a suitable buyer or not," he informed. So, the brokers are pinning their hopes on the advantage enjoyed by the tea manufacturers while selling tea through them as far as the payment is concerned. Jayanta Kakoti, secretary of Guwahati Tea Auction Centre (GTAC) which handles average 150 million kgs of tea every season, informed that the business in the auction centre was yet to be influenced by the recent amendment to the TMCO, 1984 which came at the fag end of the tea season. He said impact, if any, would become obvious in the next season beginning April this year. However, Kakoti was hopeful about the future of the GTAC and said, "tea companies are aware of the advantages of trading tea through the time-tested auction system and will, therefore, continue to route their produce through the tea auction centre." He pointed out that tea auction centres in the country were doing good business in the period before 1984 when the TMCO was not in existence. He further said tea auction centre at Colombo was doing roaring business although there was no regulation like the TMCO in practice in Lanka. "I think by asking for an amendment to the TMCO, 1984, the tea manufacturers wanted to keep options open before them as far as marketing of their produce was concerned," he said and agreed that in the wake of the amendment to the TMCO, 1984, the tea auction centres in the country would have to gear up to remain attractive to the tea manufacturers of the country. Although the State Government was likely to lose substantial sales tax revenue in case volume of trade get reduced because of the amendment to the TMCO, 1984, it is yet to react to the action of the Union Ministry of Commerce and Industries. It will be pertinent to mention that even before the recent amendment to the TMCO, 1984, tea manufacturers in the State hardly used to route 75 per cent of the produce through the GTAC as per the requirement of the order. It is evident from the simple calculation that although the State produces average 400 million kgs of tea every year, the average volume of tea traded in the GTAC every year stands around 150 million kgs which is less than even 50 per cent of the total tea manufactured. The Tea Board of India is supposed to monitor compliance of the TMCO, 1984 by tea manufacturers.