India’s tea trade turning tech savvy

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April 24 – India's tea will soon be auctioned digitally. The Indian tea board, the government regulator on Tea, plans to replace the gravel with the mouse in order to prevent planters who have been hit hard by low tea prices in the last decade. Going digital is expected to regin in an era of fair prices and lower transaction costs.

The latest exchange is being designed by NSE-IT, a branch of India’s national stock exchange that specializes in designing trading platforms. The Tea Board plans to roll out the system in Calcutta, where the first Indian tea auctions began, by December, with the software being introduced to other auction centers over the following three months.

Studies in other commodity markets around the world have shown even modest reductions in costs through automation can produce large increases in trading volume. The Tea Board’s effort is just one of several experiments in India in which computerized spot trading is being promoted as a way to improve the prices impoverished farmers receive for their crops, the New York Times reported.

The main advantage of the computerized system, according to the Tea Board, is that buyers can bid from anywhere, without having to be physically in the trading hall — or even in the same city where the tea is warehoused. “That means buyer participation will be more, competition will be more,” said H. N. Dwibedi, a consultant who has been advising the Tea Board on computerized trading. “Greater competition ensures that the true price is discovered.”

Mr. Dwibedi also said an electronic system should help automate the compilation of tea catalogs and eliminate the paperwork involved in settling sales, saving brokers time and money.

India, the world’s largest tea producer, is also the third-largest exporter, after Sri Lanka and Kenya. Today, nine auction centers operate throughout the country, handling about 55 percent of the one million tons of Indian tea sold each year. (The rest is sold from plantations directly to tea companies or consumers.)

An electronic system is particularly attractive to large tea companies, like Tata, the Indian conglomerate that owns Tetley brand tea, and Hindustan Unilever, the Indian arm of the international consumer products company Unilever, which owns the brand PG Tips.

Photo courtsey New York Times