Tea World

Lesson 26

Modes of Disposal of Tea

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There are mainly three main modes of disposal of tea. These are (a) through auction (b) ex-factory or ex-garden sale and (c) forward contract. Among these, the public auction system plays the most important role as the traditional and time tested mode of disposal.The Tea Marketing (Control) Order (1984) specified that 75% of the total output of tea estates should be sold through auction. The clause 17 of the Order was modified later inearly 2001 to remove the condition of obligatory sale through auction. With it, the producers are given freedom to sell their tea through the channel they desire with no stipulation on the quantity to be sold through auctions.

A number of interlinked modes of disposal of Indian tea are seen as follows:

(i) Direct sale by forward contract to overseas buyers

(ii) Consignment to Indian auction

(iii) Direct ex-factory sale to Indian buyers

(iv) Direct sdale by forward contract to Indian buyers

(v) Direct marketing (loose tea) in wholesale markets

(vi) Self packing and export of packets overseas

(vii) Sale of garden packed tea in Indian home market and

(viii) Sale of Indian packet tea abroad.

In India, marketing process of tea can be divided into two parts, i.e., primary and secondary markets. Primary marketing channels help in moving made-tea from the grower (tea estates) to the bulk tea buyers. It also explains the movement of tea directly from producers to national or international buyers. This channel used to carry tea from producer to auction centres where it changes hands from the producers to the large buyers through brokers.

Secondary marketing channel includes the movement of bulk tea (which is purchased in bulk in primary market) through auction trading to ultimate consumers. In this chain tea passes through wholesalers, commission agents, blenders, packers and retailers.  

Primary Marketing Chain of Tea

Producers of tea may be (a) small growers or (b) big tea estates (according to Tea Board, producers  having up to 10.12 ha of land under tea cultivation are treated as small growers and beyond that  they are called big tea estates). Small tea growers use to sell their tea leaves to the collectors or the buying centers. They give it to Bought Leaf Factory (BLF) for further processing as small tea growers are not equipped with processing factory, on the other hand most of the big tea estates have their own factory. Tea generally moves directly from factory either to auction center for sale or to direct sale to national or international buyers.

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