ATI complains about tea auction system

ATI complains about tea auction system

The Jakarta Post, Jakarta

The traditional auction system of selling tea which currently
is run by a joint marketing board had failed to prop up the price
of local tea products, the Indonesian Tea Association (ATI) said
on Wednesday.

ATI chairman Rachmat Badruddin said that the joint marketing
board was not effective because it had failed to invite new
potential buyers -- both overseas and domestic -- to participate
in the weekly tea auction.

"So there is no competition in the auction to push the price
up ... almost all the buyers are the same each time," he told The
Jakarta Post.

The joint marketing board, popularly known as KPB, is the
country's single body to auction tea on behalf of the state-owned
tea plantation companies.

Therefore, the prices are determined at the auctions, and will
be used as the benchmark for domestic tea prices.

Rachmat said that the prices resulting from the weekly tea
auction did not reflect the true value of the tea and was still
far from the International market price.

He said that the current auction system was also complicated
because new buyers are required to secure a recommendation from
the Jakarta tea buyers association to be allowed to join the
auction.

Local tea prices have dropped to an average of 95 U.S. cents
per kilogram in 2001, from the previous year of about $1.10 per
kilogram, he said.

The association said that Indonesian tea prices had continued
to drop over the past ten years mainly due to the lack of
marketing efforts.

"We (Association and KPB) must work together to seek other
alternatives in the marketing system," Rachmat said following the
opening of this year's tea auctioning season.

Yesterday's auction offered 1,500 tons of black and green tea
from several state and private companies, namely PT Perkebunan
Nusantara IV, VI, VII, IX and XII.

The private companies are PT. Pagilaran, PT Bantar, PT Tatar
Anyar Indonesia and PT Smart.

According to Rachmat, aside from state companies, a number of
private tea producing companies also offered their products at
the tea auction.

He also said that Indonesia needs to apply an online system in
selling tea products.

"The online system will be more transparent and effective in
attracting more domestic and foreign buyers," Rachmat said.

The association predicted that this year's tea production will
remain at around 150,000 tons.

Indonesia, one of the world largest tea producers, after Sri
Langka, Kenya and India exports about 70 percent of its tea
output to the United States, Europe, Australia, Pakistan and the
Middle East.

Some 10 percent is exported to Southeast Asian countries.

Meanwhile, Yuddy Sulaeman, an official from the joint
marketing board said that the continuing drop in the tea price
was mainly due to an oversupply problem on the world market.

"All of the tea producing countries are now also experiencing
a similar problem of falling prices," he told The Post.