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.