Upasi may shelve futures trade in tea

The United Planters' Association of South India (Upasi) is likely to shelve its plan to launch futures trade in tea due to a technical snag.

The planters' body could not kick off the futures trade in tea because of a number of difficulties including the problems of variety and grades. "Considering the peculiarity of this product, it is impossible to get uniform grade tea of different varieties for different months," said plantation sources.

Moreover, due to the supply of different grade and quality in different seasons, the underlying price discovery mechanism could not be achieved through the futures trade, the sources pointed out.

The plan to launch tea futures was proposed in 2002 and was slated to hit the market in April 2003. Upasi had also got the green signal from the Forward Markets Commission (FMC) to go ahead with the launch of futures in tea trade.

The association had even appointed consultants to finalise the business model and even invited bids for hardware and software to design the online trading platform. As per the original plan, it was decided that the hub of tea futures would be Kochi and Coonoor, the main trading centres, so that traders from anywhere in the country could participate in the futures trade.

At present, tea is auctioned at Coonoor and Kochi centres through open outcry method with the CTC and orthodox varieties being the main grades on offer.