The bang of the auctioneer's gavel has been replaced with the click of a button, as Sri Lanka's 126-year old Colombo Tea Auction has moved online amid the COVID-19 pandemic.
Over 16.5 million kg of tea were sold at Sri Lanka's first three e-auctions between April 4-19, allowing the country's tea export industry worth 1.5 billion U.S. dollars to continue during a nationwide curfew imposed to contain the pandemic.
ONLINE AUCTIONS
Negotiations to digitize tea auctions have been ongoing for 20 years, but it was the pandemic that finally catalyzed the shift, said Jayantha Karunaratne, chairman of the Colombo Tea Traders' Association.
As the curfew declared on March 20 made it impossible to hold physical tea auctions, an e-auction platform developed by local software company CICRA Solutions amassed a register of over 300 buyers and eight tea brokers for its first e-auction on April 4.
"The Colombo Tea Auction is a 126-year-old institution, so changing the mindset of some players is not an easy task. Our vision is to go online because it provides advantages such as lower cost, greater efficiency, and more transparency," Karunaratne said.
Registered buyers and brokers can use the platform to bid within a short period of time, during which sellers cannot close the bidding process.
Some industry insiders have predicted an increase in the platform's turnover, as buyers and brokers become familiar with the system and developers fine-tune it.
"The response from industry stakeholders has been fantastic. The Sri Lankan tea industry has once again proven its resilience to upheavals," said Dhammike Wedande, senior vice president of Asia Siyaka Commodities, a leading tea broker.
The online auction was approved by President Gotabaya Rajapaksa, Wedande said, adding that the Sri Lankan government is supporting the tea industry by designating plantations and essential export processing services.
EXPANDING EXPORTS
"Online auctions are definitely the way forward and can create more competition," Sri Lanka Tea Board Chairman Jayampathy Molligoda said.
Sri Lanka hopes to increase its global market share in tea exports amid supply disruptions from leading exporters such as India and Kenya, which have imposed lockdowns to contain the virus.
Panic purchasing before the lockdown contributed to a sharp increase in domestic demand for tea, said Molligoda, adding that the global demand for tea is also on the rise, as studies show that black tea may help boost immunity.
"Sri Lanka needs exports of tea to continue, since tourism and garment exports are down. Tea's net profits are higher compared to other exports due to lower dependency on imported inputs," said Kosala Wickremenayake, president of the International Business Council.
Sri Lanka produces around 300 million kg of tea every year, with tea being the country's main agricultural export, accounting for around 12 percent of its total exports.
The largest export markets for Sri Lankan tea are Iraq, Russia, Turkey and Iran, according to the Tea Exporters Association.
The first tea tree arrived in Sri Lanka from China in 1824, after which the island country's first commercial plantation was established in 1867 and first tea auction held in 1883. Enitem
