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Electronic trade
01 September 2007 06:16:23Sri Lanka tea auctions on automated trading
September 01, 2007 (LBO) - Millennium IT, one of Sri Lanka's key software developers, has secured the contract to automate the centuries old tea auction system, an official said.
The deal brings together one of the oldest primary commodity exports and the youngest service sector industries of the island.
A mock system has been developed with trial runs going through the teething phase before a possible implementation as early as next year, said Dickie Juriansz, Chairman of Imperial Tea Exports (Pvt) Ltd.
"The whole project will cost us around a million dollars. The systems are still being tested, brokers are being educated and trained how to use computerised bidding as against the current system of shouting out bids at the auction," said Juriansz, who is also a key member of the main trade body the Ceylon Tea Traders Association.
The current open-outcry or method of shouting out bids, has been used as a platform to sell tea in the country for over a century and over 90 percent of commodity is currently channelled through the auctions.
"We need to embrace technology, to keep costs down," he told participants at the annual tea conference in Sri Lanka.
As much as six to seven million kilos of tea, sometimes in excess of 10,000 lots, come up for sale in some weeks, with the year end average price per kilo climbing up to an all time high of 300 rupees in the recent weeks.
To cope with the volume of tea coming under the hammer each week, the trade now conducts two auctions a week spread over three rooms.
"The only way to cope with the demand is to increase the number of rooms available, but this means buyers will have to use extra staff and this will cost money. Automation seems to be the way out," he said.
He expects automation to cutback on lead times and help push through a bigger volumes of tea at a time.
The automated model is expected to embody key features of the present system with regards to transparency, efficiency and interaction between buyers, such as in the division of lots.
The system will serve as a market clearing process, allowing the backlog of tea that builds up during periods of heavy cropping to be cleared to a large extent.
Tea is currently sold through nine commodity brokers, of which tea catalogues of eight brokers have already been shifted online.
Sri Lanka, which is better known for its high quality aromatic tea known by the country's previous name Ceylon, is made with tender leafs and buds of the plant botanically known as camellia sinenis.
Uppdaterad 2007-09-02