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Debt trouble brewing for coffee planters

12 November 2019


Coffe plantation sector has sought the intervention of the State governments concerned and the Centre


The coffee plantation sector, which is facing severe financial, productivity and falling price issues consecutively for the last three years, has sought the intervention of the State governments concerned and the Centre.


The Karnataka Planters’ Association, an apex body that represents coffee farmers across key coffee growing regions — Chikmagaluru, Kodagu and Hassan, which account for 80% of the country’s total coffee production, has urged the Union government to waive the interest on all outstanding coffee crop loans as on March 31, 2019.The remaining amount may be restructured in nine annual instalments with repayment of principal with interest at 6% per annum.The association also urged the government to increase the limit on crop loans and development loans from commercial and co-operative banks, with subsidised rate of interest.


At a press conference here on Monday, KPA president, M.B. Ganapathy said despite repeated requests, the government was yet to take any initiative to address the issues of coffee farmers.“Over 90% of coffee farmers are small holders, they are in deep debt. Cost of farm labour, material and fertilizer is on a constant rise while coffee prices are only falling season after season. Drastic changes in weather patterns have adversely impacted the yield. As a result, farmers are forced to sell below cost of production,” Mr. Ganapathy said.


The cost of production of coffee per acre is up every year by 15%. The present cost of production is about ₹80,000 per acre for Arabica and ₹65,000 for Robusta, he said.KPA has also requested for the deletion of Rule 7B of Income Tax, as under this rule, income derived from curing of coffee by the grower is deemed as business income and 25% of such income is taxable under the existing regime.“Removal of 7B will enable coffee growers to cure, grade and brand their coffees which would add value and they could sell or export their coffees for a slightly better price than selling them as raw beans at the farm gate for a very cheap price,” he said.


The coffee body also requested Commerce Ministry to expedite the release of subsidies in view of severe financial crunch faced by the industry.According to Mr. Ganapathy, majority of coffee plantations in the country are older, some are as old as 80 and 100 years. “Coffee productivity is low in India compared to other coffee producing countries due to non availability of high yielding, disease and drought resistant coffee varieties. We also have to focus on replanting and planting of better coffee plants to make the industry sustainable.”


KPA has sought support from Coffee Board for a re-plantation scheme, research and development of high yielding and disease resistant coffee varieties that may offset many existing issues.Lowest productionAs per KPA, the coffee production for the crop year 2019-2020 will be down by 30% in both Arabica and Robusta. Arabica picking has just started and farmers expect the lowest ever production this year, much lower than the Coffee Board’s estimates for the year. Robusta picking will begin in December and similar decline is expected in this as well.



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