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Relief package for coffee growers

During October-December 2009, major coffee producing states such as Kerala and Karnataka received heavy rainfall. The industry not only witnessed dropping of berries but also a drop in the quality of the crop. Production during the December quarter dipped by 17.5%, compared to the year-ago quarter. A drop of around 24% in coffee output to around 220,000 tonnes is expected this year due to inadequate rainfall during February and March in the coffee growing areas of Karnataka, state media reported.

Coffee growers have also been facing debt burden. Since banks were exerting pressure on coffee growers to settle their accounts under the one-time settlement (OTS) scheme, planters had been seeking a relief package as they have suffered crop loss for a number of years. The main reason for the crop loss has been excess rainfall and pests.

Finally, on April 29, 2010, the government announced a Rs 363-crore debt relief package for the sector. Under this, small planters will get relief of up to 75% of their total outstanding arising from loans taken before 2002, subject to an effective maximum of Rs 7.5 lakh. Of this, 25% shall be waived by banks while the balance will be rescheduled. The package also provides for rescheduling of loans for medium and large growers.

A tight demand-supply position in the market has resulted in firming up of global coffee prices right from the beginning of the coffee year (October 2009). Any change in global coffee prices does have an impact on the domestic scenario as two-thirds of the Indian produce is exported. Total global production in the crop year 2009-10 is expected to fall by 4.8% compared to the previous year. Thus, a fall in production is likely to result in a rise in price.

  1. May 14, 2010 at 8:08 pm

    I suppose with the recession is having a major effect on everything. For a good quality coffee, prices has risen a bit and consumers are looking for alternative.By doing so, product stays on the shelves longer and growers at the end of the equation suffer.

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