Financial Daily from THE HINDU group of publications
Saturday, Jan 26, 2002
Agri-Biz & Commodities
Corporate - Diversification
Tata Coffee to grow vanilla, arecanut
BANGALORE, Jan. 25
TATA Coffee Ltd is looking to diversify into vanilla and arecanut cultivation to buffer the company against plummeting international coffee prices.
Till now, the company had been betting on pepper as an inter-crop on coffee plantations to even out the losses from coffee. While this strategy worked well for the industry around two years back when pepper prices ruled high, this year, prices of pepper too have fallen.
In fact, Tata Coffee's profits for the year 1999-2000 fell drastically to Rs 13.58 crore from Rs 26.12 crore the previous year, due to downward movement of international coffee prices and pepper prices.
The same year, production of cured coffee, pepper and cardamom came down. Pepper production fell from 1,058 tonnes to 929 tonnes; cardamom fell from 9.06 tonnes to 8.34 tonnes and cured coffee fell from 19,656 tonnes to 18,167 tonnes.
The company is also cultivating cardamom, which is getting a fair price now. An addition source of revenue is the timber from Silver Oak on the company's estates which is being sold under the brand name Conswood.
A recent McKinsey report, too, had recommended vanilla as a crop that the growers could look at to beat the bearish coffee market. Vanilla is used as a flavouring agent in foods, cosmetics, perfumes and so on. There is a market for natural vanilla though the synthetic version is cheaper.
The foray into vanilla and arecanut had started on an experimental basis, said Mr K M Subbiah, General Manager, Tata Coffee R&D. It might take a year or two for the plans to yield results, but the company was looking at it from a long-term point of view, he said.
Tata Coffee's R&D unit, which has an outlay of Rs 35 lakh a year has been working on tissue culture propagated vanilla, pepper and cardamom. Besides multiplying disease resistant varieties for its own estates, the unit also has a programme to help small growers.
"Some of the barren land has been converted to coffee plantations with our help,'' said Mr Subbiah.
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