The Hindu Business Line : Parliament panel moots MSP for coffee — Calls for `massive' subsidy for plantations, small growers

THE Standing Parliamentary Committee on Commerce has suggested massive doses of subsidy for coffee plantations and small growers in order to make its export a profitable proposition in the wake of adverse external factors and lack of cost competitiveness of the industry.

In its 72nd report on problems of the coffee industry, tabled by Dr Murli Manohar Joshi, Chairman of the panel, in Parliament on Wenesday, the panel said the domestic coffee industry - which annually earns Rs 1,600-2,000 crore in foreign exchange by way of exports - was passing through an unprecedented crisis due to crash in world coffee prices.

It said the average price of arabica coffee for the last 21 years was 123 cents a pound, whereas it was 50 cents now.

The robusta coffee price for the last 35 years was 80 cents whereas it was about 18 cents now.

Since more than 80 per cent of the coffee grown in the country is exported, "a plunge in the world prices has a devastating impact on coffee growers."

It added that domestic coffee traders were buying coffee at the lower international price and had increased the margin of profit.

MNCs such as Nestle were importing cheap quality coffee and re-exporting the same with value addition. This had reduced the buyers in the market, it said.

Stating that there is a huge gap between the cost of production and realisation, which is Rs 20 a kg for arabica and around Rs 15 for robusta, the report said this gap had put a lot of pressure on growers.

Hence, the Committee has asked the Government to provide minimum support price to the coffee growers and subsidy for plantation.

"The Government should occasionally undertake market intervention to purchase the coffee," it said.

It also urged the Government to consider setting up a new bank, viz., Plantation Development Bank, on the line of Nabard to better help the plantation crops, adding that the industry, like tourism or IT, be provided with investment subsidy.

The pesticides, insecticides, and machinery needed to increase productivity must be imported and import duty on them should be abolished completely, it said, adding that relief packages given to other industries such as 25 per cent capital subsidy for starting industry, waiver of stamp duty, rehabilitation of sick industry, and tax rebate should be made available to the coffee industry too.

Stating that in a situation where there is no support mechanism financial relief from the banking sector - which is the only way to overcome the crisis plaguing the coffee industry - the committee said under the Reserve Bank of India's "Relief package to coffee growers", the two-year moratorium for repayment with interest should be increased to three years without payment of interest.

The stipulation to repay 75 per cent of crop loans should be dropped.

Co-operative banks also should follow the RBI direction and re-phase all loans, fresh crop loans should be advanced in the extant scale of finance, and interest should be charged at Nabard rates.

It also suggested that all the loans be included in the Special Coffee Term Loan (SCTL).

Given the need to increase global consumption to absorb excess production, an all-out effort must be made for expansion of the domestic market in the country, the committee said.

Coffee consumption could be promoted in Defence and paramilitary services.

The import duty on coffee vending and brewing machines must be abolished so as to improve domestic consumption.

Marketing co-operatives such as Amul and NDDB had a large network and could be in a position to supply quality coffee at reasonable prices. The Government should consider involving such marketing co-operatives in domestic marketing of coffee.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Bengal bid to improve goat husbandry practices

Ban on fishing at Gangavaram village draws flak

Highway bonanza

Problems of plenty

Mangalore-based co-op takes to retailing arecanut

Rubber prices dip on global uncertainty

Brokers' indecision holds up tea futures take-off

Coffee in next leg of price rally

Nabard to continue `carrot and stick' policy on resetting rates — Seeks Rs 14,000 cr from Govt to offset loss

Upside potential for world cotton market

Area under soya may be down: Sopa survey

Parliament panel moots MSP for coffee — Calls for `massive' subsidy for plantations, small growers

Price-monitoring fund coming for uncovered crops in AP