Coffee sector revival: Growers seek special package over weak prices, freak weather patterns

Reeling under the impact of weak prices and crop losses triggered by freak weather patterns in recent years, coffee growers have urged Finance Minister Nirmala Sitharaman to consider a special package for the revival of the coffee sector

A delegation of representatives of Karnataka Planters Association (KPA), United Planters Association of South India, Codagu Planters Association and Karnataka Growers Federation met the Finance Minister Nirmala Sitharaman on Wednesday. The delegation was led by BJP National General Secretary & Chikmagalur MLA, CT Ravi, and Chairman Coffee Board, Boje Gowda.

Repackage loans

Sitharaman was urged by the delegation to rephrase-reschedule all types of loans of all coffee growers including overdue and NPA into a single term loan and name it “Special Coffee Term Loan 2020” with a repayment period of seven years. The average rate of interest be calculated at 10 per cent per annum and interest burden be shared equally by the government, banks and growers, said S Appadurai, Chairman, KPA, in a statement.

Enforcement of SARFAESI Act

Also, the Finance Minister was urged to issue suitable directions and clarifications to the Banks to not take action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI) Act against the coffee growers.

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KPA said representations have been received from growers that banks are taking action against them under the SARFAESI Act and auctioning their coffee plantations based on the Division Bench Judgement of the Karnataka High Court holding that under Section 31(i), the expression “agricultural land” does not include plantation lands including coffee plantations and so are not hit by Section 31(i).

“Considering the plight of coffee growers who are facing severe financial stress, and as plantation lands are agriculture lands, it was requested to issue suitable directions and clarifications to Banks not to take action under the SARFAESI Act,” KPA said.

Extended crisis

For the past seven years, coffee growers are facing a severe financial crisis. The years 2016-17 and 2017-18 were drought years and erratic blossom and backing showers led to a set back in production.

KPA further said that major coffee growing areas in Karnataka and Kerala constituting 90 per cent of India’s production were battered by heavy rains and landslides in 2018 and 2019 had resulted in more than 33 per cent crop loss. Since 2016, the downward trend in prices and increase in cost of production had further aggravated the crisis. Banks had rescheduled only standard loan accounts in 2018 and 2019 for one year.

Majority of coffee growers could not benefit from this as they had suffered heavy losses due to droughts and heavy rains.

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The report of the task force formed by the Government of India recommended raising the ceiling of compensation from 2 hectares to 10 hectares under the disaster relief fund, rescheduling overdue loans, and extendin fresh loans at concessional rate of interest up to 10 hectares.

As Covid-19 has further impacted coffee growers and has a long-term impact on exports and consumption in the West, the FM was urged to consider a special package for the revival of the coffee sector and address the financial crisis, KPA said.

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