Govt May Raise Tariff Binding On Coffee To 100 Per Cent

Commerce and industry minister Murasoli Maran today said that the government would consider the proposal to raise the tariff binding on coffee from 70 per cent to 100 per cent.

A delegation of coffee growers, which met the minister, urged the Centre to introduce minimum support price for the commodity, based on the Kerala model.

Coffee growers, however, expressed dismay over the government's interest subsidy and demanded a waiver of interest amounting to Rs 135 crore on bank loans, rescheduling of loans in wake of the global crash in prices and price intervention operations.

They said that the interest subsidy scheme, floated by the government last month, is only a pilot project of Rs 4.5 crore under which five per cent concession will be given on loans taken by small growers, will not address the problems of the planters.

During the meeting, the delegation, led by Karnataka Legislative Council chairman B L Shankar, demanded that Rs 900 crore loans taken by coffee growers should be made interest-free and rescheduled over 10 years.

They demanded that the import duty on coffee should be increased to 100 per cent and the government should provide support price till the market rates remain below the cost of production.

They also demanded total exemption from customs duty for importing coffee vending and brewing machines which at present stood at 70 per cent.

Further efforts should be made to expand the domestic market for coffee through the cooperatives, particularly to the non-traditional areas in the country, they said.

The delegation said annual coffee consumption of 55,000 tonne was less than 20 per cent of the total production, adding that market initiatives were needed to raise it to 50 per cent in the medium-term.

The coffee prices, at present, were 30 per cent lower than the production cost and the government should make good this gap by providing price subsidy.

The Karnataka government on its part should exempt growers from the agricultural income tax which works out to Rs 50 crore annually. Regarding loans growers said that the prevailing rate of interest charged by the banks of 14-16 per cent is on the higher side.

While small growers want a complete waiver on the loans, Karnataka planters association wants it to be brought down to the prime lending rate level of 11-12 per cent.