In good times, coffee planters say no to price stabilisation scheme

Coffee planters in major growing regions are reluctant to contribute towards the price stabilisation fund scheme of the central government on the back of high prices in the recent time. They want more benefits to be associated with the contribution towards the fund.

This scheme, run by the ministry of commerce, has a provision of contribution from both, government and planters, to assist growers during a bad crop year.

“Coffee planters are less inclined to contribute towards price stabilisation fund as they are receiving the right price for their produce in the recent time. So, the government should make the scheme attractive by adding some insurance products into the scheme,” Ramesh Rajah, president of Coffee Planters Association of India said.

Health insurance product or more crop insurance products will encourage small planters to contribute towards price stabilisation fund, he added.

Price stabilisation fund scheme was started in 2003 by the central government for coffee , tea, rubber and tobacco planters to provide assistance against low prices.

This scheme, which has started with an initial corpus of Rs 500 crore, declares a crop year as a distress year when planters get 20 per cent lower price for their crops from the seven-year average of the international prices.

Similarly, it calculates a crop year as a good crop year when planters get 20 per cent higher price than the seven-year average price.

Coffee board officials are of the opinion that as planters are receiving good price for the produce in the last six-seven years, they are reluctant to contribute even a small amount of Rs 500 as designated in the scheme towards the fund.

Recently, while prices of arabica coffee reached $1.9 a pound for December delivery at ICE futures in New York, up three per cent over previous close; robusta variety reached $1,850 a tonne on NYSE Liffe Exchange in London, up 2.7 per cent.

Moreover, this price range is historically at high level and is more than 30 per cent higher as compared to the 2004-05 level.

“International prices have been on a high in the last six-seven years, which enabled domestic planters to receive good prices for their produce. As there is no distress crop year, planters are not willing to contribute money towards the corpus,” a top Coffee Board official said.

This is not a healthy trend as the corpus is essential to provide cushion to planters during a bad crop year, he added.

“Government should revise the scheme with a change in criteria for announcing a crop year as a distress year. There also should be some kind of incentives like personal insurance so that small growers would be interested in contributing towards the fund,” he said.

Even, some planters say the assistance under the scheme should be higher to give genuine support to planters.

“Assistance provided to planters during the distress crop year is not substantial to protect growers. So, it should be higher in value terms,” A Nanda Belliappa, a planter from Kodagu region said.

“After the debt relief fund announced by the government for coffee planters, nobody is talking about this scheme. However, we need certain preparation for a bad crop year,” Belliappa added.

Central government had announced around Rs 242-crore relief package in September last year to waiver debt of small and medium coffee growers.