Coffee production likely to fall 8% this financial year

India accounts for 4% of world's total coffee production and 90% of Indian coffee is exported

Domestic coffee production is likely to decline by 8% in the current financial year mainly due to lack of timely rains, government said on Monday.

"It has been estimated that there is a likelihood of decline in coffee production in 2016-17 by 8% compared to that in 2015-16 due to lack of timely rains and high temperature during the crucial flowering stage," Commerce and Industry Minister Nirmala Sitharaman told the Lok Sabha.

Coffee Board is providing focussed support for water augmentation and extension activities to coffee growers. Besides, coffee growers are given compensation for crop losses due to erratic rainfall under the Rainfall Insurance Scheme for Coffee, she said.

The main buyers of Indian coffee are Italy, Russian Federation, Germany, Belgium and Turkey which account for over 50% of coffee exports from India.

During Question Hour, she also said the Coffee Exporters Association have represented before the Department of Commerce for adding green coffee beans to the exempted list in the proposed Goods and Services Tax (GST). "The matter is under consideration," she noted.

Regarding the proposal to repeal the Coffee Act, 1942, the Minister said it is "no longer serving the purpose".

"Over the years, the role of Coffee Board has changed and many provisions of the existing Act have become redundant, especially after abolition of Coffee Pooling System in 1996," she said.

Sitharaman said it has been proposed to repeal the law which was enacted more than 70 years back and enact a new legislation — Coffee Bill, 2016.

The suggestions received on the Bill were "regarding the control of coffee industry, definition of coffee and coffee estate, cognisance of offence under the Act etc which are being examined," she noted.

Replying to a supplementary, Sitharaman said of the total coffee growing areas in the world, only 2% is in India but it produces 4% of world's total coffee production and 90% of Indian coffee is exported.

She said even though multi-national coffee chains have set up shops in India, they do buy coffee locally.