Coffee growers told to widen local market, improve quality

The key to making the coffee economy sustainable lies in tapping the huge domestic market. For this growers have to make efforts to increase the domestic consumption by maintaining quality, said E V K S Elangovan, Union minister of state for commerce & industry.

For its part, the Union ministry will come out with a long term strategy to enable coffee growers to overcome the prolonged crisis they have faced over the last four years.

"The government is certainly willing to look at a long term perspective and come out with a road map for making the coffee industry a sustainable economy within the country," he said.

But, instead of continuously looking at short term measures, the coffee growers' community should look ahead and take the lead in coming up with a vision as well as the road map for sustainability, he said.

The growers have suffered from low realisations for their produce over the last few years and low productivity due to the white stem borer disease and they need to drive out of the crisis to become competitive, Elangovan said after inaugurating the 47th annual conference of Karnataka Planters' Association (KPA), here on Wednesday.

To compensate the coffee growers for the losses, the government of India announced a special package during the middle of this year.

The coffee package provides for waiver of 2/3rd of the interest on the special coffee term loan (SCTL) during the three year moratorium period, aggregating to Rs 191 crore. This is to be equally shared between banks and the government.

The ministry of finance has been asked to direct the banks to lower the interest charged on SCTL from the existing 11 per cent to 9 per cent or the rate applicable to agriculture sector, whichever is lower, during the remaining repayment period of SCTL loans, he said.

The government, through the Coffee Board, will also extend 5 per cent and 3 per cent interest subsidy to small and large growers respectively on the working capital loans during the remaining years of the Tenth Plan, he stated.

The government has also waived the old development loans and interest amounting to Rs 64.50 crore availed by the small and tiny coffee growers from the Coffee Board. In all, the coffee package has provided a total financial benefit of Rs 381.69 crore to the coffee growers, he added.

"Despite these measures coffee growers are still not out of the woods because of the magnitude of the crisis faced by them and the remaining debt burden which continues to be very large," he said.

Speaking on the occasion, KPA chairman A L R M Nagappan urged the government to make a special request to the Cabinet to give a little more time to growers who have not yet availed the benefits of SCTL.

He said that some banks are charging 13.5 per cent interest on the loans coming under the SCTL even though it has been specifically stated that the interest during the said period be charged at 11 per cent. Due to this discrepancy, the 1/3rd portion of the Central government has not been disbursed by the Coffee Board to the respective bankers, he said.

He also urged the banks to continue One Time Settlement scheme for the benefit of coffee growers, which was suspended by the banks after the announcement of the SCTL by the government earlier this year.