June 28, 2018,
A forecast of surplus in global production has added worries to the coffee-growers in India, who are already l under the impact of low prices, rising cost of cultivation and an unpredictable weather pattern.
Coffee growers fear that the prevailing market trend in prices, witnessed for the past 3-4 years, would extend into the new crop year beginning October as production is set to peak in major producing countries such as Brazil, Vietnam and India.
While the US Department of Agriculture recently forecast that supplies would increase by 11.4 million bags of 60 kg each in 2018-19 to a record 171.2 million bags, the International Coffee Organization expects the current year’s production to increase by 1.2 per cent at 159.66 million bags on higher production in eight of the ten large producers.
Farm-gate prices of the arabica parchment, which ruled at around Rs. 9,500-9,700 per 50 kg bag in January 2017, have now dropped to around Rs. 6,400-6,500 levels, says Bose Mandanna, a large grower in Suntikoppa. Also, the decline in rupee against the dollar in recent months has not helped stabilize farm-gate prices. However, the cost of cultivation is on the rise, driven primarily by revised wages and increase in fuel costs, he adds.
B.S. Jayaram, President, Karnataka Growers Federation, a body of small growers, fears that the global glut would bring the prices down further. “The small growers, who account for around 98.8 per cent of the grower’s community, are seen bearing the brunt,” Jayaram said. Prices of pepper, which used to augment coffee-growers’ income earlier, have dropped by over 50 per cent this year, adding to their worries, he said.
“The government should step in and come to the rescue of the small growers through a minimum support price (MSP), or a loan waiver and also help them organise marketing of their produce while boosting domestic consumption”, Jayaram said.
KPA Chairman, H.T. Pramod said that with realisations dropping below the cost of production for consecutive years, growers are finding it difficult to repay their debts. As a result, the coffee loan outstanding is on the rise, and is estimated at around Rs. 6,000 crore, sources said.