Karnataka's coffee planters disappointed with Budget over tax issue

Coffee planters in Karnataka are unhappy with the Budget as the Central government has not fulfilled their demand of complete exemption from tax on sales of coffee in different forms.

The government is levying a 25 per cent tax on coffee which is grown, cured, roasted, mixed with chicory coffee or other flavoring agents. Coffee planters are demanding complete exemption from the present 75 per cent exemption. The coffee planters and associations maintain that it will affect small coffee planters. "They must be allowed to sell intermediate products and make profits," they demand.

Small planters are exploited by the middlemen who purchase raw coffee from them at a nominal price. In turn the middle men later prepare coffee beans by way of curing, roasting and later sell them in the international market at higher prices.

In India, 99 per cent of coffee growers are small planters and grow 70 per cent of coffee. Karnataka is the top producer of coffee followed by Tamil Nadu and Kerala.

Experts opine that the failure of small farmers to make a union or come under an umbrella of Farmer Producer Organisations (FPO) is hurting them. In Karnataka there are 35 to 40 FPO's.

Karnataka produces 2.8 lakh tonnes of coffee which accounts for 72.5 per cent. Most of the coffee planters have less than 25 hectares of land. With small plantations and fluctuating markets, the coffee planters are relying on the US pricing for coffee and have constant insecurity on getting a good pricing, experts maintain.

With the BJP government at the state and at the Center, coffee planters expected that they would get a complete concession from the tax on the coffee crop. The coffee plantations are located majorly in Kodagu, Chikmagalur and Hassan districts of the state. Kodagu and Chikkamagaluru are considered as the strong base for the BJP party.

--IANS

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