Output may dampen the price cheer for coffee growers

Production to drop 30-40%

Coffee growers in the country are in a quandary as they are witnessing a good appreciation in coffee prices but are faced with a 30-40 drop in production for 2004-05.

In 2003-04, coffee production in India was 2,70,500 tonne and the planters owing to drought in the recent past are faced with total production of around 2 lakh tonne.

The growers are hoping that 2005-06 will reap in a good harvest and they are expecting prices to stabilise at current levels of Rs 4,600 for 50 kg.

The growers are also eagerly looking forward to the central package for the sector, which faced rough weather over the past couple of years.

Vijay Karnad, a spokesperson for the Karnataka Coffee Planters Association, said: "There has been a good appreciation in the price of coffee and, on an average, we are realising Rs 4,600 / 50 kg as against a low of Rs 2,800 / 50 kg during the past two years. However, we are not able to make good overall profits as production has taken a hit owing to recent drought and we anticipate a 30-40 drop compared to the levels of 2003-04."

Added Harish Bijoor, an analyst on the coffee industry: "Coffee industry is cyclical in nature. The increase in coffee prices should be addressed with adequate caution; planters should build in adequate resources. This is a critical time for the industry and it is advisable that planters consolidate this position."

He added that the coffee industry is eagerly awaiting the Centre's decision on the Special Coffee Term Loan, which should be decided shortly.

The industry had petitioned the Centre for waiver of interest for three years for the loan and reduction of interest to 6 per cent from 11 per cent.

Karnad said, "If these requests are approved by the Centre and hopefully if production improves and coffee prices remain at the current level, we should be seeing a good growth in the industry."