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Coffee plantations headed towards doom

Higher incomes and easy lifestyles of the urban elite have lured away the plantation labourers to cities to take up
Last Updated 25 July 2016, 07:13 IST

The Union Commerce Ministry proposes to repeal the anachronistic Coffee Act, 1942, and enact the Coffee Bill, 2016, which aims to benefit the coffee industry that comprises four distinct constituencies namely: the coffee planter/grower, curer (processor), trader and exporter, each with their own interests at stake.

Whenever coffee prices spiral globally, it may appear paradoxical that the grower has not benefitted in a proportionate manner. Instead, these inflated international prices have proved detrimental to the grower and only added to their woes. In an international economic climate characterised by higher prices for coffee, and an information age --- the plantation labourers become aware of the new prices and are quick to demand increased wages — which in turn heightens the cultivation costs since the late 1990s.

Clearly, times have changed for coffee planters who have over the years experienced several highs and lows. With the introduction of the free sale quota in 1995 that resulted in a transformation from a command economy to a market economy — the coffee economy underwent a paradigm shift — as the Coffee Board no longer purchased their crop and the plantation community had to directly deal with market forces to their advantage.

Banned in domestic markets  

The Coffee Board was instituted as a quasi-government organisation in 1942, and for almost four decades purchased the coffee crop from planters. The legendary Union Finance Minister, the late T T Krishnamachari in the early 1950s recognised the importance of coffee as a foreign exchange earner. In order to leverage this, sale of coffee was banned in domestic markets, except for a miniscule portion, around 20,000-30,000 tonnes of the entire 200,000 odd tonnes produced in the country, quotas were fixed for internal consumption, while the remaining was exported to earn foreign exchange.

Today, coffee plantations have become so unviable that planters are constantly under threat of their plantation lands being auctioned by the debt recovery tribunals. The three categories of coffee planters based on the acreage of their plantations are: small growers (2-25 acres), medium growers, (25-50 acres) and large growers (50 acres and above).

Today, small planters form 90% of the plantation community and apart from these proprietary plantations, are the large corporate plantations owned by the big names in the Indian industry, all of whom collectively grow 4% of the world’s coffee crop. The small growers who form 96% of the plantation community produce 60% of the country’s crop, while the remaining 4% of the large growers generate 40%. Clearly it suggests that there is something seriously wrong in the approach to cultivation practices.  

Traditionally, coffee cultivation is an extremely labour intensive process given the undulating terrain in many areas where mechanisation is a challenging and yet an unexplored proposition. Therefore, in Karnataka, the largest coffee growing state in the country, the flight of labour from its plantation districts namely: Kodagu, Hassan and Chickmaglur, has adversely affected the future of the coffee plantation sector in the country. Besides, the labour factor, unfavourable weather conditions, white stem borer infestation in Arabica plants and non availability of high yielding varieties of coffee plants, collectively contribute to stagnation in the coffee crop at an average of 300,000 tonnes for over a decade.

The cultivation of Arabica coffee crop is more labour intensive and therefore, involves higher expenditure than Robusta coffee. Also, Arabica requires lower rainfall and lower temperatures, which means more shade or tree cover, unlike Robusta. Correspondingly, Arabica sells at higher prices compared with Robusta coffee. Otherwise Arabica is vulnerable to diseases unlike Robusta, which is a relatively sturdy crop.

Karnataka has 100,323 hectares of Arabica coffee plantations and 113,063 hectares of Robusta coffee plantations, which together amount to 213,386 hectares. These plantations yielded 74,755 Metric Tonnes (MT) of Arabica and 158,475 MT of Robusta coffee, which amount to 233,230 MT, as recorded for 2014-15.

Kerala for the same period with 3,865 hectares of Arabica coffee plantations and 80,548 hectares under Robusta cultivation, collectively have 84,413 hectares of coffee plantations. Tamil Nadu has 24,461 hectares of Arabica plantations and 5,535 hectares under Robusta cultivation and correspondingly yielded 13,150 MT of Arabica and 4,725 MT of Robusta crop.  Andhra Pradesh has 51,807 hectares under Arabica and 267 hectares of Robusta coffee which yielded 7,370 MT of Arabica and 55 MT of Robusta. 

Increasing the crop yield

Today, the small grower is in a dilemma with labour wages as high as Rs 300-750 per day per worker and crop yields not exceeding 20 bags per acre does not make financial sense. The only way out for the small grower is to increase the crop yield, which requires more labour, soil nutrients, adherence to the calendar of cultivation operations that means higher expenditure. Today, the cost of cultivation per acre for Robusta is Rs 50,000 and Rs 75,000 for Arabica.  
 
The drastic shortage of labour is linked to the country’s gradual urbanisation, which gained further momentum after the implementation of the 1991 New Economic Policy of Liberalisation, and only added to the grower’s woes. Higher incomes and easy lifestyles of the urban elite have lured away the plantation labourers to towns and cities to take up unskilled/semi-skilled jobs. Besides, the state/central government’s welfare schemes for inclusive growth and other electorally-oriented steps like cheap rice, health care, administrative approvals to build cheap housing on state-owned land have made the plantation labours a reluctant work force.

Some coffee growers despite the hassles attempted to capitalise on the higher prices but at the hands of the traders it proved an exercise in futility. Well aware of the planter’s predicament, the traders are quick to impose conditions and offer to purchase coffee often at prices lower than those announced by the international markets, citing reasons like: differential rates, moisture content, and outturn. In reality, the grower is central to the coffee industry, but today, the trader has usurped that position by virtue of getting a larger share of profits than the grower. This does not augur well for the industry because the grower is on the decline while the trader is on the rise.

(The author is Vice Chairman of the Karnataka Planters Association.
Views expressed here are personal. )

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(Published 24 July 2016, 15:45 IST)

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