Coffee growers urge FM Nirmala Sitharaman to waive interest, recast loans

Coffee growers from southern states, mainly Karnataka, have sought an urgent relief package to recover from the damage caused by floods, and losses suffered due to a steep rise in input, wages and social costs.

In a presentation made to the Finance Minister Nirmala Sitharaman through a virtual consultation meeting on Friday, the growers’ bodies such as Karnataka Planters Association (KPA), United Planters Association of Southern India (UPASI) and Coffee Board have sought a loan restructuring package on the lines of the earlier SCTL package announced in 2002.

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The Coffee Board Chairman M S Boje Gowda stated that the growers have lost around 35% of their crop in 2018 and 2019 due to floods and landslides. In some areas, the losses were up to 70%. The plantation districts have once again borne the brunt of heavy rains/winds this monsoon as well resulting in severe crop damage, tree fall and landslides in many growing regions.

The lockdowns due to the Covid-19 pandemic have resulted in a disaster to coffee growers and industry. The lockdown has disrupted normal plantation activities, curing, trading and export of coffee. Due to this, the growers are facing a severe fund crunch and cash flow concerns. It was also difficult for them to harvest coffee and pepper due to migration of workers.

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"In order to overcome the current crisis, the growers need a relief package. We have sought restructuring of all crop and development loans given to coffee growers into a single-term loan. The repayment period should be extended for a period of nine years with a two-year moratorium," Shirish Vijayendra, Chairman, KPA said.

The Coffee Board has also sought a reduced interest rate of 3% per annum. "We request the government to reduce the rate of interest to 3% on all crop and development loans disbursed to coffee growers. This will help growers to compete effectively in the international markets," Boje Gowda said.

The growers have also urged the government to waive interest on coffee and pepper crops and development loans as the loans have become unserviceable due to the financial crisis faced by the planters as a result of natural calamities.

Also Read: COVID-19: Karnataka coffee growers demand special package

In reply, Sitharaman assured the planters that she will look into their concerns.

Among other demands, the planters have urged the Finance Minister to reintroduce the 5% export incentive under the Merchandise Export from India Scheme (MEIS) for plantations including coffee. The government had discontinued this scheme from April this year.

However, the commerce ministry has capped the export benefits at Rs 2 crore for every exporter with effect from September 1.