The commerce ministry’s will has prevailed over the finance ministry’s proposal to exclude large growers in the Rs600 crore coffee replantation programme in coffee estates.
According to sources familiar with the development, commerce and industry minister Kamal Nath has revised the finance ministry’s proposal, and the new plan, which now includes large coffee growers for the replantation scheme, will be sent to the cabinet for its approval next week.
Nath met the coffee planters early this week to thrash out outstanding issues.
The Coffee Board of India plans to cover around 90,000ha under the replantation scheme, starting June. However, the finance ministry was in favour of keeping out large growers and corporations with land holdings above 10ha from the scheme that plans to uproot coffee plants in phases and replant them with new ones, because nearly 30% of the area has plants that are more than 40 years old.
Small growers with less than 10ha account for close to 98% of India’s coffee growers. Although their land holding is around 70% of the 382,000ha under coffee cultivation, they account for less than 60% of the total production of 270,000 tonnes. Had the government gone ahead with the unrevised, old programme, 2% of the large growers, who hold around 30% of the land and contribute more than 40% of the total output, would have been kept out of the initiative.
A.K. Bhandari, vice-chairperson of the Coffee Board, said Nath assured a delegation that included Ullas Menon, secretary general of the United Planters Association of Southern India, and C.M. Pemmaiah, president of the Karnataka Planters Association, that large growers and firms would be included in the programme.
According to the original programme, the Coffee Board had estimated—in consultation with SBI Capital Markets Ltd—that the cost of replantation of 1ha with the higher quality Arabica coffee variety would be Rs1 lakh and that of inferior quality, Robusta coffee, Rs80,000. The board had proposed a government subsidy of Rs180 crore. Of the total cost, 40% is to come as subsidy from the government for small growers, owning land up to 4ha, 30% for medium growers, holding land between four and 8ha, and 20% for large growers. Banks are to provide 50% of the cost as loan.
“Keeping out the corporations and large growers is unfair and the commerce minister is convinced about this,” Bhandari said. “It’s not the size, but the composition of the estates that has to be considered. India produces more than 92,000 tonnes of the high quality Arabica variety of coffee, while the rest is Robusta. Arabica plantations, mostly held by large growers in Karnataka, are now infested with the white stem borer pest that destroys the plant. A replantation exercise will have to be undertaken immediately to help the industry,” he added.
The better quality Arabica coffee is grown in high altitudes and it takes roughly five-eight years for these plants to bear fruit, while the inferior Robusta variety takes around 12-15 years to bear fruit. “Without such a scheme, big growers may not take up such a replantation exercise,” said M.H. Ashraff, managing director of Tata Coffee Ltd.