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Coffee growers seek easy loan repayment norms

M.R. Subramani

CHENNAI, May 1

COFFEE growers have urged Nabard and other lending institutions to allow them to reschedule their loans in 10 equal instalments in order to continue their operations without any hinderance.

``Proper inputs are required for the crop, which is expected to be a record 3.25 lakh tonnes next season (October 2001-September 2002),'' the Coffee Board Vice-Chairman, Mr Bose Mandanna, told Business Line. ``If the crop is not to suffer, banks will hav e to reschedule our crop and term loans,'' he said.

Stating that growers had not sought any waiver of the loans availed from the banks, Mr Mandanna said they had only sought rephasing of the loans.

``We have never said we will not pay the loans or the interest. We want the banks to continue financing the sector. Right now, the situation is pretty bad and, therefore, it would be good if the loans are rescheduled. We will pay the interest as usual,'' he said.

If the loan repayment flexibility was not allowed, then the growers might have to stop manuring or even cut down labour inputs, he said.

While growers have resorted to agitations demanding rescheduling of the loans, the Union Commerce and Industry Minister, Mr Murasoli Maran, has written to the Reserve Bank of India (RBI) to look into the immediate and long-term aspects of the coffee sect or.

The growers have been affected by declining prices. While robusta prices have slid to a 30-year low, those of arabicas have dipped to a seven-year low. The 15-day moving coffee price average nosedived to a eight and half year-low of 47.19 cents a pound l ast week against 69 cents in May 2000 when the Association of Coffee Producing Countries (ACPC) announced a scheme to retain 20 per cent of exportable surplus coffee by the producing nations. The scheme has failed to bring the desired results with countr ies such as India and Indonesia putting the plan on hold.

Mr Mandanna said the growers had also held talks with Nabard for rescheduling their loans.

However, it is RBI which can allow the banks the flexibility the reschedule the loans. The Coffee Board Chairperson, Ms Lakshmi Venkatachalam, and other officials held talks with the RBI last week, according to industry sources.

An RBI spokesperson, when contacted, said the request of the Commerce Ministry as well as the growers was ``under examination''.

Industry sources said Ms Venkatachalam had held a meeting with the Nabard Managing Director and the RBI Deputy Governor.

Mr Mandanna said recovery from the coffee sector by the banks was very good and, therefore, there should be no problem in rescheduling the loans.

``Moreover, the banks are taking our estates as collateral. If the loans are rescheduled, there is good scope for the sector as the prices are expected to recover in the next 2-3 years,'' he said.

At present, the growers were facing payment problems as they were unable to sell their produce at good prices. ``Now, the prices are lower than the input prices,'' industry sources said.

The growers, on an average, avail Rs 15,000 per acre for robustas and Rs 20,000 per acre for arabica as loans. Crop loans are mainly used for crop inputs such as fertilisers. Term loans are availed for buying irrigation equipment, tillers and spray.