The Hindu Business Line : `Don't expand coffee area'

COFFEE FEST: (From left) Mr C.M. Udasi, Karnataka Minister for Rural Development and Panchayat Raj; Mr Jairam Ramesh, Union Minister of State for Commerce and Industry; and Dr Nestor Osorio, Executive Director, International Coffee Organisation, London, at the India International Coffee Festival 2007 in Bangalore on Friday. — G.R.N. Somashekar

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Bangalore Feb 23 The International Coffee Organisation's Executive Director, Mr Nestor Osorio, cautioned the Indian coffee growers on Friday against expanding their area after seeing an improvement in their purchasing power following the recent recovery in global prices.

Delivering the keynote address at the second India International Coffee Festival 2007, Mr Osorio told the growers "not to plant today the seeds of next crisis" by expanding their area. Further, Mr Osorio stressed upon the need to re-invest in technology to boost productivity and fight diseases affecting the coffee economy.

"The coffee industry is currently at a turning point. I am confident to say that what we endured for four years from 2000-04 is over. However, we have to be cautious in not agreeing to expand the coffee frontiers," Mr Osorio said.

Market `delicate'

Terming the present market condition as delicate, Mr Osorio said the balance between the global supply and demand has reduced considerably and predicted that next year (2007-08) would be an asynchronous situation. While the global consumption in 2007-08 is projected at 118 million, 60 kg bags, the output is likely to be around 110 million bags as Brazil, the largest producer faces a not-so-good-crop-year.

Moreover, the opening stocks at the beginning of the current year are at an all time low of less than 20 million bags.

"Any climatic changes affecting the crop will create dramatic scenario impacting the prices," he said.

Complimenting the Indian growers on enduring the crisis with tremendous resilience, Mr Osorio said the challenge lies in developing the market in producing countries that have largely ignored their domestic consumption.

The Union Minister of State for Commerce, Mr Jairam Ramesh, said that the rebound in prices coupled with increased output, exports and a major consumption growth in domestic market has augured well for the industry. Karnataka has led other States in boosting the consumption, which was almost stagnant in three other traditional States of Tamil Nadu, Kerala and Andhra Pradesh.

price volatility

Mr Jairam Ramesh assured the plantation sector that the Centre would take care of price volatility through price stabilisation-cum-insurance scheme.

Speaking at the IICF 2007, Mr Ramesh said the committee set up under the former Insurance Regulatory Development Authority (IRDA) Chairman, Mr N. Rangachary, has submitted its report and the details of the proposed price stabilisation-cum-insurance scheme were being published on the Commerce Ministry's Web site for seeking public opinion on Friday.

The suggested scheme would initially operate on a subsidy-based mechanism in the first five years and in the next five years it would move to a market based one, he said.

Mr Ramesh stressed upon the need to increase exports of value-added coffee products from the present five per cent to 25 per cent of total coffee exports in five years.

Stressing the need to take up replanting of coffee on the lines of tea, Mr Ramesh said that SBI Caps has submitted its report to the Coffee Board, which said that replanting has to be taken up in 80,000 hectares.

The Commerce Ministry will move the Government seeking a special purpose coffee fund, wherein growers would also contribute, he said.