The Hindu Business Line : Bankers' meeting to consider more sops for coffee growers

THE core group of bankers with maximum exposure to coffee sector loans under the `Relief package to coffee growers' scheme being administered by RBI would meet in Bangalore on Friday to evolve a response to the growers' demand for more sops.

This was one of the key decisions taken at a review meeting held here chaired by the Minister of State for Commerce and Industry, Mr Rajiv Pratap Rudy, on Tuesday with the representatives of the Karnataka Coffee Growers' Association, Coffee Board and senior officials of the Department of Commerce, official sources told Business Line here.

At the meeting, coffee growers pointed out that the steep fall in global prices has led to a huge chasm between the cost of production and realisation, about Rs 20 per kg for arabica and Rs 15 per kg for robusta varieties.

Since 70 per cent of the coffee grown in the country is exported, a plunge in the world prices has a devastating impact on the growers. The growers sought that the two-year moratorium period awarded for repayment with interest must be three years without payment of interest. The proviso to repay 75 per cent of crop loans should be dropped as growers were unable to repay any amount because the rescheduled loans advanced last year were adjusted towards arrears. They further pleaded that as originally finalised by RBI, estate purchase loans, vehicle and house loans should be covered under this package since all these loans are dependent on the returns from sale of coffee only.

The RBI Deputy Governor, Dr Vepa Kamesam, attended the meeting among others, who included Members of Parliament from Karnataka, Mr D.C. Srikantappa, Mr Puttaswamy Gowda, Mr H.K. Javare Gowda, Mr K.M. Khan, besides the Chairperson of the Coffee Board, Ms Lakshmi Venkatachalam, the Additional Secretary in the Commerce Ministry in charge of plantation industry, Mr L.V. Saptharishi and senior officials of the Government.

The important issue that came up at the review meeting, the sources said, was a review of the special coffee term loan sanctioned by RBI which envisages rescheduling of long and short term loans availed of by the coffee growers as of now. The scheme, which was put in operation in June, did not match the expectations of the growers because of some "inherent disadvantages" in its operationalisation.

The meeting also took note of the demand of growers for a longer period of rescheduling from the existing 7-9 years to beyond 9 years. However, it was stated that the scheme has been in vogue only for a short while and it would be too early to make an assessment of its viability and that operational hitches would be set right in the course of the coming days, the sources added.

However, the sources said Mr Rudy pointed out the Government had in concert with the banking sector rephrased/rescheduled the loans to coffee growers and also advanced fresh crop loans. It also approved a proposal of the Coffee Board to extend interest subsidy up to 5 per cent to the small growers on the reduced working capital loans availed of by them from the financial institutions. It has also put in place farm sector upgradation facilities in terms of quality and variety of coffee, besides a medium-term export promotion and domestic promotion schemes in place.

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