| AJAYAN
KOCHI, FEB 20: Nearly 70,000 coffee growers in the country who have been reeling under a crisis for quite a long time are pinning their hopes on the nearly Rs 600 crore relief package that awaits Cabinet nod.
The package recently got the minister's nod and was forwarded for Cabinet approval, commerce ministry sources said. According to the recommendations, there would be a Rs 286 crore interest rebate on the special coffee term loan (SCTL), besides lowering the interest of loans from 11% to 7%.
The price downturn over the years had seen the industry accumulate huge debts. Owing to the crisis faced by growers, the SCTL was sanctioned in 2001 whereby the outstandings were consolidated into a single term loan. The repayment schedule was spread over nine to 11 years with a three-year moratorium on loan payment.
However, as the crisis continued, this was extended by a year and from June, the growers would have to start repaying the loans. Despite all these efforts, the industry had not picked up and different organisations had sought relief. Several rounds of discussions were held with various departments before the package was finalised and got the minister's nod.
As per the package, Rs 286 crore had to be set aside for funding the interest payment on loans during the moratorium. The interest rate would be lowered to 7%. There was also a recommendation for total waiver of coffee loan taken by the small growers of Wayanad in Kerala and Coorg in Karnataka.
Officials said the price stabilisation fund (PSF) for tea, coffee and tobacco currently in place would be no solution to the industry. The commerce minister, not satisfied with the working of the fund, had formed a committee headed by Pranob Sen to look into the matter and devise ways to make it useful to all the growers.
Though the fund corpus was Rs 500 crore, only interest could be set aside for helping the industry, and an annual accrual of around Rs 20 crore would be pittance, said industry sources. Also, as the fund had limited entitlement to small growers, a vast section of the coffee growers were out of its purview.
Coffee futures from today
National Multi-Commodity Exchange (NMCE) is to launch coffee futures from Tuesday. The exchange managing director Kailash Gupta told FE that the it would introduce two varieties, arabica and robusta. The unit of trade would be 1,500 kg and the same for delivery.
The opening of the contracts would be minimum two months prior to the contract month. The limit on open interest for members would be 2,000 tonne and clients 500. The exchange had put in place the quality specifications for the two grades, arabica plantation A and robusta cherry AB.
While the delivery centre for arabica would be the CWC warehouse in Bangalore, it would be the CWC warehouse in Kozhikode for robusta.
Though the Indian Coffee Trade Association (ICTA) had earlier launched futures trade, it has died out, according to trade sources. This was owing to problems of mutualisation and as it was run by a traders' body, there were conflicting interests. Moreover, concentration on domestic trade that accounted for just 30% of the total consumption made the ICTA attempts to go global with the futures fail. The ICTA trade had followed the traditional outcry system and has not gone online.
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