The Hindu Business Line : UPASI spurns Cofei cuppa

THE United Planters' Association of Southern India (UPASI) has turned down a "feeler" from the Coffee Futures Exchange of India (Cofei) Ltd to take over the coffee futures exchange.

According to trade sources, talks for the take over of Cofei were at a "premilinary" stage.

The UPASI President, Mr I.J.J. Rebello, told Business Line that the planters' body executive committee, which met in Coimbatore during the weekend, had decided against buying Cofei. "We have decided against buying Cofei, which had sent feelers," he said.

"There was only one discussion by Cofei with a person who is a member of both UPASI and the exchange. The talks were at a very preliminary level," sources involved in the talks said.

Cofei sent feelers to sell the futures exchange as one of the options to tide over its current problems due to the exchange witnessing poor volume turnover during the last 4-5 months on slump in global coffee prices. Coffee prices have headed south on projections of a record 37-39 million 60-kg bag production by Brazil. The situation is so bad that there is no open position in robusta cherry AB. Besides this, Cofei trades in plantation A.

Though Cofei was the first in the world to begin futures in raw coffee in June 2000, no transactions have taken place during the last 4-5 months. The exchange has been under pressure since October 2001. Then, it decided to revert to the open outcry system after discontinuing online trading owing to the poor volume and depressed prices. Plans to start Web trading have also been put on hold.

According to the sources, UPASI and Cofei executives were to discuss the options in their respective executive committees before going ahead with further talks. "There has been no official dialogue between both," the sources said.

Cofei officials said the plan to sell was just one of the options before the exchange. "We have other options as to how to improve sagging volumes and lift the sentiments of our members," they said.

The Cofei board is to meet on July 24 to discuss further on the exchange's plans to improve the situation.

Cofei, which has a paid up capital of Rs 1.35 crore, has also asked its 400-odd members to decide on whether they would opt for sale, merger or liquidation of the exchange. This would be discussed at Cofei annual general meeting "sometime in September".

On the other hand, UPASI, which has bid to launch futures in tea, has got the Government clearance and the Forward Markets Commission, which supervises the functioning of commodity exchanges in the country, has given it eight months time to set up the facilities.

"We have formed a core committee to go through the process (of setting up tea futures). It will be meeting in the next 2-3 weeks to take a decision on some of the crucial issues. A professional consultant with expertise in tea is to be appointed. The consultant would be entrusted with the task of helping in setting up the exchange, " Mr Rebello said.

The UPASI Tea Committee Chairman, Mr N. Dharmaraj, said coffee futures failed as it had marginalized the producers. "If coffee is doing well in the New York market, it is because it is done by fund operators," he said.

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