The Hindu Business Line : Plea to pare borrowing cost for coffee sector

THE United Planters' Association of Southern India (Upasi) has urged the Government to save the coffee sector from the problems it is currently facing.

The Upasi President, Mr B.B. Medaiah, while detailing the precarious position of the coffee sector, has urged the Government to accede to the industry's request to reduce the cost of borrowings.

Incidentally, the Government had, in response to the industry's representation in 2000-01 evolved a Special Coffee Term Loan (SCTL) with a three-year moratorium on repayment of principal and a flexi-repayment period.

The industry, at the time of requesting this facility, had surmised that with normal cropping patterns and with a reasonable increase in coffee prices, it would not be altogether impossible to meet the liability of accumulated interest and principal payments by April 2004.

But that is not to be. At the prevailing rates and sharp drop in crop estimates, the industry is anticipating a cash loss of Rs 170 crore.

Production apart, coffee prices, although somewhat higher than the rates that prevailed in the past three years, was still lower by 25-30 per cent to the 1999 rates. ``As such, the prices earned at normal production levels are still lower than the cost of production,'' Mr Medaiah said.

The Upasi President attributed the drastic drop in coffee crop yields to the acute drought situation.