A crisis is brewing in the coffee industry

GS Paper 3

Source: The Hindu

 Context:  Coffee cultivation is becoming an increasingly loss-making proposition in India.

Coffee production in India

• More than 75% of Indian coffee production is Exported.
• India’s share in the global coffee market is less than 5%.
• The coffee community in India, comprises close to 4 lakh coffee growers, hundreds of large planters, and associations.

Problems being faced by coffee producers

• Erratic weather conditions are helping pests to breed and new diseases to emerge.
  • fruit rot, stalk rot, root rot and other irreparable damage due to heavy rainfall and landslides.
• The volatility in market prices and the reduced influence of producers in the value chain render coffee cultivation an increasingly loss-making proposition.
• Cost of financing: Most private banks insist that growers provide collateral for financing leading to interest rates being higher for small and medium-sized growers who lack collateral.
• The rise in the cost of inputs year on year and the increase in the cost of labour and benefits, constitute 60% to 70% of total plantation expenditure.
• Plantations face power cuts during the summer months. This makes irrigation expensive as the cost of diesel is high.
• Identity crisis: Indian coffee is still facing an identity crisis in global markets as Indian coffee was never considered a separate origin coffee. It was always used as filler.

Way forward:

• Finding alternative sources of revenue and increasing domestic consumption
• Branding and promoting Indian coffee better in the global market on the other.
• Inter-cropping: Growers should create additional revenue streams through inter-cropping or through innovative measures.
• Considering the change in land use, the government could permit growers to plant alternate crops on land not suitable for coffee cultivation.
• Sturdy and weather-resistant varieties of coffee may help.

Insta Links:

Coffee Promotion bill 2022 (check-in FFP)

Prelims Link