Coffee producers have urged the Union finance minister Nirmala Sitharaman to restructure outstanding loans of Rs 5,000 crore, some of which have turned into non-performing assets (NPAs) and some are under stress, amid a financial crisis brewing in the sector.
The industry has sought conversion of the crop loans to term loans, an increase in the repayment period to seven years with a three- year moratorium and reduction in the interest rate on loans to 3%. At present, the loans attracts an interest of 10-12%.
“We had a meeting with the FM recently. We have highlighted the need for restructuring of loans for coffee sector, as it will have a positive impact on its long-term viability,” Jeffry Rebello, chairman, United Planters’ Association of South India, told ET. “It was requested that necessary direction be given to banks to restructure all crop and development loans given to coffee growers into a single term loan.”
The restructured loans could be on the lines of the earlier special coffee term loan scheme (SCTL), which was announced in 2002 and was well accepted by all the stakeholders in the coffee trade, said Rebello.
Erratic weather conditions have hit the financials of coffee growers in the past three years.
“We are of the view that the coffee sector needs to be funded at lower rates of interest to increase domestic production and enhance global competitiveness,” said Rebello.
Domestic coffee production for 2021-22 was estimated at 369,000 tonnes (post blossom estimates), an increase of 35,000 tonnes in total production from the previous year.
Arabica and Robusta production in 2021-22 was estimated to be higher by 93,000 tonnes and 257,000 tonnes respectively. As per the estimates, Arabica production was 1,083,000 tonnes, up 29.3% year-on-year, and Robusta output was 2,607,000, up 70.7%. However, given the erratic weather condition during the blossom, there could be a shortfall of 10-15% in output.
In 2020-21, coffee exports saw a dip in the quantum while value realisation and unit value registered an increase. The export performance in terms of quantity exported decreased 159,000 tonnes at 3,107,000 tonnes, value realisation increased Rs 252.72 crore to Rs 5,452.13 crore and the unit value realisation increased Rs 16.25 per kg.