Southern States - Karnataka   

`Coffee bonds' to help growers mooted

By Our Staff Reporter

Bangalore Nov. 11. "Coffee bonds", an idea which was once rejected after the Union Government expressed its unwillingness to be a guarantor, was talked about again, at the 45th annual conference of the Karnataka Planters' Association, here on Tuesday. The conference was inaugurated by the Minister for Law and Parliamentary Affairs, D.B. Chandregowda.

A former Additional Secretary in the Ministry of Commerce and special invitee to the inauguration of the conference, L.V. Saptharishi, said the money raised through bonds could be used to help growers, who were facing a crisis.

Mr. Saptharishi said "coffee bonds" could be introduced with the Coffee Board and the Union Government acting as guarantors and ensuring timely redemption.

The Centre had given guarantee to bonds of State electricity boards (SEBs) despite the fact they had been making losses consistently. "But when the time for redemption of bonds came in the case of SEBs, their performance improved,'' he said.

The Government would have to take this step to experiment with bonds in the agriculture sector, he said. The magnitude of debt of coffee growers was smaller than that the debts in some other sectors, he added.

Cherian Philip, Chairman of the KPA, said that despite the "special coffee term-loans" given last year, growers were facing difficulties. The rescheduling of the loans from nine to 11 years had benefited banks more than growers, who were now "saddled with the responsibility of paying within the stipulated period, failing which the loans would be treated as NPAs'', he added.

Coffee was still fetching unremunerative prices, and in April and May this year, growers in Chikmagalur, Kodagu, and Hassan faced drought. Plantations were infested with the white stem borer pest. The Centre should waive the entire interest for the first year, payable by June 30, 2003, on special coffee term-loans, and re-phase the remaining repayments over 18 years, he said.

The rephrasing of loans should have a three-year moratorium, he said. The rate of interest in the remaining two years of the moratorium — 2004 and 2005 — should be four per cent.

It should be six per cent for the next 15 years, he added.

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