The Hindu : UPASI plea to Centre

Online edition of India's National Newspaper
Sunday, Feb 15, 2004

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Business

UPASI plea to Centre

By Our Special Correspondent

COIMBATORE, FEB. 14. The United Planters' Association of Southern India (UPASI) has appealed to the Central Government to initiate `emergency measures' to save the coffee industry from a `accelerating debt and destruction'.

In a memorandum to A. Sengupta, Additional Secretary, Union Ministry of Commerce, the President of UPASI, B. B. Medaiah, said the coffee sector had been facing `serious recession' for the past three and a half years. Though the Central Government had evolved a special coffee term loan with a three-year moratorium on repayment of principal and a flexible repayment period, `the industry's request to reduce the cost of its debt (Rs. 1,200 crores) had not yet been acceded to by the Government and the banking system".

He said that the continued prevalence of low prices had eroded the capital, accumulated over the years through savings and other investments. That was why the UPASI sought the intervention of the Government in 2000-01 itself to reduce interest rates `for both existing debts and future working capital borrowings'.

The industry was under the impression that it would be able to meet the accumulated interest and principal payments by April this year. "However, it is now becoming clear that there is definitely going to be a serious drop in the coffee crop being harvested now in the initial blossom estimates, especially Arabica". There would be a production shortfall of over 30 per cent in Arabica and at least 10 per cent in the yet-to-be picked Robusta crop. The lower crop would result in a loss of Rs. 170 crores.

Though coffee prices now were slightly higher than that prevailed in the past three years, they were still 25-30 per cent less than that in 1999.

With the drastic fall in the coffee crop, the cost to realisation ratio also would get skewed exponentially making the grower unable to meet the scheduled repayments this year, the association said.

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