KOZHIKODE: Coffee growers in Wayanad, a major coffee-growing region in the State, are not too enthused by the extension of deadline for paying one-third interest on Special Coffee Term Loan during the moratorium period from June 30, 2005 to May 31, 2006.

"The main beneficiaries of this decision would be coffee growers in Karnataka. Hardly 500 growers in Kerala would derive any benefits from this decision," said K. Moidu, president, Wayanad Coffee Growers Association.

Mr. Moidu, who is former Vice-Chairman of Coffee Board, said if the Union Government was sincere in helping coffee growers in the State, it should waive repayment of loans taken by small growers who are facing a crisis following the sharp decline in prices.

Or, at least, the Government should order waiver of interest on loans, he said.

The Wayanad Coffee Growers Association has submitted representations in this regard to Union Finance Minister P. Chidambaram.

Mr. Moidu said a large number of small growers were unable to repay their loans, as coffee prices had crashed to as low as Rs.20 a kg in 2002-2003.

The Centre had extended the deadline for payment of one-third interest on Special Coffee Term Loan up to May 31 with the intention of helping coffee growers, especially the small grower segment. Information and Broadcasting Minister P.R. Dasmunshi had said so after the meeting of the Cabinet Committee on Economic Affairs. "The scenario in coffee sector over the last few years has been extremely unfavourable for growers. The small grower has been the worst hit and therefore, it is necessary that the intended benefit accrues to all such small growers," he had said. The Minister had also expressed the hope that after the extension, the grower loanees would be able to pay their part of one-third share of interest component after the harvest and sale of the ensuing crop.

The Special Coffee Term Loan was announced in 2002, under which various types of loans, including interest, were consolidated into a single term loan. The loans contained a number of concessions, including a moratorium on repayment of principal amount for three years starting 2002-03.

However, as growers remained in financial difficulties due to low prices, the Government had in May 2005 given a package aimed at debt amelioration to bail out the sector.

The Government had hoped that the Cabinet approval granted on March 7 would benefit a large number of coffee growers, particularly in the southern States of Karnataka, Kerala and Tamil Nadu.

Sources said coffee harvest had registered a sharp decline this year in Wayanad. This was because it had rained in first week of February 2005 coinciding with the very day of blossoming. It hindered pollination and consequently fruit-setting.

The growers had also not been able to take proper care of their plantations by providing sufficient fertilizers and other inputs owing to financial stringency. However, the coffee production is expected to increase next year.

But the sources said that after a long spell of low prices, the price of coffee had started looking up and now stood at Rs. 50 a kg.

This is of course much less than what coffee fetched a few years back when the prices had soared to as high as Rs.120 a kg. "Such a high price is unrealistic," the source claimed, "because it was the result of a scarcity in world coffee market caused by a sharp decline in coffee production in Brazil, the major coffee producer, because of adverse weather conditions."

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