The expectation of ample global supplies is seen adding to the worries of the Indian coffee-growers, who are already reeling under the impact of low prices, rising cost of cultivation and an erratic weather pattern.

Growers fear that the prevailing bearish trend in prices, witnessed for the past 3-4 years, would extend into the new crop year beginning October as production is set to peak in major producing countries such as Brazil, Vietnam and India.

While the US Department of Agriculture recently forecast that supplies would increase by 11.4 million bags of 60 kg each in 2018-19 to a record 171.2 million bags, the International Coffee Organisation expects the current year’s production to increase by 1.2 per cent at 159.66 million bags on higher production in eight of the ten large producers.

Global coffee prices, after peaking in 2014, have been volatile in the past couple of years. The prices in India are mainly driven by the movement on the London and New York terminals.

Farm-gate prices of the arabica parchment, which ruled at around ₹9,500-9,700 per 50 kg bag in January 2017, have now dropped to around ₹6,400-6,500 levels, says Bose Mandanna, a large grower in Suntikoppa. Also, the decline in rupee against the dollar in recent months has not helped stabilise farm-gate prices. However, the cost of cultivation is on the rise, driven primarily by revised wages and increase in fuel costs, he adds.

BS Jayaram, President, Karnataka Growers Federation, a body of small growers, fears that the global surplus would bring the prices down further. “The small growers, who account for around 98.8 per cent of the growers community, are seen bearing the brunt,” Jayaram said. Prices of pepper, which used to augment coffee-growers’ income earlier, have dropped by over 50 per cent this year, adding to their worries, he said.

The government should step in and come to the rescue of the small growers through a minimum support price (MSP), or a loan waiver and also help them organise marketing of their produce while boosting domestic consumption, Jayaram said.

However, the Centre had recently ruled out an MSP for coffee. In a letter to the Karnataka Planters Association, the apex growers body in the state, the Commerce Ministry said that as 70 per cent of the Indian coffee is exported, the exporters will be announcing their purchase price based on the international prices. “Thus the MSP mechanism may be difficult to implement in case of coffee,” the Ministry said.

KPA Chairman, HT Pramod said that with realisations dropping below the cost of production for consecutive years, growers are finding it difficult to service their debts. As a result, the coffee loan outstanding is on the rise, and is estimated at around ₹6,000 crore, sources said.

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