Amidst the prevailing volatile price trend, an imminent wage hike of over 10 per cent is seen inflating the cultivation costs for the coffee growers of Karnataka, which accounts for more than two-thirds of India’s output.

Negotiations of wage hike have been completed recently between the growers and labour unions and the Karnataka government is expected to notify the new wages soon.

As part of the new wage structure, the basic daily wage is fixed at ₹305 — up 10.10 per cent over the current ₹277.41, said N Bose Mandanna, a member of the committee that negotiated the new wage structure. Including the other social costs, the total outgo for a worker would be in the range of ₹450-470 per day, he said.

Total outgo up

Labour wages account for around 60 per cent of the cultivation costs in the coffee sector, followed by fertiliser and fuel which constitute 35 per cent, Mandanna said.

“The wage hike is going to affect the growers badly,” said HT Pramod, Chairman, Karnataka Planters Association, the apex body of the growers in the State.

To offset the wage hike impact, the government should help the growers by reducing the interest costs. “We have urged the government to reduce the interest on loans up to 25 lakh at 3 per cent and above 25 lakh at 6 per cent,” he said. Pramod further said the impact of the wage hike could be more on growers of arabica, where the cost of production and pest incidence is higher and the productivity is low compared to robustas.

Global production

The revision in wages, after a gap of around four years, is happening at a time when the prices globally have been volatile and at multi-year lows.

The prevailing bearish trend in prices is largely attributed to a surge in global output, which is seen heading for a record in 2017-18 (October-September) at 158.8 million bags (of 60 kg each), about 0.7 per cent higher than last year’s 157.7 million bags, according to the latest estimates of the International Coffee Organisation released on Tuesday.

Production of arabicas is projected to reach 97.3 million bags — down 1.1 per cent from the 2016-17 season.

Robusta production in 2017-18 is seen at 61.5 million bags, up 3.7 per cent over last year, mainly on account of rebound in output of Vietnam, the largest producer of the variety. The prospect of a hike in global output is seen resulting in a bleak outlook for rebound in prices.

“We don’t have any hopes of getting a better price this year,” said DM Purnesh, a large grower in Chikmagalur.

Back home, the harvest of arabicas is almost over, while that of robustas has commenced in the key growing regions of Kodagu and Chikmagalur.

For 2017-18, the State-run Coffee Board sees a 12 per cent increase in total output at 3.5 lakh tonnes with output of arabicas estimated at 1.03 lakh tonnes and robustas accounting for the rest. Growers and the trade, based on the harvest and marekt arrivals, estimate arabica production to be around 90,000 tonnes, while that of the robusta could be much lower than the Board's estimates.

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