Budget may take a coffee-break.

BANGALORE: The Union budget may not have happy tidings for the Indian coffee sector as the Rs 505-crore relief package recommended by the Coffee Board is unlikely to find a mention. Of the Rs 505-crore package, Rs 200 crore is accounted for by the special coffee term loan (SCTL), Rs 100 crore is the outstanding interest on SCTL, while the balance being borrowings of coffee growers post 2002.

The SCTL is a vehicle into which all loans taken by growers till June 2002 were pooled into. The SCTL, which got the nod in May 2002, became a necessity as global coffee prices dropped between 1999 and 2002 affecting realisation of Indian growers.

“We are hopeful that the Union budget would provide help to the growers. However, it is a remote possibility as a Committee of Secretaries is already discussing the contours of the relief package. The Budget would have a lot of issues to address, including the economic stimulus. Under these circumstances, the relief package may be glossed over,” an industry source told ET. A Coffee Board member confirmed the move.

Initially, there had been talks of the relief package being Rs 802 crore, the Union commerce ministry only approved of the package proposed by the Coffee Board.

“We hope the coffee relief package is approved early since it can boost not just small but even large growers. While the industry is dominated by small growers (with less than five acres holding), close to 40% of the nation’s coffee is produced by large growers,” another Coffee Board member said.

India, the world’s sixth-biggest coffee producer is expected to have an output of 2.89 lakh tonne in the ongoing coffee year ending September 2010. The recent Christmas/New Year rains is reported to have impacted around 4% of the output.

Source : The Economic Times