Commodities  ^{123    15}   

Published: Aug 29, 2019
Updated: Aug 29, 2019

PLANTERS IN DISTRESS: Our refreshing cuppa, their misery

According to him, the southern states - Kerala, Tamil Nadu and Karnataka - are major producers. These states account for 67 per cent of the growers and 55 per cent of the workers engaged in plantation activities all over the country. About 12.60 lakh growers -- mainly small and marginal -- are cultivating plantation crops on 11.57 lakh hectares, providing round-the-year employment to about 13.47 lakh workers.

Pointing out that "the government policy as recommended by the Dr Swaminathan Committee is to fix the Minimum Support Price at 150% of the cost of production," Mr. Joseph adds that "plantation commodities are not covered by MSP. Niti Aayog is examining replacing the minimum support price by a minimum reserve price which could be the starting point for auctions at mandis. Similar provisions should be mandated for the plantation commodities auctioned."

HARSH LAWS

Insisting that "there is an urgent need to improve demand in domestic and export markets which will help in better realisation to the growers," Mr. Joseph adds, "The Central government, through the Commodity Boards, should come up with generic promotion campaigns for the domestic market and specific promotion programmes for select export destinations. In India, nearly 99% of coffee growers are small growers who produce around 70% of the coffee in India. Small coffee growers are unable to realize a good value on sale of coffee grown in their estates as they generally sell raw coffee beans to middlemen, who in turn carry out other activities including 'curing' to make the coffee beans marketable at a much higher price.

"Currently, the growing portion is taxed under the State Agriculture Income Tax and the manufacturing portion is taxed under the Central Income Tax. Central Income-Tax is levied on coffee growers when they undertake curing in accordance with Rule 7B of the Income-tax Rules. If the grower has to sell his coffee at his farm gate to international buyers as single-origin coffee, he has to cure and grade the coffee for the international or local buyers to gauge the quality. This will incentivise the grower to produce better-quality coffee to get better prices. This will sustain traditional shade-grown coffee cultivation. India is the only country which produces world-acclaimed shade-grown coffee in the Ecologically Sensitive Zones of the Western ghats. But the grower is unable to derive a monetary benefit because of the constraints of Rule 7B. 'Curing' is only a stage before making the product marketable but not the final product which can be consumed. It is requested that the government may consider coffee up to the stage of 'curing' as an agricultural produce and not to be taxed under Rule 7B(1), and that coffee be taxed only from the stage of roasting and powdering, where the actual value additions take place. This would enable the growers to sell coffee after curing, thereby enabling them to get a better price."

GLOBE AND INDIA

Referring to the global plantation scenario, Mr. Joseph says that world tea production, after crossing the 5 billion kg milestone in 2013, added nearly another billion kg within a span of 5 years. The world tea crop in 2018 registered an increase of 158 million to reach 5,856 million kg. India's contribution was 1,339 million kg, of which South India's contribution was 224.9 million kg. Tea prices in major producing countries except Sri Lanka reported a decline in dollar terms. South India had the lowest price realisation in dollar terms at $ 1.45 per kg, despite the fact that it witnessed a drastic decrease in production. The export performance surpassed the record high of 251.9 million achieved in 2017 by reaching 256.1 million kg.

Global coffee production during the 2018-19 season was estimated at 169.78 million bags, higher by 10.12 million bags. India reported a marginal increase and it was 3,19,500 tonnes or 5.33 million bags. Domestic Arabica prices in 2018 declined while Robustas had a slight improvement. Exports during 2018-19 saw a dip, both in quantum exported and value realization. And global natural rubber production in 2018 was more or less static, with a small increase of 44,000 tonnes. Indian production declined from 6,94,000 tonnes to 6,42,000 tonnes during 2018-19. Prices continued to decline but it has slightly improved now. The root cause for the agonising situation is excessive imports, which reached a record high of 5,82,000 tonnes in 2018-19.

"The challenges posed by natural calamities, change in weather patterns and rising temperature levels are serious threats to the plantation business." The high-cost producing region of southern India is unable to withstand global competition. Plantation crops are not able to cover the cost and there is an urgent need to enhance incomes by engaging in other activities.

Cardamom production during 2018-19 is estimated to be 12,950 tonnes from 20,650 tonnes the previous year, mainly due to the rain damage last year. The estimated export is one of the lowest in the recent past at 1,250 tonnes, compared to 5,680 tonnes in 2017-18. The only solace is the price levels averaged at Rs 1,477 per kg during the last season. Pepper production too declined in India last year from 70,878 tonnes to 62,144 tonnes. Prices of pepper last year dropped to an average of Rs 360 per kg after touching the 700 mark in 2016. In pepper as well, unregulated excessive import was the reason for the decline in prices.