Crisis

This subsection has two pages.

This article is based on an interview.

Dr. Pereira is a Microbiologist & a coffee farmer and owns the Kirehully Estate in the Western Ghats, in Hassan District, India. Ms. Geeta Pereira, wife of Dr. Anand Pereira is a horticulturist and a coffee farmer. They talked to our team about the impact of the coffee crisis on the Indian coffee farmers.

What is the impact of the coffee crisis on the Indian farmers?

The global crisis of plummeting price realizations below the average cost of production, over the last four years has taken coffee growers to the brink of disaster. The accumulated losses over the past few years has indebted the country’s 1, 78,308 coffee holdings to an extent that coffee farmers are no longer interested in holding on to their farms. Traditional coffee farmers are abandoning their estates and in many cases trapped by economic necessity farmers are selling their farms at a distress price. Majority of the coffee farmers own small land holdings of 10 hectares and less. It won’t be wrong to state that a majority of the coffee farmers are planning to jump off the cliff with fear and despair. So many farmers have so little for their livelihood.

Just have a look at the following facts:

• Total population of the Indian coffee farmer is around 1,078,308.
• Let us concentrate on the figures of Karnataka state (produces 70% of India’s Coffee) only to arrive at a sample parameter:
  • 0-10 hectares holdings – 38,000 growers
  • 10-100 hectares holdings – 1,800 growers
  • According to the figures furnished by the bankers in Karnataka state, out of 38,000 growers 30,000 growers continued to be in debts, i.e., 78% of them.
  • Out of 1,800 big growers 1,600 continue to be in debts, i.e., 90% are in debts.

The impact of the coffee crisis on the Indian coffee farmers is not uniform to all the growers. The intensity of the impact of the crisis varies according to individual financial capabilities to withstand the onslaught of the crisis in the last decade.

According to our observation we would like to group the whole planting community into three categories:

• First Category: The coffee farmers who had sufficient liquid funds with them that helped them to face the crisis and also continued to maintain the estate during the crisis without postponing the required cultural practices to keep the estate intact. This category of coffee farmers certainly will be benefited once the global price shoots up. But their numbers are very very small.
• Second Category: The coffee farmers who do not have liquid reserve funds but do not have much debt with the banks or other financial institutions. They used to maintain their estate by annual crop hypothecation. They could survive for 3-4 years. But gradually they are also being drawn into debt trap. But we guess this category of coffee farmer’s s will make a turnaround once the global price shoots up.
• Third Category: The coffee farmers who do not have liquid funds, have heavily borrowed from the bank and other sources and are deeply in debts. This category of coffee farmers was adventurous in nature. In anticipation that the coffee boom period would continue for some more years, they started expanding their land holding, invested lot on purchasing machineries, up gradation of infrastructure facilities etc. They are in deep trouble. We guess even if the coffee price shoots up to the level of boom period; survival seems to be the big question. The only hope and expectation is that the government would take necessary bailout operation and the coffee boom period would reemerge and will last for a longer period of time. Even though the impact is not uniform on all coffee farmers, 80% of them are drawn into debt trap. 60% of them severely affected. We can visualize 30% of them will loose their inherited property.

To sum up: Due to the impact of coffee crisis nearly 50% of market value of coffee plantation is wiped out. This has resulted in distress selling of inherited property at throw away price.

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