Growers want debts restructured at lower interest, with long repayment window
The Indian coffee industry will take a long time to recover from the severe blow dealt by the pandemic on all commercial activities across the globe.
Most coffee growers in the country were already in deep debt after they were hit by excessive monsoon rains, floods, landslides and huge crop losses consecutively in 2018 and 2019. Again, during the December-March (2020) picking season, they could not sell or export much of their beans due to the lockdown. “The global coffee situation is grim as the entire coffee chain is shut due to COVID-19. A bulk of our coffee goes to Europe and cafés in all those countries are shut. Nobody in the coffee community has any visibility right now and no one knows how things are going to pan out for the industry. All these could lead to a decline in demand for the commodity in the export markets,’’ Anil Kumar Bhandari, president, India Coffee Trust (ICT) told The Hindu.
Out-of-home coffee consumption, through cafés, restaurants, hotels, small coffee shops and offices etc, accounted for a decent chunk of its total consumption. With the pandemic challenging the ‘social’ factor attached to the café culture and traditional coffee retailing, café owners are now forced to look at newer ways and means to sell the beverage, by ensuring ‘social distancing’.
In the current situation, coffee growers will be forced to hold on to the last season’s produce for more time, until markets open up and demand shows up.
“Growers could not sell most of the coffee harvested in the March ending season. As a result, there is no money in their hands and also no access to bank finance because of inability to meet past debt repayment schedules.The industry is hopeful that the Union Government will restructure existing debts with lesser interest and long-term repayment options, in addition to releasing some fresh working capital to look after the workers, farms and the berries that’s already set for next season crop,’’ said Mr. Bhandari.The Ministry of Commerce has already reached out to coffee stakeholder organisations to assess their debt conditions and fund requirements.
Many growers say, the situation is critical as important farm operations such as fertilizing, pest/disease control must be completed before monsoon, that is early June. Any further delay in organising working capital would entail laying off of workers and cessation of farm operations.
“This year’s crop is reasonable, but if growers don’t have adequate working capital, the berries on the plants might wither away and it will bring more uncertainty to the already suffering sector,” said Bose Mandanna, former Coffee Board member and a leading coffee grower in Coorg.
Meanwhile, a small portion of coffee roasting operations has resumed in the last few weeks. However, most of the roasters are processing much lower quantity of coffee than what they did earlier, said Chandan Cotha, a coffee roaster and partner at Cotha Associates.
“The stimulus package announced by the government is yet to reach small businesses. There is a huge cash crunch in the market. We are in need of the stimulus right now and not two months later,’’ said Mr. Cotha.
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