COFFEE INDUSTRY

INTRODUCTION

• Indian coffee is the most extraordinary of beverages, offering intriguing subtlety and stimulating intensity.

• India is the only country that grows all of its coffee under shade. Typically mild and not too acidic, these coffees possess an exotic full-bodied taste and a fine aroma.

• It all began with a long, arduous journey around four hundred years ago... when the legendary saint Bababudan brought seven magical beans from distant Yemen and planted them in the Chandragiri hills of Karnataka. 

• India has consistently produced and exported a remarkable variety of high-quality coffees for over one hundred and fifty years.

• The world coffee production in the coffee year 2010-11 is estimated to be 123.6 million bags.

• In the export front calendar 2009 closed with a decline of 3 percent at 94.7 million bags from 97.7 million bags in 2008

• India accounts for about 4.5 percent of world coffee production.

GROWING CONDITIONS

• India cultivates all of its coffee under a well-defined two-tier mixed shade canopy, comprising evergreen leguminous trees. Nearly 50 different types of shade trees are found in coffee plantations.

• India’s coffee growing regions have diverse climatic conditions, which are well suited for cultivation of different varieties of coffee. Some regions with high elevations are ideally suited for growing Arabicas of mild quality while those with warm humid conditions are best suited for Robustas.

IMPORTANT VARITIES

• Kents :  Kents is the earliest variety of Arabica, selected by an English planter of the same name during the 1920s. 

• S.795 : This is by far the most popular Arabica selection released during the 1940s with high yields, bold beans, superior quality and relative tolerance to leaf rust.

• Cauvery : Popularly known as Catimor, Cauvery is a descendant of a cross between ‘Caturra’ and ‘Hybrido-de-Timor’. 

• Sln.9: Selection 9 is a derivative of a cross between an Ethiopian Arabica collection, ‘Tafarikela’, and ‘Hybrido-de-Timor’.

Total Export of Coffee

In 2006-07, the total production of coffee was 249029 tonnes while the export worth USD 43.6974 million.

In 2007-08 , the total production was 218998 tonnes and the export was worth USD 44.5329 million.

In 2008-09, the total production was 197171 tonnes and the export was worth USD 48.8273 million.

.In 2009-10,the total production was 181225 tonnes and the export worth USD 42.328 million.

Few more facts

• With a view to expand coffee cultivation, Coffee Board has been implementing developmental programmes for coffee development in North Eastern Region and Non Traditional areas.

• During 11th Five Year Plan, Coffee Board has proposed to support coffee expansion programme taken up by the Integrated Tribal Development Agency on 24000 ha. area in Andhra Pradesh and on 850 ha. area in North Eastern Region, which will facilitate export of coffee.

• As a part of export promotion, the Coffees from different regions with their logos are promoted including the coffee from the areas under Integrated Tribal Development Agency, as ‘Araku’ Coffee.

• Constant endeavour is being made by the Government to help the coffee growers to ease their bank debts.

Major Production Center

The major production centers can be divided into two:

Traditional Areas Non-Traditional Areas

Traditional Areas

Karnataka – Chikmagalur, Coorg including Mysore, Hassan districtsTami Nadu – Pulneys, Nilgiris, Shevroys (Salem), Anamalais (Coimbatore)Kerala – Wyanad, Travancore, Nelliampathies

Non-Traditional Areas

Andhra PradeshOrissaAssamManipurMeghalayaMizoramTripuraNagalandArunachal Pradesh

ROLE OF FTP(2009-2014)

DEPB (Duty Entitlement Pass Book Scheme)

• DEPB (Duty Entitlement Pass Book Scheme)

• DEPB means Duty Entitlement Pass Book to neutralise the incidence of basic and special customs duty on import content of export product.

• This is provided by way of grant of duty credit against the export product at specified rates. Under the post-export DEPB, which is issued after exports, the exporter is given a duty entitlement Pass Book at a pre-determined credit on the FOB value.

• The DEPB allows import of any items except the items which are otherwise restricted for import.

• In case of coffee duty credit is 4% of the fob value can be used for import of raw material , intermediates, components parts and packing material and is tradeable.

VKUGY

• Ministry of commerce has included coffee in the list of products eligible for VKUGY

• Duty credit of 5% of fob is also given under the VKUGY which may be used for the import of inputs or goods including capital goods as may be notified by the govt.

• Total duty credit under both is subject to maximum of 7.5%.

Market Access Initiative (MAI) scheme

• The Market Access Initiative (MAI) scheme is intended to provide financial assistance for medium term export promotion efforts with a sharp focus on a country and product.

•  The financial assistance is available for Export Promotion Councils, Industry and Trade Associations, Agencies of State Governments, Indian Commercial Missions abroad and other eligible entities as may be notified from time to time.

• A whole range of activities can be funded under the MAI scheme.

• These include market studies, setting up of showroom/ warehouse, sales promotion campaigns, international departmental stores, publicity campaigns, participation in international trade fairs, brand promotion, registration charges for pharmaceuticals and testing charges for engineering products etc.

• Each of these export promotion activities can receive financial assistance from the Government ranging from 25% to 100% of the total cost depending upon the activity and the implementing agency, as indicated in the detailed guidelines.

Marketing Development Assistance (MDA)

• The Marketing Development Assistance (MDA) Scheme is intended to provide financial assistance for a range of export promotion activities implemented by export promotion councils, industry and trade associations on a regular basis every year.

•  As per the revised MDA guidelines assistance under MDA is available for exporters with annual export turnover upto Rs 5 crores.

•  These include participation in Trade Fairs and Buyer Seller meets abroad or in India, export promotion seminars etc.

• Further, assistance for participation in Trade Fairs abroad and travel grant is available to such exporters if they travel to countries in one of the four Focus Areas, such as, Latin America, Africa, CIS Region, ASEAN countries, Australia and New Zealand.

•  For participation in trade fairs etc., in other areas financial assistance without travel grant is available.

RAINFALL INSAURANCE SCHEME

• This scheme is specially designed for coffee growers of Karnataka, kerla, Tamil nadu

• Premium Subsidy

Coffee Board is extending premium subsidy upto 50% of premium for growers with plantation size upto 10 hectares. The subsidy is as follows: 

• Arabica Robusta • (per Hectare) (per Hectare)• 50% of the premium 50% of the premium amount • amount subject to a subject to a ceiling Of Rs.2000• ceiling of Rs.2500

Coffee Debt Package 2010

• It is mainly for small scale coffee growers.• 50% of the pre 2002 term loans taken by coffee growers will be

waived subject to maximum of 50000 per farmer.• For post 2002 term loan 10% of the total liability will be waived

subject to a maximum of 100000.

EPCG

• Zero duty EPCG Scheme shall NOT be available for the following:

• 1) For Export of products covered under following Chapters / Headings of ITC(HS) classification as given in annexure I .

• 2) Units who are currently availing any benefits under Technology Up gradation Fund Scheme (TUFS) administered by Ministry of Textiles.

• 3) To applicants, who avail in that year, the benefit of Status Holder Incentive Scheme under chapter 3 of FTP.

Class 1 :Specialty Grade

• Full Defects: 0 to 5No primary defects allowed.

• Sample Size :500gms• Screen Size : Maximum 5% below and 5% above specified screen

size or range of screen size• Roast : Zero quakers• Moisture Content:9-13%

Class 2:Premium Grade

• Full Defects: 0 to 8Primary defects allowed.

• Sample Size : 300gms• Screen Size: Maximum 5% below and 5% above specified screen size

or range of screen size.• Roast : Maximum of 3 quakers.• Moisture Content: 9-13%

Class 3 Exchange Grade

• Full Defects: 9 to 23• Sample Size : 300grms• Screen Size : Fifty percent by weight above screen 15 and

less than 5% by weight below screen 14.• Roast : Maximum of 5 quakers.

Class 4 :Below Standard Grade

• Full Defects:24 to 86

Class5: Off Grade Coffee Beans

More than 86 full defects

PROBLEMS FACED BY EXPORTERS

• EFFECT OF RAINFALL ON COFFEE GROWTH AND HARVESTING.

• EXPORT QUANTITY HIGHLY DEPENDS UPON SEASONAL EFFECTS.

• TOO MUCH GOVERNMENT INVOLVEMENT.

• ENVIRONMENTAL ISSUES: THE RESULT FROM INCREASING PRODUCTION HAS BEEN RIVER POLLUTION, SOIL EROSION, AND DEFORESTATION.

• LIMITED MARKET AND HUGE GLOBAL COMPETITOR.

• NOT ENOUGH PROMOTIONAL ACTIVITIES AS COMPARED TO OTHER COMMODITIES.

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