Special Correspondent

Nearly 70 per cent of the output is exported

‘Entry of crop from Brazil, Vietnam has dampened prices’

Yields likely to drop by at least 10 per cent: KPA officials

Bangalore: Karnataka’s coffee economy — which produces close to three-quarters of all coffee in India — is on the verge of a major crisis. Coffee prices in the international market have tumbled in the last few weeks, triggered by the global meltdown.

Prices of Robusta coffee have fallen by almost 40 per cent and those of Arabica by about 20 per cent in the last eight weeks.

The situation is particularly grim for growers in Karnataka. Nearly 70,000 growers — of whom three-fourth are small growers — are facing a crisis because of falling prices in the international market. The Indian coffee economy’s heavy dependence on exports — nearly 70 per cent of the output is exported — threatens to place jobs in plantations at risk.

Shaji Philip, chairman of the Coffee Committee, United Planters’ Association of South India (UPASI), said the severe recession in the industrialised world had resulted in prices crashing in the international market.

Untimely rains

The crisis is not entirely about falling prices.

C.M. Pemmiah, chairman, Karnataka Planters’ Association (KPA), said untimely rain early this year and at the end of the monsoon, coupled with extended periods of drought-like conditions, had seriously harmed coffee crop.

Mr. Pemmiah said the entry of substantial volumes of coffee from good harvests in Brazil and Vietnam has dampened prices. Senior KPA officials said yields were likely to drop at least 10 per cent during the current season (the coffee growing season is from October to September).