In India deadline extended for coffee package
Some 30% or 10,000 of the 33,000 Special Coffee Term Loan (SCTL) borrowers stand to cumulatively benefit to the tune of Rs 75.4 crore, thanks to the Union Cabinet March 4 announcement, extending the Coffee Relief Package till May 31. The package had been initially announced last May with a deadline of June 30, '05.
The latest extension is in the wake of the grower-associations like Upasi pointing out that over 10,000 of the 33,000 Special Coffee Term Loan borrowers could not avail of the scheme sanctioned in May last year to alleviate the plight of growers, who had for a prolonged period of five years from the end of '99, not been able to even realise their cost of production due to a global surplus of coffee beans. Upasi had estimated the cumulative indebtedness of coffee growers at Rs 626 crore for just three of these five years.
It was during this period of intense indebtedness that the commerce ministry and the Coffee Board had come out with a scheme where individual growers could voluntarily have their dues consolidated into an SCTL rehabilitation package. However, with the realisations from coffee beans continuing to plummet, even the SCTL became a burden. Over 98% of 178,308 coffee cultivators are small growers with holdings of 10 hectare or below.
It was in this context that the package was announced towards the end of May ‘05 to provide relief to all growers who had availed of the SCTL, on April 1, ‘02. The initial announcement stated that, in the case of growers, who settled one-third of the interest-burden on their SCTL loans by June 30, ‘05, the remaining two-thirds would be equally borne by the banks and the government.
It was estimated that if all 33,000 SCTL borrowers availed of the relief package and paid one-third of their interest dues, the government burden could be Rs 95.7 crore, with an equivalent amount being borne by the banks. However, in those few weeks between the announcement and the cut-off date, just 23,000 of the 33,000 SCTL borrowers could avail of the relief by covering one-third of their interest dues, with the government and banks contributing Rs 58 crore each.
What this latest extension implies is that those growers who could not avail of this relief last year now have another opportunity to do so. The revised deadline of May 31, ‘06, gives the growers another 88 days from the date of announcement of March 4, ‘06.
The Coffee Board chairman GV Krishna Rau clarified to ET that the interest relief on SCTL loans would apply only for the moratorium period ending June 30, ‘05, so as to ensure equity between those who had availed of the facility before the original cut-off date and those now availing of the extension. The interest burden after June 30, ‘05, would have to be fully borne by the SCTL borrowers, as per banking norms.
If the remaining 10,000 SCTL borrowers now avail of the revised deadline and settle one-third of their interest dues, the government would have to cover the unutilised portion from the originally estimated Rs 95.7 crore out of which Rs 58 crore had been paid under the original deadline which works out to Rs 37.7 crore, with the banks providing an equivalent amount. Which means that if all the remaining 10,000 SCTL borrowers avail of this extension by paying one-third of their interest dues, the cumulative benefit could work out to Rs 75.4 crore.
Upasi president EB Sethna has stated that the extension would benefit thousands of coffee cultivators, especially the small growers. "We would like to place on record our appreciation of the pro-active role played by the Coffee Board chairman and the commerce ministry in facilitating this extension," he added.