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Indian coffee planters seek a natural balance.

The Codagu Planters Association (CPA) wants suitable changes in the present system of coffee marketing to enable the commodity to achieve "a natural balance" between domestic and export sales and to overcome the disadvantages in the internal sale quota (ISQ) for coffee in its present form.

The CPA, which held its annual general meeting at Madikeri in Coorg recently, demanded an increase in the ISQ from the present 30%, introduction of optional pooling of coffee and a common auction system, and option for the growers to export suitable grades.

The immediate problem thrown up by the 30% ISQ is that growers now hold certain exportable grades of coffee which have no demand in the domestic market. The planters' anxiety over this issue was amply reflected in the address of CPA chairman for 1992-93, Mr. Unnikrishnan, at the meeting.

Under the earlier system of compulsory pooling of their total produce to the Coffee Board by the growers, the domestic market had got used to certain grades of plantation coffee and Robusta cherry which formed 40 and 45%, respectively, of the internal consumption; Arabica cherry accounted for the rest.

The scenario has now changed. The ISQ in its present form allows the grower either to pool 100% of his crop to the Board as he used to do earlier, or to offer in the domestic market 30% of his production of each type of coffee.

According to Unnikrishnan, this has resulted in growers (who opted for ISQ) holding exportable grades of coffee which have no market within the country. On the other hand, the traders face a shortage of those grades which are required for blending coffee. The solution to this predicament lay in allowing growers to export suitable grades which have demand abroad, while simultaneously increasing the ISQ, Unnikrishnan argued.

Also, with no signs of any appreciable hike in the world coffee prices, the Indian coffee industry necessarily had to look to a wider domestic market for remunerative prices. The introduction of a common auction would thus go a long way in helping this commodity to find a natural balance between domestic and export sales, Unnikrishnan said. (So far, the practice has been for the Coffee Board to conduct separate auctions for release of coffee for the domestic and export markets. The Board has suspended domestic auctions following a decision to allow ISQ for the 1992-93 season.)

Unnikrishnan also reiterated CPA's demand for suitable amendments to the Coffee Act and for the abolition of purchase tax and turnover tax on coffee. He also pleaded for a reduction in the agricultural income-tax to realistic levels.
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Title Annotation:internal, external trade quota balance
Author:Dudeja, Vijay
Publication:Tea & Coffee Trade Journal
Date:Jul 1, 1993
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