A crisis is brewing in the coffee industry

Context:

Coffee cultivation is becoming an increasingly loss-making proposition in India. In addition to high input costs & labor shortages, changes in climate patterns are also affecting the industry.

The destruction caused by Rain patterns

• Damage due to Erratic weather conditions: The plantation in Kerala, Karnataka, and Tamil Nadu has been devastated by recent heavy rains and dry spells between 2015 and 2018.
• Need for weather-resistant Varieties: Heavy rainfall and landslides have resulted in infruit rot, stalk rot, and root rot. Sturdy and weather-resistant varieties of coffee may provide a solution.

Cost of financing and weak Infrastructure:

• Producers are getting marginalized: The market is rapidly turning out to be a buyer-driver and producers are losing their influence.
• Cost of Financing: The lending rates are at around 12%, which is too high compared to single-digit rates in other countries. Small growers are often left with little money to repay loans.
• Higher cost Irrigation: Frequent power cuts and increasing cost of diesel make the irrigation activity costlier. There is a need to work on developing a reliable infrastructure.