Sanketh Appaiah, a teenage coffee farmer from a village near Madikeri in North Kodagu, is now the proud owner of a recent SUV thanks to rising coffee prices over the last three months. The 42-year-old is happily driving his recent vehicle through the hilly terrain of a diminutive district in southern Karnataka.
Rising prices of coffee beans due to global shortages in crop production have given a ray of hope to coffee growers in Karnataka, which is India’s most coffee-growing state. Now at a 15-year high, these prices are a boon for growers who have weathered a tumultuous decade.
“I own an 8-acre Robusta coffee plantation. For the first time in 15 years, the price of coffee has increased, which helped me realize my plan to buy a recent SUV this year,” said Appaiah, clearly delighted. Like him, many coffee farmers who are seeing good prices after a decade are investing in various assets such as plots of land, apartments, houses and recent vehicles.
A well-known cooperative bank in Kodagu received around 800 car loan applications in one day in April. Speaking on condition of anonymity, a bank executive said: “We have never seen so many people applying for car loans. This trend can be attributed to the augment in grain prices. At the same time, we note that farmers are repaying their loans on time this year, which is also due to the augment in coffee prices.” Karnataka contributes 71% to India’s total coffee production, followed by Kerala with 21% and Tamil Nadu with 5%.
Robusta coffee flowers on a coffee plantation in Mundagodu, Chikkamagaluru district. | Photo source: RAVIPRASAD KAMILA
Some farmers are refraining from production
Abubakr Ahmad, a coffee trader in Gonikoppa in South Kodagu, says the price of a 50-kilogram bag of Robusta beans has shot up to almost N11,000. Robusta is the primary coffee variety grown in Kodagu. “This year marks a significant augment compared to the average prices seen since 2008, when Robusta was priced at between £3,000 and £4,000,” he said.
“Many coffee growers have sold their coffee and several, especially large-scale growers, are holding back their products, expecting prices to rise further in the coming days. However, there has been a slight decline in prices in the last two weeks,” Ahmad added.
KG Jagadeesha, CEO and secretary of the Coffee Board, said the significant augment in global demand is primarily due to low production in Brazil, the world’s leading coffee exporter. “Despite needy harvest, coffee production is expected to touch 3.54 lakh tonnes, a marginal augment over last year’s Indian production of 3.52 lakh tonnes,” he said.
Green coffee beans in a housing estate in Kodagu district. | Photo credit: K.MURALI KUMAR
Remembering the boom times
Residents of Karnataka’s coffee growing districts – Hassan and Chikkamagaluru, apart from Kodagu – remember the 1990s when the price of coffee rose for the first time since 1942, when the Coffee Board was formed. This caused many changes in the lifestyle of coffee farmers. Brand recent cars were spotted on the narrow lanes leading to housing estates in parts of Sakleshpur, Mudigere, Koppa, NR Pura and Balehonnur.
To provide their children with a better education, planters invested in building houses in Hassan, Chikkamagaluru and several other towns, and also repaired contemporary amenities in rural farms. They moved to the cities, occasionally traveling to their estates. This was the period when the free sales quota (FSQ) for coffee was introduced in 1992. Previously, growers had to sell their entire harvest to the Coffee Board. The liberalization of the economy initiated changes in trade in goods.
This year, farmers in Hassan and Chikkamagaluru did not benefit much because the main variety grown there is Arabica, which has not seen as much of an augment in price as Robusta.
Coffee beans on display at the Western Ghat Coffee Museum during the 5th World Coffee Conference 2023 in Bengaluru. | Photo credit: K.MURALI KUMAR
Tiny farmers continue to suffer
Lingering coffee prices have farmers reminiscing about the 1990s, but they warn that it could be a price bubble and farmers should be cautious. They also argue that rising prices should be weighed against rising production costs.
Many growers in Hassan and Chikkamagaluru districts say that, ideally, the price of coffee should have increased long ago. Surendra TP, a coffee grower at Kesaganahalli in Sakleshpur Taluk and director of the Karnataka Planters’ Federation, says that for fit and sustainable growth of the coffee sector, growers should get the current price in the early 21st century.
Moreover, the current augment in coffee prices has not helped diminutive and medium-sized growers. “The harvest takes place from December to February. By the end of February, almost 80% of the coffee was sold. At that point the price was around £6,500 for a 50kg bag. Only later did the price exceed £8,000 per unit.”
Growers are forced to sell their produce before February or March because they have financial obligations to meet at the end of the financial year. They must repay loans to maintain good creditworthiness.
The price has increased, but production costs have also increased
Despite the euphoria caused by the prevailing prices, growers point out that the costs of production inputs were increasing at an alarming rate. Surendra believes that the current price augment has no significant value considering the augment in prices of other indispensable items. “When coffee was introduced to free trade in the 1990s, the price of a 50kg Robusta was around £3,000. Long story tiny, it went up to £10,000. Petrol was then sold at £14.75 per liter and diesel at £10 per liter. Now let’s compare the dynamics of the augment in gasoline and diesel prices with coffee prices over the last 30 years, he explained.
Labor costs augment over the years. Coffee farmers pay more than workers receive under MGNREGA, but coffee plantations are not covered by crop insurance. Compensation paid in times of drought or flood is negligible considering the investment made by growers, they say, pointing to the cycles of drought, floods and landslides the district has witnessed over the past few years.
Prakash Ponnanna, a coffee grower in Virajpet, Kodagu, pointed out that while immense growers were able to mitigate the effects of drought through various water management measures, smaller growers were suffering.
“Though Kodagu is a hilly district where the Cauvery River, the lifeline of South India, flows, the district is facing severe drought and water scarcity this year. Coffee that requires hydration does not have the appropriate amount of water. Therefore, next year’s production will be much lower than this year. No matter what the price augment is, it will ultimately not benefit us much,” Ponnanna explained.
Labor shortages and other worries
Over the past 10 years, coffee farmers have struggled with low prices and high production costs, exacerbated by labor shortages and crop diseases. As a result, many diminutive and marginal growers abandoned the crop and turned their efforts toward real estate, tourism, or more lucrative crops such as areca nuts, black pepper, and avocados.
Another significant problem faced by coffee plantations is the shortage of labor. According to growers, there was a earnest labor shortage this year, which led to many growers not having workers to harvest their crops, resulting in berries falling to the ground.
“Over the past five years, we have faced a significant labor shortage in coffee harvesting. Earlier, workers came from north Karnataka, Tamil Nadu and parts of Mysuru. However, they stopped coming because they found employment in the cities, especially in construction work. In the last three years, people from Assam have come to us. This year they did not come because of the general elections. As a result, we suffered losses due to the crops not being harvested. Therefore, the price augment will not be beneficial for us,” blushes Muthappa MN, a grower from Virajpet.
In recent years, farmers in Kodagu, Hassan and Chikkamagaluru have been facing human-elephant conflict. The elephant menace has left the community in constant worry. Most of the people who died as a result of elephant attacks were plantation workers. From January to date, six people have died in elephant attacks on coffee plantations in Kodagu district alone. Whenever a herd of elephants roams the property, hundreds of coffee plantations are damaged.
Manoj Mandappa, a coffee farmer from Siddapura in Kodagu, said, “In the last three years, elephants have been destroying crops like coffee and bananas. The authorities concerned have not been able to resolve the issue.”
For now, however, Appaiah and farmers like him are ecstatic with the rise in coffee prices. “If the current price continues at this level in the coming years and if we are blessed with good harvests, diminutive growers like us will definitely experience better days in the future. This will enable us not only to make personal investments, such as buying a car or a house, but also to improve our plantations. For example, I used to only apply fertilizer to my coffee trees once a year, but now I can afford it twice a year because of the good prices we get,” Appaiah said.
