By Heneage Mitchell

Indian coffee growers, in common with all Indian agricultural sectors, are facing challenges that are threatening the profitability of the sector. Indian coffee exporters are competing for quality coffee beans with domestic suppliers as more and more Indians take up coffee drinking.
Meanwhile, ageing coffee trees and outmoded agricultural and processing practices are impeding the development of greater production and limiting the income potential for farmers and traders alike.

The Coffee Board of India, under the stewardship of its chairman, Mr. Jawaid Akhtar, has risen to the challenge and is implementing a number of measures to boost production and income in the coffee segment.
“Inputs and labor costs have risen significantly over recent years,” Mr. Akhtar told Tea & Coffee Asia. “An arabica farmer must earn around US$2 to US$2.25 per pound to break even. And labor shortages are affecting production as agricultural workers seek better paid jobs in the cities.”
One strategy aimed at persuading agricultural workers to remain in the country is the National Rural Employment Guarantee Scheme which guarantees 100 days of paid work, with the promise of more days if available. Opportunities for rural employment include road and pathway construction, dams and irrigation projects etc.
“The aim is to reduce reasons for leaving the home area and help prevent agricultural labor forces heading to the cities,” Mr. Akhtar said.

Mechanization
But the reality is that there are already significant shortfalls in available labor.
In recognition of the seriousness the situation, the Coffee Board is involving itself in mechanization programs, promoting of the development and utilization of agricultural machinery ranging from small implements to larger farm implements, thereby reducing coffee farmers’ reliance on manual labor to nurture and process the coffee crop..
“Growers co-operatives can create common facilities to benefit all the members” said Mr. Akhtar. “These are essentially self-help groups. The Coffee Board will supply co-ops with subsidies of 50%, or up to Rs500,000 (US$10,800), for items such as pulpers. The idea is to encourage the formation of these groups to create a sense of ownership and pride and community spirit though government support. Individual growers can avail of mechanization subsidies of up to Rs.200,000 for growers up to 20 ha and Rs.500,000 for SHGs/Collectives.”
As domestic consumption continues to grow, a trend that is actively encouraged and supported by the Coffee Board, and at the same time the demand for export grade Indian coffee is also strong, the challenge for the Indian coffee sector is how to increase production volumes.
An obvious solution is to boost grower productivity through replanting and rejuvenation of coffee trees. Following the lead of the tea sector, which is pursuing a massive replantation effort over the next few years, the Coffee Board has set a target of rejuvenating arabica trees older than 40 years and robusta trees over 60 years old, a total of around 80,000 ha, replanting a portion of the total every year over a period of 5-7 years.
“Replantation subsidies amounting to 40% of cost for small growers cultivating up to 2ha, 30% for growers with 2–10ha and 25% for farmers with 10ha and above are being offered to ensure the replanting program is adopted,” said Mr. Akhtar. “We are looking to introduce new, higher productivity strains. Researchers are continue to working on clones that will ensure better productivity. The aim is for higher volumes. Seeds developed in Coffee Board nurseries are being made available to coffee farmers at a very nominal price. Our overall goal is actually to double coffee exports in line with the government’s strategy to double all Indian exports by 2014/2015 from the levels of 2009/2010.”

Support
To further ensure the stable development of the coffee sector, the Coffee Board has an established extension network for promoting the latest agricultural practices through training program.
“The Coffee Board’s strategy includes extending research findings to the coffee growers,” explained Mr. Akhtar. “This is accomplished though the research stations, demonstration centers and sub-stations and through Coffee Board agricultural technicians in the field. We also select some of the more prosperous growers and bring them to larger plantations to learn from them.”
Indian coffee farmers are given further support from the Coffee Board by being kept up-to-date with international coffee prices.
The Coffee Board collects coffee futures prices from Liffe and ICE and collates ICO and our own auction and farm gate prices and these are published every day. All the information is available to coffee farmers through website and SMS,” said Mr. Akhtar.
A further strategy to ensure the sustainability of Indian coffee production is to upgrade the quality of the beans that the farmer produces and processes.
“Ten years ago, we encouraged farmers to put up pulping machines,” recalled Mr. Akhtar. “Today, the strategy is to encourage the upgrading of processing facilities through subsidy programs. This strategy has proved to be very popular with growers. We are currently in the fourth year of a five-year plan outlining physical and financial targets. And I am happy to report that the targets we set have already been exceeded, as growers have come to the realization that to survive, efficiency is the key.”
Overall, the coffee sector has responded well to the initiatives on offer, and talking with coffee growers of all sizes it is clear that there is a willingness to work with the Coffee Board.

Value addition
While the coffee sector remains largely bulk and green, some farmers are now getting into roasting. “Since 2010, we have been promoting a scheme to encourage roasting and packing units and brand building,” said Mr. Akhtar, pointing out that India exported around 73,800 tons (GBE) of instant coffee in 2010-11. “We are offering an incentive for the creation of value-added coffee exports. Encouraging value-added exports is key to the government plan to double the earnings of all Indian
exports by 2015.”
In the context of coffee, however, a 60% of total production as exports is recognized as being a more realistic target as the pressure from domestic growth in coffee consumption is affecting coffee exports.
“Whether we are talking about value or volume, the target is 60% for coffee. Recent years have seen significant growth in income in the coffee sector,” said Mr. Akhtar. “In particular, specialty coffee is a key segment that can help to achieve the export value growth required. Identifying and marketing specialty coffee registration remains an integral strategy to help grow income from Indian coffee exports and in the domestic market as Indian coffee consumers become more discriminating and sophisticated.
The Starbucks/Tata tie-up may be primarily about ensuring security of supply, but it will also help to boost demand for specialty coffees domestically and bolster prices in a country that sees its local franchises, such as Café Coffee Day and Barista selling at relatively low cost. Certainly, the evidence suggests that Indian consumers are prepared to pay higher prices for what they perceive to be better coffee.
In this primarily tea consuming nation, the Coffee Board supports any effort that brings more consumers to coffee.
“We are trying to make inroads into traditional tea consumption areas,” admitted Mr. Akhtar. “We are seeing an annual increase of 6%-8% in domestic coffee consumption. But the quantity of tea consumed by Indians remains 4-5 times greater than that of coffee every year.”

Initiatives
Further initiatives being promoted by the Coffee Board include the Rainfall Insurance Scheme For Coffee (RISC). This unique product is designed by the Agriculture Insurance Company (AIC) of India Ltd, with the support of Coffee Board. The policy covers the risk against deficit and excess rainfall. The Coffee Board and the Indian government are extending premium subsidies up to 50% for small growers cultivating up to 10ha to a ceiling of Rs.2,500/ha for arabica and Rs.2,000/ha for robusta. Large growers can also participate by paying full premium.
Farmers in the North Eastern Region and other parts of India who practice slash and burn farming techniques are being weaned away from this destructive practice through the introduction of coffee in an effort to improve the prevailing socio-economic conditions.  The Coffee Board is extending research and technical support for coffee cultivation as well as financial support for expansion and consolidation of the acreage under coffee and for the upgrading of the quality and processing of the coffee grown. The Board offers financial incentives to meet the cost of collection, curing, transportation, warehousing and marketing of coffee from the North Eastern Region as part of its efforts to support coffee production in the region.
Under the able stewardship of Mr. Akhtar, the Coffee Board remains a pillar of strength and support for coffee farmers large and small, and support for the commercial sector has lent to the Coffee Board’s efforts are an indication that the Board is certainly on track to ensure the continued sustainability and profitability of India’s coffee as the segment faces the challenges with innovative and effective measures to protect and grow the industry.