The
coffee industry has sought a review of the GST rates on instant coffee and the
curing process, while stating that such high rates would hurt consumption and,
eventually, growers’ realisations.
Coffee
growers are under pressure as the volatile trend in global prices, which
directly influence local prices, has already kept their realisations in check.
The GST
on instant coffee has been fixed at 28 per cent, while the curing or dry
processing of the beans attracts a levy of 18 per cent.
Parity sought with tea
Making a case for reduction in GST on instant coffee, The India Coffee Trust,
represented by various stakeholders from the sector, has appealed to the Prime
Minister’s Office to bring it down to 18 per cent, on par with the instant tea.
Anil
Kumar Bhandari, President, ICT, in a letter to the PMO, said the high GST rate,
besides bringing down instant coffee consumption in the country, would also
have a significant impact on the coffee farmers of Karnataka and South India,
since instant coffee manufactures will source less raw coffee from them.
According
to the ICT, of the 3.46 lakh tonnes of raw coffee produced in the country,
about 2.78 lakh tonnes is exported, while the rest is consumed domestically.
Of the
0.78 lakh tonnes consumed domestically, about 50,000 tonnes is used in the form
of roast and ground, while the remaining 28,000 is consumed as instant coffee.
South
India accounts for the bulk of the coffee consumption, though off-take has picked
up in the northern States in recent years.
The
Trust said instant coffee is largely consumed by poor consumers and the cost
per cup is lower when compared to the roast and ground.
It also
said that higher tax would impede the development of the coffee habit in North
and East India.
Seeking a cure
Meanwhile, the All India Coffee Curers Association has demanded the withdrawal
of 18 per cent GST levied on coffee curing.
Curing
involves dry processing and grading of green coffee beans.
As
curing is an investment-intensive process, the majority of coffee growers
normally outsource the dry processing of the green beans to curing works, where
they are processed, graded and sorted.
“Any
levy on curing would eventually hit farm-gate prices, thereby reducing growers’
realisations. The government should withdraw the levy,” said AN Devaraj,
President of the All India Coffee Curers Association.
Farm-gate price worries
Coffee growers are concerned about how the impact of the GST levy on curing
will influence farm-gate prices, even as the early harvesting of the arabica
variety has begun in parts of Kodagu and Chikmagalur, the main growing regions.
“The
GST on curing may impact farm-gate prices. With the season yet to start in full
swing, it is too early to quantify the impact,” said HT Pramod, Chairman of the
Karnataka Planters’ Association.
Arabica
prices are hovering between ?7,000
and ?7,200
per 50-kg bag for the parchment, while arabica cherry prices are in the ?3,700-4,000 per bag
range, lower than last year.
“We are
waiting for clarity on this issue. No sale of coffee from the new crop has
taken place as growers are not in a hurry to sell as prices are low,” said N
Bose Mandanna, a grower in Kodagu.
Source: Thehindubusinessline.com
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