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A tropical evergreen shrub whose beanlike seeds are roasted and ground to
produce a drink of the same name. According to legend, coffee was discovered in
Ethiopia. The first big coffee craze, though, occurred in Arabia, where by the 13th
century Muslims were brewing and drinking huge quantities of it. Travelers from
Arabia took the beans with them wherever they went – beans deliberately made
infertile, allegedly, by parching or boiling. Because of this strict export control
policy, it is claimed that no coffee seed sprouted outside Africa or Arabia until the
17th century.
Production area:
In India, coffee bean cultivation is largely confined to the hilly regions of the
southern states of Karnataka, Tamil Nadu and Kerala.
Only one fifth of the coffee bean produced in India every year is consumed
in the domestic markets, while rest of it is exported.
Most of the exports are to Russian Federation, Germany, Italy and US. Till
recently, the Coffee Board directed coffee sales in India. Coffee growers with a
total coffee cultivation area of above 10 hectares were required to sell a minimum
of 30% of their production to the Coffee Board. This quota system has now been
abolished to encourage exports and now growers can export 100% of their produce
In order to boost the coffee consumption the coffee industry has started
emphasizing on three channels of distribution, namely Cafe chains, vending
machines and ready to drink products. While the industry expects vending machine
to contribute 45% of the volume followed by cafe chains with 40% of the
consumption market.
Coffee Marketing
Coffee market can be segmented as instant and filter coffee. Filter coffee can
further be segmented into pure and chicory blend coffee. Coffee is a major export
commodity in many developing countries. Many countries like India, USA
depends heavily on coffee as a source not only to foreign exchange but also of
employment in rural areas. Before liberalization heavy taxation made coffee an
important source of government revenue. Governments of developing countries
regulated coffee marketing not only because coffee was so important as a source of
export earning and foreign exchange, but also for institutional and political
reasons. The main intergovernmental organization for coffee, bringing together the
world coffee sector through international cooperation is The International Coffee
Organization (ICO).
ICO:
Working closely with the private sector through a 16 strong Private Sector
Consultative Board which tackles issues such as food safety.
Producers
Coffee Board
Producers
AUCTION
Exporters
Export finance refers to the finance of the goods from the home country to
the importers port. The export financing begins with as soon as export order is
received and accepted. The exporter needs finance for transportation, taxes,
documentation, insurance, packing, clearing and forwarding and payment of
freight. Most of the export trade is carried out on credit basis. It takes 3 to 6
months to realize the export bills. Meantime the exporter has to execute further
orders for which additional working capital is required. The export finance
mechanism and institutional support are vital for the promotion for international
business. India, is the first among the developing countries to design an integrated
export financing scheme. The various agencies involved in provision of finance are
RBI, Exim Bank, Commercial Banks, ECGC and other financial institutions.
The nature of export finance may be short term or long term credit. Short
term credit facility is extended for a period from 30 days to 180 days which is
granted by commercial banks. The long term finance is provided for a period from
5years to 2o years which is provide by EXIM, ECGC and IDBI bank. The
irrevocable letter of credit is generally used in export of coffee.
Pre – Shipment Finance:
Replanting loan.
Interest subsidy.
Expansion subsidy.
Replanting.
Water Augmentation.
Quality Upgradation.
Objectives:
Subsidy component:
The subsidy is provided subject to ceiling limit prescribed for the above said
activities. While the subsidy is generally linked to credit provided by financial
institutions, the Board may extend subsidy also in select cases where growers are
able to provide details of funds procured from other sources. A subsidy of 20% on
the capital cost is provided for replantation, quality upgradation and pollution
abatement measures and 25% for water augmentation.
Eligibility:
An applicant can avail subsidy benefit for one or more than one component
of the scheme provided the grower gives undertaking of the sources of
finance.
Defaulters under Board's (old) scheme of Development loans are not eligible
to avail the benefits of the scheme.
Conclusion