The Association makes suitable representation to the concerned Ministries in the State and Central Government on various problems faced by the plantation industry. In this regard the Association leads delegations to meet Ministers, Secretaries of important Ministries and submits memorandums highlighting problems and seeks appropriate relief.
Some of the matter taken up and pursued currently include:
A: With the Central Government
1. Appointment of Coffee Board Chairman
- The KPA has requested the Ministry of Commerce & Industry to appoint a full time Chairman to the Coffee Board. The former Chairman, Mr.Jawaid Akthar’s, tenure came to an end on 11th May 2015.
2. Research on Clonal Propagation and Tissue Culture
- In the current year the CCRI distributed 10,000 Robusta Clones in Chikmagalur and Hassan districts which amounts to 20 Acres of plant material which is grossly inadequate.
- The UPASI had submitted a research proposal, on clonal propagation in coffees to the Coffee Board and to the Ministry of Commerce in 2014-15.
- The CCRI had rejected this proposal stating (“old Technologies”) to be adopted by UPASI in carrying out their research.
- Therefore it is imperative that this research is outsourced as productivity levels are low , costs of production cannot be met and Arabica plantations are dwindling in number.
3. Dwindling Arabica Plantations and White Stem Borer (WSB)
- KPA is concerned about dwindling Arabica plantations due to the high incidence of white stem borer, leaf rust and low productivity.
- Under the aegis of Mr. Rajani Ranjan Rashmi, the former Additional Secretary (Plantations), Dept. of Commerce Government of India, a steering committee on finding a solution for WSB was formed.
- KPA appreciates the efforts and progress made on this front.
- CCRI should consider import of Arabica varieties which are WSB resistant, leaf rust resistant and genetically proven to be high yielding under the multi collaborative research project coordinated by the World Coffee Research.
- Research in Tissue culture in finding White Stem Borer resistant plant material to be outsourced.
4. Repeal of Coffee Act 1942 and Enactment of Coffee Bill 2016
- Ministry of commerce and Industry has proposed to repeal the existing Coffee Act 1942.
- Existing provisions therein have become outdated.
- Existing act not in sync with today’s scenario.
- Draft Coffee Bill 2016 was uploaded by the Ministry on its website on 23rd March 2016.
- KPA and UPASI have submitted a detailed memorandum.
- KPA – UPASI submissions to the Coffee Bill 2016 may be considered.
5.Reconstitution of the Coffee Board
- Coffee Board has been reconstituted under the notification dated. 15th December 2016.
- Large grower representation – Two Memberships
- Small grower representation – 5 memberships vacant.
- Curing Establishment – Not been represented.
- Requested the Ministry of Commerce and Industry to expedite filling up remaining vacancies.
6. Coffee Effluent Treatment
- Coffee pulping period – Two to three months in an year depending on the size of plantations.
- Coffee was brought under orange category from red category under notification of KSPCB dated 22nd August 2013.
- Central Pollution Control Board has uploaded draft notification on 18th March 2016.
- Standards and Parameters therein are severe and equivalent to heavy industries.
- They are not achievable as the technology is not available in India.
- Effluent generated is organic and non toxic.
- After treatment the slurry is used as compost – saves on fertilizers.
- Alternative methods – Eco-pulpers, Bio-reactors, Bio-enzymes.
Eco-pulpers consume minimum water but are expensive and have to be imported.
- Request MoEF& CC and CPCB to prescribe standards and parameters which are attainable as coffee is organic.
The KPA has submitted its memorandum requesting the following
- The drying of coffees (Cherry Coffee) without the use of coffee processing pulper units may be exempted from the operation of the notification.
- The distance of lagoons from the nearest stream / Water bodies may be made 50 Meters.
- Coffee produced by wet process which does not produce any effluent may be exempted from the applicability of the notification.
7. Integrated Coffee Development Plan (ICDP)
- Cabinet Committee on Economic affairs (CCEA) approved Integrated Coffee Development Projected.
- Tenure : 2012-2017.
- Main objective of the scheme to develop improved varieties and technologies , increasing production, productivity, quality of coffee, promote Indian Coffee in overseas and domestic markets and encourage value addition.
- There is delay in the disbursement of subsidy under the “Replanting” and other schemes.
- Out of 93 Crores subsidy for re-planting, 35 Crores is released against re planting where as the applications received were Rs. 70 Crores for 2016-17. Request for utilization of full 93 Crores.
- Request the Ministry to expedite the release of these subsidies.
8. Additional Soil and Leaf laboratories in Sakleshpur and Coorg
- There are shortages of Soil and Leaf analysis laboratories in our plantation districts in Karnataka.
- KPA has requested Ministry of Commerce and the Coffee Board to set up two additional Soil and leaf analysis labs in Sakleshpur and the other at Chetalli as the CCRI is situated in Balehonnur, and which logistically far away from Sakleshpur and Kodagu.
- Appoint qualified technicians to operate atomic spectrometer for leaf and micro nutrient analysis at Chettalli.
- Production in coffees can only increase if the soil and leaf are analysed periodically for deficiencies.
- These deficiencies can only be addressed if multi soil and leaf laboratories are set up in the planting districts so a grower can apply and spray the prescribed fertilizers, fungicides and insecticides to enhance productivity. It is imperative that the Ministry of Commerce and the Coffee Board take cognizance of these inadequacies.
9. Promotion of Coffee Consumption
- It is Imperative to the Coffee industry to increase coffee consumption in India to enable the industry to sustain itself during cyclic swings in prices.
- International Coffee Festival is held every two years year since 2004 to promote consumption of coffees.
- Coffee industry benefits immensely from Conferences and Festivals such as IICF
- KPA congratulates the Coffee Board and the India Coffee Trust for promoting the drinking of coffee in non-traditional areas.
10. Mandatory routing of 50% Tea through tea auction Canters
- The Pan India auction is not viable as teas have to be physically present at auction centers and Karnataka does not have a tea auction centre.
- Transporting teas to far off auction centers like Cochin is logistically difficult at today’s tea prices.
- Non traditional areas like Karnataka were earlier exempted from mandatory routing to auction centers.
- We request that Karnataka be exempted from the Mandatory routing of 50% Tea through auction centers.
11.Mandatory Export of Tea under QUPD Scheme
- Quality Up-gradation and Product Diversification (QUPD) scheme is applicable if a minimum quantity of 20% of Tea manufactured is exported by Tea factories.
- Most teas in Karnataka are grown in lower elevations and therefore not of a high quality. Therefore these teas are offered for sale in the domestic markets only.
- KPA has requested that Karnataka Tea be exempted from the mandatory export clause.
12. Import of Sri Lankan Pepper
- KPA has requested the Ministry of Commerce to put into place a mechanism the import of Vietnam pepper routed through Sri Lanka.
- This pepper is being imported into India to avail many import duty rebates/discount schemes which have been allowed by the Ministry.
13. Change of Coffee Board Export Nomenclature to avail MEIS Incentive
- The Coffee Board is implementing the Merchandise Exports from India (MEIS) export incentive scheme to boost Coffee exports.
- Nomenclature of the grades of coffees exported and classified by the Coffee Board are not in sync with the nomenclatures used world wide.
- This difference needs to be addressed immediately as applications under MEIS incentive schemes are being rejected by Director General of Foreign Trade.
14. Goods & Service Tax (GST)
- The Central Government will be introducing the Goods and Service Tax Act (GST) from 1st April 2017.
- If coffee is made taxable under GST, input tax paid by the “Agriculturist” on inputs used or consumed by the agriculturist in growing this product should be allowed to be set-off.
- The Entire process of Coffee growing up to the stage of its curing, be considered as “intermediary stage” of Coffee production and exempted from the provisions of GST.
- “Coffee” seeds cannot be consumed till they are roasted and ground.
- Therefore, taxable event under GST should commence from the stage of its Value Addition i.e from the stage coffee is Roasted and Ground.
- If Agriculturist is not allowed to avail input tax credit, then there should be an exemption from GST on all inputs including fertilizers, chemicals etc used by an ‘Agriculturist’
15. Rule 7B of Income Tax Rules
- Coffee as an agricultural produce undergo various process in its cultivation.
- The ripe fruit are pulped, washed and dried after plucking from the garden.
- It is further cleaned and Graded in a Curing Works.
- These entire processes are an intermediary stages and coffee is not fit for consumption and remains as an agricultural produce.
- It is only after it is Roasted and Ground, coffee can be consumed by way of beverage.
- KPA will submit a memorandum routed through Upasi to the Central Govt. to amend the above Rule 7B R/w Sec 2 (1A) of Income Tax Act so as to give effect to the changes in the Ruling to cover “Coffee Curing” is within the meaning of “coffee grown”
16. Sharing of Social Costs
- Plantations are highly labour intensive and since they are situated in interior and remote areas, social benefits to workers is to be provided under plantation labour laws.
- Today the grower bears the total social cost which tantamount to increase in cost of production which makes the plantation industry unsustainable.
- The Inter Ministerial Committee appointed by the Government of India recommended sharing of social costs: 50% by Management, 40% by GOI and 10% by the State Govt.
- KPA requests the Government of India to implement the report.
17. Spices as a Commodity under Single Administration
- Presently the ‘Spices’ are under the Spices Board under the Ministry of Commerce and Industry.
- Pepper and Cardamom are also under the State Horticultural department.
- Spices Board is responsible for the development and extension activities.
- The State Horticultural department implements and regulates the policies and programmes.
- Further any new schemes have to be approved by the Union Ministry of Agriculture.
- This has resulted in ambiguity, confusion and delayed implementing the policies and programmes.
18. Pepper Strains for Higher Altitudes
- Many plantations are located at altitudes ranging from 3,600 Ft to 4,600 Ft.
- New varieties of pepper plant material have to be propagated which will be suitable for these altitudes.
- KPA requests research on the above pepper plant material to be expedited and be made available to the growers in Karnataka
19. Extension of Duty Concession on Plantation Machinery
- Concessional import tariff extended to plantation machinery was in force till the budget year 2011-12 and for some reason wasn’t
- The modernisation of the plantation sector depends on latest technologies and machinery and to overcome scarcity of skilled/unskilled labour.
- KPA requests that concessional import duties be extended to plantation machines with maximum excise/CVD exemption
20. Employees Provident Fund Issues
i). Amendment to Para 26:
- The Employee Provident Fund (EPF) Scheme 1952, Para 26 has been amended from 31-1-1981 wherein the qualifying 60 day period of service attendance within a period of 3 months for enrollment to the fund existing earlier was deleted.
- Due to this, it has become mandatory that EPF be deducted from an employee who is engaged for one day.
- The plantation sector is in a lot of difficulty as sourcing additional migratory workers during the harvesting season becomes impossible as these migratory workers refuse to enroll in EPF.
- Special exemption has to be granted to seasonal migratory labour under Section 16(2) of the EPF Act during the harvest period from Dec-March.
B: With the State Government
1. Repeal of Agricultural Income Tax Act 1957
- The KPA in its Pre-Budget Memorandum dated 24th February 2016 had requested the State Government to abolish and Repeal the Agricultural Income Tax Act 1957, citing plantations on the brink of being unsustainable due to low prices, rise in cost of production, low productivity, lack of research, effect of climate change and seasonal droughts.
- The Honourable Chief Minister in his Budget speech on 18th March 2016 announced the abolishing and the repealing of the act.
- The KPA is immensely grateful to the Government of Karnataka for this abolishing and the repeal of the act.
- The taxable component is now being ploughed back into plantations to improve productivity and economic conditions
2. Exemption of VAT on Agriculture Input.
- The cost of Fertilizers , Micro Nutrients and other Agricultural inputs has shot up by more than 100 % over the last few years.
- The rate of VAT charged on agriculture inputs like chemicals and fertilizers is 5.5 %
- Agricultural nutrients and plantation machinery the rate is 14.5 %.
- Cost of machinery run into several lakhs of Rupees,. The VAT charged run into several thousand rupees. This will be a heavy burden on plantations.
- KPA requests the Government of Karnataka that a recommendation be made to the Government of India, Ministry of Finance that VAT on chemicals, fertilizers, micro nutrients and plantation machinery used in agriculture and plantations be exempted as this would help curtail the cost of production.
- Tamil Nadu & Kerala have exempted VAT on chemicals and fertilizers.
3. Budget Allocations for Wildlife Management
- Wildlife are straying and residing in plantations because they offer better habitat, plenty of water and fodder.
- It is crucial that the State Government takes cognizance of this and manages the forests professionally.
- Separate Budget allocations need to me made for Wildlife management to increase the flora and fauna.
- The Forest department must identify and grow varieties of indigenous tress and plants which wildlife can feed on.
- It is imperative that our forests be rid of the Lantana bush. This covers the under growth with a result that even grass cannot grow in these areas, and therefore wild animals migrate to plantations and other areas where there is plentiful of feed and water.
4. Elephants in Plantations
- Coffee plantations are located in three districts of Karnataka; Kodagu, Hassan and Chikmagalur districts.
- These areas border the Western Ghats.
- Before 1990 there were limited reported incidences of elephants in plantations.
- Gradual depletion of rain fall , growing numbers of wild animals, lack of forests being managed professionally, and change in climate has made the wildlife to move out of the forest.
- In recent years the elephants have moved to and are habituated in coffee plantation and are residing there.
- Elephants have found sufficient water and fodder inside coffee plantation and tend not to return to forests where there is a shortage of water and food.
- There have been considerable casualties in Kodagu and Hassan.
- 24,727 incidences of crop damage and property damage were registered between 2005 and 2015 from Kodagu district; and in turn a sum of Rs.6,96,85,313 /- was paid as compensation.
- 106 human deaths and 90 cases of human injury due were recorded between 2005 and 2015.
- In last three years elephants have been reported to be feeding on coffee berries as well as bananas, oranges, lemons, jackfruit and bamboo causing destruction to these as well as other crops.
- In some areas the estimated crop loss is as a high as 20% apart from the damage to plants and saplings. This causes is tremendous stress for the planter as these incidences are a threat to safety and crop.
- KPA requests the Government of Karnataka to kindly help in the immediate control of these elephant in plantations.
5. Development of Pepper in Karnataka
- Pepper Package Scheme was submitted by the Spices Board to the Karnataka Horticulture Department for development of pepper for Karnataka under the NHM scheme for Rs. 1384.15 Lakhs.
- The State Government has already recommended to the NHM to extend the scheme to Karnataka.
- We request the National Horticulture Mission, Ministry of Agriculture, and Government of India to approve the proposal submitted by Spices Board and extend pepper development scheme to Karnataka.
6. Infrastructure – Roads and Power situation
- Roads in the plantation districts require repairs and maintenance pre and post monsoon.
- The KPA requests that the PWD be specially tasked with the repairs of roads and similar infrastructure.
- The KPA had submitted a memorandum on 27-12-2014 requesting the exemption on electricity tax which was reintroduced on captive generators.
- The KPA is grateful to the Government of Karnataka for considering its request.
- The power supply to the plantation areas is extremely unsatisfactory. Supply of uninterrupted power for working plantation machinery and equipment’s is very necessary low voltage and extreme fluctuation in voltage results in damage to expensive pump sets and motors.
- The growers are forced to purchase diesel generators to generate power which leads to enhanced cost of production.
- Most of the Reservoirs in the State are empty and the State must ensure alternate power.
The KPA requests the State Government improve these infrastructure problems in plantation areas to enable plantations to be cost effective and competitive in the global market.
7. Eco-Pulpers and Effluent Treatment Plants
- Karnataka State Pollution Control Board recommends the use of Eco-Pulpers which consume minimum amount of water for processing harvested coffee and berries and helps in preventing pollution.
- Eco-Pulpers are imported from South America as indigenously manufactured Eco-Pulpers are prohibitively priced and not of the same quality .
- Modern and State of the Art effluent Treatment plants are very essential in coffee plantations , and these plants Ensure that coffee effluent is treated before being discharged.
- It is our request that an import mechanism with duty concessions be put into place for the import of these Eco-Pulpers and Effluent treatment plants, as well as manufacturing them indigenously.
8. Mechanisation of Coffee Estate Operations
- To increase productivity and to overcome severe shortage of labour , most cultural operations in plantations like spraying, Fertilizer application, weeding and digging of puts to plant coffee seedlings are being done through the use of machinery.
- Most of these machinery which is specific n nature is not available in our country and therefore being imported.
- There is a need for research in developing new mechanisation equipment for the use in coffee plantations in association with agricultural equipment manufacturing institutions and also introduce incentives for mechanisation equipment used in coffee estate operations, harvest and post harvest operations.
9. Incentives for Providing Green Cover under the ‘Krishi Aranya Protsah Yojane’
- Coffee plantations have unparalleled bio diversity and are excellent examples of ecological balance that provide a haven for wild life conservation .
- They sustain a unique Eco system of endemic flora and fauna that can only be found at plantations.
- The Government of Karnataka Forest department is proposing to introduce a scheme know as ‘ Krishi Aranya Protash Yojane’,with an objective to increase green cover in the non first areas of the state.
- Citing the above, it is imperative that plantations are brought under this scheme as this will encourage the growers to maintain an ecological balance in the future too.
10. Agricultural Loans from Co-operative Societies
- The Government of Karnataka has provided interest relief to agriculturalists who have borrowed loans from co-operative banks and co-operative Societies with the present rate of interest @ 3% per annum on agricultural term loans/crop loans up to Rs 10 lakhs.
- The Cost of Production per acre is approximately Rs 60,000/- per year and therefore we request that the Government increase the advances/loan limit to Rs 25 lakhs.
11. Export Promotion and Incentives
- Coffee is basically an export oriented commodity. 70% of the coffee produced in India is exported. The department of industries provide various incentives for export promotion and incentives.
- Coffee plantations must be brought under any export incentive/ incentives introduced by the state department of industries for exports.
12. Promotion of Coffee
- The KPA requests that the State Government tie up with the Coffee Board and ensure that good quality drinking coffee is made available at all Government offices including the Gram panchayat – Zilla Panchayat offices as well as the Taluk offices and the District offices throughout the State.
Due to the efforts put in by the KPA in representing the problems of the industry both before to the members in particular and the industry in general. The main achievements in this regard right from the inception of the KPA is listed herein below:
- Export Duty of Rs. 2/- kg. on Tea was removed (1978-79).
- The Union Government exempted the levy of Wealth Ta on Plantation from the Assessment Year 1983.
- The Union government abolished Export Duty on Coffee in the year 1987-88.
- Coffee and Tea was excluded in the purview of the Central Excise w.e.f 28-02-1993.
- In the year 1995-96 State Budget, the maximum rate of Agriculture Income Tax for non-corporate Sector was reduced form 55% to 45% and for Companies, from 65% to 60%
- In view of the financial crisis faced by the plantation industry, the Government of Karnataka in its State budget 2002-03, exempted the coffee holdings of 50 acres and below from payment of AIT. This exemption was continued for a period of 5 years from 2000-01.
- The Union Government introduced the Special Coffee Term Loan Scheme for the benefit of the Coffee Growers who were not able to repay the Bank Loan due to the crisis in the industry (2002-03).
- The SCTL package was further modified as per which, 2/3rd of the interest liability during the three – year moratorium period was absorbed equally by the Central Government and the Banks (2005).
- The Karnataka Budget for the year 2006-07 exempted the individuals from the payment of Agriculture Income Tax. The maximum rate of AIT for Companies was reduced from 50% to 35% and for Firms from 40% to 30%.
- Coffee was included in the Prime Minister’s Vidharba Package as per which interest due on all outstanding loans as on 1st July, 2006 is exempted.