Wayanad district in north Kerala accounts for over 78 per cent of coffee production in Kerala and 15 per cent of the national coffee production because of the favourable climatic and soil conditions.

While global factors such as rise in production of coffee, including the comeback of Brazil as a major producer and poor growth in consumption have contributed to the price decline, the Kerala coffee growers have also to contend with low productivity and rising labour costs. The coffee prices were in the range of54 per kg last year, while the ruling price now is only Rs 34 per kg. Coffee growers said that if cultivation is to become viable, the prices should reach atleast Rs 50 per kg, Coffee Growers Association members said. With prices of coffee becoming unremunerative, coffee growers are not interested in replantation in the state, they added. As in the case of rubber, coconut etc, majority of the coffee growers in the state are small-scale farmers which only worsens their plight.

World consumption of coffee has risen by only one per cent whereas production had risen by seven per cent during 1999-2000. The Kerala farmers also lose out to the nearby state Karnataka where production costs are lower.According to Coffee Marketing Federation estimates, Kerala coffee growers stand to lose Rs 110 crore annually due to the price fall while the country would lose over Rs 500 crore in foreign exchange earnings.

India accounts for only 4.2 per cent of the total coffee production and productivity is also low at 741 kg per hectare compared to Costa Rica's 1410 kg per hectare and Colombo's 1131 kg per hectare. On the other hand, Kerala coffee growers productivity is further lower at 150-200 kg per hectare.

Coffee Board is considering a proposal for coffee retention scheme of ACPC, the global body of coffee producing countries for which the Union government would have to provide financial support. This scheme, whereby the coffee would be procured without being introduced in the market, is expected to help the farmers during fall in prices of the commodity.

Meanwhile, the Kerala government has announced reduction in sales tax for coffee from eight per cent to four per cent to provide relief to farmers suffering from price decline. The new rate would be effective for two months from June 9. The government has also brought down the inter-state tax on tea sold at Kochi auction from four to two per cent. It has also cut the tax on copra and coconut to one per cent brought by oil mills.