Madikeri: A sharp drop in prices of coffee and pepper has growers in Madikeri worried.
The district accounts for more than 30 percent of the nation's coffee production and 15 percent of the state's pepper production. Coffee cultivation is spread over one lakh hectares in the district while pepper is grown on about 11000 hectares.
In January, a 50 kg Arabica coffee bag was sold at Rs9700-9800 but today the price has crashed to Rs 7800. The country produces 3.5 lakh tonnes of coffee annually of which more than 70 percent is exported to foreign countries.
Rajiv Kushalappa, a coffee trader, said arabica's price had dropped compared with robusta owing to variations in international market. He said robusta was sold at Rs6500 per 50 kg bag at the moment from Rs7000 in January.
Price of pepper, which fetches good income due to better prices in the international market, has also seen a drop with a kilo of pepper priced at Rs 460 from a high of Rs 580 just two months ago.
Market sources said that pepper from Vietnam cost around Rs300 per kg in Vietnam and exporters opt to buy from there. But the price fluctuation does not affect the local market as more than 60 percent of the production is consumed locally.
Experts asked growers to not panic, saying that price fluctuation was temporary. They advised growers to avoid panic selling.
Effect on the retail market Consumers, however, may not see the effect of plunging prices of coffee immediately. The price of coffee for the retail market is dependent on the rates during the auction at the Coffee Board in Bengaluru. Benefit of lower prices cannot be passed on to the consumer unless the prices are stable for more than 15 days, said Coffee Board officials.
Coffee powder sold at the counter to the consumer is blended with chicory as a flavour additive, and this will have its own value addition. So the price at the consumer level might not reflect the decrease in prices of raw coffee.