Araku’s coffee is world-famous, but why are its farmers still struggling?

While coffee grown in Araku is sold at premium prices, farmers growing it don’t even get Rs 100 a kilo for the same coffee fruit.
Araku’s coffee is world-famous, but why are its farmers still struggling?
Araku’s coffee is world-famous, but why are its farmers still struggling?

Andhra Pradesh, especially Visakhapatnam, is very proud of its ‘Araku Coffee’. Right from the time one sets foot into the city, there are restaurants, coffee shops, food stalls selling the world-famous ‘Organic Araku Coffee’. The bittersweet scent of this coffee is all-pervasive.

But a look at the lives of farmers growing this coffee paints a picture of stark contrast. 

The origin of this award-winning coffee lies in the lush hills of Andhra’s reserve forest area. Over 100 kilometres away from Vizag, as one drives through the dense forest areas at an altitude of nearly 1000 metres above sea level, the roads are dotted with coffee plants and pepper creepers on either sides. Most of these coffee plants grow under the shade of jack fruit and silver oak trees.

Over 93,000 tribal farmers in the Tribal area of Andhra Pradesh are engaged in cultivation of coffee. While this coffee is sold for around Rs 120 for 100 grams, these farmers don’t even get Rs 100 for a kilo of the coffee fruit they produce.

In fact, this organic coffee earned global recognition when it won a gold medal at the Prix Epicures OR 2018 Award in Paris, a first for an Indian coffee brand. 

Vandalam Balayya, an award-winning coffee producer from GK Veedhi mandal in Andhra Pradesh’s tribal region, is busy drying, sorting coffee beans as the harvest season for the ‘Arabica’ coffee has just ended in December and January. Hundreds of sacks are stacked in a small room, overlooking the hills, all filled with coffee plantations.

“See this, this dried fruit has been sold for Rs 110-120/kg in the past,” Balayya says, as he shows us a handful of dried coffee fruit, which will have to be pulped, roasted and then grounded to get coffee powder.

Vandalam Balayya, an award-winning coffee farmer from AP's GK Veedhi mandal

“We have heard that people sell a cup of this coffee in Vizag and also in other countries for anywhere between Rs 150-500 a cup, but here they can’t even give us Rs 100 per kilogram. If this coffee has won an award, it means that the coffee grown in this area is good. The government must recognise that and buy it at a good price,” Balayya says.

History of Araku Coffee

Coffee cultivation in the reserve forest areas of AP dates back to the 60s, when the Andhra Pradesh Forest Department first took up the project and developed over 10,000 acres of plantations. This then went into the hands of the AP Forest Development Corporation in 1985, who also then brought in the Girijan Cooperative Corporation (GCC) to help engage the tribal persons living in these agency areas and give them a livelihood. Through a separate wing ‘Coffee Cell’, GCC started promoting coffee across 4,000 hectares.

It was then announced in the state budget in 1985 that coffee plantation will be taken up in 5,000 acres by establishing Girijan Coffee Co-operative Development Corporation (GCCDC).

According to an official of the Integrated Tribal Development Agency (ITDA), GCC gave the tribal persons access to coffee, who began realising that coffee could bring them nearly double the income compared to cultivation of paddy, millets and pulses that they were then involved in.

ITDA came into the picture in 1997, when the employees of GCCDC were deployed to ITDA, which then took up coffee expansion. At present, coffee is cultivated in one lakh acres. These lands are maintained by the tribal farmers.

According to data from GCC, there is currently more than 1.5 lakh acres of coffee plantation across the tribal region of AP, producing nearly 10,000 metric tonnes of coffee.

The investment into cultivating coffee each season, runs into a few lakhs for each farmer.

“Coffee plantations require work three times a year from us. First, what we do is clean up the plantation area (weeding), then we trim the plants, where we chop off unnecessary branches, twigs, and then we use plant-based compost and fertilisers for the plants. Once the plants bear fruit, we cut them and take it back to be dried,” says Manuguru Sankarayya, a coffee farmer from Kothuru village in GK Veedhi Mandal.

This entire process involves hiring labour to help get the work done. And Sankarayya says that at the end of each season, they are hardly left with a few thousand rupees, after bearing the cost of labour.

Economics of Coffee

Until recently, coffee farmers were heavily dependent on middlemen who would buy the produce from them and sell them in the market, mostly in Bengaluru and parts of Karnataka. Balayya says that the prices were set based on on-going rates in the markets of Bengaluru and there were times that they got up to Rs 125 for a kilogram of dried coffee fruits.

“Nearly 2,000 tonnes of coffee is produced from the entire area. We even had a mill where we would pulp the coffee fruit and sell it. We used to get Rs 220-250 a kilo for the pulped beans. Earlier, we would call private traders and businessmen from Bengaluru and parts of Karnataka and they would come buy from us. But ever since GCC has started buying from us, the prices have dropped drastically,” Balayya says.

Currently, GCC buys the dried coffee fruit from these farmers for Rs 60-65 per kilo. For every acre, Balayya and neighbouring farmers produce roughly about 300 kg each without the use of any pesticides. At about Rs 60 a kilo, these farmers make hardly Rs 18,000 per acre, not including labour and other costs.

Farmers say that this price is far from fair and brings them no profits for the amount of investment they put in.

“For that money, what will be left for us once we pay the labourers as well?  A lot of the farmer's time and effort goes into this, but the final price we get is not worth it,” Balayya says.

His son quickly adds, “We are working extremely hard. Each of us get about 10 bags. Ideally we should be making about Rs 2 lakh per season, but we only get Rs 80,000-Rs 90,000. After bearing all other costs, we are hardly left with anything to sustain ourselves. And there is no growth. As a result, people are starting to lose interest in coffee farming.”

And farmers claim that every year, this price is only decreasing, with no signs of picking up.

Promising support

ITDA blames the involvement of middlemen and lack of awareness for the situation of the farmers. It says that the government, along with ITDA and GCC is working to uplift these farmers and give them a better income.

The ITDA says that it has been actively involved through the coffee project. The coffee project, which is worth about Rs 526 crore, covers four important components: expansion, rejuvenation, doubling farmer income and organic certification, marketing of the coffee.

“The idea is to double the coffee (plantation) area. The target is 1 lakh acres and we have already done around 32,000 acres. The second is to double the yield, double the productivity, what we call rejuvenation. We were given a target of 45,000 acres, and we have already completed it. The third one is to double the income through value addition. Rather than farmers selling the fruit per se, he may have to process it and sell it for getting a better price. And this, ITDA is trying to achieve through provision of baby pulpers, which are used for pulping. The fourth component is organic certification and marketing of the coffee, which according to the project, is being taken up and being entrusted to the GCC,” says DK Balaji, Project Officer in Paderu region, ITDA.

GCC, on the other hand, says that it is one of the only organisations working towards the upliftment of tribal coffee farmers from the grassroots level.

“The GCC now is personally taking the farmers to Bengaluru coffee market. Even there, the coffee price is decided by cup quality. This includes the taste, flavour, aroma etc. The main defect here is that during pre-harvest, they have some cultural practices. For example, after the beans are harvested, we have to dry it on the floor, but the tribal people dry it differently in the mud. The beans absorb the smell of soil and the flavour content decreases. There are cases where farmers sell a kg for Rs 90 or Rs 110. By following certain improved practices and meeting quality parameters, the same product can be sold in the international market at a dollar rate of Rs 2,000 to Rs 4,000,” T Babu Rao Naidu, Vice-Chairman and MD, GCC says.

But Sankarayya says that GCC is taking away even the effort they put in.

Manuguru Sankarayya, coffee farmer

With GCC having set this price, farmers say that private traders and businessmen too, have stopped giving them a decent price. “Private traders take GCC’s price as a base and they are buying it at around Rs 55 a kilo. As a result, we are not making any profits from the business,” Balayya adds.

The baby pulpers given by ITDA too, are not of much help, Balayya says. “Right now we get about Rs 100-120 for the pulped beans. But the time and energy required to manually pulp the coffee fruit is not worth the price. Moreover, 6 kgs of dried fruit has to be pulped to get one kg of coffee bean. So most of us prefer selling the dried fruit.”

The farmers say that a fair price of at least Rs 100 for a kilo of the dried fruit and Rs 200 a kilo for the beans will ensure they earn a better livelihood from cultivating coffee.

“We are cultivating right now but aren’t getting any advantage from it. Private brokers are benefitting by taking it and going to cities like Bengaluru and by calling it organic, they’re selling it at high prices,” Balayya says.

Interestingly, as per reports, one kilo of coffee produced by these tribal farmers is sold for nearly Rs 7000 at a cafe in Paris.

As a result, farmers have been slowly losing interest in coffee cultivation, something they all started in the hope of earning a decent livelihood. While several farmers have left and moved on to towns and cities in search of other work, many farmers grow crops such as turmeric, paddy and kidney beans to sustain coffee cultivation.

Organic yet unsustainable

“If you look at it based on the current situation, investment is high for me. Mostly for cutting, weeding to pluck the coffee fruit and drying them, it takes a lot.  But the return on all this is very low.  And it’s because we don’t get a fair price for the coffee. If you remove all the investments and payments, I am left with about Rs 5,000-6,000 only,” Sankarayya says.

According to him, apart from a fair price, receiving loans from the government will help them with capital to invest into the crop every season. “If we invest well and get a food crop, we get better income out of it. We can pay back based on the returns we get. If the government helps us that way, we will be able to earn a good livelihood. It’s risky right now for us to approach for loans. The process is too long,” Sankarayya adds.

Farmers also want a storage facility to store the fruits. They say that they dry the fruit at their own houses and don’t have anywhere to store the beans. This results in distress sale to get rid of the stock, as a result of which they don’t get a fair price either.

“If forced sales and distress sales should not happen, tribal farmers need financial support. Now GCC is giving a loan of Rs 20,000 per acre to farmers as well. But we are able to help only a few people with this. Even if we do a lot, he (farmer) will not give the entire product to us. 50% will come to us and 50% will go to the broker or middleman. When he does this, the debt continues. To avoid this, the entire department has to play a role and do it properly,” GCC’s Babu Rao says.

ITDA says it is currently in the process of understanding the credit needs of farmers and is planning to send a proposal to the government to come up with coffee loans.

“There should be some institution close by to the farmers which should be able to give them money in times of need. Interestingly, the amount of money that farmers need is not very high. it is just Rs 5,000 or Rs 10,000. So even if you are able to get that institutional financing, it will have a profound impact on ensuring that the farmers get their due share,” Balaji says.

In addition to this, ITDA is also setting up Farmer Producer Organisations (FPO) run by farmers themselves and a third-party person to help bring a fair price to the famers. This is currently being piloted in Chinthapalle mandal.

But how beneficial the FPO model will be, is yet to be ascertained by the ITDA. And any such support is yet to reach the farmers in and around the GK Veedhi mandal.

Currently, these farmers are in the process of harvesting another variety of coffee called ‘Robusta’, whose quality isn’t as good as the Arabica coffee. But due to the dwindling coffee income, these farmers are experimenting with whatever they can to sustain their livelihoods.

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