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Quake cost may hit coffee retention plan

India is likely to reconsider a decision to hold back coffee exports in line with a global plan to boost prices because of the financial burden imposed by last week's earthquake, an industry source said.

"We don't think the government will want to fund the retention...after the Gujarat earthquake," a source in the state-run Coffee Board said on Wednesday.

India had said only last week it would implement the Association of Coffee Producing Countries (ACPC) plan to cut coffee exports to boost prices, after deliberating over a decision for more than four months.

India produces about 4 per cent of the world's coffee and exports more than 75 per cent of its output.

The plan to hold back 20 per cent of export volume over a six-month period would cost an estimated Rs 60 million and was to be funded by the Union government.

But three days later, Gujarat was pulverised by an earthquake that is believed to have killed at least 20,000 people.

Industry groups have estimated that losses and the cost of rebuilding Gujarat could run into billions of US dollars and analysts fear a large part of the expenditure may have to be borne by the cash-strapped Union government.

Prime Minister Atal Bihari Vajpayee said on Tuesday new taxes would be imposed to meet the cost of the quake.

Coffee Board vice-chairman Bose Mandanna said the retention plan would not be directly funded by the Union government but from a pool administered by the board.

"The ACPC could pass strictures against us and even fine us if we don't implement the plan," Mandanna said.

A federal official said there had been no discussion so far about reconsidering the retention plan.

"In fact we haven't even started discussions about when to start the retention," the official, who did not want to be identified, said.

The Complete Coverage | List of earthquake sites

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