Union Finance Minister Intervenes to Protect Karnataka Coffee Planters
In a significant development for Karnataka's struggling coffee industry, Union Finance Minister Nirmala Sitharaman has issued directives to immediately suspend the online auction of coffee estates under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act. This intervention follows intense lobbying by planters and political representatives who raised alarms about the potential sale of plantations to foreign entities.
Delegation Raises Concerns Over Foreign Ownership
A high-level delegation led by former Prime Minister and Rajya Sabha MP H D Deve Gowda, along with Udupi-Chikkamagaluru MP Kota Shrinivas Poojary and various coffee industry stakeholders, met with Finance Minister Sitharaman to present their case. They detailed how multiple coffee estates across Chikkamagaluru, Hassan, and Kodagu districts had been listed for online auction by banks due to loan defaults.
The planters expressed deep concerns that foreign buyers acquiring these plantations through online auctions would fundamentally alter local communities, potentially disrupting traditional lifestyles and cultural practices that have been intertwined with coffee cultivation for generations.
How SARFAESI Act Was Being Applied
Under the provisions of the SARFAESI Act, banks and financial institutions have the authority to sell properties—excluding those directly related to agriculture—when borrowers fail to repay loans on time. This process can occur without requiring court intervention, which has led to situations where estate owners were completely unaware their properties were being auctioned until the registration process was already underway.
Karnataka Growers Federation (KGF) president Halse Shivanna explained that "hundreds of coffee estates had been earmarked for auction as owners struggled with financial hardships that made loan repayment impossible." The online auction system created additional anxiety among planters who feared losing their livelihoods to distant, unknown bidders.
Immediate Relief for Debt-Ridden Planters
According to Shivanna, Finance Minister Sitharaman has instructed concerned officials to stop the auction process immediately, though a formal official order confirming this suspension remains pending. This directive represents a crucial reprieve for coffee planters who have been grappling with:
- Mounting debt burdens from loans taken during periods of financial strain
- Uncertainty about the future of their family-owned estates
- Concerns about foreign ownership changing local economic dynamics
- The stress of potentially losing properties without adequate notice
Political and Industry Advocacy Bears Fruit
The intervention came after concerted efforts by the Karnataka Growers Federation, whose team including vice-president K K Vishwanath and Chikkamagaluru district president K U Ratheesh approached Karnataka's Members of Parliament seeking their assistance. Their advocacy highlighted the unique challenges facing coffee plantations compared to other types of properties subject to SARFAESI proceedings.
Finance Minister Sitharaman responded sympathetically to these concerns, promising to thoroughly review how the SARFAESI Act is being applied specifically for recovering coffee farm loans. This review could potentially lead to more permanent protections for agricultural properties within the legal framework.
The suspension of online auctions provides temporary breathing room for Karnataka's coffee industry while broader discussions about loan recovery mechanisms for agricultural properties continue at the national level.
