Thousands of Coffee Growers in Kodagu, Chikkamagaluru, Hassan, Karnataka Risk Losing Land Over Unpaid Loans

These farmers owe a cumulative sum exceeding ₹500 crore to banks.

Bengaluru/Chikkamagaluru/Madikeri: Over 6,000 coffee growers in Karnataka, spread across Kodagu, Chikkamagaluru, and Hassan districts, are staring at the grim prospect of losing their plantations as the June 30 deadline to repay their outstanding loans lapsed on Monday.

These farmers owe a cumulative sum exceeding ₹500 crore to banks, and with the grace period now over, banks are preparing to initiate recovery proceedings under the SARFAESI Act, according to a report published in Deccan Herald(DH).

Invoking the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, several banks have already begun issuing auction notices, particularly targeting growers in Chikkamagaluru and Kodagu districts, report states. Although standard coffee crop loans are not covered under SARFAESI, loans taken for developmental purposes on plantations fall under its purview, a senior Coffee Board official confirmed.

Thousands of growers in Karnataka have, over decades, taken loans for various plantation improvements. With repayment proving difficult, defaults have mounted to alarming levels. “The total unpaid amount has now crossed ₹500 crore,” M.J. Dinesh, Chairman of the Coffee Board of India, said," as quoted by DH.

In a bid to rescue these distressed growers, a delegation led by Dinesh had met Union Finance Minister Nirmala Sitharaman in November last year. Responding to their plea, the Finance Ministry had worked out a one-time settlement (OTS) package in consultation with the Finance Secretary.

Under the scheme, growers were granted an eight-month window ending June 30, 2025, to repay their dues. Loans up to ₹25 lakh attracted a concessional interest rate of 3%, while those between ₹25 and ₹50 lakh were charged 4%. Importantly, growers who managed to pay at least 5% of their outstanding amount by March 31 were shielded from immediate SARFAESI-related action.

Despite this relief measure, only 518 growers across Karnataka availed the OTS scheme. With the majority of defaulters failing to meet the March 31 cut-off, banks have now begun sending notices ahead of initiating auction procedures from July 1.

“Small growers are battling multiple crises — declining productivity, skyrocketing input and labour costs, and inconsistent market prices. Recovering in just one or two instalments is nearly impossible for most,” Arvind Rao, a grower from Chikkamagaluru and Chairman of the Karnataka Planters’ Association told DH. He appealed to both banks and the Union government to extend the repayment deadline.

Meanwhile, Dinesh is scheduled to meet Finance Ministry officials in New Delhi this week to request a further extension of the OTS deadline in hopes of preventing widespread distress among the state’s coffee-growing community.

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