Are Subsidies for Coffee Farmers Inclusive in India? Evidence and Implications from a Household Survey

Abstract

Using newly collected data from a household survey of 575 coffee farmers in traditional coffee growing regions of India, this article answers policy-relevant questions regarding (a) the nature, extent and intensity of inclusiveness of subsidies to coffee farmers and (b) responsiveness of subsidies to constraints of coffee farming by small farmers. The analyses are disaggregated by states (Karnataka, Kerala and Tamil Nadu) and districts in Karnataka (Chikmagalur, Hassan and Kodagu). Subsidies refer to explicit support by the Government of India for water augmentation, quality upgrading and coffee replantation. A subsidy policy is distinguished between inclusive and intensely inclusive by high proportion of small, poor, and socially, economically and educationally disadvantaged beneficiaries of the subsidies. Inclusiveness is measured by both individual indicators and a composite index. The results offer strong evidence for inclusiveness of subsidy for coffee replantation and, in particular, subsidy for clean replanting. Other subsidies are inclusive but intensity of inclusiveness shows remarkable variations by the components of subsidies and across regions. Furthermore, the subsidies are found to be partially responsive to the coffee farming constraints of small farmers only under coffee replantation. These analyses and results have implications for developing taxonomy of subsidies as a basis for designing a more inclusive and responsive subsidy policy for household coffee farmers by traditional coffee regions in India, especially during the Twelfth Five Year Plan of India (2012–17).