The exchange will benefit producers, trade and consumers by providing a mechanism for price discipline.

COFEI will help growers, curers, roasters and exporters to have better estimates of future coffee prices.

Coffee futures contract is a market-based instrument which provides for hedging against price risks.

This is significant as one of the most important challenges for participants in the coffee industry is price volatility. Volatility in global markets gets reflected in the domestic price also which affects both production and, consequently, the welfare of growers, traders and exporters.

Hegde suggested that steps be taken to promote coffee in the domestic market by organising coffee festivals in different parts of the country and the production of speciality coffee,including organic coffee, be taken up as part of the export promotion efforts.

Rathi Vinay Jha, additional secretary in the commerce ministry, and SV Ranganath, chairman, Coffee Board, briefed the minister on the coffee scenario.

Ranganath indicated that a plan of action was being prepared to boost domestic consumption for which a report of an expert panel was awaited. Generic promotion to promote coffee drinking habit was also being takenup.

Coffee production had surpassed the target of two lakh tonnes fixed for the Eighth Plan by 1967-97 itself, touching a level, of 2,23,000 tonnes.

The thrust areas would now include reaching a production target of 3 lakh tonnes by the year 2000, raising productivity of small growers to 1,000 kg per hectare, upgradation of quality of coffee and various export promotion measures such as participation in trade fairs and exhibitions and participation of exporters in the coffee association meetings of target market countries.

Special programmes have also been drawn upto promote cultivation of coffee in the north eastern region.

Ranganath urged the minister to press for reduction of the excise duty on instant coffee brands from 18 per cent to 8 per cent to give a boost to internal promotion.