Plantation companies as a whole hold promise

Folks, it’s time I really gave you something on what is happening in the market. In case you are a player in the stocks market, then here is something for you to ponder.
This was an expected thing but it has happened without many taking notice. I am talking about coffee consumption in India.
The Coffee Board says it has touched 1 lakh tonnes. That’s a great news for the coffee sector because domestic consumption had for long been dormant around 50,000 tonnes. The efforts of various Coffee Board Chairpersons starting from 1997 have finally yielded results.
In fact, the most surprising thing about this rise is consumption is the pace of growth since 2002. It is proof of the fact that Indians now have more cash at hand to spend.
Well, why should we attach much importance to this event? It is simple. Till now, coffee had been totally dependent on exports that made up two-thirds of the production. The rise in consumption at nearly 6 per cent a year means, we are heading (or have we reached the situation?) for a tight demand-supply scenario.
It means that we are likely to be a net importer in the next couple of years. Changes have to be made in the rules since coffee imports are allowed now only for re-imports. Surely, the situation will thrust such a move by the Government. No doubt on that, take it from me.
I don’t want to get more into this subject but the fact is that coffee is surely going to be in demand. This means, coffee companies such as CCL products and Tata Coffee are bound to do well, really well.
In the long-term, these stocks will really pay handsome dividends. Therefore, it will be good to bet on coffee.
In fact, if you ask me, one can take chances with companies associated with the plantation sector. During the current quarter (April-June 2010), some of the tea companies, especially those having estates in the North-East, have reported loss. But we can expect that to be a passing phenomenon if they can recover from the pest attack and weather woes. However, other firms that have rubber plantations such as Harisson Malayalam should benefit from the high rubber prices.
With the transport sector witnessing a rebound and sales of vehicles picking up, we are set to witness a long-term imbalance in the demand-supply situation. Therefore, rubber plantation companies too hold promise.
And then, pepper is really facing supply shortage and its prices are on fire. So, there is additional incentive since pepper is an inter-crop mainly in coffee plantation. Cardamom too is all flavours for the growers. Only vanilla seems to be lagging but how many really grow vanilla?
Therefore, my personal take, is that you can hedge your bets on plantation companies.
Maybe, fix a stop loss or keep a target for profit and see.