India’s Coffee Exports Look Up As The World Runs Short Of The Beverage

A bumper harvest of coffee will help India to recover lost ground in exports in the midst of fears of a worldwide shortage and higher prices triggered by a crop shortfall in Brazil, the world’s biggest coffee producer.

India exports over 70 percent of its coffee production.

The price of arabica coffee futures, a global benchmark, hit a seven-year high of $2.07 per pound towards the end of July as severe frost hit coffee plantations in Brazil, which had already expected a lower crop because 2021 is an off-year for the country’s production. Although prices have eased to about $1.76 per pound, they are still 40 percent higher than at the start of the year.

India’s coffee production was 12 percent higher at 334,000 tonnes in 2020-21, according to data from the Coffee Board. Almost 70 percent of India’s production is robusta coffee, which increased 11 percent from the previous year to 235,000 tonnes. Arabica crop output in India has stagnated in the range of 90,000 to 100,000 tonnes.

Robusta coffee prices rose in tandem with arabica prices in July, crossing the $2,000 per tonne mark. It hovers at about $1,770 per tonne at present.

India’s coffee exports climbed 10 percent to 226,177 tonnes in the January 1 to August 5 period from a year earlier. In Europe, the main export destination for Indian coffee, out-of-home consumption was hit badly by the pandemic in 2020. Italy, Germany, and Belgium are the top three buyers of Indian coffee.

“More cafes are opening up and the situation is improving gradually in the European countries. The government has targeted $1 billion in the export of coffee, which is tough. We achieved around $750 million in 2020,” Rajah said.

Coffee growers are holding on to their stock, expecting prices to go up further.

“It has become difficult to source coffee beans for processing and export from both world and domestic markets. While there is a shortage of arabica beans, robusta growers are not selling much in anticipation of higher prices,” said N. Sathappan, director of SLN Coffee, based in Coorg.

“We expect a higher robusta crop next year too as the plantations have received good summer rains,” said T.T. John, a member of the Coffee Board. “If there is no unusually heavy rainfall during this monsoon, then the robusta output may go up by 15 percent.”

Coffee Board’s post-blossom estimate for 2021-22 pegs output at 369,000 tonnes, of which 260,700 tonnes would be of the robusta variety.

Producers expect coffee prices to remain high in the short to medium term as output will trail consumption. The US Department of Agriculture (USDA) forecast world coffee production for 2021/22 will decline by 11 million bags to 164.8 million due to the combined effect of the off‐year of the biennial production cycle and adverse weather in Brazil.

The USDA predicted global consumption of coffee to rise by 1.8 million bags to 165 million bags, with the largest gains from the European Union, the US, and Brazil.

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Credit: Money Control