Indian coffee planters profit from higher global prices

"Indian coffee prices will remain high in international markets as its consumption is growing at five percent per annum and global stocks remain at the lowest," state-run Coffee Board director Y. Raghuramulu told IANS on the sidelines of a planters' conference in Coonoor. With global coffee consumption growing at two million bags per annum, demand for Arabica and Robusta varieties from India is set to increase because of its quality, aroma and competitive pricing.

World coffee consumption is estimated to be around 129 million bags of 60 kg each in 2009 as against 128 million bags in 2008. Consumption in producing countries like India is one-third of the production. Though 75 percent of the coffee produced in India is exported, the stagnant domestic market, mostly in southern India, is set to grow at five percent annually by 2011 due to demographic dividend, disposable income, change in consumption patterns and expansion of coffee chains at retail levels across metros and cities.

"The Indian coffee sector stood the onslaught of great price depression for four fiscal years (2001-02 to 2004-05), drought and pest outbreak. The growing image of our quality, especially for Robusta, has enabled the sector to be resilient and bounce back," Raghuramulu pointed out.

According to the International Coffee Organisation (ICO), the price of India-grown Arabica shot up to Rs.135 per kg in fiscal 2007-08 from Rs.77.50 per kg in fiscal 2004-05 and the price of Robusta increased to Rs.70 per kg from Rs.31.90 in the same period at international auctions.

At auctions conducted by the Indian Coffee Trade Association (ICTA) in Bangalore, Arabica (Plantation A) price soared by 36 percent to Rs.180 per kg in the first nine months (Jan-Aug) of 2009 from Rs.132 per kg in the same period of 2008, while the price declined by 13 percent in Robusta Cherry to Rs.83 per kg in the first nine months of 2009 from Rs.95 per kg in the same period of 2008.

In spite of a 10.3 percent decline in export quantity to 196,530 tonnes in fiscal 2008-09 from 218,996 tonnes in 2007-08, value realisation increased by 9.2 percent to Rs.2,235 crore from Rs.2,046 crore in the same period, as unit value went up by 22 percent to Rs.114 per kg in fiscal 2009 from Rs.94 per kg in fiscal 2008.

In the first quarter (April-June) of FY 2009, export quantity declined by 15 percent to 50,305 tonnes from 59,072 tonnes in the same quarter of 2008, resulting in 17 percent decrease in value realisation to Rs.542 crore from Rs.649 crore despite marginal drop in unit value to Rs.108 per kg from Rs.110 per kg in the same period.

"Indian coffee has become the flavour of the season in the matured markets such as Europe, Russia, Japan and the US (for speciality coffee) despite increasing competition from new entrants like Vietnam and Indonesia," Raghuramulu said.

Arabica (Plantation A) price appreciated by 17 percent to Rs.132 per kg in 2008 from Rs.113 per kg in 2007, while Robusta price shot up by 28 percent to Rs.97 per kg from Rs.76 per kg in the same period.

Karnataka accounted for 70 percent (183,860 tonnes) of the coffee production (262,300 tonnes) in the country during fiscal 2008-09. With Kerala contributing 22 percent (57,200 tonnes) and Tamil Nadu chipping in with 6.2 percent (16,255 tonnes), southern India accounted for 98 percent (257,315 tonnes) of the total output last fiscal. India's share of global production and exports is a mere 3.5 percent.