The coffee prices have slumped yet again, reaching the lowest in the last five year at London market on Tuesday. Robusta coffee beans fetched the lowest price of $1,380 a tonne.
Robusta coffee had fetched $2,050 during the corresponding period last year. Similarly, Arabica coffee was priced at 118 cents for a pound at the New York market.
Supply and rate
Brazil, known for the major production of Arabica coffee in the world, has supplied 51 million bags of coffee – a record. This, in turn, is expected to result in a drop in the price of coffee in the market.
Brazil had, similarly, produced 50 million bags of coffee in 2012. The decline in the price at the international market has also led to the price of Arabica parchment collapsing to Rs 8,300 per bag (50 kg) and Rs 3,200 per bag (50 kg) of cherries.
Low yield
The production of Robusta coffee has not reached the expected rate and this will have an impact on the market of Arabica coffee. Following a sudden fall in price of Robusta coffee, Vietnam – the highest coffee-producing country – has started selling Robusta coffee that it has produced, in a hurry.
“Robusta coffee had fetched Rs 3,000 a bag in 1994-96. The then wages of plantation workers was Rs 25 while the diesel price was Rs eight a litre. Now, the wages of the workers are in the range of Rs 250 to Rs 270 and the price of diesel is Rs 49 a litre. In such a scenario, growing coffee has become a loss-making business,” said a senior grower.
Maintenance of Robusta coffee crop has also become a costly affair now. Even if the production is 25 bags of coffee per acre, then the grower will have to spend a minimum of Rs 2,000 for it. In such a scenario, getting profits by growing coffee is just a dream.
Published 30 January 2016, 19:03 IST