Exports value in dollar terms was down 24%, while in rupee terms it fell 8%.
Indian coffee exports have taken a beating from global financial crisis and low domestic output. Coffee exports from India fell by 14.5 per cent in January-February 2009, as compared to the year-ago period. Total exports were 33,120 tonnes from January up to March 5 of the present calendar year compared with 38,766 tonnes in the year-ago period, according to the provisional data released by the Coffee Board.
Exports value in dollar terms was down 24 per cent, while in rupee terms it fell 8 per cent. Exports value was $74.14 million (Rs 354.15 crore) in Jan-Feb ’09 as against $97.44 million (Rs 386.27 crore) in the corresponding months of the previous year.
Of the coffee exports, Arabica accounted for 8,997 tonnes and Robusta 24,123 tonnes. Arabica, a tropical lowland plant, is mainly used in premium coffees while Robusta, a lowland tropical plant, is a lower-cost variety, used for brewed and instant coffee. Robusta constitutes about 70 per cent of the country’s coffee output.
“Demand from Russia and Ukraine has come down sharply. Offtake from European markets has also reduced,” said Ramesh Raja, president, Coffee Exporters Association of India. Russian Federation is the second largest buyer of Indian coffee after Italy. Shipments to European markets account for 65 per cent of the total exports. “The impact of recession is longer than initially expected. January-March quarter will be a bad quarter for coffee, exports may come down by 20 per cent, compared to the year-ago period” he said, maintaining that exports may remain flat in the next few months.
According to Coffee Board chairman G V Krishna Rau, recession has brought a sense of caution among the coffee traders, and therefore the forward contracts were not concluded especially during September-November 2008. Global coffee prices suddenly came down by more than 25 per cent in these months. “Because of this sudden drop in prices, there was uncertainty about the direction in which prices were likely to move, resulting in lower forward contracts” he noted.
Apart from economic slowdown that resulted in lower global demand especially for premium and value-added coffee, a fall in domestic production has also hit exports. Coffee production may remain lower during this crop year (October 2008 - March 2009) as compared to the initial estimations. The Coffee Board’s post-monsoon survey in November 2008 estimated the country’s new crop at 2,76,600 tonnes. This was 5.6 per cent less than the post-blossom survey (May 2008) estimate of 2,93,000 tonnes. According to Rau, there will be a further fall about 12,000 tonnes in output before the crop year concludes.
Karnataka accounted for almost the entire reduction in the new crop. “Production in Kerala and Tamil Nadu are largely on the expected lines. However, in Karnataka, mainly in the Chikmaglur district, harvesting has been low due to untimely rains. Crops have been adversely affected by lack of fertiliser availability and menace of pests,” Rau said. About two-thirds of the country’s coffee is grown in Karnataka.
India ships abroad 70-75 per cent of the coffee grown in the country. According to some exporters, prices of Indian coffee are not competitive enough to have an edge in the global market. Vietnamese coffee costs at least 50 per cent less than the Indian coffee. “In India, transportation and processing costs are too high, owing to lack of adequate infrastructure and technology. This adds up to price, making it less attractive for overseas buyers,” said Marvin Rodrigues, managing director of a Hassan-based coffee exporting firm.
The Coffee Board, however, is hopeful of meeting the export target for 2008-09 in terms of value. Export target for the crop year in value terms was set at Rs 2,100 crore ($525 million). Of this Rs 2,066.55 crore ($476.71) has already been achieved, as per the Coffee Board figures.
In volume terms the target was set at 2,10,000 tonnes and as on March 5, 1,83,659 tonnes have been dispatched. For the crop year 2008-09, coffee exports are estimated to be 6-7 per cent lower as compared to 2007-08.
“The coming crop from Brazil is expected to be lower, resulting in less global supply as compared to demand. Hence expectations are that coffee prices will firm up in the months to come. This may have a positive impact on exports too,” Rau said.
Source : Business Standard